VINAYAK NARAYAN DEOSTHALIversusC.B.I.

                        [2014] 12 S.C.R. 3os


A                VINAYAK NARAYAN DEOSTHALI
                                  v:
                               C.B.I.
                 (Criminal Appeal No. 346 of 2004)
                       DECEMBER 02, 2014
B
           [SUDHANSU JYOTI MUKHOPADHAYA AND
                ADARSH KUMAR GOEL, JJ.]

         Special Court (Trial of offences relating to Transactions
 C in Securities) Act, 1992: s.10 - Allegation of diversion of
   public funds belonging to certain public sector banks and
   financial institutions by employees of such banks and financial
   institutions in collusion with some brokers - Conviction of
   appellant-bank manager ulss. 120-8, 409, 467, 471 /PC and
 D ss. 13(1)(c) and (d) of Prevention of Corruption Act, 1988 by
   special court - Held: Action of appellant involved
   unauthorised conversion of public funds to private funds of
   an individual - Mens rea was established from the f?ct that
   false bank receipts were issued for non-existent securities -
·E Diversion of public funds by appellant by committing forgery/
   use of forged documents amounted to criminal breach of trust
   as well as offence under POC Act - Conviction upheld.

        Disposing of the appeal, the Court

F.     HELD: 1. The facts are undisputed and clearly stand
  established on the record : (i) The EEPC is functioning
  under the control of Ministry of Commerce to help export
  of engineering goods and services. It was operating
  International Price Reimbursement Scheme with a view
G to neutralize the price of Steel for domestic exporters. It
  had funds for disbursement. Further it had funds on
  account of sale o.f office. IPRS was being operated by PW
  3. He made a deposit of a sum of Rs.7.75 crores with the
  UCO Bank by way of three cheques in favour·of the UCO
H·                              308
      VINAYAK NARAYAN DEOSTHALI v. C.B.I.             . 309


 Bank~ (iij The appellant acting as Assistant Manager of        A
 the UCO Bank transferred the amount to the account of
 Mehta which was apparently in collusion with Mehta
 without any authority by EEPC. He issued Bank Receipts
 in lieu of. physical delivery of securities without such
 securities being in existence. (iii) The EEPC never            B
 instructed purchase of securities through Mehta nor
 allowed'the transfer .of the amount in question to Mehta
 but the EEPC was made to sign documents under a
 mistal(en belief at the instance of the appellant. PW-3, who
 represented the EEPC fully supported the prosecution           c
 version of having made deposit with the Bank and
 having not authorized the diversion of the said amount
 in favour of any private party. The said evidence has been
 duly accepted by the Special Court. The appellant
 unauthorisedly credited the amount to Mehta's account          o
 by abusing his position in conspiracy with Mehta. The
 accused also issued bank receipts for security
 transactions without physical existence of securities
  which amounted to forgery. It is thus, safe to infer the
  abuse of position by the accused-appellant in conspiracy      E
  with and to the benefit of Mehta. Diversion of public funds
  by the accused amounted to criminal breach of trust by
  committing forgery/use of forged documents as well as
  offence under the provisions of the Corruption Act. PW-
  10 and PW-12, who were maintaining· register for sale and
· purchase of securities could not show that the securities     F
  in question were physically available with the Bank when
  the bank receipts were issued by the accused which
  could be done only if securities were available. The
  Special Court thus rightly held the charge to be proved.
  It was not necessary to prove that the accused had            G·
  derived any benefit or caused any loss to the Bank. The
  fact remains that action of the appellant involved
  unauthorized conversion of public funds to private funds
  of an individual. Issuing of Bank receipts for securities
                                                                H
    310      SUPREME COURT REPORTS                [2014] 12 S.C.R.


A without existence of securities could not be justified
  except for illegal benefit to a private individual. Patent
  illegality cannot be defended in the name of practice or
  direction of higher authorities. Mens rea is established
  from the fact that false Bank Receipts were issued for non-
B existent securities. Thus, the offences of conspiracy,
  forgery, misappropriation and corruption stand
  established. [Paras 14, 15 and 16] [332-A-H; 333-A, E]

        Ram Narayan Popli vs. Central Bureau of Investigation
c   (2003) 3 sec 641: 2003 (1) SCR 119 - relied on.
                          Case Law Reference:
          2003 (1) SCR 119         relied on              Para 4
      CRIMINAL APP ELLATE JURISDICTION : Criminal f\ppeal
D No. 346 of 2004.

          From the Judgment & Order dated 20.01.2004 Special
    Court (Trial of Offences Relating to transaction in Securities)
    Act, 1992 in Case No. 1 of 1997 in R.C. No. 9 (BSC)/94/Bom.
E
        Kamini Jaiswal, Dhiraj Mirajakar, S. Altaf for the Appellant.
                   ..             '
        Chetan Chawla, T.A. Khan, B.V. Balramdas, Arvind Kumar
    Sharma for the Respondent. .

F         The Judgment of the Court was delivered by ·

       ADARSH KUMAR GOEL, J. 1. This appeal has been
  preferred under Section 10 of the Special Court (Tri'al of
  Offences relating to Transactions in Securities) Act, 1992 (for
  short "the Special Court") against the Judgment and Order
G dated 20th January,, 2004 passed by the Special Court
  constituted under the sai_d Act in Special Case No.1 of 1997
  in R.C. No.9 (BSC)/94/BOM.

       2. In the wake of report of enquiry committee constituted
H by the Reserve Bank of India under the Chairmanship of Shri
         VINAYAK NARAYAN DEOSTHALI v. C.B.I.                    311
              [ADARSH KUMAR GOEL, J.]

Janki Raman to enquire into the allegation of unauthorized             A
diyersion of public funds belonging to certain public sector
banks and financial institutions by employees of such banks and
institutions in collusion with some brokers, the Act was enacted
for constitution of a Special Court for trial of criminal offences
                                                                           -
in respect of transactions during the period 1st April, 1991 to        B
6th June, 1992 as provided under the Act. The object of the
Act was speedy recovery of public money all<!gedly diverted
in security transactions and to punish the guilty and to restore
confidence and credibility of the banks and the financial
institutions.                                                          C

       3. The Special Court was to try notified persons jointly with
  other connected persons. One of such named persQns was the
  broker- Harshad S. Mehta who died during the trial. The
  appellant was Assistant Manager of the UCO Bank, Hamam
  Street Branch who was jointly tried with Mehta on the allegation     D
  that during the period 12th March, 1991 to 24th April, 1991,
  he diverted funds of the Engineering Export Promotion Council
  (for short "EEPC'.') amounting to Rs.7.75 crores to the private
  account ·Of Harshad S. Mehta. Though the said funds were
  transferred back to the EEPC, conduct of the appellant               E
  amounted to offences under Sections 120-B, 409, 467, 471 of
  the Indian Penal Code and Sections 13(1 )(c) and (d) of the
. Prevention of Corruption Act, 1988.                              ·

      4. The ch_arge has been held proved by the Special Court.        F
 It may be noted that the appellant's conviction by the Special
 Court for abusing .his official position in relation to five other
 transactions involving diversion of funds to the account of late
 Mehta, has been earlier upheld by this Court in Criminal Appeal
 No.1141 of 1999 decided on 14th January, 2003 reported in             G
 Ram Naravan Popli vs. Central Bureau of lnvestigation 1
 We also find reference to the conviction of the appellant by the
 Special Court in two other cases giving rise to the filing of

 1.   (2003) 3 sec 641.                                                H
    312     SUPREME COURT REPORTS              [2014] 12 S.C.R.


A   Criminal Appeal No.687 of 2006 and Criminal Appeal No.335
    of 200q ii) this Court.         '

        5. In the present ca~e. charg'es against the appellant as
    framed by the Special Court are as follows :
B        "FIRSTLY: That during the period from August, 1990 to
         April 1991, you the accused abovenamed, working as
         Assistant Manager, UCO Bank, Hamam Street Branch,
         Mumbai did enter into a criminal conspiracy with Harshad
         Shanti/al Mehta, original accused No. 1 (since deceased),
c        a Share, Stock and Securities Broker, Mumbai, the object
         whereof was to illegally divert the funds of Engineering
         Export. Promotion Council (EEPC) to the extent of
         Rs. 7.75 crores to the Current Account No.1028 of the
         aforesaid Harshad Shanti/a/ Mehta (since deceased),
D        maintained with UCO Barik, Hamam Street Branch,
         Mumbai, in the name of Mis Harshad S. Mehta, and
         thereby to obtain undue pecuniary advantage to the said
         Harshad Shanti/al Mehta (since deceased), by you the
         accused abovenamed misusing your official position as
E        a Public SeNant by corrupt or illegal means, under the
         garb of Securities transactions, camouflaging the same
         as if the transactions were of UCO Bank, while knowing
       · or having reason to believe that the transactions were in
         fact of the said Harshad Shanti/al Mehta and that you
F        thereby committed an offence punishable under Section
         120-B of the Indian Penal Code and· within my
         cognizance.

         SECONDLY: That in pursuance of the said criminal
       . conspiracy and in the course of the same transaction, on
G        or about 123, 1991, the said Harshad Shanti/al Mehta
         (since deceased), while purporting to act as a Broker of
         UCO Bank, dishonestly issued two contract notes to
         EEPC, Mumbai, showing purchase of 692 /akh units of
         UNITS HJ64 Scheme at Rs.14.4585 per unit on ready
H        forward basis for the sale of the same securities on
  VINAYAK NARAYAN DEOSTHALI v. C.B.L                  313
       [ADARSH KUMAR GOEL, J.)
22.03.1991 on their behalf at Rs.14.50628 per unit as         A
also issued false Delivery Orders to the EEPC instructing
them to receive the delivery of the aforesaid securities
from UCO Bank and also issued another Delivery Order
of even date to UCO Bank to deliver the said securities
to EEPC knowing or having reason to believe that UCO          B
Bank could not deliver the said securities to EEPC in the
absence of the UCO Bank holding any such securities
on account of the said Harshad Shanti/al Mehta (since
deceased) and in furlherance of the said conspiracy, and
during the course of the same transaction, you the            C
 accused abovenamed, being a Public Servant, and
having been entrusted with the funds or dominion over
the funds of or under the control of UCO Bank, Hamam
 Street Branch, Mumbai, dishonestly issued a Cost Memo
dated 12.03.1991 in respect of the aforesaid sale of the
                                                              0
 said securities for a total sum of Rs.99,99,988.20,
 knowing or having reason to believe that UCO Bank had
 no such transaction with EEPC and also committed the
 offence of forgery by issuing BR N0.111191 of UCO
 Bank on the instructions of the said Harshad Shanti/a/
 Mehta (since deceased) knowing or having reason to           E
 believe the same to be false document, by fraudulently
 signing and issuing the said BR, knowing or having
 reason to believe that the said BR was not backed by
 securities, and in consideration thereof having received
 Bankers Cheque No.054053 dated 12.03.1991 drawn on           F
 State Bank of India, Cuffe Parade Branch, Mumbai, from
 EEPC for Rs. 1 crore issued in favour of UCO Bank,
 obtained ·undue pecuniary advantage in favour of the
 said Harshad Shanti/al Mehta (since deceased), without
 any public interest and committed Criminal Misconduct        G
 by crediting the proceeds of the said Cheque directly into
 the Current Account No.1028 maintained by the said
 Harshad Shanti/al Mehta (since deceased) in the name
 of Mis Harshad S. Mehta with UCO Bank, Hamam Street
 Branch, Mumbai without any instructions in that behalf       H
    314       SUPREME COURT REPORTS              [2014] 12 S.C.R.


A         from the issuing Bank, and in furtherance of the said
          criminal conspiracy and during the course of the same
          transaction you the accused abovenamed dishonestly
          received the credit of the said amount knowing or having
          reason to believe the same to be stolen property viz, the
B         property in respect of which an offence of Criminal
          breach, of Trust had been committed and that you
          thereby committed offences punishable under Section
          120B of the Indian Penal Code read with Sections 409,
          411, 467, 471 of the l.P.C. and sections 13(2) read with
c         13(1)(c) and 13(1)(d) of the Corruption Act, 1988 and
          within my cognizance.

          THIRDLY: That in pursuance of the said criminal
          conspiracy - and during the course of the same
          transaction, on or about 12.03.1991 you the accused
D         abovenamed, acting in your official capacity as Assistarit
          Manager, UCO Bank, Hamam Street Branch Mumbai,
          dishonestly and fraudulently issued_ a UCO Bank Cost
          Memo dated 12.03.1991 in respect of the aforesaid
          ostensible sale of the said securities for a total sum of
E         Rs.99,99,980.20, knowing or having reason to believe
          that UCO Bank had no such transaction with EEPC and
          further, 'dishonestly issued UCO Bank BR No.111191
          favouring EEPC knowing or having reason to believe that
          the same was not backed with securities and that you the
F         accused abovenamed thereby committed an offence
          punishable under Section 120-B read with Section 467 ·
          of the Indian Penal Code and within my cognizance.

          FOURTHLY: That in pursuance of the said criminal
          conspiracy and during' the course of the same
G         transaction, on or about 12.03.1991 you the accused
          abovenamed used the abovesaid forged BR No.111191
          a genuine by forwardfng the same to EEPC and that you
          thereby committed an offence punishable under Section
          120-8 read with Section 467 read with 471 of the Indian
H
   VINAYAK NARAYAN DEOSTHALI v. C.B.I.                315
        [ADARSH KUMAR GOEL, J.]

 Penal Code and within my cognizance.                        A

 FIFTHLY: That in pursuance of the said criminal
 conspiracy and during the course. of (he same
 transaction, on or about 12.03.1991, you the accused
 abovenamed, being a Public Servant and working your B
 capacity as Assistant Manager, UCO Bank, Hamam
 Street Branch, Mumbai, and in such capacity having
 been entrusted with the funds or dominion over the funds
 of or under the control of UCO Bank, Hamam Street
 Branch, Mumbai, having received an Account Payee C
 Banker's Cheque No.054053 payable to UCO Bank and
 drawn on the State Bank of India, Cuffe Parade Branch,
 Mumbai, for an amount of Rs. 1 crore, in violation of
 express or implied contract touching the mode of
 discharge of such trust, credited the same directly into
 the Current Account No.1028 maintained by the said D
 Harshad Shanti/al Mehta (since deceased) in the name
 of Mis Harshad S. Mehta, with UCO Bank, Hamam Street
 Branch, Mumbai, without any instructions in that behalf
 from the issuing Bank, and that you thereby committed
 an offence punishable under Section 120-B read with E
 Section 409 of. the Indian Penal Code and within my
 cognizance.

  SIXTHLY: That in pursuance of the said criminal
  conspiracy and during the course of the same               F
  transaction, on or about 12.03.1991; you the accused
. abovenamed, being a Public Servant, by abusing your
  official position as Assistant Manager, UCO Bank,
  Hamam Street Branch, Mumbai and by corrupt or illegal
  means, having received an Account Payee Banker's           G
  cheque No.054053 for Rs. 1 crore, payable to UCO Bank
  drawn on State Bank of India, obtained for the said
  Harshad Shanti/a/ Mehta (since deceased) obtained
  undue pecuniary advantage without any public interest,
  and committed criminal misconduct by illegally crediting
                                                             H
     316      SUPREME COURT REPORTS              (2014] 12 S.C.R.


A        the proceeds of the said cheque directly into the Current
         Account No.1028 maintained by the said Harshad
       · Shanti/al Mehta (since deceased) with UCO Bank,
         Hamam Street Branch, Mumbai, in the name of Mis
         Harshad S.• Mehta without any instructions in that behalf
B        from the issuing Bank, and that you thereby committed
         an offence punishable under Sec_tion 120-B of the Indian
         Penal Code read with Section 13(2) read with Sectin
         13(1)(d) of the Prevention of Corruption Act, and within
         my cognizance.
c        SEVENTHL Y: That in pursuance of the said criminal
         conspiracy and during the course of the same
         transaction, on or about 12.03.1991, you the accused
         abovenamed, being a Public SeNant, by abusing your
         official position as Assistant Manager, UCO Bank,
.D       Hamam Street Branch, Mumbai having received an
         Account Payee Bankers Cheque No. 054053 for Rs. 1
         crore, payable to UCO Bank drawn oh State Bank of
         India, dishonestly misappropriated the said funds by
         crediting the proceeds of the said cheque directly into the
E        Current No: 1028 maintained by the said Harshad
         Shanti/al Mehta (since deceased), with UCO Bank,
         Hamam Street Branch, Mumbai, in the name of Mis
         Harshad S. Mehta, without any instructions in that behalf
         from the. issuing Bank, and that you thereby committed
F        and offence .punishable under Section 120-B of the
         Indian Penal Code read with Section 13(2) read with
         13(1)(c) of the Prevention of Corruption Act, and within
       · my cognizance.

           EIGHTHL Y: That in pursuance of the said criminal
G
           conspiracy and during the course of the same
           transaction, on or about 23.04.1991, the said Harshad
           Shanti/al Mehta (since deceased), while purporting to act
           as Broker for UCO Bank, dishonestly issued two Contract
           Notes to EEPC, Mumbai, showing, purchase of 35 /akh
H
  VINAYAK NARAYAN DEOSTHALI v. C.B.L                317
       [ADARSH KUMAR GOEL, J.]
units of UNITS 1964 Scheme at Rs.1500 per unit on A
ready forward basis for the sale of the same securities on
08.05.1991 on their behalf at Rs. 15.11096 per unit and
also issued false Delivery Orders to the EEPC instructing
them to receive the delivery of the aforesaid securities
from UCO Bank and also issued another Delivery Order B
of even date to UCO Bank to deliver the said securities
to EEPC knowing or having reason to· believe that UCO
Bank could not deliver the said securities to EEPC in the
absence Of the UCO Bank holding any such securities
on account of the said Harshad Shanti/al Mehta (since c
deceased), and in furtherance of the said conspiracy, and
 during the course of the same transaction, you the
 accused abovenamed being a Public Servant, and
 having been entrusted with the funds or dominion over .
 the funds of or under the control of UCO Bank, Hamam
                                                            0
 Street Branch, Mumbai, dishonestly issued A Cost. Memo
 dated 23.04.1991 in respect of the aforesaid sale of the
 ~aid securities for a total sum of Rs.5.25 crores, knowing
 or having reason to believe that UCO Bank had no such
 transaction with EEPC and also committed. the offence
 of Forgery by issung BR No.153191 of UCO Bank on the E
 instructions of the said Harshad Shanti/al Mehta (since
 deceased) knowing or having reason to believe the same
 to be false document by fraudulently signing and issuing
 the said BR knowing or having reason to believe that the
 said BR was not backed by securities, and in F
 consideration thereof having received Banker's Cheque
 No.054337 dated 23.04:1991 drawn on State Bank of
 India, Cuffe Parade Branch, Mumbai, from EEPC for
 Rs.5.25 crores in favour of UCO Bank obtained undue
 pecuniary advantage in favour of the said Harshad G
 Shanti/al Mehta (since deceased) without any public
 interest and committed criminal misconduct by crediting
 the proceeds of the said Cheque directly into the Current .
 Account No. 1028 maintained by the said Harshad
 Shanti/al Mehta (since deceased) in the name of Mis H
     318       SUPREME COURT REPORTS               [2014] 12 S.C.R.

A·         Harshad S. Mehta with UCO Bank, Hamam Street
           Branch, Mumbai, without any instructions in that behalf
           from the issuing Bank, and that you thereby committed
           offence punishable underSection 120-B of the Indian
           Penal Code read with Sections 409, 471 of the Indian
B          Pena/ Code and Sections ,13(2) read with 13(1)(c) and
           13(1)(d) of the Prevention of Com:Jption Act, and within my
           cognizance.·

           NINTHL Y: That in pursuance of the said criminal
           conspiracy and during the course of the same
c          transaction, on or about 23.04.1991, you the accused
           abovenamed acting in yours official capacity as Assistant
           Manager, UCO Bank, Hamam Street Branch, Mumbai,
           dishonestly and fraudulently issued a UCO Bank Cost
           Memo dated ·23.04.1991 in respect of the aforesaid
D          ostensible sale of the said securities for a total sum of
           Rs.5.25 crores, knowing or having reason to believe that
           UCO Bank had no such transactioo with EEPC and
           further dishonestly issued UCO Bank BR No.153191
           favouring EEPC or having reason to believe that the
.E         same was not backed with securities and that you the
           accused abovenamed thereby committed an offence
           punishable under Section 120-B read with Section 467
           of the Indian Penal Code and within my cognizance.

F           TENTHLY: That in pursuance of the said criminal
            conspiracy and during the course of the same
            transaction, on or about 23.04.1991, you the accused
           "abovenamed used the a/5ovesaid forged BR No.153191
            as genuine by forwarding the same to EEPC and that you
            thereby committed an offence punishable under Section
G
            120-B read with Section 467 read with Section 471 of.the
            Indian Penal Code and within my cognizance.

           ELEVENTHL Y: That in pursuance of the said criminal
           conspiracy and d.uring the course of the same
H          transaction, on -or about 23.04.1991 you the accused
  VINAYAK NARAYAN DEOSTHALI v. C.B.I.                 319
       [ADARSH KUMAR GOEL, J.]
abovenamed, being a Public SeNant and working in your A
capacity as Assistant Manager, UCO B9nk, Hamam
Street Branch, Mumbai, and in such capacity having
been entrusted with the funds or dominion over th.e funds
of or under the control of UCO Bank, Hamam Street
Branch, Mumbai, having received an Account Payee B
Banker's Cheque No. 054337 payable UCO Bank and
drawn on the State Bank of India, Cuffe Parade Branch,
Mumbai, for an amount of Rs.5.25 crores, in violation of
express or implied contract touching the mode of
discharge of such trust, credited the same directly. into c
the Current Account No.1028 maintained by the said
Harshad Shanti/al Mehta (since deceased) in the name
of Mis Harshad S. Mehta, with UCO Bank, Hamam Street
Branch, Mumbai, without any instructions in that behalf
from the issuing Bank, and that you thereby. committed
                                                          0
an offence punishable under Section 120-B read with
Section 409 of the Indian Penal Code and within my
cogni1ance,

TWELTHL Y: That in pursuance of the said criminal
conspiracy and during the course of the same                  E
transaction, on or about 23.04.1991 you that accused
abovenamed, being a Public SeNant, by abusing your
official position as an Assistant Manager, UCO Bank,
Hamam Street Branch, Mumbai, having received an
Account Payee Banker's Cheque No.054337 for Rs.5.25           F
crores payable to UCO Bank drawn on the State Bank of
India, dishonestly misapprqpriated the said funds by
crediting the proceeds of the said cheque directly into the
Current Account No.1028 maintained by the said
Harshad Shanti/al Mehta (since deceased) in the name          G
of Mis Harshad S. Mehta; with UCO Bank, Hamam Street
Branch, Mumbai, without any instructions in that behalf
from the issuing Bank, and that you thereby committed
an offence punishable under Section 120-B read with
Section 13(2) read with 13(1) of the Prevention of            H
     320       SUPREME COURT REPORTS              [2014] 12 S.C.R.

A           Corruption Act, and within my cognizance.

           THIRTEENTHL Y: That in pursuance of the said criminal
           conspira9y and during the course of the same
           trmsaction, ·on or about 23.04.1991 you the accused
           ; bovenamed, being a Public Servant, by abusing your
 B
           :Jfficial positional as an Assistant Manager, UCO Bank,
           Hamam Street Branch, Mumbai, having received an
           Account Payee Banker's Cheque No. 054337 for Rs.5.25
           crores, payable to UCO Bank and drawn on the State
           Bank of India, Cuffe Parade Branch, Mumbai,
c          dishonestly misappropriated the said funds crediting the
           proceeds. of the said cheque directly into the Current
           Account No.1028 maintained by the said Harshad
           Shanti/al Mehta (since deceased) in the name of Mis
           Harsf1ad S. Mehta, with UCO Bank; Hamam Street
 D         Branch, Mumbai, without any instructions in that behalf
           from .the issuing Bank, and that you thereby committed
           an offence punishable under Section 120-~ read with
           Section 13(2) read with 13(1)(c) of the Prevention of
           Corruption Act, and within my cognizance.
 E
             FOURTENTHL Y: That in pursuance of the said criminal
             conspiracy and during ·the course of the same
             transaction, on or about 24.04.1991 the said Harshad
             Shanti/al Mehta (since deceased), while purporting to act
 F           as a Broker of UCO Bank, dishonestly issued to Contract
             Notes to EEPC, Mumbai, showing purchase of 10 lakh
             units of UNITS 1964 Scheme at Rs.15.00 per unii on
             ready forward basis for the sale of the same securities .
             on 29.04.1991 on their, behalf at Rs.15.04110 perunit as
             also issued false Delivery Orders tp the EEPC instructing
.G
             them to receive the delivery of the aforesaid securities
             from UCO Bank and also issued another-Delivery Order
           , of even date to UCO bank to deliver the said securities
             to EEPC knowing or having reason to believe that UCO
             Bank could not deliver the said securities to EEPC in the
H
  VINAYAK NARAYAN DEOSTHALI v. C.B.I.                321
       [ADARSH KUMAR GOEL, J.]
absence of the UCO bank holding any such securities A
on account of the said Harshad Shanti/al Mehta (since
deceased), and in furtherance of the said conspiracy, and
during the course of the same transaction, you the
accused abovenamed, being a Public Servant, and
having been entrusted with the funds or dominion over B
the funds of or under the Control of UCO Bank, Hamam
Street Branch, Mumbai, dishonestly issued a Cost Memo
dated 24.04.1991 in respect of the aforesaid sale of the
said securities for a total sum of Rs. 1. 50 crores, knowing
or having reason to believe that UCO Bank had no such c
transaction with EEPC and also committed the. offence
of Forgery issuing BR No.16B/91 of UCO Bank on the
instructions of the said Harshad Shanti/al Mehta (since
deceased) knowing or having reason to believe the same .
to be false document by fraudulently signing and issuing
                                                             0
the said BR knowing or having reason to believe that the
said BR was not backed by securities and in
consideration thereof having received Banker's Cheuqe
No.054353 dated 24.04.1991 drawn on the State Bank
of India, Cuffe Parade Branch, Mumbai, from EEPC for
Rs. 1 crore issued in favour of the UCO Bank, obtained E
undue pecuniary advantage without any public interest
for the said Harshad Shanti/al Mehta (since deceased)
and committed Criminal Misconduct by crediting the
proceeds of. the said Cheque directly into the Current
Account No.1028 maintained by the said Harshad F
Shanti/al Mehta (since deceased) in the name of Mis
Harshad S. Mehta with UCO Bank, Hamam Street
Branch, Mumbai, without any instructions in that behalf
from the issuing Bank and that you thereby committed
offence punishable under Section 120-B of the Indian· G
Penal Code read with Sections 409, 467, 471 of the
Indian Penal Code and Sections 13(2) read with 13(1)(c)
and 13(1)(d) of the Prevention of Corruption Act, 1988,
and within my cognizance.
                                                             H
     322        SUPREMi= COURT REPORTS             [2014) 12 S.C.R.


A            FIFTEENTHL Y: That in pursuance of the said criminal
             conspiracy and during the course of the same
             transaction, on or about 24.04.1991, you the accused
             abovenamed, acting your official capacity as Assistant
             Manager, UCO Bank, Hamam Street Branch, Mumbai,
B            dishonestly and fraudulently issued a UCO Bank Cost
             Memo dated 24.04.1991 in respect of the aforesaid
             ostensible sale of the said securities for a total sum of
             Rs.1.50 crores, knowing or having reason to believe that
             UCO Bank had no such· transaction with EEPC and
c          . further dishonestly issued UCO Bank BR No. 168791
             favouring EEPC knowing or having reason to believe that
             the same was not backed with securities and that you the
             accused abovenamed thereby committed an offence
             punishable under Section 120-B of the Indian Penal
             Code read with Section 467 of the Indian Penal Code and
D
             Within my cognizance.

           SIXTEENTHL Y: That in pursuance of the said criminal
           conspiracy and during the course of the same
           transaction, on or about 24.04.1991 you the accused
E          abovenamed used the abovesaid forged BR No.168191
           as genuine by forwarding the same to EEPC and that you .
           thereby committed an offence punishable under Section
           120-B read with Section '.467 read with 471 of the Indian
           Penal Code and within my cognizance.
F
           SEVENTEENTHL Y: That in pursuance of the said
           criminal conspiracy 24. 04. 1991 you the accused
           abovenamed, being a Public SeNant and working in your
           capacity as Assistant Manager, UCO Bank, Hamam
           Street Branch, Mumbai, and in such capacity having
G
           been entrusted with the funds or dominion over the funds
           of or under the control of UCO Bank, Hamam Street
           Branch, Mumbai, having received an Account Payee
           Bankers Cheque No.054353 payable to UCO Bank and
H.         drawn on the State Bank of India, Cuffe Parade Branch,
  VINAYAK NARAYAN DEOSTHALI v. C.B.I.               323
       [ADARSH KUMAR GOEL, J.]
Mumbai, for an amount of Rs.1.50 crores, in violation of A
express or implied contract touching the mode of
discharge of such trust, credited the same directly into
the Current Account No.1028 maintained by the said
Harshad Shanti/al Mehta (since deceased) in the name
of Mis Harshad S. Mehta; with UCO Bank, Hamam Street B
Branch, Mumbai, without any instructions in that behalf
from the issuing Bank, and that you thereby committed
an offence punishable under Section 120-B of the Indian
Penal Code read with Section 409 of the Indian Penal
Code and within my cognizance.                           c
EIGHTEENTHL Y: That in pursuance of the said criminal
conspiracy 24.04.1991, you that accused abovenamed,
being a Public Servant, by abusing your official position
as Assistant Manager, UCO Bank, Hamam Street
Branch, Mumbai, and by corrupt or illegal means having      D
received an Account Payee Banker's Cheque No.054353
for Rs.1.50 crores, payable to UCO Bank and drawn on
the State Bank of India, obtained undue pecuniary
advantage without any public interest for the said
Harshad Shanti/al Mehta (since deceased) and                E
committed criminal misconduct by illegally crediting the
proceeds of the said cheque directly into the Current
Account No.1028 maintained by the said Harshad
Shanti/al Mehta (since deceased) with UCO Bank,
Hamam Street Branch, Mumbai, in. the name of Mis            F
Harshad S. Mehta, without any instructions in that behalf
from the issuing Bank, and that you thereby committE!d
an offence punishable under Section 120-B of the Indian
Penal Code read with Sections 13(2) read with 13(1)(d)
of the Prevention of Corruption Act, and within my          G
cognizance.

NINETENTHL Y: That in pursuance of the said criminal
conspiracy 24.04.1991 you the accused abovenamed,
being a Public Servant, by abusing. your official position H
    324     SUPREME COURT REPORTS                [2014] 12 S.C.R.


A         as Assistant Manager, UCO Bank, Hamam Street·
          Branch, . Mumbai, having received an Account Payee
          Banker's cheque No.054353 of Rs.1.50 crores, payable
        · to UCO Bank drawn on State Bank of India, dishonestly
          misappropriated the said funds by crediting the proceeds
B         of the said cheque directly into the Current Account
          No. 1028 maintained by the s.aid Harshad Shanti/al
          Mehta (since deceased) with UCO Bank, Hamam Street
       . Branch, Mumbai, in the name of Mis Harshad S. Mehta,
          without any instructions in that behalf from the issuing
c         Bank and that you thereby committed an offence
          punishable under Section-120B of the Indian Penal
          Code read with Section 13(2) read with 13(1)(c) of the
          Prevention of Corruption Act, and within my cognizance."

         6. The EEPC was set up to promote export of engineering
D   goods and services under the Ministry of Commerce. It was
    operating a. scheme called the International Price
    Reimbursement Scheme (for short "IPRS") with the object of
    neutralizing price of steel for domestic exports at par with the
    international market where prices were lesser. The scheme
E   envisaged compensating the exporters by way of
    reimbursement of the price difference. The funds received by
    the EEPC through Joint Plan Committee ("JPC") were kept with
    the State Bank of. India at Calcutta. PW-3, Girish Chandra an
    offi~er of EEPC was running the scheme. Apart from the said
F   funds, other source of available funds with the EEPC was sale
    of premises at Tardey, Mumbai to shift the office to rented
    premises in World Trade Centre which was considered to be
    more suitable. Sale proceeds were kept with the State Bank
    of India, Cuffe Parade Branch. During the period between 12th
G   March, 1991 and 24th April, 1991, PW-3 issued three cheques
    in favour of the UCO bank where the appeilant was posted.
    Without instructions from EEPC, the said amount was
    transferred to the private account of late Mehta. Though the
    EEPC received contract notes and· delivery orders in respect
H   of the three transactions and. the documents were signed by
       VINAYAK NARAYAN DEOSTHALI v. C.B.I.                   325
            [ADARSH KUMAR GOEL, J.]
·PWc3, but this was under a mistaken 'thought that he was merely A
 signing a format prescribed by the Bank. Thus, the appellant'
 abused his position in collusion with Mehta resulting in transfer
 of public funds to private account of an individual
 unauthorisedly. Forged Bank Receipts (BRs) were issued by
 the Bank to EEPC in lieu of physical delivery of securities, B
 without such securities being in existence. PW-4, Arup Mohan
 Patnaik, an officer of CBI, after investigation, lodged the FIR
 on 30th November, 1994. Investigation was further conducted
 by PW-13, Mr. S.K. Sareen, Inspector CBI, who collected
 documents from EEPC, UCO Bank and State Bank of India and c
 also recorded statements of witnesses. He filed charge sheet
 against. late Mehta and the appellant.

      7. Apart from producing the documents, the prosecution
relied upon the oral evidence of Mr. Chhadisingh-PW-1, Mr.
Maitra-PW-2, Mr. Girish Chandra-PW-3, Mrs. Sudha Kubal- D
PW-4, Mr. Ankur Gupta-PW-5 and Mr. Babaji Firoz-PW-6, all
of them working with EEPC in the Regional Office at Mumbai
in different capacities; Mr. B.D. Raut-PW-7; Mr. Aarsiwala-PW
8 working with State Bank of India; Mr. Anjaria-PW-9; Mr.
Pinjani-PW-10 and Nilam Keni-PW-12 working with UCO E.
Bank, Hamam Street Branch, Mumbai, in different capacities ..
Rest of the witnesses are Mr. Jain-PW-11, the Hand Writing
Expert; Mr. Patnaik-PW-14, who lodged the FIR and Mr. S.K.
Sareen-PW-13 is the Investigating Officer and had filed charge
sheet against the accused.                                     F

    The accused led defence evidence and examined DW-1-
Mr. Atul Manubhai Parekh, who was working in the office of
Harshad Mehta at the relevant time and Mr. Pradeep Anant
Karkhanis-DW-2, who was working in the UCO Bank as a                 G'
Senior Manager at the relevant time.

      8. Stand of the appellant is that the deposit in the account
of late Mehta was not on account of dishonest intention of the
appellant. The Bank had been offering facility to brokers for
security transactions by charging commission. Transactions           H
    326       SUPREME COURT REPORTS                 [2014] 12 S.C.R.

                                      . I
A   were between brokers and "the counter party. All the documents
    were prepared in normal course of banking.                ·

        9. The Special Court rejected the defence of the accused
    and held that transfer oi' funds to private account of late Mehta
8   was without any authori2:ation by the EEPC. It was observed:-

          "The entire evidence in this regard has gone
          unchallenged, The defence of the accused is, however,
          that Hamam Street Branch of UCO Bank was having
          such securities transactions on behalf of the clients and
c         they were going on since 1987, much before he joined
          the said branch in 1989. According to him there were
          eighteen brokers getting such routine facility. This facility
          was temporarily stopped for the period between May, 1991
          and March, 1992 and in March, 1992, similar facility was
D         continued to be given to the brokers. His defence is that
          the aforesaid three transactions were between EEPC and
          HSM. No contract notes were ever sent to UCO Bank.
          The Head Office was aware of such transactions. While
          admitting that all the vouchers, cost memos and BRs
E         related to the aforesaid three transactions were prepared
          at his instance in his branch. His defence is that those
          were performed in normal course of banking business.
          He states that he is innocent and acting as per the
          procedure adopted by the bank.
F
          The charge against the accused is that he had conspired
          with HSM for diverting the funds of the EEPC, the public
          money, to HSM with dishonest and fraudulent intention,
          the object of which was to give benefit of such diverted
          money to HSM. It is also the charge against the accused
G         that he had no authority either from the EEPC or from the
          Bank Authorities to credit the amount of the aforesaid
          three bankers' cheques issued by SB/ in favour of the
          UCO Bank, to the HSM's account No. 1028 and, therefore,
          the accused had misused his official position as a public
H
  VINAYAK NARAYAN DEOSTHALI v. C.B.I.                 327
       [ADARSH KUMAR GOEL, J.]
seNant, namely, the Manager in Securities Depaitment         A
of Hamam Street Branch of UCO Bank, at Mumbai.

The accused is a/so charged for having issued BR's in
respect of these transactions without there being any
backing of physical securities for issuing such BRs and,
therefore, it is alleged that the accused had prepared the   8
documents like cost memos and BRs by forging them
and by using them as genuine.

Since all the three transactions have been proved having
taken place in the manner aforesaid, it is clear that EEPC C
had transferred their funds from their account in SB/ to
UCO Bank for the purpose of their short term investments.
The evidence of Girish Chandra-PW 3 clearly shows that
as per the instructions and circulars issued by the Central
Government, he had authority to make investments of the o
surplus funds of EEPC, either in nationalized banks or
in Government Securities or Government approved
securities and he had no authority to transfer the funds
of the EEPC for the benefit of any individual, including
HSM. From the aforesaid transactions, it is clear that all E
the three bankers' cheques issued in favour of the UCO
Bank were credited into the account of HSM, being
Account No.1028. The transactions also show that the
accused had issued cost memos against EEPC for the ·
transactions of sale of securities shown therein. When the F
cheques were received the amount were credited to the
account of HSM. There were instructions under the
delivery notes issued by HSM to the UCO Bank that UCO
Bank should deliver to EEPC certain number of units
1964 scheme, as shown in the delivery orders, at the
indicated rates to UCO Bank. The accused, therefore, G
had acted as pr the instructions of HSM. However, this
was contrary to the contract notes issued by HSM to
EEPC, which clearly indicated that in all the three
transactions HSM was acting as broker. Indication in the
                                                            H
    328      SUPREME COURT REPORTS                [2014] 12 S.C.R.


A       contract notes is that HSM had purchased certain
        number of units of 1964 scheme for and on behalf of the
        EEPC and the delivery orders issued to EEPC as also
        to UCO Bank, indicated that EEPC has to receive the
        said Units from UCO Bank and UCO Bank had to hand
B       over those units to EEPC. This clearly indic;;ites that
        HSM was acting as a Broker and he was not the principal
      . nor the counter party to . those transactions. Even then,
        UCO Bank had treated HSM as principal i.e. counter
        party having direct .contact with EEPC. The accused,
        therefore, credited the amount received from SB/ on
c       behalf"of the EEPC to the account of HSM. In any event,
        the bankers' cheques drawn on SB/, Account EEPC, were
        in fact in favour of the UCO Bank only and not in favour
        of any other party. Therefore, the accused could only
        have credited those amounts under those three cheques
D
        only in UCO Bank account and nobody else's account.
        There were apparently no instructions from EEPC in that
        behalf. It, therefore, clearly shows the meeting of mind
        of the accused and HSM in illegally diverting the EEPC's
        funds to HSM's account and giving undue pecuniary
E       advantage to HSM. Therefore, the prosecution has
        established that it is a criminal conspiracy betWeen the
        two, the object of which was to illegally divert the funds
        of EEPC, totally amounting to Rs. 7. 75 crores to the
        current account of HSM in Account No.1028, enabling
F       the HSM to obtain undue pecun·iary advantage of the
        same and that the accused had misused his official
        position as public servant by camouflaging the
        transaction as securities transaction.

G         It is also established that the accused issued BRs in lieu
          of the physical delivery of securities, when the securities
          were not available with the Bank at all. The burden to
          prove that the BRs were not backed by the physical
          securities is on the prosecution. However, it is a negative
          burden to be discharged and it is therefore lighter burden
H
  VINAYAK NARAYAN DEOSTHALI v. C.B.I.                   329
       [ADARSH KUMAR GOEL, J.]
  to discharge. The witnesses namely, PW 10 Pinjani and A
  Mrs. Kini-PW 12 have stated that they used to maintain
· register for sale and purchase of the securities. But they
  did not state that there were securities physically available
  with the bank when cost memos and BRS were issued
  by the accused. Investigating Officer has spoken about B
  no securities being physically available with the bank.
  The evidence of Anjaria-PW 9 also indicates that no
  register of Units 1964 Scheme was maintained either
  security-wise or broker clientwise. This established non
  existence of securities where accused issued BRs to c
  back them. Above evidence is sufficient to discharge the
  burden. It is pertinent to note that even it is not the
   defence that physical securities were available to back
  the BRs. Therefore, it is established that BRs were issued
   without the backing of physical securities and in lieu of
                                                                0
  physical securities.

 It is undisputed position that HSM was dealing in
 securities. OW 1 Atul Parekh has spoken about the
 delivery orders having been issued from the office of
 HSM in respect of all the three transactions and that those E
 were the transactions of HSM. He has also stated that the
 letter at Exhibit A-2(3) was written by Girish Chandra-PW
 3 to Pankaj Shah, along with this letter he had also sent
 bankers' cheques drawn in favour of the UCO Bank for
 Rs. 1 crore. Girish Chandra - PW3 has admitted to have F
 written this letter. He however, states that the cheque was
 issued in favour of the UCO Bank and not in favour of
 HSM. The letter mentions about discussion with Pankaj
 Shah and Girish Chandra-PW3 on 11.3.1991 regarding
 investment of Rs.1 crore; for the period between 12.3.1991 G
 and 22.3.1991 @ 14%. The letter also mentions about
 reversal of the transaction on 22.3.1991 and sending
 back the bankers cheque along with accrued interest. It
 is submitted on behalf of the accused that this indicated
 that the transaction was between EEPC and HSM as H
    330        SUPREME COURT REPORTS                (2014] 12 S.C.R.


A         counter party. However, the fact remains that the cheque
          of Rs. 1 crore was not issued in favour of HSM but it was
          in favour of UCO Bank only. It is further to be noted that
          EEPC had not issued any instructions to UCO Bank for
          debiting the amount of Rs. 1 crore in the account of HSM.
B         In absence of these details, it cannot be said that HSM
          was the counter party or principal with whom EEPC had
          direct transactions. On the contrary it indicated that the
          payment of the cheque of Rs. 1 crore was to be made to
          UCO Bank. If this; is so, at the most HSM can be said to
c         be only broker and nothing else. Even then the accused,
          on receiving the cheques in respect of these three
          transactions, credited the amount to the account of HSM,
          was totally illegal.

            Under these circumstances, the accused could have
D           credited the amount of three cheques into the account
            of UCO Bank only and not in the account of HSM. In this
            regard it is also vehemently submitted on behalf of the
            accused that there is an indication from letter dated 12th .
            March, 1991 written by Girish Chandra to Pankaj Shah,
E           who was working in the office of HSM that there were
            some talks between Girish Chandra- PW 3 and HSM with
            regard to their short term investment and in respect of the
            said two transactions also there appears to have been
            some talk between the two. Even so, there is no evidence
F           to indicate that EEPC or Girish Chandra-PW 3 for that
            matter, had direct dealing with HSM as a counter party
            or principai. Alf the bankers' cheques issued by EEPC
          · through SB/ were in favour of the UCO Bank alone,
            without any further instruction to UCO Bank for depositing
           ·those amounts in the account of HSM. There is no
            evidence to show that the EEPC had direct transactions
            with HSM, as a counter party. This being so, the. accused
            did not have any authority to divert EEPC's funds to the
            account of HSM and in doing so he had committed
H           illegality. The .accused similarly did not have any
       VINAYAK NARAYAN DEOSTHALI v. C.B.I.                    331
            [ADARSH KUMAR GOEL, J.]
    authority to act for or on account of HSM with the EEPC          A
    as counter party. The contract note and delivery orders
    issued by HSM, on the contract note and delivery orders
    issued by HSM, on the contrary indicate that UCO Bank
    was principal. The cheques issued by EEPC were also
    in favour of UCO Bank. Under the circumstances, it was           B
    clear that the cheques issued.by EEPC in favour of the
    UCO Bank were in favour of the UCO Bank alone and
    were not to be transferred to anybody else's account,
    including HSM. Therefore, the accused had no authority
    to transfer or divert EEPC's funds to the account of HSM         c
    and, therefore, he had committed illegality, obviously with
    an intention to give HSM undue pecuniary advantage of
    those funds. These circumstances, ·therefore, clearly
    establish the criminal conspiracy between the accused
    and HSM as also. The object of illegally diverting the
                                                                     D
    EEPC's funds to the account of HSM enabling HSM to
    obtain undue pecuniary advantage by the accused by
    misusing his position as public servant by corrupt or
    illegal means, showing the transactions to be the
    securities transactions of HSM camouflaging the same
    as if the tr~nsactions were of UCO Bank."                        E

     10. We have heard learned counsel for the parties.

     11. The contentions raised on behalf of the appellant is that
the documents in question were prepared by Mehta and the             F
money was handed over by the EEPC to Mehta. No loss was
suffered by the EEPC nor any gain was made by the appellant.
The appellant had no dishonest intention and acted as officer
of the Bank in routine.

    12. Learned counsel for the CBI supported the impugned           G
order.

     13. The question for consideration is whether conviction
of the appellant is sustainable on the basis of evidence on
reoo~.                                                               H
    332      SUPREME COURT REPORTS               [2014] 12 S.C.R.

A        14. We find that the following facts are. undisputed and
    clearly stand established on the record :

          "(i) The EEPC is functioning under the control of Ministry
          of Commerce to' help export of engineering goods and
          services. It was operating International Price
B
          Reimbursement Scheme with a view to neutralize the
          price of Steel for domestic exporters. It had funds for
          disbursement. Further it had funds on accoLint of sale of
          office. IPRS was being operated by PW 3, Girish              '
          Chandra. He made a deposit of a sum of Rs. 7. 75 crores
c         with the UCO Bank by way of three cheques in favour of
          the UCO Bank.

          (ii) The appellant acting as Assistant Manager of the UCO
          Bank transferred the amount to the account of Mehta
D         which was apparently in collusion with Mehta without any
          authority by EEPC. He issued Bank Receipts in lieu of
          physical delivery of securities without such securities
          being in existence.           ·

          (iii) The EEPC never instructed purchase of securities
E
          through Mehta nor allowed the transfer of the amount in
          question to Mehta but the EEPC was made to sign
          documents under a mistaken belief at the instance of the
          appellant."

F      15. PW-3, Girish Chandra who represented the EEPC fully
  supported the prosecution version of having made deposit with
  the Bank and having not authorized the diversion of the said
  amount in favour of any private party. The said evidence has
  been duly accepted by the Special Court. The appellant
G unauthorisedly credited the amount to Mehta's account by
  abusing his position in conspiracy with Mehta. The accused
  also issued bank receipts for security transactions without
  physical existence of securities which amounted to forgery. It
  is thus, safe to infer the abuse of position by the accused-
H appellant in conspiracy with and to the benefit of Mehta.
       VINAYAK NARAYAN DEOSTHALI v. C.B.I.                    333
            [ADARSH KUMAR GOEL, J.)
Diversion of public funds by the accused amounted to criminal A
breach of trust by committing forgery/use of forged documents
as well as offence under the provisions of the Corruption Act.
PW-10, Pinjani and PW-12, Mrs. Kini who were maintaining
register for sale and purchase of securities could not show that
the securities in question were physically available with the B
Bank when the bank receipts were issued by the accused
which could be done only if securities were available. The
Special Court thus rightly held the charge to be proved. It was
not necessary to prove that the accused had derived any benefit
or caused any loss to the Bank. The fact remains that action of c
the appellant involved unauthorized conversion of public funds
to private funds of an individual. Issuing of Bank receipts for
securities without existence of securities could not be justified
except for illegal benefit to a private individual. Patent illegality
cannot be defended in the name of practice or direction of
                                                                      0
higher authorities. Mens rea is established from the fact that
false Bank Receipts were issued for non-existent securities.

     16. Thus, the offences of conspiracy, forgery,
misappropriation and corruption stand established. It is not
necessary to discuss the ingredients of the said offences in         E
detail as the matter has been gone into earlier by this Court in
respect of the appellant himself in the reported judgment in
Ram Narayan Popli (supra). We may only quote the
conclusions arrived at in the said case:
                                                                     F
     "About the offence of conspiracv :

     356. After referring to some judgments of the United
     States Supreme Court and of this Court in Yash Pal
     Mittal v. State of Punjab [(1977) 4 SCC 540]-and Ajay
     Aggarwal v. Union of India [(1993) 3 SCC 609]-the Court G
     in State of Maharashtra v. Som Nath Thapa-[(1996) 4
     sec 659]-summarized the position of law and the
     requirements to establish the charge of conspiracy, as
     under: (SCC p. 668, para 24)
                                                             H
    334        SUPREME COURT REPORTS               [2014] 12 S.C.R.


A                  "24. The aforesaid decisions, weighty as they are,
            lead us to conclude that to establish a charge of
            conspiracy knowledge about indulgence in either an
            illegal act or a legal act by illegal means is necessary.
            In some cases, intent of unlawful use being made of the
B           goods or SeNices in question may be inferred from the
            knowledge itself. This apart, the prosecution has not to
            establish that a particular unlawful use was intended, so
            long as the goods or seNice in question could not be put
            to any lawful use. Finally, when the ultimate offence
c           consists of a chain of actions, it would not be necessary
            for the prosecution to establish, to bring home the charge
            of conspiracy, that each of the conspirators had the
            knowledge of what the collaborator would do, so long as
            it is known that the collaborator would put the goods or
          . seNice to an unlawful use." [See State of Kera/a v. P.
D
            Sugathan-[(2000) 8 SCC 203]-(SCC p. 212, para 14)]

            358. Much has also been submitted that repayment has
            been made. That itself is not an indication of lack of
            dishonest intention. Sometimes, it so happens that with
E         · a view to create confidence the repayments are made so
            that for the future transactions the money can be
            dishonestly misappropriated. This is a part of the scheme
            and the factum of repayment cannot be considered in
            isolation. The repayment as has been rightly contended
F           by the Sol(citor-General can be a factor to be considered
            while awarding sentence, but cannot be a ground for
            proving innocence of the accused.

          xxxxxxxxxx
G         About the offence of criminal breach of trust :

          361. To constitute an offence of criminal breach of trust,
          there must be an entrustment, there must be
          misappropriation or conversion to one's own use, or use
H         in violation of a legal direction or of any legal contract;
  VINAYAK NARAYAN DEOSTHALI v. C.B.I.               335
       [ADARSH KUMAR GOEL, J.]

and the misappropriation or conversion or disposal must A
be with a dishonest intention. When a person allows
others to misappropriate the money entrusted to him, that
amounts to a criminal breach of trust as defined by
Section 405. The section is relatable to property in a
positive part and a negative part. The positive part deals B
with criminal misappropriation or conversion of the
property and the negative part consists of dishonestly
using or disposing of the property in violation of any
direction and of law or any contract touching the
discharge of trust.                                        C
xxxxxxxxxx
About the offence of forgery :

374. In order to constitute an offence of forgery the D
documents must be made dishonestly or fraudulently.
But dishonest or fraudulent are not tautological.
Fraudulent does not imply the deprivation of property or
an element of injury. In order to be fraudulent, there must
be some advantage on the one side with a corresponding E
loss on the other. Every forgery postulates a false
document either in whole or in part, however small.

xxxxxxxxx
377. The accused persons have tried to take shelter F
behind what they have described as "market practices".
Such practices even if existing, cannot take the place of
statutory and regulatory functions. There is no public
interest involved in such practices and they cannot be a
substitute for compliance with the regulatory or statutory G
prescriptions. An attempt was made to show that there
was subsequent disapproval of the market practices; at
the point of time when the transactions took place there
was no embargo. It is their stand that the practices were
a part of accepted norms. We do not find anything. H
    336       SUPREME COURT REPORTS                (2014] 12 S.C.R.

A         plausible in these explanations, A practice even if was
          prevailing, if wrong, is not to be approved. The
          subsequent clarifications do not in any way put seal of
          approval on the practices adopted in the past, on the other
          hand it condemns it.
B
          xxxxxxxxxxx
          About the Corruption Act :

          379. Section 13(2) of the pc Act is intended to deal with
c         aberrations of public seNants. In view of the finding that
          A-1, in furtherance of criminal conspiracy, in his capacity
          as a public seNant abused his position by causing and/
          or allowing MUL 's funds to be utilized for the wrongful gain
          of A-5, provisions of Section 13(1)(c) read with Section
0         13(2) are clearly applicable. Similar is the position
          vis-a-vis A-3. •

         17. In view of above, we are unable to interfere with the
    conviction of the appellant. The same is affirmed. However,
    having regard to totality of circumstances, we are of the view
E   that ends of justice will be met if sentence of imprisonment is
    reduced to the period already undergone. We order
    accordingly.

          18. The appeal is disposed of.
F
    Devika Gujral                                    Appeal disposed of.