Featured image for Supreme Court Judgment dated 08-09-2020 in case of petitioner name Ashoo Surendranath Tewari vs The Deputy Superintendent of P
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CBI Fraud Case: Supreme Court Acquits Bank Officer in Money Transfer Scam

The Supreme Court of India, in the case of Ashoo Surendranath Tewari vs. The Deputy Superintendent of Police, EOW, CBI & Anr., delivered a significant judgment concerning wrongful prosecution in a financial fraud case. The case involved allegations of criminal conspiracy and financial misappropriation in the disbursement of funds by the Small Industries Development Bank of India (SIDBI) through fraudulent RTGS transactions.

The Court held that if an accused is exonerated in departmental proceedings based on the same evidence used in a criminal prosecution, then continuing with the criminal trial would amount to an abuse of the legal process. This judgment reaffirms the principle that prosecution should be based on substantial and independent evidence rather than assumptions or weakly established links.

Background of the Case

The case arose from an FIR registered on December 9, 2009, regarding a financial fraud committed in the MSME Receivable Finance Scheme operated by SIDBI. Several vendors had complained of delays in receiving their payments, prompting SIDBI to implement an RTGS-based disbursement system in consultation with Tata Motors Limited.

The fraud was detected when it was found that twelve payments amounting to ₹1,64,17,551 (₹1.64 crores) were transferred to a fraudulent account at Federal Bank, Thripporur, instead of the legitimate account of Ranflex India Pvt. Ltd. (RIPL) at Central Bank, Bangalore.

Legal Issues and Arguments

The key legal issues raised in this case were:

  • Whether the criminal trial could continue when the accused had already been exonerated in departmental proceedings.
  • Whether the accused’s involvement in forwarding an email containing RTGS details constituted criminal intent.
  • Whether there was a failure in obtaining proper sanction under Section 197 CrPC before prosecuting the accused.

Arguments by the Petitioner (Ashoo Surendranath Tewari)

The petitioner, a bank officer, argued that:

  • He had merely forwarded an email containing RTGS details as per standard protocol, with no evidence linking him to the fraudulent transaction.
  • The fraudulent transaction was orchestrated by another accused, Muthukumar, who had misused the forwarded information.
  • The CVC (Central Vigilance Commission) had already conducted an independent inquiry and concluded that he was a victim of fraud rather than an active conspirator.
  • The High Court erred in ignoring the CVC findings, which categorically stated that no criminal intent was found against him.
  • He was discharged from Prevention of Corruption Act charges due to the absence of proper sanction, and the remaining IPC charges should also be quashed.

Arguments by the CBI

The Central Bureau of Investigation (CBI), represented by the Additional Solicitor General, countered that:

  • The accused played a role in forwarding critical financial information, which ultimately led to fraudulent transactions.
  • The departmental inquiry findings should not automatically exonerate him from criminal prosecution.
  • The fact that Muthukumar was absconding did not absolve other accused persons of their role in the conspiracy.
  • The fraud caused significant financial loss, warranting a full criminal trial.

Supreme Court’s Ruling

On the Impact of Departmental Exoneration

The Supreme Court relied on previous judgments, including Radheshyam Kejriwal vs. State of West Bengal (2011), which held that:

  • When an accused is exonerated in departmental proceedings on merits, a criminal trial based on the same facts should not be continued.
  • The criminal prosecution should be quashed if the departmental inquiry finds no contravention of rules or criminal liability.

On Lack of Evidence Against the Accused

The Court observed that:

  • The accused merely forwarded an email as part of routine work, without any evidence indicating criminal conspiracy.
  • The fraudulent activity was orchestrated by another accused, who remained absconding.
  • The CVC report clearly stated that the petitioner was a victim rather than a participant in the conspiracy.

On Quashing of Proceedings

Given these findings, the Court ruled that continuing the criminal trial would be an abuse of the process of law. It set aside the judgment of the High Court and the Special Judge and discharged the petitioner from all charges under the IPC.

Legal Principles Established

This ruling reinforces several key legal principles:

  • Departmental Exoneration and Criminal Trials: If an accused is cleared in departmental proceedings based on the same evidence, a criminal prosecution should not continue.
  • Burden of Proof: Criminal liability must be established beyond a reasonable doubt, unlike departmental inquiries, which operate on a preponderance of evidence.
  • Quashing of Frivolous Prosecutions: The courts have the power to quash criminal proceedings if no prima facie case is made out.

Conclusion

The Supreme Court’s decision in Ashoo Surendranath Tewari vs. CBI is a landmark ruling in protecting individuals from wrongful prosecution in financial fraud cases. By emphasizing the importance of independent evidence and ensuring that departmental exoneration is given due weight, the Court has reinforced safeguards against malicious litigation.

This judgment serves as an important precedent for professionals accused in financial fraud cases, ensuring that criminal prosecutions are not pursued without substantial proof of intent and involvement.


Petitioner Name: Ashoo Surendranath Tewari.
Respondent Name: The Deputy Superintendent of Police, EOW, CBI & Anr..
Judgment By: Justice R.F. Nariman, Justice Navin Sinha, Justice Indira Banerjee.
Place Of Incident: Pune, Maharashtra.
Judgment Date: 08-09-2020.

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