- 1 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE V SRISHANANDA CRIMINAL APPEAL NO. 1136 OF 2011 (C) BETWEEN: BHAGHWAN L. MISTRY, S/O LATE L.D. MISTRY, AGED ABOUT 57 YEARS, MANAGER (ADVANCE DEPT.), SYNDICATE BANK, FRAZER TOWN BRANCH, BANGALORE, RESIDING AT NO.140, KALATHUR LAYOUT, JALAHALLI, BANGALORE. …APPELLANT (BY SRI. M. SHARASS CHANDRA, ADVOCATE) AND: STATE OF KARNATAKA BY C.B.I.P.S. (ACB BANGALORE), (REPRESENTED BY SPL. PUBLIC PROSECUTOR) …RESPONDENT (BY SRI. P. PRASANNA KUMAR, ADVOCATE) THIS CRL.A IS FILED U/S.374(2) OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED:14.10.11 PASSED BY THE XLVI ADDL. C.C. AND S.J., AND SPL. JUDGE FOR CBI CASES, BANGALORE CITY IN SPL.C.C.NO.134/10 - CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE P/U/S 420, 409 OF IPC AND SEC.13(2) AND 13(1)(d) OF THE PREVENTION OF CORRUPTION ACT AND THE APPELLANT/ACCUSED IS SENTENCED TO UNDERGO S.I. FOR TWO YEARS AND TO PAY A FINE OF RS.10,000/- AND IN DEFAULT TO PAY FINE AMOUNT, TO UNDERGO S.I. FOR FURTHER PERIOD OF SIX MONTHS FOR THE OFFENCES P/U/S 420 OF IPC. Digitally signed by MALATESH K C Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE V SRISHANANDA ORAL JUDGMENT Heard Sri.M.Sharass Chandra, learned counsel for the appellant and Sri.P.Prasanna Kumar, learned counsel for the respondent. 2. Accused No.1 who has suffered an order of conviction for the offence punishable under Section 420, 409 of IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 is the appellant. 3. Brief facts of the case which are utmost necessary for disposal of the appeal are as under: 3.1. A case came to be registered by the Central Bureau of Investigation(CBI) in RC No.13(A)/2009-BLR for the offences punishable under Section 120B read with Section 420, 468 and 471 of IPC and under Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988. - 3 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 3.2. Initially, a case was registered against Sri.N.S.Raghavan and others. Gist of the complaint averments would reveal that appellant being the Manager (Advances Department, Syndicate Bank, Frazer Town Branch) has committed great irregularities in sanctioning the housing loan in the project called ‘Synd Nivas’ whereby housing loans were disbursed by the Syndicate bank. The documents pertaining to sanctioning of the loan etc., were all seized by the CBI during the course of investigation and statements of witnesses have been recorded. Several irregularities like when loan was sought in a sum of Rs.14,00,000/-, loan of Rs.25,00,000/- was recommended, had been noticed during such investigation. 3.3. On completion of the investigation, charge sheet came to be filed for the offences punishable under Section 120B read with Section 420, 409 of IPC and Sections 13(2) read with Section 13(1)(c) and 13(1)(d) of Prevention of Corruption Act, 1988. - 4 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 4. Learned Special Judge took cognizance of the aforesaid offences and secured the presence of the accused persons and framed the charges. 5. Accused pleaded not guilty and therefore, trial was held. 6. In order to bring home the guilt of the accused persons, prosecution proceeded to examine 17 witnesses as P.W.1 to 17 and placed on record fifty documents which were exhibited and marked as Exs.P.1 to P.50. 7. Cross-examination of P.W.1 and 6 who are the most material witnesses for the case of the prosecution, did not yield any positive material so as to disbelieve the case of the prosecution. 8. Thereafter, accused statement as is contemplated under Section 313 of Cr.P.C. was recorded. Accused has denied the incriminatory circumstances which were put to the accused. However, nine documents were - 5 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 placed on record on behalf of the accused which were exhibited and marked as Exs.D.1 to 9. 9. On conclusion of recording of the evidence, learned Special Judge heard the parties in detail and on cumulative consideration of the oral and documentary evidence placed on record, acquitted accused Nos.2 and 3 and convicted accused No.1 for the offences punishable under Section 420, 409 of IPC and Section 13(2) and Section 13(1)(d) of the Prevention of Corruption Act, 1988 and sentenced for a period of two years simple imprisonment for each of the offences and ordered to pay fine of Rs.10,000/- and default sentence for the fine amount. 10. Being aggrieved by the same, accused is before this Court, in this appeal. 11. Sri.M.Sharass Chandra, learned counsel for the appellant reiterating the grounds urged in the appeal memorandum vehemently contended that even as per the - 6 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 case of the prosecution, complaint came to be registered against Sri.N.S.Raghavan at the first instance. After thorough investigation, Sri.N.S.Raghavan and other similarly placed bank officials were exonerated and present appellant alone has been falsely implicated in the matter as he was the one who has handled the loan application and did not make any recommendation for grant of the loan and therefore, sought for allowing the appeal. 12. He also pointed out that appellant is not the person who was authorized to sanction the loan. Therefore, when there is an acquittal order for the offence punishable under Section 120B of IPC recorded by the learned Special Judge himself, conviction of the appellant for the offences punishable under Section 420 and 409 of IPC is per se impermissible. 13. He also contended that since there is no material on record to establish that appellant has misused his official position for extraneous consideration, conviction - 7 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 is per se impressible and sought for allowing the appeal. 14. He also pointed out that since the entire loan amount has been repaid by accused Nos.1 and 3 which has been taken note of by the learned Special Judge himself, there is no question of wrongful loss or wrongful gain caused to the Syndicate Bank, Frazer Town Branch. Therefore, no ingredients are available to attract the offence under Section 420 of IPC. Thus, sought for allowing the appeal. 15. He also pointed out that since the appellant is not an sanctioning authority, question of conviction of the appellant for the offence punishable under Section 409 of IPC is per se impermissible as there was no misappropriation of the bank funds and sought for allowing the appeal in toto. - 8 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 16. Alternatively, Sri.M.Sharass Chandra, learned counsel for the appellant contended that in the event, this Court upholding the order of conviction, may consider the case of the appellant in a sympathetic manner taking note of the fact that appellant is now aged about 78 years and at this distance of time, if he is sent to the prison, untold hardship would be caused not only to the appellant but also to his family at large. 17. He further submitted that appellant is already suffering from serious old age ailments. Therefore, sought for setting aside the imprisonment period by enhancing the fine amount reasonably and sought for allowing the appeal to that extent. 18. Sri.P.Prasanna Kumar, learned counsel for the respondent opposes the appeal grounds vehemently. 19. He further contended that in the case on hand, even though the case came to the registered against Sri.N.S.Raghavan and others at the first instance, after - 9 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 thorough investigation especially after collecting necessary documents which were placed on record before the Trial Court which would contain the recommendation and signatures made by the very same appellant, the charge sheet came to be filed against the appellant and two other accused persons. 20. 20. He further pointed out that mere repayment of the money would not ipso facto efface the criminality in the actions that has been committed by the appellant which has been substantially established by the prosecution by placing cogent and convincing evidence on record and thus, sought for dismissal of the appeal. 21. Insofar as the alternate submission is concerned, Sri.P.Prasanna Kumar, contended that if the people like appellant is shown mercy or leniency, the same would encourage the similarly placed perpetrators of the crime in committing such offences in future as well. Therefore, appeal has to be dismissed in toto. - 10 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 22. Having heard the parties in detail, this Court perused the material on record meticulously. On such perusal of the material on record, following points would arise for consideration: 1. Whether the prosecution has successfully established all ingredients to attract the offence under Section 420, 409 of IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988? 2. Whether the appellant makes out a case that the impugned judgment is suffering from legal infirmity or perversity? 3. Whether the sentence is excessive and needs a modification? 4. What order? REG. POINT Nos.1 AND 2: 23. In the case on hand, it is the defence of the appellant that the amount transferred from the account of the borrowers to the accounts of accused No.2 – Sri.N.Venkatesh and accused No.3 – Sri.DVG Bharat itself, would not be enough to consider the case of the prosecution for the offence punishable under Section 120B of IPC. Same is accepted by the learned Special Judge and ingredients to attract the offence under Section 120B - 11 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 of IPC having not been established by the prosecution, recorded an order of acquittal. 24. Prosecution did not challenge the acquittal of the accused persons for the offence under Section 120B of IPC and therefore, the findings become final. So also the prosecution did not challenge the acquittal of accused Nos.2 and 3. Therefore, accused No.1 cannot conspire with himself. Hence, Trial Court rightly acquitted accused persons for the offence punishable under Section 120B of IPC. 25. The said finding recorded by the learned Special Judge shows that there is total application of mind by the learned Special Judge while appreciating the case on hand. However, with regard to the offences under Section 420 and 409 of IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 is concerned, there is no dispute that the appellant was discharging the functions of the public servant being the Manager(Advances Department in Syndicate Bank, Frazer - 12 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 Town Branch) as on the date of the incident. Material on record would go to show that Sri.B.Balasubramaniyan, who is examined as P.W.1, was working as Assistant General Manager (Risk management and recoveries in regional office, Syndicate Bank, Bangalore) has deposed before the Court that there were ten housing loans sanctioned by Sri.N.S.Raghavan under Synd Nivas project. Of the ten such transactions, five transactions were clear transactions and there was no infirmity in such applications. 26. He further deposed that appellant being the Manager (Advances department) discharged the work in Frazer Town Branch during the year 2005 and 2006. He indentified the loan applications that were processed by the appellant herein. One such application was taken into consideration were the applicant has paid the loan of Rs.14,00,000/- where as recommendation and sanction is to the tune of Rs.25,00,000/-. - 13 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 27. He further deposed that annual income shown in the said application vide Ex.P.4 was in a sum of Rs.4,98,365/- and in Ex.P.6 which is the process note, prepared by the officer and sanctioned by the bank Manager against the norms for entertaining and processing the application. So also in respect of the loan application made by Sri.G.Murali, which is marked at Ex.P.13, the process note contains improper appreciation of the loan application vide Ex.P.16. Ex.P.18 is the loan application of Mr.Ravi Kumar and Sri.Siddaraju for construction of the house and they sought for Rs.20,00,000/- as the loan amount and process note pertaining to the same is at Ex.P.19. These documents during the course of inspection were found to be not in order and therefore, he made a report. 28. Further, Smt.Jayashree who is examined as P.W.3, worked as Assistant Manager in Information Technology Department, Regional Office, Syndicate bank, deposed before the Court that each of the employees of - 14 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 the bank are given identity card and login ID would be created for such officers with a specific initial password which is recorded in the registrar and access to the system is by the concerned staff member and after he accesses the system, it was required on the part of the officials to change the password to avoid the misuse of the system. 29. P.W.4 – Sri.M.Kemparaju deposed before the Court as to the loan records of Smt.Suhasini, Sri.Murali, Sri.Girish, Sri.Siddaraju and Sri.Dinesh. It is further deposed by him that the vouchers were not prepared properly and there were serious discrepancies and also documents furnished for the processing of the loan application were not proper. 30. P.W.5 is Smt.Shobha Alba, who deposed that user ID and password was given to accused No.1 for accessing the computer system for the purpose of preparing necessary debit and credit vouchers. - 15 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 31. Sri.P.Vinodkumar, Sri.P.Dinesh, Sri.G.Murali, Sri.R.Srinivasan, Sri.Deepak Kumar and Sri.Dinesh Devarajan were examined as P.W.6 to 11. They are all circumstantial witnesses who deposed about the irregularities found in the loan application. 32. Sri.U.Jayantha Shenoy, who is examined as P.W.12, deposed before the Court that he was working in the advance section and he has processed the loan application of house building advance loan of Sri.K.J.Girish and he deposed that Ex.P.10 is the process note and Chief Manager, Sri.N.S.Raghavan has sanctioned the loan to said Sri.K.J.Girish in a sum of Rs.21,50,000/-. 33. P.W.13 – Smt.Uma K.R., who was working as Probationary Officer in the Syndicate Bank, Frazer town deposed that disbursement of the loan amount to Sri.Siddaraju, Sri.Ravikumar, Sri.P.Dinesh, Sri.Kavitha, Murali G., Sri.Govindaraju, Sri.K.J.Girish, Smt.Deepa and Sri.D.Devarajan by using her ID and password and she did not authorize the disbursement of loan amount to the loan - 16 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 of Sri.Siddaraju, Sri.Ravikumar, Sri.P.Dinesh, Sri.Kavitha, Murali G., Sri.Govindaraju, Sri.K.J.Girish, Smt.Deepa and Sri.D.Devarajan. 34. It is her specific say that somebody has misused her login ID and thereafter, disbursed the loan to them. 35. Among the documentary evidence that is placed on record, Ex.P.1 is the housing loan project details in the name of Synd Nivas housing loan scheme and Ex.P.13 is the revised housing finance scheme. Ex.P.1 enumerates necessary details as to the eligibility criteria which was further modified in Ex.P.21. Based on those documents, the loan applications of Smt.Suhasini and other four accounts had to be processed. There is a deviation from the eligibility criteria and other requirements for sanctioning the loan is established by the prosecution not only by placing oral evidence but also on the basis of the documents which were seized and marked as Ex.P.2 to 20 and Ex.P.22 to 50. - 17 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 36. Signature of the appellant was found in majority of those documents and there was no explanation whatsoever that was offered by the accused except stating that he has filed the written submission. According the prosecution, following are the fraudulent transactions that have been carried out by accused No.1: SL. No. Name and address of the beneficiary S.B.A/c.No. The details of amount disbursed A/c. No. and name of the borrower Amount transferred (in Rs.) 1. Sh.N.Venkatesh, R/O.No.51, 1st Main, 2nd Cross, Dwarkanagar, Banashankari, 3rd stage Hosakerehalli, Bangalore 201/792006 i. No.721/1336 Sh. Dinesh 4,00,000/- ii. No.721/1364 Sh.K.J.Girish 2,00,000/- iii. No.720/412 Sh.Siddaraju B. 90,000/- 2. Sh.D.V.G.Bharath, R/o.91, SHIG-6, C Block, 5th Phase, Yelahanka, New Town Bangalore 201/81671 No.721/1374 Sh.K.J.Girish i. No.721/529 Sh.P.Vinod Kumar 3,00,000/- ii. No.721/1364 Girish K.J. 60,000/- TOTAL Rs.10,50,000/- - 18 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 37. Appellant did not dispute the fact that he worked in Frazer town branch for a period of 2001 to 2007. He has stated that Sri.Jayanth Shenoy was a loan officer and has also stated that it is Sri.N.S.Raghavan who was required to process the loan applications and Sri.N.S.Raghavan was in direct contact with the prospective customers and he was receiving necessary documents from the parties and photocopies were verified with the original and thereafter, photocopies were handed over for the loan processing. He has further stated that he was handling bulk cash and it was the duty of the loan officer or the Chief Manager to visit the sight and prepare the note for the purpose of release of the loan. 38. It is further contended that he was asked by Sri.N.S.Raghavan to release the loan and he was not in a position to say whether he has released the loan or not since the password of the Chief Manager is known to Sri.N.S.Raghavan himself. He was also not in a position to use the login ID and password in the absence of concerned - 19 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 officers for the purpose of sanctioning the loan nor in the absence of release slip that was shown to him and therefore, he is no way connected with the alleged fraud. 39. These aspects of the matter have been taken note by the learned Special Judge in a pragmatic manner and noted that the contentions urged on behalf of the appellant that he is no way connected with the release of the amount would not be countenanced for want of necessary evidence. 40. Probative value of the documents placed on record on behalf of the accused which was marked as Exs.D.1 and 9 has also been discussed at length by the learned Special Judge in the impugned judgment. 41. Taking note of these aspects of the matter, this Court re-appreciated the material evidence on record. On such re-appreciation of the material on record, the written submission furnished by the accused at the time of recording the accused statement would only go to show - 20 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 that he did not release the amount but he was very much involved in processing of the loan application. 42. Admittedly, the funds of the bank has been paid to respective loanees and there were transfer of amount to account of accused Nos.2 and 3 as well. However, since the offence under Section 120B of IPC has been acquitted and CBI did not challenge the order of acquittal of accused Nos.2 and 3 or for that matter if the acquittal of accused persons for the offence under Section 120B of IPC, further discussion in that regard is unnecessary. 43. Fact remains that money of the bank has been transferred from the bank to the loan transactions which were not in order. 44. Repayment of the loan amount or recovery of the loan amount would not ipso facto efface the criminality. Therefore, contentions urged on behalf of the appellant that there is no wrongful loss caused to the bank and wrongful gain caused to the accused cannot be - 21 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 countenanced in law. Further, accused failed to summon Sri.N.S.Raghavan as a witness to establish that it is Sri.N.S.Raghavan who was alone entitled to release the money by entering login ID and password. Sri.Jayanth Shenoy is no doubt examined as a witness but in his cross-examination, no useful material is elicited so as to say that appellant did not have any hand in processing the loan application. 45. Under such circumstance, offence under Section 420 of IPC stands established by placing necessary evidence on record. Insofar as offence under Section 409 of IPC is concerned, appellant being the Manager (Advance Deparment) as is admitted by him, he was handling the bulk cash, there was an automatic entrustment of the funds of the bank in the hands of appellant. Admittedly, those funds were to be handled by the appellant being the responsible officer namely the Manager of Advance Department as per the sanction order and after verifying that the transactions are in order as per Exs.P.1 and 21. - 22 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 46. Admittedly, the loan transactions were not in order as per Exs.P.1 and 21 and therefore, misappropriation of the funds of the bank has been established by placing necessary oral and documentary evidence on record by the prosecution and therefore, offences under Section 420 and 409 of IPC stood established by the prosecution by placing necessary evidence on record. 47. Admittedly, appellant being the public servant was required to discharge his work in accordance with law. There is a deviation that has been proved by the prosecution. Whether it was for an extraneous consideration or not is not established by the prosecution by placing cogent evidence. 48. In the absence of any other material forthcoming from the records on the question of who are all responsible and was there any role played by the appellant in sanctioning the loan to the aforesaid five loan transactions by misusing the official position, this Court is - 23 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 of the considered opinion that conviction of the appellant for the offence punishable under Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 needs interference. Accordingly, point Nos.1 and 2 is answered in partly in the affirmative. REG.POINT No.3: 49. Sri.M.Sharass Chandra, learned counsel for the appellant made an alternate submission of pleading mercy taking note of the age of the accused being 78 years as of now. 50. He also pointed that he has been discharged from the bank and thereafter, he has laid his life and is now suffering from old age ailments and at this distance of time, if he is sent to the prison, he would be put to untold hardship. Same is seriously opposed by learned counsel for the respondent on behalf of CBI. 51. Taking note of the fact that appellant has lost his job and is now aged about 78 years and is suffering - 24 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 from old age ailments, this Court is of the considered opinion that setting aside the imprisonment of two years for the aforesaid offences which were ordered to run concurrently by ordering the appellant to undergo simple imprisonment for a day till rising of the Court and enhancing the fine amount in a sum of Rs.1,00,000/- (Rs.25,000/- imposed by the learned Trial Magistrate + Rs.1,00,000/- = Rs.1,25,000/-) would meet the ends of justice in the attendant facts and circumstances of the case. Accordingly, point No.3 is answered partly in the affirmative. REG. POINT Nos. 4: 52. In view of the findings of this Court on point Nos.1 to 3 as above, following: ORDER i. Criminal Appeal is allowed in part. ii. While maintaining the conviction of the appellant/accused for the offences - 25 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 punishable under Section 420, 409 of IPC, accused/appellant is acquitted for the offence punishable under Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act, 1988, the sentence of imprisonment of two years for each of the offences ordered by the learned Special Judge for the aforesaid offences is hereby set aside by directing the Accused/ appellant to undergo simple imprisonment for a day till rising of this Court and by enhancing the fine amount in a sum of Rs.1,00,000/- (Rs.25,000/- imposed by the learned Trial Magistrate + Rs.1,00,000/- = Rs.1,25,000/-). iii. Enhanced fine amount is ordered to be paid on or before 10.02.2025 failing which, imprisonment ordered by the learned Special Judge stands restored automatically. - 26 - NC: 2025:KHC:1415 CRL.A No. 1136 of 2011 Office is directed to return the Trial Court Records with copy of this order forthwith. Sd/- (V SRISHANANDA) JUDGE KAV List No.: 1 Sl No.: 53 CT: BHK