1. 2nd accused in C.C.No.08/2003 on the files of the Special Judge (SPE/CBI)-I, Ernakulam, impugns the verdict dated 24.12.2009 in the said case, whereby the learned Special Judge tried the 2nd accused along with the 1st accused alleging commission of offence punishable under Section 120B r/w Section 409 of the Indian Penal Code (for short, ‘the IPC’ hereinafter) as well as under Section 13(1)(c) and (d) r/w Section 13(2) of the Prevention of Corruption Act, 1988 (for short, ‘the PC Act, 1988’ hereinafter) and recorded conviction and sentence against accused Nos.1 and 2 finding that both of them committed offences punishable under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988 as well as under Section 120B of the IPC.

2. Heard thelearned counsel for   the appellant/2nd accused as well as the learned Special Public Prosecutor appearing for the CBI. Perused the verdict of the Special Court and the evidence available.

3. Here, the prosecution allegation is that, the 1st accused, who worked as the Branch Manager of Canara Bank, Sulthan Bathery, Wayanad during March, 1999, conspired with the 2nd accused, who is a builder and the 3rd accused, who is the Assistant Engineer of the Panchayat, on the premise of misappropriating a sum of Rs.3 Lakh by granting a housing loan in the name of K.Raghavan, residing at Kuniyil Veedu, Chettimoola, Sulthan Bathery, and thereafter, without making any construction of the house, periodical loans were sanctioned to the tune of Rs.3 Lakh and the entire amount was encashed by the 2nd accused through his agents.

4. The Special Court ventured the matter and recorded evidence. PW1 to PW21 were examined and Exts.P1 to P73 were marked on the side of the prosecution.  On the side of the defence, Exts.D1 to D18 were marked.

5. On appreciation of the evidence, the learned Special Judge convicted and sentenced the accused for the offence under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988 as well as under Section 120B of the IPC, and sentenced accused Nos.1 and 2 as under:

                  “………..A1 and A2 are sentenced to undergo Rigorous Imprisonment for three years each under Section 120 B of the Indian Penal Code r/w Section 13(2) r/w Section 13(1) (d) of the Prevention of Corruption Act, 1988 and also sentenced to pay a fine of Rs.50,000/- each with default Simple Imprisonment for six months each. A1 is further sentenced to undergo Rigorous Imprisonment for three years under Section 13(2) r/w Section 13(1) (d) of the Prevention of Corruption Act, 1988 and further A1 shall pay a fine of Rs.50,000/- with default Simple Imprisonment for six months. The sentence will run concurrently.”

6. It is submitted by the learned    counsel for the appellant/2nd accused that after the verdict, the 1st accused died. The learned counsel argued that the allegation of the prosecution was not proved by cogent and convincing evidence, and the versions of PW1 and PW15 - Geemol Chacko, in this regard is not convincing. Therefore, after acquitting the accused of the offences under Section 409 of the IPC as well as under Section 13(1)(c) of the PC Act, 1988, the finding of the Special Court that the 2nd accused committed offences under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988, as well as under Section 120B of the IPC, by the 2nd accused, is liable to be set aside.

7. Opposing this contention, the learned Special Public Prosecutor would submit that, as evident from Exts.P34 to P41, Rs.3 Lakh was sanctioned as loan in the name of PW18, K. Raghavan, for construction of a house. PW18 deposed that although the 2nd accused had assured that construction would be undertaken on availing the loan and had remitted amounts of Rs.20,000/- and Rs.17,000/-, no substantial construction was carried out only unloading of materials and some minor basement works were done, without doing any other works thereafter. According to the learned Special Public Prosecutor, as per the evidence of PW15 - Geemol Chacko and as evident from Exts.P2 to P6, cheques for Rs.75,000/-, Rs.50,000/-, Rs.1,25,000/-, Rs.10,000/- and Rs.40,000/- respectively, those cheques were encashed by PW15 and PW15 deposed that those cheques were encashed as instructed by the 2nd accused. It is also pointed out that, as stated by PW1, based on Ext.P1 inspection report, no house was constructed in the plot for which the housing loan was obtained. Even though the encashment of Ext.P4 cheque for Rs.1,25,000/- could not be corroborated by examining Rajagopal, as he was not available, the fact of encashment of the amount, at the instance of the 2nd accused, and the non-use of the same for house construction, could be gathered to indicate the commission of the offences found by the Special Court as the outcome of the conspiracy hatched between accused Nos.1 to 3. Therefore, the verdict of the Special Court is liable to be confirmed.

8. Adverting to the rival arguments, the points arise for consideration are;

                  (i)       Whether the Special Court was right in holding that accused No.2 committed offence punishable under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988?

                  (ii)      Whether the Special Court was right in holding that accused No.2 committed offence punishable under Section 120B of the IPC?

                  (iii)     Whether the verdict would require interference?

                  (iv)     The order to be passed?

9. In the instant case, the evidence of PW18 - K.Raghavan is that, he had no house of his own and he had 10 cents of property in Chettimoola of Bathery Panchayat.  He attempted to take loans from the Housing Board for the construction of a house, but the same was not materialized. Thereafter, while waiting so, he had the occasion to see an advertisement board at Chungam in Bathery town, stating that house would be constructed by availing loan and pursuant to this advertisement, he reached the office of Vishnu Construction and he found a lady therein. Then she informed him that Ravi was the owner of the construction and she introduced Ravi to him. PW18 testified further about the assurance given by the 2nd accused to obtain loan of Rs.3 Lakh and construction of a house for PW18, and accordingly, he had entrusted the title deeds, copy of ration card, tax receipt, estimate and plan to Ravi. Then Ravi called him to the Bank and a paper was obtained from the Manager of the Bank and he signed therein before the Manager. At that time, Ravi and the Manager were present and he had signed in a printed paper and the same was not filled up. According to him, he had purchased the said property of 10 cents by spending Rs.15,000/- alone, and thereafter, some materials were unloaded and some excavation work was carried out. In the meantime, Ravi handed over Rs.20,000/- to be given to the persons who unloaded the materials, and Rs.17,000/- was given to pay wages to the employees who had done the excavation. Later, since no construction was made, he went to the house and office of the 2nd accused. Then, he agreed to complete the construction and he met the Manager. When he met a person who introduced himself as the cousin of the Manager, he realised that he had also met this man earlier in the office of Ravi. Later, he met Gopinadhan, Advocate of the Bank and he had informed him that the entire loan was withdrawn from the Bank. Later, he reached the office of the 2nd accused and discussed with Geemol Chacko, who was examined as PW15 and she handed over the pass book.

10. It is argued by the learned counsel for the appellant/2nd accused that Ext.P12 loan application in the name of PW18, produced by PW1, is only a photocopy, but the same was marked and tendered in evidence without any objection. In this connection, it is relevant to note that as far as the sanction of loan is concerned, the prosecution not only relied on Ext.P12 application, apart from that, a bundle of documents have been placed by the prosecution to prove that loan of Rs.3 Lakh was sanctioned in the name of PW18 and also withdrawal of amounts by using Exts.P2 to P6 cheques for Rs.75,000/-, Rs.50,000/-,  Rs.1,25,000/-,  Rs.10,000/-  and  Rs.40,000/- respectively from the account of PW18, on deposit of the loan amount of Rs.3 Lakh in the account of PW18. Out of which, Rs.1,25,000/- as per Ext.P4 was encashed by Rajagopal and the other amounts were encashed by PW15 as directed by the 2nd accused. It is relevant to note that PW15, who was examined to prove the encashment of Exts.P2 to P6 cheques for and on behalf of the 2nd accused, turned hostile to the prosecution, and accordingly, the learned Special Public Prosecutor declared her hostile and put questions to her. During such examination, PW15 categorically stated that she had encashed Exts.P2, P3, P5 and P6 cheques and the money obtained by her was entrusted to the 2nd accused. It is relevant to note that, as per Ext.P46, a statement was given by PW15 Geemol Chacko to the Bank Manager admitting the same, despite having given evidence before the Special Court regarding the encashment and entrustment of the amounts covered by Exts.P2, P3, P5 and P6 cheques to the 2nd accused. It is relevant to note further that, as per Ext.P20, a loan to the tune of Rs.3,00,000/- was sanctioned in the name of K.Raghavan, and as per Ext.P53, the SBI account passbook No.20595 in the name of K.Raghavan, supported by Ext.P54 cheque book numbers 275111 to 275120. It is evident that the entire amount of Rs.3 Lakh was sanctioned and encashed through Exts.P2 to P6 cheques. Thus, the grant of loan in the name of PW18 K.Raghavan, in fact, came to light as a foul  play  when  the  Bank  noticed  the  irregularity,  and K.Raghavan raised specific complaint regarding non-receipt of the loan amount by him.

11. In order to establish the procedural irregularities found in the bank, the prosecution examined PW2 Kunjiraman, a clerk in the advance section at the relevant time. He did not support the prosecution and was, therefore, declared hostile. However, from his evidence, it could be seen that, as he was a clerk in the advance section, the loan papers ought to have come before him. When the loan papers were shown to him, he deposed that neither his handwritings nor his initials could be found therein. He further deposed that it was his responsibility to prepare the documents relating to the housing loan. He identified Exts.P2 to P6 cheques and stated that the payments in respect of those cheques were made by him. He deposed further that the denominations, for which, the payments were issued had been written on the backside of the cheques and that the handwritings therein were of him. During cross-examination, he also stated that the person who received the amount would sign on the backside of the cheques.

12. PW8, a Senior Manager of Canara Bank who was posted in the Regional Office at Calicut during the relevant period, was thereafter examined by the prosecution. He testified that he had conducted an enquiry in this loan transaction and his evidence is that though in the application form, it is stated that an income certificate was attached, no such certificate either attached or found. The certified copy of the application as Ext.P12 marked through him. He further deposed that the loan amounts were to be disbursed in three stages and that the party was required to file an application for further disbursement at each stage, but those applications were missing in the present case, and the prosecution case was that no such applications neither filed nor acted upon. It was through him, the photocopy of the pronote purportedly executed by  K.Raghavan  was  marked  and  PW8  deposed  that  the signature therein was that of Ramakrishnan(A1). The photocopy of the delivery letter to DPL was marked as Ext.P48. Ext.P15, the declaration-cum-certificate also tendered in evidence through PW8 and he deposed that as per Ext.P15, the site had been inspected by Ramakrishnan, who had signed the certificate dated 12.03.1999. Regarding the construction of a house, by utilising the loan, PW8 testified that this witness had clearly stated that he had visited the site and found that no construction existed. Regarding this evidence, it was observed by the learned Special Judge as under:

                  “The importance of this evidence lies in the fact that the loan file contained an original stage-completion report prepared by the 3rd accused, stating that work worth Rs.2,20,000/- had already been completed. When the certificate (Ext.P15) was on record and Ramakrishnan claimed to have visited the site on 12.03.1999, the certificate and the stage-completion report could not stand together. Thus, it followed that, at the time of signing Ext.P15, Ramakrishnan would have been aware that the stage-completion report was forged or false and could not be relied upon. When an official performs his official duties, only the surrounding circumstances can reveal whether he acted with any fraudulent or dishonest intention. In other words, it is only from the circumstances that abuse of power can be inferred. It is to be remembered that the manager had the authority to grant housing loans up to Rs.5 Lakh, as evidenced by the testimony of PW12. No documentary evidence was produced by the CBI to show this authority, no circulars or written materials were placed before the Court. However, there was oral evidence from PW3, PW8, and PW12 regarding the procedure for housing loan disbursement.”

13. In order to corroborate the documentary evidence, the prosecution examined PW13, Shyamala, who was working as a clerk in the Canara Bank when Ramakrishnan was the Manager. She identified the signatures and handwritings of Ramakrishnan in Exts.P12, P13, P14, P15, P17, P18, P19, P20, P21, P28 and P29, out of which Ext.P12 is the certified photocopy of loan application, and Ext.P13 certified photocopy of pronote and the other documents pertain to the grant of loans. Apart from that, PW13 identified the handwritings and signatures of Ramakrishnan, the 1st accused in Exts.P20, P42 and P43 and also in Exts.P34 to P41 vouchers whereby the loans were issued. Apart from that, she identified Ext.P44 account opening form in the name of PW18 and she had issued pass book in the name of the account holder. She also deposed that, out of the cheque book issued in the name of Raghavan from the account as per Ext.P44, bearing cheque numbers 275111 to 275120, cheques bearing numbers 275111 to 275115 were used and the same were Exts.P2 to P6, and the cheque book containing the remaining cheque leaves was marked as Ext. P53 through her.  In fact, the evidence of PW13 has been relied on by the prosecution to prove that the loan application of Raghavan was sanctioned, that an account was opened in the name of PW18 Raghavan and cheque books were issued in her name. That apart, the cheques were thereafter encashed by the staff of the 2nd accused, who all acting at the helm of the 1st accused, Ramakrishnan.

14. In order to show that the salary of Raghavan was only Rs.3,000/- per month during the period 1998-1999, PW14 was examined, and he had deposed to that effect, stating that he had run a theatre during 1998-1999 and that Raghavan was employed therein on a monthly salary of Rs.3,000/-.

15. PW15 examined in this case is Geemol Chacko and she had admitted issuance of Exts.P2, P3, P5 and P6 cheques in her name and encashment of the same by her and entrustment of the said amount to the 2nd accused. In order to prove that the 2nd accused Ravi had been doing construction work, Ext.P63 survey plan, Ext.P64 Certificate issued from Village Office, Sulthan Bathery, and Ext.P65 Estimate of proposed residential building recovered by the Investigating Officer as per Ext.P61 search list and Ext.P62 Mahazar were tendered in evidence through PW16.

16. Apart from that, PW19, who issued Ext.P68 sanction to prosecute the 1st accused, was examined. PW20 also supported the evidence of PW16. PW21 is the Deputy Superintendent of Police, CBI, Cochin since February 2005 and he had given evidence stating that he had registered Ext.P69 FIR as R.C.3(A) of 2000 and the same would bear his signature. He deposed about the investigation in detail without any ambiguity.

17. According to the learned counsel for the appellant/2nd accused, since no loss was sustained by the Bank and the loan amount was secured, as evidenced by Exts.D13 and D14, the judgment and decree respectively in O.S.No.18/2002, whereby the Sub Court, Sulthan Bathery, granted a decree in favour of the Bank to realise the amount from the property standing in the name of Raghavan. In fact, the same by itself would not absolve the liability of the 2nd accused in this case. The rationale is   that;   here   the   prosecution   alleged   and   proved   misappropriation of the loan amount by the 2nd accused on the premise that he had encashed Exts.P2, P3, P5 and P6 cheques through PW15 and obtained an amount of Rs.1,75,000/-, out of which only a nominal sum was spent for the construction of the house, and that he had misappropriated the remaining amount without carrying out any further construction work. The prosecution case further is that the remaining amount of Rs.1,25,000/- also was encashed by the 2nd accused through one Rajagopal, though this aspect is not proved by examining Rajagopal. Thus, mere reduction of the loan amount by executing the decree, in respect of the misappropriated loan amount by the 2nd accused, which was granted in the name of PW18, who is the judgment debtor in the decree, would not absolve the 2nd accused from criminal culpability, in a case where the discharge of the decree debt is now also the liability of PW18, though he did not receive the entire loan amount.

18. In order to corroborate the prosecution case that there was misappropriation, as alleged by the prosecution, the prosecution examined PW5, the Senior Manager of Canara Bank, Thrissur unit during 1999. According to him, he was one among the members who conducted investigation and prepared Ext.P1 investigation report in relation to the activities of the 1st accused Ramakrishnan. According to him, during investigation, it was revealed that even though Rs.3 Lakh was disbursed, no construction was done in the concerned plot apart from some excavation works.

19. The learned Special Judge, on appreciation of evidence found that the accused persons committed offences punishable under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988 and also under Section 120B of the IPC, for which, the 2nd accused was sentenced as extracted hereinabove. On appreciation and re-appreciation of evidence, as discussed in detail, in fact, the Special Court is justified in finding so and therefore, the conviction does not require any interference.

20. Coming to the sentence, the Special Court imposed rigorous imprisonment for three years each under Section 120B of the IPC and under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988 and also sentenced to pay a fine of Rs.50,000/- each with default simple imprisonment for six months each. Taking into consideration of the plea raised by the learned counsel for the appellant/2nd accused, I am inclined to modify the sentence.

21. In the result, the appeal is allowed in part. The conviction imposed by the Special Court is confirmed. The sentence imposed by the Special Court is modified as under:

                  The appellant/2nd accused is sentenced to undergo rigorous imprisonment for one year for the offence punishable under Section 13(1)(d) r/w Section 13(2) of the PC Act, 1988 and to pay a fine of Rs.75,000/- and in default of payment of fine to undergo rigorous imprisonment for a period of three months. Similarly, for the offence punishable under Section 120B of the IPC, the appellant/2nd accused is sentenced to undergo rigorous imprisonment for a period of one year and to pay a fine of Rs.50,000/- and in default of payment of fine to undergo rigorous imprisonment for a period of three months.

                  The order suspending sentence and granting bail to the appellant/2nd accused stands cancelled and the bail bond executed by him also stands cancelled. The appellant/2nd accused is directed to surrender before the Special Court, forthwith to undergo the modified sentence, failing which, the Special Court is directed to execute the sentence, without fail.

                  Registry is directed to forward a copy of this judgment of the Special Court, forthwith, without fail, for information and compliance.