Supreme Court of India
N. RAGHAVENDERversusSTATE OF ANDHRA PRADESH, CBI
- Citation
- 2021 INSC 876
- Decided
- 13 December 2021
- Disposal
- Disposed off
- Bench
- N V RAMANA
Holding
The prosecution failed to prove the charges under Sections 409, 420 and 477A IPC and Section 13(2) read with 13(1)(d) of the PC Act beyond reasonable doubt, so the convictions are set aside.
Summary
The appellant, a former branch manager of Sri Rama Grameena Bank, was convicted under Sections 409, 420 and 477A of the IPC and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act for allegedly allowing withdrawals from an account of the Nishita Educational Academy and prematurely encashing two fixed deposits belonging to B. Satyajit Reddy. The prosecution’s case rested on the issuance of three loose cheques, alleged insufficient funds, and the non‑entry of those transactions in the current‑account ledger, as well as the claim that the appellant acted to benefit his brother‑in‑law. The trial and High Courts found the appellant guilty, despite the fact that the account had sufficient funds, the bank suffered no loss, and the customer who owned the deposits was never examined. The Supreme Court held that the prosecution failed to prove the essential elements of criminal breach of trust, cheating, and falsification of accounts beyond reasonable doubt, noting the material non‑production of evidence and the absence of any proven mens rea. Consequently, the convictions under the IPC and the PC Act were set aside, though the appellant’s dismissal from service for gross departmental misconduct was upheld. The appeal was therefore disposed of, with the benefit of doubt extended to the appellant.
Issues considered
- The prosecution must prove the essential ingredients of Sections 409, 420 and 477A IPC, including entrustment, dishonest misappropriation, and intent to defraud.
- Whether the appellant’s issuance of loose cheques and alleged premature encashment of fixed deposits constitute criminal breach of trust, cheating, or falsification of accounts.
- Whether the non‑examination of the depositor, B. Satyajit Reddy, and the non‑production of certain bank ledgers defeat the prosecution’s case.
- Whether the conviction under Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act can stand in the absence of proof of corrupt intent.
- Whether the appellate court may interfere with the concurrent findings of fact and law of the trial and High Courts.
Legislation cited
- Indian Penal Code, 1860s. 120B, s. 405, s. 409, s. 420, s. 477A
- Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2)
Subjects
criminal breach of trustcheatingfalsification of accountsPrevention of Corruption Actbankingloose chequesmens reabenefit of doubtdepartmental misconduct
Judgment
[2021] 12 S.C.R. 57 57
N. RAGHAVENDER A
v.
STATE OF ANDHRA PRADESH, CBI
(Criminal Appeal No. 5 of 2010)
DECEMBER 13, 2021 B
[N. V. RAMANA, CJI, SURYA KANT AND
HIMA KOHLI, JJ.]
Prevention of Corruption Act, 1988 – s.13(2) r/w s.13(1)(d)
– Penal Code, 1860 – ss.409, 420, 477A – Criminal breach of trust
C
by public servant or Banker – Strong suspicion short of conclusive
proof – Case of prosecution that accused no.3-brother-in-law of
appellant-Branch Manager opened an account of the Academy of
which he was Treasurer – Allegedly, appellant and the other co-
accused also working in the Bank conspired with accused no.3 by
allowing withdrawal of amounts from the said account, despite D
insufficient funds – Appellant was further accused of pre-maturely
encashing two FDRs belonging to a customer which amount was
transferred to the aforesaid account – Co-accused acquitted by
Trial Court – Appellant held guilty concurrently – On appeal, held:
Material on record does not disclose conspiracy between the accused
E
persons – Further, there were sufficient funds in the account for
passing the three cheques in question – Mere issuance of the
aforesaid loose cheques, not sufficient to conclude that the appellant
acted unlawfully or committed criminal misconduct – There is also
serious dispute on the factum of whether or not the customer had
sought the premature withdrawal and subsequent transfer of the F
proceeds of FDRs to the account of Academy – He was the best
person to throw light on the said fact, but he was not examined
which is materially fatal to the prosecution’s case – On facts, no
financial loss was caused to the Bank/customer – Direct and relevant
evidence being withheld, benefit of doubt extended to appellant –
G
Prosecution failed to prove charges u/ss.409, 420 & 477A, IPC
against the appellant beyond reasonable doubt – Conviction u/
s.13(2) r/w s.13(1)(d), PC Act also cannot be sustained.
Criminal Law – Mixed questions of law and facts – Concurrent
view taken by Courts below – Scope of interference – Discussed.
H
57
58 SUPREME COURT REPORTS [2021] 12 S.C.R.
A Penal Code, 1860 – ss.409, 420 and 477A – Charges under
– Necessary ingredients to prove – Discussed.
Criminal Law – Mens rea – Held: Crucial word used in s.405,
IPC is ‘dishonestly’ – It pre-supposes the existence of mens rea –
Penal Code, 1860 – s.405.
B Penal Code, 1860 – s.405 – ‘Entrustment of property’ –
Burden to prove – Initial burden; shifting of burden – Discussed.
Banking/Banks – Conventional bank transactions –
Relationship between the Bank and the Customer – Discussed.
C Criminal Law – Standard of proof – Domestic enquiry vis-à-
vis criminal charge – Discussed.
Words & Phrases– ‘intent to defraud’ u/s.477-A – Elements
of – Discussed – Penal Code, 1860 – s.477-A.
Disposing of the appeal, the Court
D
1. Section 409 IPC pertains to criminal breach of trust by a
public servant or a banker, in respect of the property entrusted
to him. The onus is on the prosecution to prove that the accused,
a public servant or a banker was entrusted with the property
which he is duly bound to account for and that he has committed
E criminal breach of trust. The entrustment of public property and
dishonest misappropriation or use thereof in the manner
illustrated under Section 405 are a sine qua non for making an
offence punishable under Section 409 IPC. The crucial word used
in Section 405 IPC is ‘dishonestly’ and therefore, it pre-supposes
the existence of mens rea. The second significant expression is
F
‘mis-appropriates’ which means improperly setting apart for ones
use and to the exclusion of the owner. Unless it is proved that
the accused, a public servant or a banker etc. was ‘entrusted’
with the property which he is duty bound to account for and that
such a person has committed criminal breach of trust, Section
G 409 IPC may not be attracted. ‘Entrustment of property’ is a wide
and generic expression. While the initial onus lies on the
prosecution to show that the property in question was ‘entrusted’
to the accused, it is not necessary to prove further, the actual
mode of entrustment of the property or misappropriation thereof.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 59
Where the ‘entrustment’ is admitted by the accused or has been A
established by the prosecution, the burden then shifts on the
accused to prove that the obligation vis-aÌ-vis the entrusted
property was carried out in a legally and contractually acceptable
manner. [Paras 41-43, 45][81-D-F; 82-C-D, G-H; 83-A-B]
Sadupati Nageswara Rao v. State of Andhra Pradesh B
(2012) 8 SCC 547 : [2012] (6) SCR 1143 – relied on.
2. In order to attract the provisions of Section 420 IPC, the
prosecution has to not only prove that the accused has cheated
someone but also that by doing so, he has dishonestly induced
the person who is cheated to deliver property. There are, thus, C
three components of this offence, i.e., (i) deception of any person,
(ii) fraudulently or dishonestly inducing that person to deliver
any property to any person, and (iii) mens rea of the accused at
the time of making the inducement. For the offence of cheating,
fraudulent and dishonest intention must exist from the inception
D
when the promise or representation was made. The phrase
‘dishonestly’ emphasizes a deliberate intention to cause wrongful
gain or wrongful loss, and when this is coupled with cheating and
delivery of property, the offence becomes punishable under
Section 420 IPC. For the purpose of holding a person guilty under
Section 420, the evidence adduced must establish beyond E
reasonable doubt, mens rea on his part. Unless the complaint
showed that the accused had dishonest or fraudulent intention
‘at the time the complainant parted with the monies’, it would not
amount to an offence under Section 420 IPC and it may only
amount to breach of contract. [Paras 47, 48][83-D-H]
F
3. In an accusation under Section 477A IPC, the prosecution
must prove- (a) that the accused destroyed, altered, mutilated or
falsified the books, electronic records, papers, writing, valuable
security or account in question; (b) the accused did so in his
capacity as a clerk, officer or servant of the employer; (c) the
G
books, papers, etc. belong to or are in possession of his employer
or had been received by him for or on behalf of his employer; (d)
the accused did it wilfully and with intent to defraud. [Para 50]
[84-D-E]
H
60 SUPREME COURT REPORTS [2021] 12 S.C.R.
A 4. 1 The High Court held that the actions of the Appellant
were not to his benefit, but to the advantage of his brother-in-
law, i.e., Accused No. 3. The Brother-in-law of the Appellant was,
however, acquitted by the Trial Court and no appeal was preferred
by the State against his acquittal. The findings in respect to his
innocence have attained finality. There is no doubt that amongst
B
the three accused persons, the Appellant being the Branch
Manager, had the sole authority to issue and pass the three loose
cheques. Since no explicit prohibition on issuing of loose cheques
has been proved, the mere fact that the Appellant issued those
loose cheques, is not sufficient to conclude that he acted
C unlawfully or committed a ‘criminal misconduct’. The case of the
Prosecution rested heavily on the premise that the three cheques
in question, i.e., Ex. P25 to P27, were passed even though there
weren’t adequate funds in account No. 282. On perusal of the
Current Account Ledger for account No. 282 (Ex P23) it appears
that there were sufficient funds in account No. 282 for passing all
D
the three cheques in question. So far as this part of the transaction
is concerned, the Bank did not suffer any loss. In order to
substantiate the charge under Section 477-A IPC, the primary
contention of the Prosecution is that despite passing the three
cheques, the Appellant did not make the relevant entries into
E the Current Account Ledger (Ex P23) of account No. 282. This
was allegedly done to conceal the withdrawals as there were
insufficient funds in the account of the Academy. The expression
‘intent to defraud’ as given under Section of 477-A, contains two
elements, deceit and injury. So far as the second element is
concerned, as already noted no financial injury was caused to the
F
Bank. With respect to the question of ‘deceit’, the depositions
of PW-2 (the Auditor) and PW-6 (an Accountant at the Branch)
unveil that though the relevant entries were missing in the
Current Account Ledger, they do find a mention in the other ledger
sheets maintained by the Bank, namely, the Officer’s Cash Scroll
G and the Cashier Payment Register. PW-6 has further deposed
that the entry relating to Ex P25, has been mentioned in the
Current Account Ledger. The ledger- Ex P23 does reveal that
there is some truth in the deposition of PW-6. There is an entry
made with a pencil for an amount of Rs. 2.5 lakhs and the relevant
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 61
cheque number of Ex P25 has also been recorded. Two other A
entries marked as Ex D3 and Ex D4, pertaining to the other
amounts of Rs. 4 Lakhs and Rs. 3.5 Lakhs have also been
inserted, but here the relevant cheque numbers have not been
recorded. When this is viewed in the light of the deposition of
PW-2, non-production of the other relevant ledgers cannot be
B
overlooked. Since the direct and relevant evidence has been
withheld, the benefit of doubt for such failure ought to be accorded
to the Appellant. [Paras 38, 55-59][81-A-B; 85-G, H; 86-A, B-H;
87-A-E]
4.2 To prove the charge under Section 409 IPC, the
prosecution need not prove the exact manner of misappropriation. C
Once the ‘entrustment’ is admitted or proved, as has been done
in the present case, the onus lies on the Accused to prove that
the entrusted property was dealt by him in an acceptable manner.
Thus, misappropriation with this dishonest intention is one of
the most important ingredients of proof of ‘criminal breach of D
trust’. There is a serious dispute on the factum of whether or not
the customer had sought the premature withdrawal and the
subsequent transfer of the proceeds of FDRs to the account of
Academy. The best person to clear the air would have been the
customer himself, but neither was he associated during the course
of inquiry/audit or the investigation nor was he examined as a E
prosecution witness in the trial. Further, there is also no written
or oral complaint made by the customer against the Appellant or
other officials of the Bank accusing them of misusing his FDRs
or causing any financial loss to him. On the contrary, the Appellant
has produced on record two letters (ExP6 and ExP7) purportedly F
written by the customer for premature encashment of his FDRs
and to deposit the amount in the account of the Academy. These
written requests have gone unrebutted. The prosecution has
surely proved payment of interest on those FDRs to the customer
even after pre-mature closure thereof, but that payment was made
by the Appellant from his personal account and no public fund G
has been divested for such payment. There is indeed no quarrel
that no financial loss was caused to the customer. [Paras 62, 64
and 65][88-D-E; 89-D-F; G-H; 90-C-D]
H
62 SUPREME COURT REPORTS [2021] 12 S.C.R.
A 4.3 The non-examination of the customer has been
materially fatal to the case of the prosecution. Some of the proven
facts, like deposit of interest amount from the account of the
appellant to that of the customer, do create a strong suspicion
against the Appellant, but suspicion cannot take the place of proof,
howsoever, strong. The best and the only person who could throw
B
light on whether or not he had voluntarily agreed to transfer his
FDR amount in the account of the Academy or there was an
element of inducement, cheating or a false promise, was the
customer himself who has chosen not to enter the witness box.
Though there is a strong suspicion of criminal breach of trust,
C cheating and/or fabrication of the Bank records against the
Appellant, but such suspicion falls short of a conclusive proof to
hold him guilty of the criminal charges. The best evidence having
been withheld by the prosecution, the benefit of doubt must be
extended to the Appellant. Non-production of the records of the
Bank also adversely comments on the fairness and independence
D
of the investigation conducted in the instant case. [Paras 66, 67
and 70][90-F-G; 91-A-B; 92-C-D]
4.4 The record does not indicate that any pecuniary loss
was caused to ‘BSR’-the customer or to any other customer of
the Bank. The material does not disclose any conspiracy between
E the accused persons. In the absence of any reliable evidence
that could unfold a prior meeting of minds, the High Court erred
in holding that Appellant and other accused orchestrated the
transactions in question to extend an undue benefit to Accused
No.3. The prosecution has failed to prove the charges under
F Sections 409, 420 and 477A IPC against the Appellant beyond
reasonable doubt. As a necessary corollary, his conviction under
Section 13(2) read with Section 13(1)(d) of the PC Act can also
not be sustained. The Appellant is guilty of gross departmental
misconduct, for which the punishment of dismissal from service
was adequately awarded. [Paras 71, 72][92-E-G; 93-A-C]
G
Prabhat & Ors v. State of Maharashtra (2013) 10 SCC
391; Mahak Chand & Ors v. State of U.P. (2019) SCC
OnLine All 4044; Hari Sao & Anr v. State of Bihar
(1969) 3 SCC 107 : [1970] 2 SCR 823; Mohd. Ibrahim
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 63
& Ors v. State of Bihar & Anr (2009) 8 SCC 751 : A
[2009] 13 SCR 1254; Samsul Haque v. State of Assam
(2019) 18 SCC 161; N.V. Subbarao v. State (2013) 2
SCC 162 : [2012] 12 SCR 701; Vinayak Narayan
Deosthali v. Central Bureau of Investigation (2015) 2
SCC 553 : [2014] 12 SCR 308; Neera Yadav v. Central
B
Bureau of Investigation (2017) 8 SCC 757 : [2017] 8
SCR 498 – referred to.
Case Law Reference
[1970] 2 SCR 823 referred to Para 23
[2009] 13 SCR 1254 referred to Para 23 C
2012] 12 SCR 701 referred to Para 33
[2014] 12 SCR 308 referred to Para 34
2017] 8 SCR 498 referred to Para 34
D
[2012] 6 SCR 1143 relied on Para 34
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No.5 of 2010.
From the Judgment and Order dated 18.06.2009 of the High Court
of Andhra Pradesh at Hyderabad in Crl. A. No.337 of 2002. E
Sidharth Luthra, Sr. Adv., Somiran Sharma, Ms. Shubhangi Jain,
Pankaj Singhal, Advs. for the Appellant.
Jayant K. Sud, ASG, Ms. Sonia Mathur, Sr. Adv., Ms. Priyanka
Das, Anmol Chandan, Ms. Snidha Mehra, Arvind Kumar Sharma,
Randeep Sachdeva, Harish Nadda, Mukesh Kumar Maroria, Advs. for F
the Respondent.
The Judgment of the Court was delivered by
SURYA KANT, J.
1. Appellant is aggrieved by the judgment dated 18th June, 2009 G
passed by Andhra Pradesh High Court, dismissing his criminal appeal
against the judgment and order dated 28th March, 2002 of the Special
Judge, CBI Cases, Hyderabad whereby he was held guilty of the
offences under Sections 409, 420, and 477A of the Indian Penal Code
(for short, “IPC”) and Section 13(2) read with Section 13(1)(d) of the
H
64 SUPREME COURT REPORTS [2021] 12 S.C.R.
A Prevention of Corruption Act, 1988 (for short, “PC Act”) and sentenced
to a total of five years of rigorous imprisonment with various fines for
each offence. Accused Nos. 2 and 3 who were also tried along with the
appellant, were, however, acquitted of all the charges.
Facts:
B 2. The brief facts germane to the appeal are as follows:
The Appellant- N. Raghavender worked as a Branch Manager in
Sri Rama Grameena Bank, Nizamabad Branch from May, 1990 to
September, 1995. A. Sandhya Rani, Accused No. 2 worked as a Clerk-
cum-Cashier in the same Bank from 1991-1996 and she also attended
C day-to-day transactions in current and savings accounts relating to
preparation of credit and debit vouchers. C. Vinay Kumar, Accused No.
3 was the Treasurer of the Nishita Educational Academy (for short, “the
Academy”) and is the brother-in-law of Appellant (Accused no. 1).
Accused No. 3 opened Current Account No. 282 in the afore-said Bank
D in his capacity as an authorized signatory of the Academy. The account
was opened with an initial deposit of Rs. 5,00,000/-. The prosecution
case is that the Appellant and Accused No. 2 abused their respective
position in the Bank and conspired with Accused no. 3 by allowing
withdrawal of amounts up to Rs. 10,00,000/- from the account of the
Academy, notwithstanding the fact that the account did not have the
E requisite funds for such withdrawal.
3. The alleged modus operandi of the accused persons was that
the Appellant, in his capacity as a Branch Manager, issued loose-leaf
cheques on 23.04.1994 and thereafter, for a sum of Rs. 2,50,000/-, and
despite withdrawal of the said amount, the debit was deliberately not
F entered into the ledger book. After that, another such transaction took
place on 30.06.1994 for a sum of Rs. 4,00,000/-, and once again, the
debit was not entered into the ledger sheet of the Bank. This was followed
by the Appellant issuing another cheque on 30.07.1994, of a closed
account for withdrawal of Rs. 3,50,000/-. The endorsement on the third
G cheque issued by the Appellant showed the payment in favour of Accused
No.3; however, the signature on the cheque did not tally with that of
Accused No.3. The Appellant was further accused of pre-maturely
closing two FDRs on 24.02.1995 and 25.02.1995, which were for a sum
of Rs. 10,00,000/- and 4,00,000/- respectively, and stood in the name of
one B. Satyajit Reddy. As per the vouchers issued by the Bank, a total
H of Rs. 14,00,000/- were credited to account No. 282 but only Rs. 4,00,000/
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 65
[SURYA KANT, J.]
- were shown in the ledger. The remaining Rs. 10,00,000/- were allegedly A
adjusted towards the secret withdrawal from account No. 282 during
the year 1994. It is the prosecution’s case that the Appellant, Accused
No.2 and Accused No.3, worked in tandem to engineer these
transactions, which resulted in a wrongful loss to the Bank and its
Depositors.
B
4. Eventually, the Auditor (PW-2) began to notice the irregularities.
The Appellant was thereafter shifted from the above-stated Branch to
the Head Office, and an internal inquiry was ordered. The said inquiry
prompted the Chairman of the Bank (PW-1) to make a written complaint
dated 27.11.1995 (Ex P1) to the Superintendent of Police, Central Bureau
of Investigation at Hyderabad (for short, “CBI”), the relevant extracts C
whereof being highly relevant, reads as under:
“Our Grameena Bank is established in February 1985 under
the Regional Rural Bank Act of Parliament, and sponsored
by State Bank of Hyderabad. The Bank is a scheduled bank
and its area of operation is restricted to the district of D
Nizamabad with its headquarters at Nizamabad town. We have,
as of now, 26 branches operating in the district. The branch
at Nizamabad is one of the 26 branches.
2. The branch during the period 1990 to 1995 was headed
by one Shri N. Raghavender as the Branch Manager. E
3. During the course of audit of the branch certain
transactions of seriously irregular in nature, put through by
the Branch Manager with the connivance and co-operation
of certain members of staff and customers have come to
surface. Some of the transactions are considered to be very F
serious and were put through by the Branch Manager,
bypassing the laid down instructions and norms for conducting
such transactions, with an intent to pass on undue monitory
benefit to certain customers who are his near relatives
including his wife. The transactions of the above nature are G
large in number. However, one such transaction is detailed
hereunder for your considering an investigation.
UNAUTHORISED ENCASHMENT OF TERM DEPOSITS NO.
0257120 AND 0257121 FOR RS.10.00 LACS AND RS.400
LACS RESPECTIVELY.
H
66 SUPREME COURT REPORTS [2021] 12 S.C.R.
A The laid down procedure for such transactions warrant
that if and when the depositor desires premature withdrawal
he should present to the branch, the term deposit in question
duly discharged along with written request for premature
withdrawal of deposits. Thereupon, the Branch Manager, after
duly verifying the genuineness of the signature of the depositor
B
and the deposit receipts may permit premature payment. In
respect of fixed deposits where interest is paid periodically
will be worked out and adjusted from the interest payable on
such deposits and net amount of interest payable and the
principle will be released to the depositor. As per the Income
C Tax rules any such amount exceeding Rs.20,000/- is to be
paid either by crediting to the depositor’s account with the
branch or paid by way of Banker’s Cheque in the name of
depositor “crossed account payee”.
xxx xxx xxx
D
Unauthorised payment of deposit came to light on 12.9.1995
when the depositor called on the branch for drawing interest.
From the scrutiny of records it is found that even though the
deposits are terminated in February 1995, periodical interest
continued to be credited to the depositor’s Savings Bank A/c
E No.5520 by remitting cash and also transfer from the joint
account of Branch Manager and his wife bearing SB A/c
No.5555, apparently to make the depositor believe that the
deposit is intact.
After unearthing of these transactions Shri
F Raghavender, who was relieved of the branch charge,
managed with the depositor and produced predated letter and
relative deposit receipts with the apparent intent to regularize
the transaction. The relative term deposit receipts are clean
and without any endorsements or stamps on the face of the
receipts. Thereby even though the Bank did not incur any
G
minority loss under this transaction, the Branch Manager
misusing his official position and passing on benefit to the
tune of Rs.14.00 lacs to the firms having substantial interest
of his near relatives is considered an act calling for
investigation.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 67
[SURYA KANT, J.]
Further investigation into the transactions at the branch A
is in progress and report when received will indicate further
the fraudulent transactions if any put through by the then
Branch Manager Shri N. Raghavender.
The Branch Manager wields considerable influence with local
leaders, officials and other VIPs. The departmental enquiry B
by the Bank may not be very effective in safeguarding the
interests of the Bank in its totality, since investigation into the
transactions warrants contacting various outside parties to
whom access of the Bank is not likely to be possible.
xxx xxx xxx” C
5. CBI registered case No. RC7(A)/96-CBI/Hyderabad under
Sections 409, 477(A), and 120B IPC, and Section 13(2) read with 13(1)(c)
& (d) of the PC Act. Investigation was held; charge-sheet was filed and
the learned Special Judge, CBI, framed the following charges against
the Appellant and his co-accused: D
“CHARGE NO.1:
That, all of you i.e., A.1 to A.3 during the years 1994-95,
while A.1 and A.2 were under employment of M/s. Sri Rama
Grameena Bank, Nizamabad, and A3 as Treasurer, Nishita E
Educational Academy, agreed to do or caused to be done an
illegal act to wit to cheat Sri Rama Grameena Bank,
Nizamabad in the matter of allowing withdrawals of amounts
to the tune of Rs.10.00 lakhs in current A/c No.282 of Nishita
Educational Academy, Nizamabad without having sufficient F
funds, in pursuance of the agreement and thereby committed
an offence punishable U/Sec. 120-B I.P.C. and within my
cognizance.
CHARGE NO.2:
G
That all of you i.e., A.1 to A.3 as stated above, cheated by
dishonestly and fraudulently inducing the said bank to deliver
Rs.10 lakhs to you and which was the property of the said
Bank and that you thereby committed an offence punishable
U/Sec.420 IPC and within my cognizance.
H
68 SUPREME COURT REPORTS [2021] 12 S.C.R.
A CHARGE NO.3:
That all of you as stated above (Charge No.1) and being in
such capacity entrusted with certain property committed
criminal breach of trust in respect of that property, and thereby
you committed an offence punishable U/Sec.409 IPC and
B within my cognizance.
CHARGE NO.4:
That all of you during the same course of transaction as stated
in Charge No.1 being in such capacity wilfully and with intent
to defraud, fabricated certain papers, writings and accounts
C of Srirama Grameena Bank, Nizamabad and Nishitha
Educational Academy, and you thereby committed an offence
punishable U/Sec.477-A IPC and within my cognizance.
CHARGE NO.5:
D That A.1 and A.2 of you being public servants employed as
formerly Manager, Sri Rama Grameena Bank, Nizamabad
(A.1) and formerly Clerk-cum-Cashier, Sri Rama Grameena
Bank, Nizamabad (A2) respectively during the year 1994-95
by corrupt or illegal means or by otherwise obtained for
yourself a pecuniary advantage of Rs.10 lakhs from Sri Rama
E Grameena Bank, Nizamabad and thereby committed an
offence punishable U/Sec.13(2) r/w 13(1)(c) & (d) of P.C.
Act, 1988 and within my cognizance.”
6. In the aftermath trial, a total of eleven witnesses, PW-1 to PW-
11, were examined by the Prosecution and documentary evidence
F comprising Exhibits P-1 to P-68 were also put forth. The Accused on
their part, were examined under Section 313 of Code of Criminal
Procedure (in short, ‘Cr.P.C’), but no other defence witness was brought
forward. The Accused did produce documentary evidence Exhibits D-1
to D-6 in their defense.
G 7. To substantiate the charges against the present Appellant, the
case of the prosecution rested heavily upon circumstantial and
documentary evidence. Bhaskar Reddy (PW-1), Chairman of the Bank,
deposed that in November, 1994, Badam Swamy (PW-2) conducted an
audit of the Nizamabad Branch and some irregularities were found to
have been committed by the Branch Manager N. Raghavender.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 69
[SURYA KANT, J.]
Thereafter, he ordered a detailed audit. During the course of the audit, A
PW-1 called upon the Appellant and questioned him about the said
irregularities. PW-1 further deposed that when he asked the Appellant
as to how he had allowed the premature closing of the two FDRs
bypassing the prescribed procedure, the Appellant produced two letters
(marked as Ex P6 & Ex P7), purportedly written by B. Satyajit Reddy to
B
the Bank Manager. Vide the aforesaid letters, B. Satyajit Reddy had
authorized premature withdrawal of FDRs with a request to the Bank
Manager to transfer the amounts into the account of Nishita Educational
Academy. PW-1 stated that the standard procedure for prematurely
closing an FDR required the FDR holder/depositor to present the receipt
of the FDR along with a written request seeking premature payment. C
He explained that in the present case, the FDRs remained with the
depositor and no specific request was received. He further explained
that the alleged premature payment was permitted by the Branch Manager
by using general debit vouchers instead of term deposit receipts. PW-1
in his cross-examination, while admitting that he never received any
D
complaint from Mr. Reddy regarding the premature closure, disputed
the genuineness of Ex P6 & P7. So far as the allegation regarding the
unlawful withdrawal of Rs. 10 Lakhs from account No. 282 is concerned,
PW-1 deposed, “The account holder is required to utilize the cheques
issued to him only. In cases of certain contingencies he may request
the Branch in writing to issue a loose cheque leaf for operating the E
account. Such a request in writing is to be approved by the Branch
Manager when he may issue a loose leaf making appropriate
endorsement on the cheque form itself and on application”. PW-1
additionally clarified that, “There is no prohibition for re-using cheque
books of loan A/cs if they are sufficient in number to be used as
F
loose leaves provided they are recorded as such in the cheque book
issue register.” Lastly, PW-1 acknowledged that during the period the
Appellant was the Branch Manager, the business of the Bank had grown
and the Bank was recategorized from Scale-I to Scale-II.
8. The deposition of Badam Swamy (PW-2), Auditor, is crucial to
the Prosecution’s case. He deposed that under instructions of PW-1, he G
had conducted a special audit of the Nizamabad branch in the year 1995.
PW-2 in his deposition explained that he scrutinized two sets of
transactions, the first being the premature closing of the two FDRs in
the name of B. Satyajit Reddy, and the second being the transactions
relating to withdrawal of Rs. 10 Lakh from account No. 282. So far as H
70 SUPREME COURT REPORTS [2021] 12 S.C.R.
A the first set of transaction is concerned, PW-2 deposed that B. Satyajit
Reddy had purchased two FDRs for 4 Lakhs (Ex P4) and Rs. 10 lakhs
(Ex P5) respectively, and in addition to these, Mr. Reddy had also opened
S.B. Account No. 5520 (marked as Ex P11). The FDRs, Ex. P4 and Ex.
P5, were purchased in January, 1995 for a period of 12 months. PW-2
explained that in the present transaction, the Branch, as per the
B
instructions of the party/depositor, had to credit a monthly interest in
S.B. Account No. 5520. PW-2 alleged that the Appellant, without the
knowledge of the party and without any authorization, withdrew the FDR
amounts from the Bank by raising two debit vouchers (marked Ex P29
and Ex P30). These vouchers were prepared by Accused No.2 and
C were passed by the Appellant. The withdrawn amount was thereafter
credited to a third-party account, i.e., account no. 282 of the Nishitha
Educational Academy. PW-2 alleged that there was nothing in the records
to show that either Mr. Reddy had surrendered the FDRs or that he had
moved any application for payment of the FDRs. PW-2 further deposed
that even after the FDRs were withdrawn, the monthly interest of Rs.
D
11,570/- payable to Mr. Reddy continued to be credited into his S.B.
Account No. 5520. It was alleged that in order to transfer Rs. 11,570/-,
debit vouchers bearing S.B. Account No. 5555 were raised. The said
S.B. Account No. 5555 stood in the name of the Appellant and his wife.
E 9. With respect to the second set of transactions, PW-2 deposed
that in the year 1994, an amount of Rs. 10,00,000/- was ‘fraudulently’
withdrawn from account No. 282 by passing three cheques (Ex P25, Ex
P26 & Ex P27) which were signed by Accused No.3. However, neither
did the signature on the three cheques tally with that of Accused No.3
nor were these transactions reflected in the concerned ledger sheet (Ex
F P23). PW-2 alleged that the ledger sheet- Ex P23 was intentionally ill-
maintained to suppress these transactions. PW-2 further alleged that
while there was balance in account no. 282 when Ex P25 was presented,
there were insufficient funds when the other two cheques were passed.
Thus, according to PW-2, the Appellant had allowed withdrawal of Rs.
G 10,00,000/- from account No. 282, even though there were insufficient
funds in the said account. It was also pointed out that the Appellant had
also permitted overdrawing of another Rs. 4 lakhs from account No.
282. PW-2 alleged that in order to cover up these withdrawals and to
adjust the amounts, the Appellant withdrew the amount of Rs. 14 Lakhs
pertaining to the FDRs of B. Satyajit Reddy.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 71
[SURYA KANT, J.]
10. During his cross-examination, PW-2 deposed that he had never A
personally enquired from B. Satyajit Reddy about the premature closure
of his FDRs, instead, he claimed that PW-1 had spoken to Mr. Reddy.
PW-2 further admitted that despite knowing that the signature on the
three cheques did not match with that of Accused No.3, he never enquired
about the transactions from Accused No.3 directly. PW-2 shed light on
B
the fact that beyond the account ledger sheet (Ex P23), the Bank also
maintained three other ledgers, i.e., the Officer’s Cash Scroll, Transit
Voucher Register and the Cashier Payment Register. PW-2 deposed
that he had examined these three ledgers, but these were not filed before
the Court. PW-2, however, admitted that the three cheques in question
were reflected in the Officer’s Cash Scroll. He further admitted that C
entries relating to cheques Ex P25 and Ex P26 were duly mentioned in
the Bank Payment Register maintained for the period from 23.04.1994
to 21.07.1994.
11. The Manager of the Bank, Mr. D. Ram Mohan Rao, appeared
as PW-3. While he mainly deposed about the various standard operating D
procedures at the Bank, it is relevant to note that he too testified about
the uncommon but acceptable practice of issuing loose cheque leaves
upon the request of a customer. He further deposed that “Sometimes
the important customers sit in the cabin of the manager and their
cheques are sent to the counter for encashment, and at times cash E
is delivered to the customer in the manager cabin.”
12. B. Chandrasekhar (PW-4), Cashier, deposed that Accused
No.3 was an important customer of the Bank. He stated that the three
cheques in question were taken by the Appellant personally and handed
over to Accused No. 3, and then the Appellant had passed those cheques. F
He further stated that the amounts relating to the cheques, Ex P25 to
P27 were handed over by him to the appellant, and then the appellant
handed it over to Accused No.3. He too deposed that entries relating to
Ex P26 and Ex P27 were not found in the concerned ledger sheet- Ex
P23. In his cross-examination, he stated, “It is true that Ex P25 contains
the signature of N. Lalitha on its reverse side. The signature of the G
person who receive the amount will be obtained on the reverse of
cheque in token of receipt of the said amount. The signature on the
reverse of Ex P-26 is not that of A1. It is also true that the signature
of A1 is also not there on the reverse of Ex. P27”.
H
72 SUPREME COURT REPORTS [2021] 12 S.C.R.
A 13. The evidence of Mallikarjun Sanne, PW-5, is of no consequence
as he was not personally aware of any of the facts relating to the case.
Next comes the deposition of B. Ganagaram (PW-6), who worked as
an Accountant at the Nizamabad Branch. He testified that loose cheque
leaves could be issued by the Bank, provided that the record of the same
was maintained. He went on to depose that, “It is true that there was
B
sufficient amount in a/c No. 282 to meet the cheque amount of Rs.
2.50 Lakhs.There was a balance of Rs. 4,78,480/- was the balance
in the A/c of 282 as on 30.06.1994 and I have authenticated the
said balance on the same day. It is true that there was sufficient
amount to meet the cheque of Rs. 4 lakhs on 30.06.1994. The balance
C amount available in the said A/c No. 282 on 28.07.1994 was Rs.
12,12,830/-. It is true that an entry with pencil was made between
the lines debiting a sum of Rs. 3.50 Lakhs to A/c No. 282. The said
entry is now marked as Ex D3” (sic). He lastly stated, “There is a
possibility of missing certain entries in posting the same in the ledger
entry due to rush of work. But they will be rectified at the time of
D
balancing the amount. See Ex P8, it is balancing register. It was
maintained by A2.”
14. J. Madhusudhan (PW-7), Second Officer of the Nizamabad
Branch, deposed that B. Satyajit Reddy had approached him in the first
E week of September 1995 with a request to credit the interest accrued in
the two FDRs into his S.B. A/c 5520. He stated that when he inspected
the FDR register, he found that the two FDRs had been prematurely
closed. He then brought this to the notice of Mr. G. Nagesh Reddy, the
then Manager. He testified that the Appellant had signed the entries
relating to those closures as is evident from the Term Deposit Register
F (Ex P9). He further stated that he had not seen any letters written by B.
Satyajit Reddy for closing of the FDRs or for transferring the said amount
to account no. 282. He, however, could not testify as to at whose instance
the two FDRs were prematurely closed. G. Nagesh Reddy (PW-8), was
appointed the Branch Manager after the Appellant was shifted to the
G Head Office. PW-8 also deposed that he did not find any letter by B.
Satyajit Reddy requesting the Branch to transfer the amounts from his
FDR into account No. 282. PW-8 further stated that, “Our bank has
not suffered any loss due to the transaction involved in the present
case”. B. Satyanarayana, PW-9, was a formal witness who accorded
the sanction for prosecution of the Appellant and Accused No. 2.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 73
[SURYA KANT, J.]
15. Amar Singh (PW-10), was the handwriting expert who A
examined the various cheques, vouchers and other relevant documents
in the present case. According to PW-10, the questioned signatures were
freely written in normal hand. He stated that one of the signatures on Ex
P27 matched the specimen signature of the Appellant, but the purported
signatures of Accused No.3 on the three cheques did not tally with his
B
specimen signature. He further opined that the disputed signatures on
the two letters (Ex P6 and Ex P7) were tallying with the specimen
signatures of B. Satyajit Reddy. S. Vadyanathan (PW-11), is the
Investigating Officer in the present case. PW-11 collected various
documents from the Bank and Nishita Educational Academy. He also
collected the sanction order from PW-9 for prosecution of the Appellant C
and Accused No.2. We may also note that PW-11 stated that the
specimen signature of the Appellant was not taken before any Judicial
Authority though it was obtained before independent witnesses.
16. The Appellant, in his statement recorded under Section 313
Cr.P.C., denied the prosecution case. When confronted with the D
allegations levelled by PW-1 regarding the unauthorized premature closure
of the two FDRs, the Appellant stated that he had done so, “With the
request in writing, of depositor only premature payment was
permitted. As depositor requested that he had misplaced FDRs and
could not trace them out. As he is V.I.P. customer, I obliged.” The
Appellant (Accused No.1) categorically denied the allegation that E
premature withdrawal had been done without the consent or knowledge
of B. Satyajit Reddy. He further stated that it was on the request of B.
Satyajit Reddy that Rs. 4 Lakhs were transferred to the account of the
Academy, i.e., account No. 282. When asked about the withdrawal of
Rs. 10,00,000/- from account No. 282 in the year 1994, he disputed the F
version put forth by the prosecution, and stated, “As there was balance,
I passed the cheque and paid the amount to A3.” Lastly, the Appellant
claimed that he had been falsely implicated due to the rivalries between
the two Bank Unions.
17. We may, at the outset, clarify that the learned Special Judge in G
paragraph 50 of his judgment dated 28.03.2020 has unequivocally
acquitted all the accused of offences under Section 120B IPC and under
Section 13(2) read with Section 13(1)(c) of the PC Act. Accused No.2
and Accused No. 3 were further acquitted of all the other charges as
well. The Appellant, however, was held guilty of offences punishable
under Sections 420, 409 and 477A IPC as also under Section 13(2) read H
74 SUPREME COURT REPORTS [2021] 12 S.C.R.
A with Section 13(1)(d) of the PC Act. It is useful to reproduce paragraph
50 of the judgment of the Special Judge which reads as follows:
“50. The same thing can also be stated about A.3. Though
A.3 credited amount to A/c No. 342 of Nishita Builders instead
of A/c No. 282 of Nishita Educational Academy but it has by
B no way resulted in having benefit to A.3 either directly or
indirectly. It is A.1 who has deposited interest in his account
though the F.D.Rs. were prematuredly encashed that too
without proper authority of Satyajit Reddy. As started earlier
Satyajit Reddy has not given evidence in favour of A.1 as he
was not aware about premature payment of F.D.Rs. by A.1.
C
There are no specific overact of A.3 to say that he
conspired with A.1 to cheat the bank or caused wrongful loss
to bank and corresponding wrongful gain to himself. A.3 has
acted in normal course of his duties. No intention can be
attributed to A.3. on the basis of available evidence it also
D does not suggest that A.3 has done any specific crime....”
(sic)
18. As for the Appellant, the Trial Court held that the prosecution
had adequately proved its case against him. Despite taking note of some
of the discrepancies in the prosecution case, and the ineffective cross-
E examination concerning the allegations of passing of the three cheques
(Ex. P25 to P27) and the illegal withdrawal of Rs. 10 lakhs from account
No. 282, the Court opined that, “However, the subject matter of enquiry
is the premature withdrawal of the two FDRs in February 1995
without any authority or with knowledge to FDR holder…” (sic).
F 19. With respect to the premature encashment of the two FDRs
which stood in the name of B. Satyajit Reddy, the Trial Court was not
convinced with the explanation of the Appellant. The two letters (Ex P6
and Ex P7) given by the Appellant to PW-1 were disbelieved and instead,
the Court laid emphasis on the fact that despite premature closure of the
G two FDRs, the Appellant continued to deposit the monthly interest in the
account of B. Satyajit Reddy. The Court also noted that the subsequent
interest payments were not made by the Bank, but the amount was
instead transferred from account No. 5555, which stood in the name of
the Appellant and his wife. Since no explanation was given in regard to
these interest payments made to B. Satyajit Reddy, the Court drew an
H adverse inference, and propounded that the interests were credited to
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 75
[SURYA KANT, J.]
create the illusion that the FDRs were still alive. The Court, therefore, A
summarily concluded that these circumstances clearly revealed that the
Appellant had, without any authorization or consent, encashed the two
FDRs. Thus, the Trial Court found the Appellant guilty, and consequently
convicted and sentenced him to five years imprisonment along with various
fines.
B
20. The Appellant challenged his conviction and sentence before
the High Court of Judicature, Andhra Pradesh at Hyderabad. Much like
the Trial Court, the High Court did not accord any weight to the allegations
or the defence raised by the Appellant pertaining to the withdrawal of
Rs. 10 lakhs from account No. 282. Upon appraising itself of the evidence
on record, the learned Single Judge noted that no financial loss was C
caused to the Bank. The High Court, however, held that a loss had been
incurred by B. Satyajit Reddy, because without his consent and knowledge,
his deposits in the two FDRs were transferred to another account. Whilst
observing that B. Satyajit Reddy was the best person to testify about the
pre-mature withdrawal of the FDRs, the Court opined that in the light of D
the overall circumstances of the case, the non-examination of B. Satyajit
Reddy could not lead to an adverse inference against the prosecution’s
case. Thus, the High Court held that the Appellant had misused his official
position as the Bank Manager to prematurely encash the two FDRs,
and thereafter transfer the amount into the account of the Academy.
The High Court also held that in order to extend an undue advantage to E
his brother-in-law, i.e., Accused No.3, the Appellant had intentionally
indulged in the falsification of records pertaining to the three cheques
passed by him in the year 1994. Accordingly, the High Court concurred
with the findings of the Trial Court and dismissed the appeal preferred
by the Appellant. F
21. The aggrieved appellant is now before this Court.
Contentions:
22. Shri Sidharth Luthra, learned Senior Counsel on behalf of the
Appellant vehemently argued that the prosecution case is based upon G
surmises and conjectures, and the best neutral evidence has been withheld
without any explanation. He contended that the most serious accusation
attributed to the Appellant is that he had unauthorizedly closed two FDRs
of B. Satyajit Reddy pre-maturely and transferred the sum of Rs.
10,00,000/- and 4,00,000/- respectively to the account of his brother-in-
law, i.e., account No. 282 which stood in the name of the Academy. H
76 SUPREME COURT REPORTS [2021] 12 S.C.R.
A Learned Senior Counsel urged that neither had B. Satyajit Reddy been
examined by the CBI as a witness nor was his statement recorded during
the course of internal auditing. He canvassed that there is nothing on
record to doubt the two letters dated 22.02.1995 (Ex P6) and 24.02.1995
(Ex P7), whereby, B. Satyajit Reddy authorized the Appellant to pre-
maturely withdraw the FDRs and requested him to transfer the said
B
amount to the account of Nishita Educational Academy. He further
contended that no effort was made to investigate as to whether or not
the Appellant had the authorisation for pre-mature withdrawal of the
FDRs. Learned Senior Counsel drew our attention to the evidence of
the handwriting expert (PW-10), to highlight that signature on the letters
C dated 22.02.1995 and 24.02.1995, matched with the signature of the B.
Satyajit Reddy. Thus, by relying upon the principles enunciated in Prabhat
& Ors v. State of Maharashtra1 and Mahak Chand & Ors v. State of
U.P.2, it was contended that the non-examination of B. Satyajit Reddy
was fatal to the case of the Prosecution. It was passionately urged that
the statement of the Appellant made under Section 313 Cr.P.C., has in
D
this regard been completely overlooked.
23. Shri Sidharth Luthra then pointed out paragraph 23 of the
High Court judgment, wherein, it was acknowledged that no loss to the
Bank was caused as a result of the alleged misdemeanours of the
Appellant. He relied upon the statements of Chairman (PW-1) and Branch
E Manager (PW-8) of the Bank, who have admitted that no loss was caused
to the Bank and no complaint from B. Satyajit Reddy was ever received
against the Appellant. Learned Senior Counsel also pressed the decisions
of this Court in Hari Sao & Anr v. State of Bihar3 and Mohd. Ibrahim
& Ors v. State of Bihar & Anr4, in aid to urge that in such circumstances,
F no offence can be said to have been made out against the appellant.
24. Adverting to another incriminating circumstance, namely, the
deposit of interest accrued on the two disputed FDRs in the account of
B. Satyajit Reddy even after closure of the FDRs from the personal
account of the appellant and his wife, learned Senior Counsel argued
G that this allegation was raised for the first time in the deposition of PW-
2, and no charge was framed against the Appellant generally or
1
(2013) 10 SCC 391, ¶ 11
2
(2019) SCC OnLine All 4044, ¶ 63 to 65
3
(1969) 3 SCC 107
4
H (2009) 8 SCC 751
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 77
[SURYA KANT, J.]
specifically in relation thereto. In this regard, he took the plea that the A
credit vouchers Exhibits P-37 to P-42 and the ledger Exhibit P-11 were
not put to the Appellant while his statement was recorded under Section
313 Cr.P.C. Drawing force from the decision of this Court in Samsul
Haque v. State of Assam 5, it was argued that if circumstances are not
put to the accused in his examination under Section 313 Cr.P.C., they
B
must be excluded from consideration because the accused did not have
any chance to explain them. Alternatively, learned Senior Counsel
submitted that since the charge-sheet accuses the Appellant of
transferring interest from his account to account no. 5520 of B. Satyajit
Reddy, it is not a case where bank funds were utilized for depositing the
interest in the account of B. Satyajit Reddy. The Bank, thus, has suffered C
no loss.
25. With respect to the second set of transactions, learned Senior
Counsel for the Appellant highlighted that there is no finding of the Trial
Court or the High Court, regarding insufficiency of funds in account No.
282 of the Academy when the Appellant allowed withdrawals of the D
amount to the tune of Rs. 10,00,000/- under the three cheques (Exhibits
P-25 to P-27). It is asserted that the evidence of PW-2 and PW-6, in this
regard, is inconsistent. While PW-2 admitted that there was balance in
the account of the Academy by the date Ex P-25 was passed but there
was inadequate balance at the time of two other transactions (cheques E
marked as ExP-26 and ExP-27). Rather, PW-6 in his cross-examination
has candidly admitted that there were sufficient funds available in the
afore-stated account on the dates when the amounts were withdrawn.
Learned Senior Counsel argued that the aforesaid inconsistency has
been duly noticed in the impugned judgment yet the High Court proceeded
on a wrong premise that the onus was on Accused No. 3 to prove the F
availability of funds in the account.
26. It was further claimed that there is total absence of mens rea
as no benefit was drawn by the Appellant even if the cash was handed
over to Accused no. 3, who has since been acquitted. The statement of
B. Chandrasekhar (PW-4) is said to have been misconstrued by the G
Trial Court and the High Court, as he had clearly admitted that not only
was the amount pertaining to the three cheques- Ex P25 to P27, handed
over to Accused No.3 but also that the signature of the Appellant was
5
(2019) 18 SCC 161, ¶ 13, 22, 32
H
78 SUPREME COURT REPORTS [2021] 12 S.C.R.
A not found on the three cheques. It was advanced that the findings of the
High Court were also self-contradictory in as much as the Court held
that the Appellant’s acts were meant for the benefit of Accused No. 3,
and yet the acquittal of Accused No. 3 was sustained.
27. With regard to the use of loose cheques and the alleged omission
B to record relevant entries in the ledger of current account no. 282, it is
claimed that the same cannot be a ground to convict the Appellant for
offences under Sections 420, 409 and 477A IPC or under the provisions
of PC Act. Learned Senior Counsel maintained that, at worst, it was a
case of gross administrative misconduct for which the Appellant has
already been dismissed from service and denied his pensionary benefits.
C
This allegation, according to him, should be mirrored in the light of the
fact that the Bank has not suffered any losses. Reliance was also placed
on the statements of PW-1 and PW-2 to contend that (i) Officers Cash
Scroll; (ii) Transit Voucher Register; & (iii) Cashier Payment Register
have not been produced by the prosecution as the production of that
D record would have proved that though the total amount pertaining to the
three cheques was not reflected in the account ledger, yet it finds mention
in other ledgers and was duly accounted for.
28. Learned Senior Counsel further urged that once the Appellant’s
signatures on Exhibit P-25, P-26 and P-27 have not been proved, the
E very foundation of use of loose cheques by the Appellant stands
demolished. This fact is further fortified as the specimen signatures of
the Appellant were never taken before a Judicial Officer.
29. It was also contended on behalf of the Appellant that charges
under Sections 409 and 420 IPC cannot go together. Shri Siddharth Luthra
F canvassed that the Appellant is a victim of rivalry between two factions
of the Bank. It was highlighted that the overall deposit in the Bank had
enormously increased during the appellant’s tenure as its Branch Manager
which became a cause of eyesore amongst his rivals.
30. Lastly and alternatively, learned Senior Counsel for the
G Appellant persuaded this Court to take a compassionate view. Banking
upon the successful performance of the Appellant that he increased the
total deposit from 40,00,000/- to 7,00,00,000/- and resultant increase in
the status of the Bank as Scale-II, coupled with the fact that the Appellant
has no criminal antecedents, it was prayed that it is a fit case for reduction
of sentence to the extent already undergone.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 79
[SURYA KANT, J.]
31. Shri Jayant K. Sud, learned Additional Solicitor General, A
appearing for the prosecution—CBI, on the other hand, rigorously
defended the judgments of the Trial Court and High Court. He reminded
us of the well-known limitations in exercise of powers under Article 136
in a concurrent finding of facts. Learned ASG urged that there is no
question of law involved in this appeal and all that has been determined,
B
are essentially mixed questions of law and facts for which the Courts
below have appraised and re-appraised the entire evidence.
32. Learned ASG reiterated that to establish mens rea or criminality
under Sections 420, 409 and 477A IPC, it was not necessary to prove
that the Appellant had derived benefit or caused any loss to the Bank.
C
The fact remains that the action of the Appellant involved unauthorized
conversion of public funds of an individual. He pointed out that the
issuance of bank receipts for withdrawal of funds without existence of
securities could not be justified except for illegal benefit to a private
individual, namely, brother-in-law of the Appellant (Accused No. 3). Such
illegalities cannot be defended on the pretext of practice or internal D
procedure being followed by the Bank.
33. Learned ASG argued that the Appellant was the custodian of
the Branch and had to take the entire responsibility for the duties he had
failed to discharge. According to him, the onus stood shifted on the
Appellant to show that he had complied with all transactions genuinely E
and all the requirements or conditions were adhered to (see: N.V.
Subbarao Vs. State6). He explained that there is no error of facts or in
law when the Court relies on factual presumptions to convict or exonerate
the accused like the Appellant.
34. In all fairness, we may point out that learned ASG also relied F
upon two more decisions of this Court in Vinayak Narayan Deosthali
v. Central Bureau of Investigation 7 and Neera Yadav v. Central
Bureau of Investigation8.
Analysis:
G
35. Having heard learned Counsel for the parties at considerable
length, we find that two questions fall for our consideration in the present
6
(2013) 2 SCC 162
7
(2015) 2 SCC 553
8
(2017) 8 SCC 757 H
80 SUPREME COURT REPORTS [2021] 12 S.C.R.
A appeal. First, whether a case is made out for interference by this Court
in the concurrent findings of the Courts below? If yes, then whether
conviction of the present Appellant for offences under Sections 409, 420
and 477-A of the IPC as well as under Section 13(2) read with Section
13(1)(d) of the PC Act is sustainable?
B 36. We may at the outset concur in principle with the contention
of the learned ASG that the scope of interference by this Court in a
question of fact or even in a mixed question of fact and law, is narrow.
Unless there are exceptional circumstances where this Court finds that
material evidence has been misread or misconstrued or has been
completely overlooked resulting in a perverse finding, this Court will be
C
extremely reluctant to scrutinize or reappraise the evidence, more so
when the concurrent view taken by the courts below, is one of the plausible
or possible views.
37. These self-evolved principles on the Court’s limitation to
interfere with a synchronal finding of conviction are, however, always
D
subject to caveats and lawful exceptions. The very ethos of our criminal
justice system lies in the understanding that better it is to acquit n number
of suspicious persons, rather than convicting one innocent. Nevertheless,
no crime should go unpunished.
38. We may point out that in the case before us, neither the Trial
E
Court or the High Court has discussed the ingredients of Sections 409,
420, or 477-A IPC, nor have they made any effort to refer to the specific
evidence which may satisfy such ingredients. There is no gainsaying
that the role of the Trial Court and the High Court is not just to decipher
and bring to light the relevant evidence, but also to apply the relevant
F laws to the factual matrix before it. It further appears that the Courts
below have inter-changed and mixed up the allegations against the
Appellant. While the charges were framed primarily with respect to the
issuance of the three loose cheques and the alleged unlawful withdrawal
of Rs. 10 Lakhs from account no. 282, the Courts below have proceeded
to convict the Appellant on the ground that he prematurely and fraudulently
G
enchased the two FDRs, which stood in the name of B. Satyajit Reddy.
Further, the High Court, while acknowledging that no loss was caused to
the Bank, held that a loss had been incurred by B. Satyajit Reddy. But
the charges against the Appellant, as can be seen in Paragraph No. 5
above, were that the three accused, by their fraudulent and illegal actions,
H caused a loss to the Bank. Even further, as pointed out by the learned
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 81
[SURYA KANT, J.]
Senior Counsel for the Appellant, the High Court held that the actions of A
the Appellant were not to his benefit, but to the advantage of his brother-
in-law, i.e., Accused No. 3. The Brother-in-law of the Appellant was,
however, acquitted by the Trial Court and no appeal was preferred by
the State against his acquittal. Keeping these contradictions in mind, we
are of the opinion that the boundaries of judicial temperance would not
B
be disturbed if the present matter is looked at more closely.
39. Within these broader contours, the litmus test is whether a
case under Sections 409, 420 and 477A IPC, and under Section 13(2)
read with Section 13(1)(d) of the PC Act is made out against the
Appellant?
C
40. Before we advert to the relevant evidence on record, we
deem it appropriate to brace ourselves with the relevant statutory
ingredients necessary to bring home the guilt of an accused when charged
under Sections 409, 420 and 477A IPC.
Ingredients necessary to prove a charge under Section 409 D
IPC:
41. Section 409 IPC pertains to criminal breach of trust by a public
servant or a banker, in respect of the property entrusted to him. The
onus is on the prosecution to prove that the accused, a public servant or
a banker was entrusted with the property which he is duly bound to E
account for and that he has committed criminal breach of trust. (See:
Sadupati Nageswara Rao v. State of Andhra Pradesh9).
42. The entrustment of public property and dishonest
misappropriation or use thereof in the manner illustrated under Section
405 are a sine qua non for making an offence punishable under Section F
409 IPC. The expression ‘criminal breach of trust’ is defined under Section
405 IPC which provides, inter alia, that whoever being in any manner
entrusted with property or with any dominion over a property, dishonestly
misappropriates or converts to his own use that property, or dishonestly
uses or disposes of that property contrary to law, or in violation of any
law prescribing the mode in which such trust is to be discharged, or G
contravenes any legal contract, express or implied, etc. shall be held to
have committed criminal breach of trust. Hence, to attract Section 405
IPC, the following ingredients must be satisfied:
9
(2012) 8 SCC 547 H
82 SUPREME COURT REPORTS [2021] 12 S.C.R.
A (i) Entrusting any person with property or with any dominion
over property;
(ii) That person has dishonestly mis-appropriated or converted
that property to his own use;
(iii) Or that person dishonestly using or disposing of that property
B
or wilfully suffering any other person so to do in violation of
any direction of law or a legal contract.
43. It ought to be noted that the crucial word used in Section 405
IPC is ‘dishonestly’ and therefore, it pre-supposes the existence of mens
C rea. In other words, mere retention of property entrusted to a person
without any misappropriation cannot fall within the ambit of criminal
breach of trust. Unless there is some actual use by the accused in violation
of law or contract, coupled with dishonest intention, there is no criminal
breach of trust. The second significant expression is ‘mis-appropriates’
which means improperly setting apart for ones use and to the exclusion
D of the owner.
44. No sooner are the two fundamental ingredients of ‘criminal
breach of trust’ within the meaning of Section 405 IPC proved, and if
such criminal breach is caused by a public servant or a banker, merchant
or agent, the said offence of criminal breach of trust is punishable under
E Section 409 IPC, for which it is essential to prove that:
(i) The accused must be a public servant or a banker, merchant
or agent;
(ii) He/She must have been entrusted, in such capacity, with
F property; and
(iii) He/She must have committed breach of trust in respect of
such property.
45. Accordingly, unless it is proved that the accused, a public servant
or a banker etc. was ‘entrusted’ with the property which he is duty
G bound to account for and that such a person has committed criminal
breach of trust, Section 409 IPC may not be attracted. ‘Entrustment of
property’ is a wide and generic expression. While the initial onus lies on
the prosecution to show that the property in question was ‘entrusted’ to
the accused, it is not necessary to prove further, the actual mode of
H entrustment of the property or misappropriation thereof. Where the
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 83
[SURYA KANT, J.]
‘entrustment’ is admitted by the accused or has been established by the A
prosecution, the burden then shifts on the accused to prove that the
obligation vis-à-vis the entrusted property was carried out in a legally
and contractually acceptable manner.
Ingredients necessary to prove a charge under Section 420
IPC: B
46. Section 420 IPC, provides that whoever cheats and thereby
dishonestly induces a person deceived to deliver any property to any
person, or to make, alter or destroy, the whole or any part of valuable
security, or anything, which is signed or sealed, and which is capable of
being converted into a valuable security, shall be liable to be punished for C
a term which may extend to seven years and shall also be liable to fine.
47. It is paramount that in order to attract the provisions of Section
420 IPC, the prosecution has to not only prove that the accused has
cheated someone but also that by doing so, he has dishonestly induced D
the person who is cheated to deliver property. There are, thus, three
components of this offence, i.e., (i) deception of any person, (ii)
fraudulently or dishonestly inducing that person to deliver any property
to any person, and (iii) mens rea of the accused at the time of making
the inducement. It goes without saying that for the offence of cheating, E
fraudulent and dishonest intention must exist from the inception when
the promise or representation was made.
48. It is equally well-settled that the phrase ‘dishonestly’
emphasizes a deliberate intention to cause wrongful gain or wrongful
loss, and when this is coupled with cheating and delivery of property, the F
offence becomes punishable under Section 420 IPC. Contrarily, the mere
breach of contract cannot give rise to criminal prosecution under Section
420 unless fraudulent or dishonest intention is shown right at the beginning
of the transaction. It is equally important that for the purpose of holding
a person guilty under Section 420, the evidence adduced must establish
beyond reasonable doubt, mens rea on his part. Unless the complaint G
showed that the accused had dishonest or fraudulent intention ‘at the
time the complainant parted with the monies’, it would not amount to
an offence under Section 420 IPC and it may only amount to breach of
contract.
H
84 SUPREME COURT REPORTS [2021] 12 S.C.R.
A Ingredients necessary to prove a charge under Section 477-
A IPC:
49. The last provision of IPC with which we are concerned in this
appeal, is Section 477A, which defines and punishes the offence of
‘falsification of accounts’. According to the provision, whoever, being a
B clerk, officer or servant, or employed or acting in that capacity, wilfully
and with intent to defraud, destroys, alters, mutilates or falsifies any
book, electronic record, paper, writing, valuable security or account which
belongs to or is in possession of his employer, or has been received by
him for or on behalf of his employer, or wilfully and with intent to defraud,
or if he abets to do so, shall be liable to be punished with imprisonment
C
which may extend to seven years. This Section through its marginal
note indicates the legislative intention that it only applies where there is
falsification of accounts, namely, book keeping or written accounts.
50. In an accusation under Section 477A IPC, the prosecution
must, therefore, prove—(a) that the accused destroyed, altered, mutilated
D
or falsified the books, electronic records, papers, writing, valuable security
or account in question; (b) the accused did so in his capacity as a clerk,
officer or servant of the employer; (c) the books, papers, etc. belong to
or are in possession of his employer or had been received by him for or
on behalf of his employer; (d) the accused did it wilfully and with intent
E to defraud.
51. Let us now test the evidence to determine whether or not an
ex facie case under the above-stated three provisions of the IPC is
made out against the Appellant?
52. We may at this stage, recapitulate the two sets of allegations
F
against the Appellant. First, is that the Appellant misused his official
position at the Bank and passed three loose cheques in 1994, to withdraw
funds from account No.282, despite there being insufficient funds in the
said account, and thereby extended an undue advantage to his brother-
in-law, Accused No. 3. It is alleged that these actions of the Appellant
G caused a wrongful loss to the Bank. It is further alleged that this
transaction was deliberately not recorded in the current account ledger
sheet of account no. 282 (Ex P23) so as to screen the offence from the
Head Office. The second allegation, which according to the two courts
below was the gravamen of the accusation, is that two FDRs of Rs.
10,00,000/- and Rs. 4,00,000/-, respectively belonging to B. Satyajit Reddy
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 85
[SURYA KANT, J.]
were prematurely encashed by the Appellant in February 1995, and the A
said amount was thereafter transferred to account no. 282. It has been
further held that even though the two FDRs were for a combined amount
of Rs. 14 Lakhs, only Rs. 4 lakhs were shown to be credited into the
Account of the Academy. The rest of the amount was adjusted towards
the concealed withdrawals that took place in the year 1994.
B
53. Even though the two sets of allegations are continuous parts
of one single transaction, for the sake of brevity and clarity, we propose
that the two allegations may first be examined independently.
(A) Fraudulent and unlawful withdrawal of Rs. 10 Lakhs
from Account No. 282 in the year 1994. C
54. We may outrightly note that so far as this allegation is
concerned, there is no dispute as to the factum of ‘entrustment’. The
Appellant being the Branch Manager was in-charge and responsible for
the deposits made by the Bank customers. The prosecution in regard to
this set of transaction, has put forth a five-pronged claim. First, the D
Appellant along with co-accused conspired to cause wrongful loss to
the Bank. Second, the Appellant permitted the use of three loose cheques.
Third, the cheques were passed by the Appellant even though there
were insufficient funds in account No. 282. Fourth that the relevant
entries regarding this transaction were intentionally not recorded in the
ledger book- Ex P23, and fifth, that the amount pertaining to these cheques E
was collected by the Appellant. This according to the Prosecution, and
as held by the High Court, was done to extend an undue benefit to the
brother-in-law of the Appellant, i.e., Accused No.3.
55. It may first be noted that the Trial Court has unequivocally
held that neither was there a conspiracy between the three accused F
persons, nor did the withdrawal result in any direct or indirect advantage
to Accused No.3. In fact, the learned Special Judge went to the extent
of holding that Accused No.3 merely acted in the normal course of his
duties as a Treasurer/authorized signatory of the Academy. Since the
prosecution has not assailed the acquittal of Accused No. 3, the findings G
in respect to his innocence have attained finality. In any case, the
prosecution has adduced no other evidence that would indicate a prior
meeting of minds between the Appellant and his co-accused.
56. There is no doubt that amongst the three accused persons, the
Appellant being the Branch Manager, had the sole authority to issue and
H
86 SUPREME COURT REPORTS [2021] 12 S.C.R.
A pass the three loose cheques. The record though clearly reveals that
issuance of a loose cheque was a departure from the standard operating
procedure followed at the Bank, but no evidence has been led that it
was an ‘illegal practice’. The deposition of PW-1 and PW-3 is clear on
this point. Both have deposed that in the ordinary course of business, the
cheque holder ought to only utilize the cheques that are issued to him,
B
but in certain contingencies or exceptional situations, the Bank could
issue loose cheques also. Since no explicit prohibition on issuing of loose
cheques has been proved, the mere fact that the Appellant issued those
loose cheques, is not sufficient to conclude that he acted unlawfully or
committed a ‘criminal misconduct’.
C 57. The case of the Prosecution rested heavily on the premise
that the three cheques in question, i.e., Ex. P25 to P27, were passed
even though there weren’t adequate funds in account No. 282. The first
cheque (Ex P25) was for an amount of Rs. 2.5 Lakhs and was passed
on 23.04.1994; the second cheque (Ex P26) which was for an amount
D of Rs. 4 Lakhs was passed on 30.06.1994; and the third cheque (Ex
P27) was passed on 30.07.1994 for an amount of Rs. 3.5 Lakhs. While
PW-2 deposed that there were sufficient funds at the time of passing of
Ex P25, he claimed insufficiency of funds when Ex P26 and Ex P27
were passed. On the other hand, the Appellant in his statement under
Section 313 CrPC contradicted the stand of PW-2 and has testified about
E there being sufficient funds in account No. 282 throughout. The stand of
the Appellant also finds corroboration in the testimony of PW-6, Accountant
of the Branch. We have perused the Current Account Ledger for account
No. 282 (Ex P23) and it appears that there were sufficient funds in
account No. 282 for passing all the three cheques in question. Thus, the
F contention that the three cheques were passed despite insufficient funds
in account No. 282, cannot be sustained. This being the case, we have
no difficulty holding that so far as this part of the transaction is concerned,
the Bank did not suffer any loss.
58. In order to substantiate the charge under Section 477-A IPC,
G the primary contention of the Prosecution is that despite passing the
three cheques (Ex P25 to Ex P27), the Appellant did not make the relevant
entries into the Current Account Ledger (Ex P23) of account No. 282.
This was allegedly done to conceal the withdrawals as there were
insufficient funds in the account of the Academy. We may note that the
expression ‘intent to defraud’ as given under Section of 477-A, contains
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 87
[SURYA KANT, J.]
two elements, deceit and injury. So far as the second element is concerned, A
it has already been noted that no financial injury was caused to the
Bank.
59. With respect to the question of ‘deceit’, the depositions of
PW-2 and PW-6 unveil that though the relevant entries were missing in
the Current Account Ledger, they do find a mention in the other ledger B
sheets maintained by the Bank, namely, the Officer’s Cash Scroll and
the Cashier Payment Register. PW-6 has further deposed that the entry
relating to Ex P25, has been mentioned in the Current Account Ledger.
The ledger- Ex P23 does reveal that there is some truth in the deposition
of PW-6. It can be seen that there is an entry made with a pencil for an
C
amount of Rs. 2.5 lakhs and the relevant cheque number of Ex P25 has
also been recorded. We have further noted that two other entries marked
as Ex D3 and Ex D4, pertaining to the other amounts of Rs. 4 Lakhs and
Rs. 3.5 Lakhs have also been inserted, but here the relevant cheque
numbers have not been recorded. When this is viewed in the light of the
deposition of PW-2, non-production of the other relevant ledgers cannot D
be overlooked. Had the prosecution produced the other ledgers with
some discrepancies therein, we would have been inclined to take an
alternative view. But since the direct and relevant evidence has been
withheld, the benefit of doubt for such failure ought to be accorded to
the Appellant.
E
60. It is also alleged that the afore-said amount of Rs. 10 lakh
was collected by the Appellant. The prosecution witnesses have deposed
that the operating procedure at the Bank entailed that the signature of
the person who received the cheque would be recorded on the back side
of the cheque. Two incriminating circumstances have come on record in
so far as this allegation is concerned. First, as deposed by PW-2, and F
corroborated by PW-10, the signature on the back of the cheque did not
tally with that of Accused No.3. Second, the signature of the wife of the
Appellant- N. Lalitha, appears on the back of Ex. P25. Undoubtedly,
this raises a suspicion. But as can also be seen from the record, there
are contradictions on this point as well. PW-4 has acknowledged that G
the payment for the three cheques was received by the Appellant and
he subsequently handed over the same to Accused No.3, who at the
relevant time, was waiting in the office room of the Appellant. Further,
neither of the courts below have recorded a finding that the Appellant
gained any pecuniary benefit nor is there any other adverse circumstance
H
88 SUPREME COURT REPORTS [2021] 12 S.C.R.
A which may lead us to reach such a conclusion. Therefore, in view of
such slippery evidence, we are not inclined to accord much weight to
this allegation.
(B) Unauthorised premature encashment of the two FDRs
belonging to B. Satyajit Reddy
B 61. We may now consider the second set of allegations pertaining
to the alleged premature withdrawal of two FDRs and the subsequent
unauthorised transfer of Rs. 14 Lakhs to account No. 282. It may be
noted that the allegation of premature withdrawal is also accompanied
by the averment that despite the premature withdrawal, the interests
relating to the two FDRs continued to be deposited into savings account
C
No. 5520 of B. Satyajit Reddy. The interest amount, however, was
transferred from account No. 5555, which stood in the name of the
Appellant and his wife. It is alleged that the subsequent interest payments
were made to ‘deceive’ the FDR holder into believing that the FDRs
were still alive.
D 62. As already clarified by us, to prove the charge under Section
409 IPC, the prosecution need not prove the exact manner of
misappropriation. Once the ‘entrustment’ is admitted or proved, as has
been done in the present case, the onus lies on the Accused to prove that
the entrusted property was dealt by him in an acceptable manner. Thus,
E misappropriation with this dishonest intention is one of the most important
ingredients of proof of ‘criminal breach of trust’. The offence under
Section 409 IPC can be committed in varied manners, and as we are
concerned with its applicability in the case of a bank officer, it is fruitful
to point out that the banker is one who receives money to be drawn out
again when the owner has occasion for it. Since the present case involves
F a conventional bank transaction, it may be further noted that in such
situations, the customer is the lender and the bank is the borrower, the
latter being under a super added obligation of honouring the customer’s
cheques up to the amount of the money received and still in the banker’s
hands. The money that a customer deposits in a bank is not held by the
G latter on trust for him. It becomes a part of the banker’s funds who is
under a contractual obligation to pay the sum deposited by a customer to
him on demand with the agreed rate of interest. Such a relationship
between the customer and the Bank is one of a creditor and a debtor.
The Bank is liable to pay money back to the customers when called
upon, but until it’s called upon to pay it, the Bank is entitled to utilize the
H money in any manner for earning profit.
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 89
[SURYA KANT, J.]
63. In the case in hand, the Appellant in his examination under A
Section 313 Cr.P.C. has neither disputed the factum of the premature
withdrawal, nor of the subsequent transfer of the amount to account
No. 282. On the contrary, he has specifically claimed that he only acted
on the written request made by the customer. The Appellant has fortified
his assertion by producing two letters (Ex P6 and Ex P7) statedly written
B
by B. Satyajit Reddy and addressed to the Branch Manager. The
deposition of the handwriting expert (PW-10) has given some credence
to the Appellant’s version as according to his opinion, both the letters
bear the signature(s) of B. Satyajit Reddy.
64. On the other hand, the Prosecution disputed the genuineness
of these two letters and has accused the Appellant of securing these C
letters antedated. The subsequent conduct of the Appellant i.e., the deposit
of interest from his own account to that of B. Satyajit Reddy has been
strongly highlighted to emphasize that the Appellant had made the
withdrawal without the knowledge or consent of the FDR holder and in
contravention of the law. The latter fact weighed heavily on the minds D
of the Courts below as both have proceeded to convict the Appellant on
the assumption that he did not receive any authorization for the premature
encashment and transfer. There is thus a serious dispute on the factum
of whether or not B. Satyajit Reddy had sought the premature withdrawal
and the subsequent transfer of the proceeds of FDRs to the account of
Academy. The best person to clear the air and enlighten us would have E
been B. Satyajit Reddy himself, but neither was he associated during the
course of inquiry/audit or the investigation nor was he examined as a
prosecution witness in the trial.
65. The investigating agency did not care to record the statement
of B. Satyajit Reddy either under Section 161 Cr.P.C. or as a court F
witness. There is not even a whisper that B. Satyajit Reddy was won
over by the appellant from the very inception and/or his examination at
any stage would have been an exercise in futility. Further, there is also
no written or oral complaint made by B. Satyajit Reddy against the
Appellant or other officials of the Bank accusing them of misusing his G
FDRs or causing any financial loss to him. On the contrary, the Appellant
has produced on record two letters dated 22.02.1995 and 24.02.1995
(Ex P6 and Ex P7) purportedly written by B. Satyajit Reddy for premature
encashment of his FDRs and to deposit the amount in the account of the
Academy. These two letters (which the Appellant is accused to have
obtained antedated) suggest that copies thereof were physically received/ H
90 SUPREME COURT REPORTS [2021] 12 S.C.R.
A handed over to the Chairman and other officials of the Bank. There
was, thus, sufficient time to contact a valuable customer like B. Satyajit
Reddy and enquire about the genuineness of those letters. The Chairman
of the Bank (PW-1) in his complaint to CBI dated 27.11.1995 (Ex P1)
did not make even a bald allegation about genuineness of these two
letters which were already in his possession. Unfortunately, CBI too
B
made no effort to contact B. Satyajit Reddy and ascertain the correct
facts. There is indeed no quarrel that no financial loss was caused to B.
Satyajit Reddy. It, thus, emerges indisputably that:
(i) B. Satyajit Reddy had made no complaint alleging any loss
to him;
C
(ii) His written requests dated 22.02.1995 and 24.2.1995 (Ex
P6 and Ex P7) have gone unrebutted;
(iii) The prosecution has surely proved payment of interest on
those FDRs to B. Satyajit Reddy even after pre-mature
closure thereof, but that payment was made by the Appellant
D
from his personal account and no public fund has been
divested for such payment;
(iv) B. Satyajit Reddy has been receiving interest even after
premature encashment of the FDRs. He may or may not
have got undue monetary gain but definitely he suffered no
E loss in any manner.
66. Having given our anxious thought to these facts, we are of the
considered opinion that the Prosecution has failed to establish the charge
of criminal breach of trust against the Appellant beyond a reasonable
doubt. We are inclined to agree with the learned Senior Counsel for the
F Appellant that the non-examination of B. Satyajit Reddy has been
materially fatal to the case of the prosecution. Furthermore, it appears
that B. Satyajit Reddy was deliberately not examined as he would have
deposed against the prosecution. Undoubtedly, some of the proven facts,
like deposit of interest amount from the account of the appellant to that
G of B. Satyajit Reddy, do create a strong suspicion against the Appellant,
but as held by this Court time and again, suspicion cannot take the place
of proof, howsoever, strong it may be. We are, therefore, of the firm
belief that in the absence of cogent and unimpeachable evidence to prove
that the Appellant has misappropriated the funds of the Bank and/or of
B. Satyajit Reddy, it would not be safe to convict him under the provisions
H of Section 409 IPC.
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 91
[SURYA KANT, J.]
67. So far as the charge under Section 420 IPC is concerned, A
once again, the best and the only person who could throw light on whether
or not he had voluntarily agreed to transfer his FDR amount in the account
of the Academy or there was an element of inducement, cheating or a
false promise, was B. Satyajit Reddy himself who has chosen not to
enter the witness box. In the absence of even an ordinary complaint by
B
B. Satyajit Reddy regarding misuse of his FDRs, it will be too far-fetched
to hold that the Appellant had any mens rea to deceive or to
misappropriate or destroy valuable property of B. Satyajit Reddy.
68. We may at this stage, briefly note that learned Senior Counsel
for the Appellant had raised another contention, namely, that the charges
under Section 409 and Section 420 IPC cannot go together. He eloquently C
argued that the essential ingredients of the two offences are conflicting
in nature. Section 409 (or 405) IPC deals with offences where the
accused has been ‘entrusted’ with the property and Section 420 IPC
deals with offences where the accused has ‘dishonestly induced’ the
victim/complainant to depart with the property in question. It was, D
therefore, argued that an accused cannot be charged under both the
sections simultaneously. This contention, however, has been rendered
academic in the light of the afore-stated discussion and conclusion(s).
We thus do not express any opinion and leave this question open for
adjudication in an appropriate case.
E
69. Having held so, we hasten to add that the Appellant acted
brazenly contrary to the norms and internal instructions of the Bank.
Although he was clever enough to not trespass into the prohibited area(s)
of Sections 409, 420 and 477-A IPC, he ran the risk of causing financial
loss to the Bank. Despite his subsequent act of depositing the interest
accrued upon the FDRs of B. Satyajit Reddy, from his personal account, F
and thereby absolving the Bank from such liability, the actions of the
Appellant constitute gross departmental misconduct and are unbecoming
of a senior Bank Officer. The management of the Bank rightly lost faith
in the Appellant and the punishment of dismissal from service imposed
on him vide order dated 06.01.2006, on the basis of his conduct which G
led to his conviction by the Trial Court, is fully justified. In the peculiar
facts and circumstances of this case, there was no legal necessity to
hold any departmental enquiry to reiterate the same factual conclusions
which have surfaced during the course of criminal trial. Such findings
though may not be sufficient to fasten criminal liability on the appellant,
his dismissal from service of the Bank is fully legitimised and the H
92 SUPREME COURT REPORTS [2021] 12 S.C.R.
A punishment so awarded, is proportionate to the proven misconduct. We
say so, also for the reason that neither can the Appellant be allowed to
take undue advantage of the benefit of doubt being extended to him, nor
is a recourse to a departmental enquiry desirable at this belated stage.
On the other hand, upholding the order of dismissal dated 06.01.2006
will serve the cause of public interest and send a befitting message amongst
B
the Appellant’s peers.
70. We are also constrained to observe that in this case the CBI
has either adopted a casual and callous approach or there was some
hidden pressure to derail a fair investigation. The resultant effect is that
though there is a strong suspicion of criminal breach of trust, cheating
C and/or fabrication of the Bank records against the Appellant, but such
suspicion falls short of a conclusive proof to hold him guilty of the criminal
charges. The best evidence having been withheld by the prosecution,
the benefit of doubt must be extended to the Appellant, for no conviction
can be sustained on the basis of conjectures and surmises. Non-production
D of the records of the Bank also adversely comments on the fairness and
independence of the investigation conducted in the instant case.
71. To sum-up the above-stated discussion, the following
incontrovertible factors have emerged in the present appeal:
First, no financial loss was caused to the Bank.
E
Second, the record before us does not indicate that any pecuniary
loss was caused to B. Satyajit Reddy or to any other customer of the
Bank.
Third, the material before us does not disclose any conspiracy
F between the accused persons. In the absence of any reliable evidence
that could unfold a prior meeting of minds, the High Court erred in holding
that Appellant and other accused orchestrated the transactions in question
to extend an undue benefit to Accused No.3.
Fourth, the Appellant committed gross misconduct by misusing
his position as the Branch Manager. Notwithstanding the final outcome,
G
the Appellant’s abuse of powers clearly put the Bank at the risk of
financial loss.
Fifth, despite dereliction of his duties, none of the acts proved
against the Appellant constitute ‘criminal misconduct’ or fall under the
ambit of Sections 409, 420 and 477-A IPC.
H
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI 93
[SURYA KANT, J.]
Conclusion: A
72. We face no difficulty in holding that the prosecution has failed
to prove the charges under Sections 409, 420 and 477A IPC against the
Appellant beyond reasonable doubt. As a necessary corollary thereto,
his conviction under Section 13(2) read with Section 13(1)(d) of the PC
Act can also not be sustained. However, the benefit of doubt being B
extended to him on account of a thin margin between ‘strong suspicion’
and ‘conclusive proof’, shall not entitle him to initiate a second round of
lis to seek his reinstatement or to claim other service benefits from the
Bank. We have already held that the Appellant is deemed to be guilty of
gross departmental misconduct, for which the punishment of dismissal
from service has been adequately awarded. It requires no repetition that C
standard of proof to establish a misconduct in a domestic enquiry i.e.
even preponderance of evidence, is drastically different to those of proving
a ‘criminal charge’ beyond any reasonable doubt. The Appeal is
accordingly disposed of in the above terms. Bail bonds, if any, furnished
by the Appellant stand discharged. D
Divya Pandey Appeal disposed of.
E
F
G
H
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