Holding

A connecting link, such as the branch manager's habit of receiving illegal gratification together with the appellant's receipt of an unauthorised overdraft, is sufficient to frame a charge of conspiracy, and the courts below were correct in refusing to quash the proceedings.

Summary

Hardeo Singh, a contractor, obtained overdraft facilities totalling Rs 21.5 lakh from the Birpur branch of Central Bank of India, facilities that were beyond the authorised limit of the branch manager, S.K. Roy, who was alleged to habitually receive illegal gratification from a third party. Although the FIR named only the branch manager and other conspirators, the charge‑sheet included Singh as a recipient of the illegal loan and charged him under Sections 120B, 409, 420, 468, 471 and 477A IPC and the Prevention of Corruption Act. Singh applied for discharge of the proceedings before the Special Judge; the Special Court and the Patna High Court rejected his application, holding that there was a prima facie case. Singh appealed to the Supreme Court, contending that the habit of the branch manager and his repayment of the loan within 46 days should preclude continuation of the case. The Supreme Court held that a connecting link – the branch manager’s habit of receiving gratification coupled with Singh’s receipt of an unauthorised overdraft – is sufficient to frame a charge of conspiracy, and that the courts below were correct in refusing to quash the proceedings. Consequently, the appeal was dismissed.

Issues considered

The adequacy of the connecting factor (habit of the branch manager) to constitute a prima facie case of conspiracy under Section 120B IPC.
Whether the appellant's repayment of the overdraft within 46 days warrants discharge of the criminal proceedings.
Whether the High Court erred in refusing to exercise its inherent jurisdiction under Section 482 Cr.P.C. to quash the charge‑sheet.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 120B, s. 409, s. 420, s. 468, s. 471, s. 477A
Prevention of Corruption Acts. 5(1)(a), s. 5(1)(c), s. 5(1)(d)

Subjects

conspiracySection 120B IPCPrevention of Corruption ActSection 482 Cr.P.C.charge framingbank fraudoverdraft facilityhabit of illegal gratification

Judgment

A HARDEO SINGH
v.
STATE OF BIHAR AND ANR.

MAY 11, 2000

B (G.B. PATTANAIK AND UMESH C. BANERJEE, JJ.]

Indian Penal Code-Sections l 20B, 409, 420, 468, 471, 477A-
Prevention of Corruption Act-Ss.5(J)(a), 5(J)(c), 4(1)(d)- Charge sheet
as against Appellant for conspiracy-For obtaining loans from main accused,
C a bank employee-Beyond financial limits-Main accused alleged to be in
the habit of receiving illegal gratificatiori from a specified person-
Application for discharge by Appellant dismissed by Special Court-upheld
by High Court-Whether Appellant is liable to be discharged-Held, No--
Some connecting link or connecting factor would be good enough for framing
D of a charge--lt cannot be equated to establishing the charge of conspiracy.

The Appellant alongwith others was charged under Sections 1208, 409,
420, 468, 471, 477 A of IPC read with Sections S(l)(a), S(l)(c) and S(l)(d) of
the Prevention of Corruption Act. The charge sheet mentioned that one 'R'
who was an employee of a Bank in connivance with some named accused in
E the FIR had cheated the Bank of serval lakhs of rupees, misusing his official
position. After investigation it was found that the said 'R' had granted
overdraft facility to the Appellant transgressing his financial competence, on
different dates. Though the FIR did not mention the Appellant as an accused,
his name had been shown as a person receiving loan on breach of fina11cial
obligation.
F
Special Judge took cognizance of the case and summons was issued to
the Appellant. The Appellant after obtaining bail, applied for discharge alld to
drop proceedings against him. Special Court dismissed the applicatio11 and
held that there were sufficient materials existing for a prima facie case against
G the accused person for framing of charges.

Petition under Section 482 Cr.P.C. filed by the Appellant before the High
Court was dismissed.

In appeal to his Court the Appellant contended that a specific person
H has been named in the matter of formation of habit so far as illegal gratification
222
HARDEO SINGH v. STATE OF BIHAR 223
is concerned and since the Appellant's name does not find any place, question A
of continuation of proceedings as against the Appellant does not arise, and
that the charge sheet has not mentioned the fact of repayment of the said loan
by the Appellant within 46 days, being the shortest possible time which has
to be viewed seriously.

The Respondent contended that there is a charge under Section 1208 B
and as such, question of setting the Appellant free at this stage does not arise,
that the offence under Section 1208, is an independent offence and while it is
true that the gist of the offence, is the agreement between two or more
offenders but particular facts of the conspiracy need not even be shown in the
charge, that some general evidence pertaining to the conspiracy would be C
sufficient to form part of the charge of conspiracy in the chargesheet, and
that since conspiracy is generally a matter of influence and since Appellant
did take advantage of the overdraft facility knowing fully well that the same
is beyond the financial limits of the Branch Manager, the natural inference
may be drawn that the same must have been done upon some other
consideration and it is the assessment of the same which should prompt the D
court to thwart such an attempt.

Dismissing the Appeal, the Court

HELD: 1. The allegation pertains to the factum of the habit of Branch
manager, of receiving illegal gratification from a person however by itself E
may or may not be sufficient to bring he. ne the charge of conspiracy but that
by itself would not authorise the court to call it a day in regard to the charge
of conspiracy on the wake of the factual matrix of the situation at this stage
of proceedings. Criminal prosecution does not necessarily mean harassment
and in the event the prosecution of this nature is allowed to be continued, it F
would not be in our view a traversity of justice or any undue prejudice or even
otherwise prejudicial since ultimately in the event the charge is not proved,
he would be acquitted. The Counter Affidavit filed by the Respondents herein
does disclose the materials for scrutiny against the Appellant; as such the
Court cannot assist the Appellant. (229-E-F)
G
2. As a matter of fact some connecting link or connecting factor
somewhere be good enough for framing of charge since framing of charge
and to establish the charge of conspiracy can not possibly be placed at par. To
establish the charge of conspiracy, there is required cogent evidence of
meeting of two minds in the matter of commission of an offence-in the absence
of which the charge cannot be sustained. This is however not so, in the matter H
224 SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A of framing of charge since the incidence of the offence shall have to be
investigated. (229-CJ

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
477 of 2000.

B From the Judgment and Order dated 30.7.99 of the Patan High Cot/rt in
Crl.M. No. 4292 of 1993.

Altaf Ahmed, Additional Solicitor General, P.S. Mishra, S.B. Upadhayay,
Sanjay K. Shandilya, Rajeev Sharma, P. Parmeshwaran, Kumar Rajesh Singh
and B.B. Singh for the appearing parties.
c
The Judgment of the Court was delivered by

BANERJEE, J. Leave granted.

This Appeal directed against the judgment and order of the Patna High
D Court pertains to refusal to exercise jurisdiction under Section 482 Cr.P.C. in
the matter of discharge of the complaint against the petitioner under Section
120B, 409, 420, 468, 471, 477A JPC read with diverse provisions of Prevention
of Corruption Act in RC No.35/85 before the Special Judge, Patna. On the
factual score it appears that the First Information Report was lodged against
E one S.K. Roy; Branch Manager, Birpur Branch of Central Bank of India alleging
inter alia that in connivance with some other named accused he has cheated
the Bank to the tune of Rs. 7,47,000 by misusing his official position, and
thus, wrongful loss to the bank to the above extent and wrongful gain to
himself and others having entered into a criminal conspiracy with Ved Prakash
Agrawal, Satya Narain Agrawal ;md Mis Arnn Khadya Tel Udyog. During the
F course of investigation by Central Bureau of Investigation (CBI), the present
Appellant's name surfaced from the record that the latter having an Ac~ount
in the Bank made an application on 8th February, 1985 for sanction of loan
of Rs. 14 lakhs for urgent payment of labourers in contract work. It has also
come to Jight that the Branch Manager S.K. Roy has given sanctiol) and
G allowed a total amount of overdraft facility to the extent of Rs. 21,50,000 on
different dates to the Appellant. It is this grant of overdraft facility which
have been very strongly criticised by Mr. Altaf Ahmed, the learned Additional
Solicitor General Mr. Ahmed contended that the Branch Manager of the Bank
has had no power to the grant of overdraft facility beyond a sum Rs. I 0,000
and this accommodation to the appellant herein is, obviously, for reasons not
H far to seek.
HARDEO SINGH v. STATE OF BIHAR [BANERJEE, J.] 225
The contextual facts depict that inspector of Police, SPE, CBI, Patna Shri A
Jyoti Kumar lodged an FIR being RC No. 35185 Patna wherein it has been
alleged as below:

"An information has been received through a reliable source that
~ Shri S.K. Roy, while functioning as Branch Manager, Birpur Branch of
Central Bank of India during the period 1983 to 1985 entered into a B
criminal conspiracy with S/Shri Ved Prakash Agrawal, Satya Narain
Agrawal, Mis Arun Khadya Tel Udyog and others and cheated the
Central Bank of India to the tune of Rs. 7,47,000 by misusing his
official position and thus caused wrongful loss to the Bank to the
/ extent of Rs. 7,47,000 with corresponding wrongful gain to himself and
others.
c
2. It is. alleged that Shri Ved Prakash Agrawal applied for loan and
filled up only the amount of finance required by him leaving all the
other particulars including the nature of business blank in the loan
application form. Shri S.K. Roy, Branch Manager sanctioned Rs. 10,000 D
cash credit open limit on adhoc basis pending regular proposal and
sanction Shri S.K. Roy also fraudulently and dishonestly allowed the
party to draw to the extent of Rs. 2,57,655.55 without knowing the
nature of business and without obtaining the financial statement,
financial report, inspection report and stock statement.
E
3. It is alleged that there was no shop/establishment in the name of
Shri Ved Prakash Agrawal.
-
'
4. It is alleged that Shri Ved Prakash Agrawal (A-3) was fraudulently
and dishonesty allowed by Shri S.K. Roy (A-1) to withdraw to the
extent of Rs. 89,464.10 without any loan application, proposal, sanction, F
financial statement report, stock statement and inspection report. It is
also alleged that this also is a fake and fictitious financing since there
is no establishment/shop in the name of Shri Satya Narain Agrawal.

5. Further it is alleged that Mis. Arun Khadya Tel Udyog (A-7) was
allowed by A-1 Shri S.K. Roy to draw to the extend ofRs. 4,94,620.50 G
without regular proposal, sanction, financial statement, financial report
and inspection report. All the documents are blank, undated and

7 unstamped.

6. It is also alleged that Shri S.K. Roy (A-I) made fictitious finance as
term loans even to the citizens of Nepal. A few names given in the H
~ .
226 SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A records of the bank with their addresses from Nepal are as under:-
(i) Bihari Manda!, Biral Nagar, Nepal.
(ii) Nageshwar Manda!:, Inarwa, Nepal.
(iii) Narain Prasad Shah, Lahi, Nepal.
B (iv) Deo Narain Yadav, Lahi, Nepal.
(v) Jageshwar Manda!, Bhim Nagar, Nepal.
7. It is learnt that Birpur Branch is a medium grade Branch and the
financial competence of the Branch Manager in respect of over
c draft is Rs. 10,000 only. Shri S.K. Roy, A-1 transgressed his
financial competence and allowed the following clean over drafts
and that to the same parties several times on different dates:-
I. Shri Hardeo Singh: Rs. 13,50,000 on 28.1.85 and Rs. 14,00,000 on
162.85.
D 2 Shri D.M. Tiwari: Rs. 1,00,000 on 13.3.84, Rs. 1,00,000 on 28.6.84
and again Rs. 1,50,000 on 23.6.84.
8. The aforesaid facts disclose( commission of offence U/S Sl20B, 409,
420, 468, 471, 477A IPC and 5(2) r/w 5(1Xc) & (d) of the P.C. Act(Act
II of 1947) by Shri S.K. Roy, Branch Manager, Central Bank oflndia,
E Birpur Branch, Shri Ved Prakash Agrawal, Shri Satya Narain Agrawal,
Mis. Arun Khadya Tel Udyog all of Birpur and others."
While it is true that the First Information Report has not named the
appellant herein but the appellant's name does figure as a person receiving
loan on clear breach of financial obligation. The facts depict that the appellant
F was however, subsequently made an accused and the chargesheet Np.7/87
submitted by the SPE (CBI) Patna in the Court of Special Judge, CBI, Patna
was filed against the appellant, wherein it has ben stated:

"Shri Hardeo Singh, a contractor having an Account No. 335, in the
Central Bank oflndia, Birpur Branch, made an application on 8.2.85 to
G the Branch Manager of the said Bank for sanction of Rs. 14 lacs for
payment to labourers in a contract work. The said Shri roy put his
remarks on the said letter "allowed Rs.14 lacs in view of the party's
difficulty." The said Shri Roy allowed overdraft of Rs. 21.5 lacs on
different dates to the said Shri Hardeo Singh in the same fashion.
H In this way the said Shri Roy allowed the overdraft facility to the tune
HARDEO SINGH v. STATE OF BIHAR [BANERJEE, J.] 227

- of Rs.35.5 lacs fraudulently and dishonestly to the said Shri Hardeo
Singh."
A

The records depict further that the learned Special Judge, North Bihar,
Patna took cognizance of the matter and issued summons in terms of his
Order dated 12th August, 1987 and the Appellant in terms thereof appeared
before the Special Court and was granted Bail. Subsequently, however, upon B
receipt of the copies of the documents, the Appellant moved an application
in Special Case No. 115/85, before the Special judge, CBI for discharging him
of the case and to drop the proceedings against him. Similar application for
discharge was also filed by other accused persons and the Special Court in
.. a common judgment came to a conclusion that there are sufficient materials C
existing for a prima facie case against the accused person for framing of
charges. The Appellant herein as against the order as above, moved the High
Court under Section 482 Cr.P.C. to quash the proceeding against the petitioner
pending before the Court of Special Judge, CBI, North Bihar, Patna. The High
Court, however, dismissed the application of the Petitioner and hence the
Appeal before this Court. D
Mr. Mishra, the learned Senior Advocate very strongly\ commented
upon the factum of total omission of repayment of the loan in the charge by
the Appellant herein within forty six (46) days, being the shortest possible
time. Be it noted that similar submission was also made before the High Court
and the learned Single Judge though recorded the same but did not take note E
of the same by reason of the submission of the learned Advocate appearing

- for CBI that the court below decided the matter, has come to a positive finding
that there are material evidence against the Petitioner for framing of charges
and as such the Court ought not to intervene or interfere in exercising its
inherent jurisdiction.
F
Apart from the above, the accusation against Shri S.K. Roy and Shri
B.N. Choudhary is also of some significance and as such the same is set out
herein below:

"The said Shri S.K. Roy and Shri 8.N. Choudhary were in habit of
receiving illegal gratification from Shri Ved Prakash Agrawal which G

- is evident from the entries made in personal diaries of Ved Prakash
Agrawal and the account of Sri Roy." (Emphasis supplied)

It is on this score also Mr. Mishra very strongly contended that a
specific person has been named in the matter of formation of habit so far as
illegal gratification is concerned and since the appellant's name does not find H
228 SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A any place, question of continuation of proceedings as against the appellant
does not arise. It is no doubt true that only one person has been named to
be providing the illegal gratification but does that mean and imply release of
another beneficiary of largess of the Branch Manager and it is on this score
the totality of the situation shaH have to be scrutinised in a little more greater
B detail. It appears that the appellant herein has obtained some overdraft facilities
from the Bank which is stated to be much beyond the financial power of the
Branch Manager but paid back the same within 46 days inclusive of all
interests therein and the Branch Manager is in the habit of receiving illegal
gratification from Shri Ved Prakash Agrawal which is apparent from the entries
in the personal diary of Shri Ved Prakash Agrawal and account of S.K. Roy.
C The charge pertaining to the appellant, therefore, is restrictive but allowing
him overdraft of Rs. 21.5 lacs on different dates which stands repaid alongwith
interest and which according to the charge is much beyond the financial
powers of the Branch Manager also needs a probe. The cha~esheet has been
filed against the persons nam(:d in the charge, including the appellant under
Sections 120B, 420, 418, 467, 477 A of the IPC and Sections 5(1 )(a), 5(1 )(c) and
D 5(l)(d) of the Prevention of Corruption Act for taking cognizance and the
Special Judge did take cognizance in regard to such offences so far as the
Appellant is concerned.

True there is no accusation that the account of Roy depicts a balance
E which is much higher than the amount shown in the personal diary of Shri
Ved Prakash, but two several sums of Rs. 60,000 have been stated to have
been deposited on 14.2.85 and 26.3.85 which though by itself not, connote
any culpability of the Appellant Hardeo Singh, neither the same however
proves his innocence at this juncture. There may not be any direct evidence
against the appellant herein as regards the payment of illegal gratification by
F the appellant to the Branch Manager or the Accountant, but factum of having
enjoyed the privilege of having large sums of money on term loans without
any authorisation to allow the same obviously raises some eye-brows
somewhere and this is inspite of the fact of repayment of the term loan with
interest: The question cannot be avoided as to the reasons for such an act
G which stands beyond the powers-ls this a purely customer and the Bank
relationship or something else-This is what is to be investigated more so
having regard to this so-called habit of Roy as noticed above.

Mr. Altaf Ahmed, Additional Solicitor General, contended that there is
a charge under Section 120B and as such, question of setting free the Appellant
H at this stage of the proceeding does not and cannot arise. Mr Ahmed
HARDEO SINGH v. STATE OF BIHAR [BANERJEE, J.] 229
contended that the offence under Section 1208, is an independent offence, A
and while it is true that the gist of the offence, is the agreement between two
or more offenders but particular facts of the conspiracy need not even be
show in the charge. Some general evidence pertaining to the conspiracy
would be sufficient to form part of the charge of conspiracy in the chargesheet.
As a matter of fact some connecting link or connecting factor somewhere B
would be good enough for framing of charge since framing of charge and to
establish the charge of conspiracy can not possibly be placed at par: To
establish the charge of conspiracy, there is required cogent evidence of
meeting of two minds in the matter of commission of an offence-in the
absence of which the charge cannot be sustained-This is however not so, in
the matter of framing of charge since the incidence of the offence shall have C
to be investigated. It is on this count Mr. Additional Solicitor General contended
that since conspiracy is generally a matter of inference and since Appellant
herein did take advantage of the overdraft facility knowing fully well that the
same is beyond the financial limits of the Branch Manager, the natural inference
may be drawn that the same must have been done upon some other
consideration and it is the assessment of the same which should prompt this D
Court not to toward such an attempt.

The criminal purpose in the matter cannot possibly be ruled out as
against the appellant. The allegation pertains to the factum of the habit of
Branch Manager, of receiving illegal gratification from Shri Ved Prakash Agrawal,
however, by itself, in our view, may or may not be sufficient to bring home E
the charge of conspiracy but that by itself would not authorise the court to
call it a day in regard to the charge of conspiracy on the wake of the factual
matrix of the situation at this stage of proceedings. Criminal prosecution does
not necessarily mean harassment and in the event the prosecution of this
nature is allowed to be continued, it would not be in our view a travesty of F
justice or any undue prejudice or even otherwise prejudicial, since ultimately
in the event the charge is not proved, he would be acquitted. The Counter
Affidavit filed by !he respondents herein does disclose some materials for
scrutiny against the appellant as such we are unable to render any assistance
to the appellant herein.
G
In that view of the matter this Appeal fails the order of the High Court
as passed by the learned Single Judge cannot and ought not to be interfered
with on the given set of facts as noted above. There shall, however, be no
order as to costs.

-. VM Appeal dismissed. H