Fraud and Misuse of Official Position: Station House Officer, CBI/ACB/Bangalore vs. B.A. Srinivasan

This case concerns an appeal filed by the Station House Officer, CBI/ACB/Bangalore, against the judgment passed by the High Court of Karnataka, which had allowed a revision petition and discharged B.A. Srinivasan (Respondent No. 1) of charges under Sections 419, 420, 467, 468, 471, and 120B of the Indian Penal Code, 1860 (IPC), and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. The Respondent, a former Assistant General Manager (AGM) at Vijaya Bank, was accused of conspiring with others to sanction fraudulent loans, misusing his official position for financial gains.

Key Facts of the Case:

• The Respondent, while serving as AGM and Branch Head at Vijaya Bank’s Mayo Hall Branch, Bangalore, was involved in sanctioning a loan of Rs. 3 Crores (Rs. 2 Crores as a term loan and Rs. 1 Crore as cash credit) to M/s. Nikhara Electronics and Allied Technics (A-2), despite knowing that the documents submitted were fraudulent and misrepresented the financial condition of the company.
• The Respondent, along with other accused individuals (A-3, A-4, A-5), facilitated the fraudulent transactions, which caused wrongful loss to the bank and gain to the beneficiaries.
• On 28.10.2013, an FIR was registered, and after investigation, a charge sheet was filed in 2014 against the Respondent and others for committing fraud and corruption. The High Court of Karnataka later discharged the Respondent, which led to this appeal.

Petitioner and Respondent Arguments:

Petitioner (CBI/ACB/Bangalore): The petitioner argued that the Respondent’s actions were a clear case of fraud and abuse of his official position. The petitioner claimed that the Respondent, despite being fully aware of the fraudulent nature of the loan application and documents, sanctioned the loan in favor of the company, facilitating the commission of crimes under the IPC and the Prevention of Corruption Act.

Respondent (B.A. Srinivasan): The Respondent’s counsel argued that the actions of the Respondent did not amount to criminal misconduct. The Respondent claimed that he was merely following the procedures and did not have the intent to cause any wrongful gain or loss. Furthermore, the Respondent contended that the charges were exaggerated and that there was insufficient evidence to prove his involvement in the fraudulent scheme.

Important Judge Arguments:

Justice Uday Umesh Lalit: Justice Lalit noted that the allegations against the Respondent were serious, involving the sanctioning of loans based on fabricated documents and fraudulent representations. He emphasized that public servants must maintain integrity and due diligence while exercising their official powers. The Judge observed that while the Respondent may have had some discretion in sanctioning the loan, his failure to scrutinize the financial documents and conduct proper verification showed a disregard for the legal requirements.

Justice Indu Malhotra: Justice Malhotra concurred with the findings of Justice Lalit, stating that the Respondent’s actions went beyond administrative lapses. The Judge emphasized that the Respondent’s involvement in approving fraudulent documents and misrepresenting the facts constituted an act of dishonesty, warranting a trial to examine the criminal conspiracy and misconduct more thoroughly. The failure to adhere to standard banking procedures was a critical point in the case.

Justice Krishna Murari: Justice Murari agreed with the conclusions of the previous judges, highlighting that the Respondent, despite being a senior official, failed to exercise due diligence in assessing the loan application. The Judge pointed out that criminal conspiracy, involving the fraudulent creation of documents and misappropriation of bank funds, was a serious offence that warranted prosecution under the relevant provisions of the IPC and the Prevention of Corruption Act.

Legal Provisions Discussed:

• Section 120B (Criminal Conspiracy) of IPC: This section pertains to the involvement of the Respondent and others in a conspiracy to commit fraud and misuse their positions for personal gain.
• Section 420 (Cheating) of IPC: The Respondent was charged under this section for deceiving the bank by approving a loan based on fraudulent documents.
• Section 467 (Forgery of Valuable Security) and Section 468 (Forgery for Purpose of Cheating) of IPC: The Respondent and co-accused were found to have forged financial documents to facilitate the loan approval.
• Section 471 (Using a Forged Document as Genuine) of IPC: The Respondent was charged for using the forged documents to process and approve the loan disbursement.
• Section 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988: These provisions were invoked due to the Respondent’s abuse of official position for financial gains and involvement in corrupt practices.

Final Judgment:

The Supreme Court allowed the appeal, setting aside the High Court’s decision to discharge the Respondent. The Court held that there was sufficient material on record to proceed with the trial, particularly regarding the Respondent’s involvement in the fraudulent loan sanctioning process. The Court emphasized that while the Respondent had retired from his post, the criminal acts he committed while in service were sufficient grounds to proceed with the case. The matter was remitted back to the trial court for further proceedings, and the Respondent was directed to appear before the Special Court on the scheduled date.

Conclusion:

This judgment highlights the importance of due diligence and integrity for public servants, particularly in positions of financial authority. The decision reaffirms the necessity for transparency and accountability in the discharge of public duties, especially when public funds are involved. The Court’s ruling reinforces the principle that no one, irrespective of their official position or retirement, is above the law.

Petitioner Name: Station House Officer, CBI/ACB/Bangalore.
Respondent Name: B.A. Srinivasan.
Judgment By: Justice Uday Umesh Lalit, Justice Indu Malhotra, Justice Krishna Murari.
Place Of Incident: Bangalore.
Judgment Date: 05-12-2019.

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