Holding

Criminal conspiracy and breach of trust were established against Accused 1, 2, 3 and 4, their convictions under the IPC and the Prevention of Corruption Act were upheld, while Accused 5 was acquitted and forgery convictions were set aside.

Summary

The Supreme Court examined the conduct of four bank officers (Accused 1, 2, 4 and 5) and a securities broker (Accused 3) who were alleged to have credited large sums to the broker's account without the corresponding bankers' cheques being in the bank’s possession, thereby causing loss to the bank. The Court held that a criminal conspiracy existed among Accused 1, 2, 3 and 4, establishing liability under Sections 120A and 120B of the IPC and criminal breach of trust under Section 409, as well as offences under the Prevention of Corruption Act, 1988. However, the evidence did not conclusively link Accused 5 to the conspiracy, leading to his acquittal. The Court also set aside convictions for forgery and false document offences (Sections 463, 464, 467, 471, 477A) as the statutory elements were not satisfied. The convictions and sentences of Accused 1, 2, 4 under the Prevention of Corruption Act and of Accused 3 under Sections 120B and 411 were affirmed, while Accused 5 was acquitted of all charges.

Issues considered

The existence of a criminal conspiracy under Section 120A IPC among the accused.
Whether the bank officers had dominion over bank funds sufficient to constitute criminal breach of trust under Section 409 IPC.
The applicability of the Prevention of Corruption Act, 1988 (Sections 13(1)(c), 13(1)(d), 13(2)) to the officers' conduct.
Whether the prosecution proved the making of a false document or forgery under Sections 463, 464, 467, 471, 477A IPC.
The admissibility and sufficiency of circumstantial evidence to establish conspiracy.
The relevance of banking practice of instant credit and its compatibility with statutory duties.
The jurisdiction of the Special Court under the Special Court (Trial of Offences Relating to Securities) Act, 1992.

Legislation cited

Indian Penal Code, 1860s. 120A, s. 120B, s. 405, s. 409, s. 410, s. 411, s. 463, s. 464, s. 467, s. 471, s. 477A
Prevention of Corruption Act, 1988s. 13(1)(c), s. 13(1)(d), s. 13(2)

Subjects

criminal conspiracycriminal breach of trustPrevention of Corruption Actforgeryfalse documentbanking fraudinstant creditcircumstantial evidencepublic servantmisappropriationstolen property

Judgment

[2009] 13 (ADDL.) s.c:R. 124

A MIR NAGVI ASKARI
v.
+
C.B.I.
(Criminal Appeal No. 1477 of 2004)

AUGUST 7, 2009
B
[S.8. 51.NHA AND CYRIAC JOSEPH, JJ.]
...,._
PENAL CODE, 1860/PREVENT/ON OF CORRUPTION
ACT, 1988:
c
Sections 109, 120A, 120B, 410, 411, 463, 464, 467, 471,
4771113(1), 13(2) - Bank Officers Accused Nos. 1, 2, 4, 5
unlawfully and dishonestly permitting Accused No.3 (Power
broker in securities transactions) to withdraw substantial
D amounts - Wrongful loss to Bank - Criminal conspiracy -
Receiving of stolen property - Crimina__I breach of trust -
Accused .convicted and sentenced by Special Court - On
appeal, Held: Criminal conspiracy established against
Accused 1 to 4 - No conclusive evidence as regards
involvement of A-5 - A-5 also acquitted of all charges under
E
the Prevention of Corruption Act - A-1, A-2 and A-4 being
public servants guilty of offences under Section 13(1) rlw
Section 13(2) as also Section 13(1)(d) rlw Section 13(2) of
Prevention of Corruption Act - Expression direction of law in
the context of Sections 405 and 409 /PC includes not only
F legislations but also directions instruments and circulars
issued by an authority entitled ·therefor - Accused could not
have been convicted with making of false document -
Conviction under Section 471, 477A set aside~ A-3 guilty of
offence under Section 411 since he had dishonestly received
G stolen property - A-3 also guilty of offences punishap!e under
Sections 120B, 411 rlw 120-B /PC - Sentence imposed
accordingly - Since CBI has not preferred any appeal against
the quantum of sentence, higher sentence could not be

H 124
MIR NAGVI ASKARI v. C.B.I. 125

imposed on A-3. A

BANKING - BANKER AND CUSTOMER:

An officer of a bank holds a position of trust - Expected
to perform his duties also in terms of statutory directions
issued by Reserve Bank and his own employees. 8

Banker to take all precautions to prevent a fraud or deceit
on the part. of customer.

These appeals filed against the judgment and order C
of the Special Court relate to abuse of position by Bank
Officers (accused 1, 2, 4 and 5) by unlawfully and
dishonestly permitting accused No.3 to withdraw
substantial amounts without having actually received any
1 bankers' cheques. In all there were 10 transactions. The
0
accused were also charged with entering into criminal
conspiracy. The accused were held guilty by the Special
Court and were accordingly convicted and sentenced.
Hence the appeals.
Disposing of the appeals, the Court E

HELD: 1. Condition precedent for holding the
accused persons to be guilty of a charge of criminal
conspiracy must, therefore, be considered on the anvil
of the fact which must be established by the prosecution,
F
viz., meeting of minds of two or more persons for doing
or causing to be done an illegal act or an act by illegal
means. The courts, however, while drawing an inference
from the materials brought on record to arrive at a finding
as to whether the charges of the criminal conspiracy
have been proved or not, must always bear in mind that G
a conspiracy is hatched in secrecy and it is difficult, if not
impossible, to obtain direct evidence to establish the
same. The ma·nner and circumstances in which the
offences have been committed and the accused persons
H
....
126 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A took part are relevant. For the said purpose, it is
necessary to prove that the propounders had expressly
agreed to it or caused it to be done, and it may also be
proved by adduction of circumstantial evidence and/ or
by necessary implication. [Para 17] [166-F-H]
B
Mohammad Usman Mohammad Hussain Maniyar &
Ors. v. State of Maharashtra (1981) 2 SCC 443; Kehar Singh
and Ors. v. State (Delhi Administration), 1988 (3) SCC 609; ...,.._
State of Maharashtra v. Som Nath Thapa (1996) 4 SCC 659
and K.R. Purushothaman v. State of Kera/a (2005) 12 SCC
c 631, relied on.

Mohmed Amin @ Amin Choteli Rahim Miyan Shaikh
and Anr. v. C.B.I. through its Director, 2008 (14) SCALE 240
and R Venkatkrishnan v. Central Bureau of Investigation
D (Criminal Appeal No. 76 of 2004 decided by S.C, on
7.8.2009, referred to.

2.1. With respect to the transactions involved in the
present case, the ultimate beneficiary was Accused No.3.
Amount received from different banks by the Andhra
E
Bank were credited to his account as a result whereof the
cheques issued by him in favour of third parties could be
honoured. But for the said credits made in his account,
it would have been overdrawn on a few occasions. The
nature of transactions, the manner in which the same had
F been dealt with, and the fact that some of the officers of
the Andhra Bank, employed· in the Funds Department and
authorized to get the amounts in question cr~dited to the
account of A-3, had facilitated the same although the
bankers' cheques in question had in some cases not
G even been received by the Bank clearly establish the_.
factum of conspiracy. [Para 27] [194-E-H; 195-A] ~
~
2.2. An officer of a bank holds a position of trust.
Each one of them, keeping in view the nature and extent
H
MIR NAGVI ASKARI v. C.B.I. 127

of duties required to be performed, is expected to do so A
+ not only in terms of statutory directions, but as also the
directions issued· by the Reserve Bank of India and his
own employer. Documents for the purpose of giving
credit in the account of a customer would indisputably
be required to be prepared on the basis of the cheque 8
receipts. It cannot be prepared in anticipation of receipt
of a cheque; firstly, because the amount of the cheque,
the name of the drawee and other particulars would not
be known to them; secondly, the bank is required to
maintain a large number of registers to put in place a c
sound banking system. All precautions must be taken to
prevent a fraud or deceit on the part of a customer.
Therefore, the fact that, credit and debit vouchers were
prepared and other registers were filled up, although the
i cheques were not in physical possession of the bank, D
-.. clearly establishes the existence of a criminal conspiracy
between the ultimate beneficiary, on the one hand, and
some of the officers of the bank, on the other. A debit or
credit voucher furthermore is not prepared in piecemeal
or in installments. Bank officers are not supposed to
E
know the immediate requirement of an account· holder.
[Para 27] [195-8-F]

2.3. An analysis of the facts of the case clearly
demonstrates that a conspiracy had been hatched
between the accused 1,2, 3 and 4 its object being that F
accused Nos.1, 2 and 4 who were the manager and
officers working in the Funds Department and had
dominion over the funds of Andhra Bank connived with
A3 to prepare credit and debit vouchers authorising the
Current Account department to credit tho~ cheques to G
the account of Accussed No.3 and, thus, affording him
)If

.. to take. pecuniary advantage of the public money of the
Bank, without some of the cheques in question having
even been received by the bank and thus dishonestly
H
#"'
/

128 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A enabling A3 to make. withdrawals from his account
No.4819 against the said credit afforded to his account. +
Such things would not have been possible but for
meeting of mind amongst the accused involved herein.
It is not in dispute that A3 was a broker in securities
B transaction through the Funds and Investment
Department of Fort Branch, Andhra Bank. From these
circumstances it is clear that there existed a conspiracy
between A 1, A2 and A4 the object of which was to obtain
undue pecuniary advantage for A3. The said act of the
c accused had been in violation of the guidelines issued
by Andhra Bank. In relation to all the ten transactions in
detail this Court has not been able to find any conclusive
evidence as regards the involvement of Accused No. 5
in the offence of criminal conspiracy. [Para 27] [195-G-H;
D 196-A-D]
2.4. The conduct of the accused, keeping in view the
aforementioned finding of fact, being clear and explicit;
the ingredients of conspiracy as enumerated under
Section 120A of the Indian Penal Code must be held to
E have been clearly established only against A 1, A2, A3
and A4. [Para 27] [196-E]

C. Chenga Reddy v. State of A.P., (1996) 10 SCC 193,
referred to.
F 3. The accused in the present case indisputably had
dominion over the funds of the bank. They through their
acts facilitated misappropriation of the funds to the
account of A3. Without the assistance provided by the
other accused, the main· accused herein A3 would not
G · have been able to withdraw from his account amounts
of money to which he was not entitled to under law. The
accused herein being public servants had an additional
responsibility of ensuring that the funds of the public
were not misappropriated in any manner or form, what
H so ever. A3 did not have over draft facility or any overdraft
MIR NAGVI ASKARI v. C.RI. 129

limit sanctioned to him. A3 could not have overdrawn his A
account. He was facilitated to do so by A 1, A2 and A4.
Since this Court has not been able to fine. adequate
evidence of the involvement of A 5 in the transactions,
he is acquitted of all charges under the Prevention of
Corruption Act. It is, therefore, beyond the purview of any B
doubt that A1, A2 and A4 being public servants were
guilty of offences under s. 13(1)(c) r/w 13(2) as also s.
13(1) (d) r/w 13(2) of the Prevention of Corruption Act.
[Para 28] [198-G-H; 199-A-C]

4.1. A person is said to make a false document or
c
record if he satisfies one of the three conditions under
Section 464 IPC provided for under the said section. The
first condition being that the document has been falsified
with the intention of causing it to be believed that such
--f document has been made by a person, by whom the .D
person falsifying the document knows that it was not
made. Clearly the documents in question in the present
case, even if it be assumed to have been made
dishonestly or fraudulently, had not been made with the
intention of causing it to be believed that they were made E
by or under the authority of some one else. The second
criteria of the section deals with a case where a person
without lawful authority alters a document after it has
~
been made. There has been no allegation of alteration of
the voucher in question after they have been made. F
Therefore in our opinion the second criteria of the said
section is also not applicable to the present case. The
third and final condition of Section 464 deals with a
document, signed by a person who due to his mental
capacity does not know the contents of the documents G
which were made i.e because of intoxication or
)If
unsoundness of mind etc. Such is also not the case here.
;.-
., Indisputably therefore the accused could not have been
convicted with the making of a false document. The
Special Judge, therefore, erred in holding that the H
130 SUPREME COURT REPORTS [2009) 13 (ADDL.) S.C.R.

A accused had prepared a false document, which clearly'-
having regard to the provisions of the law, could not have
been done. [Para 29] [201-H; 202-A-F]
":'

4.2. Further the offence of forgery deals with making
of a false document with the specific intentions
B
enumerated in Section 463 IPC. However, since it is
already held that the commission of the said offence has
not been convincingly established, the accused could not ~
have been convicted for the offence of forgery; The
definition of "false document" is a part of the definition ~
c of "forgery". Both must be read together. Accordingly, the
accused could not have been tried for offence under
Section 467 which deals with forgery of valuable
securities, will etc. or Section 471, i.e., using as genuine
a forged document or Section 477-A, i.e, falsification of
D accounts. The conviction of the accused for the said r-
offences is accordingly set aside. [Para 29] [202-G-H; 203- ->
A-DJ

Dr. Vim/a v. Delhi Administration, [1963] Supp 2 SCR
E 585, relied. on.
5.1. There is no doubt that the offences relating to
criminal breach of trust stands established against the
accused. They were the officers in the Funds Department _;-
of Andhra Bank. In the said capacity they had been
F entrusted with the funds of the Bank. In that sense they
had dominion over a thing. The money which was
transferred to the account of A3 was the money
belonging to the Bank. Only the said accused had the
power to transfer it to the account of A3. [Para 30] [206-
'
G B-C]
~
5.2. In the present case, the same has been done
dishonestly to cause wrongful gain to A3 and in the ;
process wrongful loss has been caused to the Bank. The
H instruments based on which the funds of Andhra Bank
MIR NAGVI ASKARI v. C.8.1. 131

were transferred to the account of A3 were not physically A
available with Andhra Bank at the time the accused
persons authorized the transfer of the funds of Andhra
Bank to the account of A3. Al also utilized the said credit
given and accordingly even cheques issued by him were
honoured. Had it not been for the credits given on the 8
relevant dates his account would have been overdrawn.
Interest was not charged from A3 and was not debited
from his account and loss was therefore caused to the
bank. Moreover, it must be noted in this respect that
Banking norms and established practices and c
procedures would contain directions of law prescribing
the mode in wbich the trust is to be discharged. The
expression direction of law in the context of sections 405
and 409 would include not only legislations pure and
simple but also directions, instruments and circuJars 0
issued by an authority entitled therefor. [Para 30] [206-D-
H]
5.3. The trust in this regard would therefore have to
be discharged in terms of such directions. Acting in
,.
violation thereof causing wrongful gain to A3 and loss to E
the Bank would bring the action within Section 409 IPC.
Established banking norms are binding on an officer of
the Bank in the matter of discharge of the trust i.e. in
dealing with the money entrusted to him. He is required
to follow the same and that would be an implied term of F
his contract of service as an officer of the bank. The
accused have acted in breach of the same. The
prosecution has sufficiently been able to prove the
involvement of A1, A2 and A4 as regards the offence of
criminal breach of trust. [Para 30] [207-A-C) G
Onkar Nath Mishra and Ors. vs. State (NCT of Delhi) and
Anr., (2008) 2 SCC 561; K Venkatkrishnan v. Central Bureau
r
of Investigation (Criminal Appeal 76 of 2004 decided by
S.C. on 7.8.2009); State of Punjab v. Pritam Chand and Ors.,
H
132 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A 2009 (2) SCALE 457 and Sharon Michael and Ors. v. State
of Tamil Nadu and Anr., 2009 (1) SCALE 627, referred to.

6.1. Section 410 IPC accordingly defines stolen
property. A property is stolen for the purpose of this f-
section when its possession is transferred by theft,
B
extortion, robbery, dacoity or criminal breach of trust or
which was obtained under misappropriation committed
whether in India or outside. An extended meaning is
'1--
given to the words 'stolen property' which are used in the
I
four subsequent sections. Not only things which have -'
c been stolen, extorted or robbed but also things which
have been obtained by criminal misappropriation or
criminal breach of trust are within the meaning assigned
to these words. As has already been noted, Accused A 1,
A2 and A4 here, were involved in the offence of criminal
D ~
breach of trust and accordingly the funds which were
transferred to the account of A3 falls within the definition
of stolen property. Section 411 provides punishment to
the person who dishonestly receives stolen property.
The person must have the knowledge that it is a stolen
E property. One must bear in mind that A3 had entered into 'r

a criminal conspiracy with A1, A2 and A4. He would in that
respect be deemed to have known that the property in
question was stolen property. This section as also the
succeeding sections are directed not against the principal ~
E offender e.g. a thief, robber or misappropriator but
against the class of persons who trade in stolen articles
and are receivers of stolen property. Principal offenders
are therefore outside the scope of this section.
Accordingly the conviction of the principal offender is
G also not a prerequisite to the conviction of the receiver ~
of stolen property under this section. However in the '
present case the principal offender i.e. A1, A2 and A4 )(.

have been held guilty of a ' criminal breach of trust'
therefore the convi<:tion of A3 would be even more clearly
H established from the facts and circumstances of the
MIR NAGVI ASKARI v. C.8.1. 133

_... present case. [Para 31] [208-8-H; 209-A-B] A

6.2. It has therefore been conclusively established by
the prosecution that the A3 was guilty of an offence under
Section 411, since he had dishonestly received stolen
property. [Para 31] [209-G-H; 210-AJ 8
7.1. Since the CBI has not preferred any appeal
against the quantum of sentence, this Court cannot
~ impose a higher sentence. (Para 32] (210-B]

7.2. Since this Court has acquitted accused No. 5 of C
all the charges against him the order of sentence passed
against him is hereby quashed. [Para 32] [210-8-C]

7.3. Since this Court has acquitted all the accused of
-... offences under Section 467 read with Sections 120, 471
read with Section 1208 as well as section 477 A read with D
120-B of the Indian Penal Code, the sentence passed by
the Special Judge against all the accused as regards the
said offences is hereby quashed. [Para 32] [210-C-D]

7.4. The Main accused herein A 3, has been found E
guilty of offences punishable under Section 1208 and 411
read with Section 1208. He is hereby sentenced to suffer
rigorous imprisonment for 6 months and to pay a fine of
Rs. 50,000 and in default to suffer Rigorous imprisonment
for one month. [Para 32] [210-E] F

7 .5. So far as the sentence for the offences
punishable under s. 409 r/w section 109 of the Indian
Penal Code and Section 13 (1) (c) and Section 13(1}(d)
read with 13(2) of the Prevention of Corruption Act read G
with Section 109 of the Indian Penal code is concerned,
this Court agrees with the conclusion arrived at by the
Judge that no special sentence needs be passed against
him in this respect. [Para 32] [210-F-G]

H
134 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A 7.6. The sentence imposed by the Special Judge with
regard to the offence under the Prevention of Corruption
+-
Act is affirmed. [Para 32] [210-G-H]

7. 7. Accused 1, Accused 2, and Accused 4 are
sentenced to suffer RI for one month each and to pay Rs.
B
1000/- in fine and in default to suffer RI for seven days
each for the offences punishable under Section 13(1)(c)
read with Section 13(2) of the Prevention of Corruption .,._
Act read with Section 120-B of the IPC. [Para 32) [210-H;
211-A-B]
c
7.8. Similarly, the accused are also sentenced to
suffer RI for one month and to pay a fine of Rs. 1000/-
each in default to suffer RI for seven days each for
offences punishable under Section 13(1)(d) read with
D Section 13(2) of the Prevention of Corruption Act read r
with Section 1208 of the IPC. Further Accused 1,
Accused 2 and Accused 4 are sentenced to suffer RI for
6 months each and to pay fine of Rs. 5000/- each , and in
default to suffer RI for one month each for offences
E punishable under Section 1208 and Section 409 read
with Section 1208 of the IPC. [Para 32) [211-B-D]

7.9. All substantive sentences are directed to run
concurrently. Each accused should be given· the benefit ~
of set off for the period for which he has already
F undergone imprisonment in this case. So far as the
payment of fine is concerned, a period of 2 months time
is given to all accused persons, to deposit the same.
[Para 32) [211-E]

G Case Law Reference:
(1981) 2 sec 443 relied on Para 17
1988 (3) sec 609 relied on Para 17
"" ,.
''
(1996) 4 sec 659 relied on Para 17
H

+
MIR NAGVI ASKARI v. C.8.1. 135

(2005) 12 sec 631 relied on Para 17 A

2008 (14) SCALE 240 referred to Para 17

(1996) 10 sec 193 referred to Para 207

(1963) Supp 2 SCR 585 relied on Para 29
B
(2008) 2 sec 561 referred to Para 30

2009 (2) SCALE 457 referred to Para 30
2009 (1) SCALE 627 referred to Para 30
c
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 1477 of 2004.

From the Judgment & Order dated 19.10.2004 of the
_., Special court (Trial of Offences Relating to Transactions in
Securities) at Bombay in Special Case No. 5 of 1994 in R.C. D
No. 3 (SSC) 1993.

WITH

Crl. A. Nos. 121 & 5 of 2005
E
Crl. A. Nos. 1525 & 1526 of 2004

Shekhar Naphade, Sr. Adv., Rahul Moshe, Sweta Moshe,
Amit Kumar Sharma, Ms. Purnima Bhat, Sunil S. Kale, Satyajit
Saha, V.D. Khanna, C. Mukund, Shashank Sharma, Parvez F
Ubharay, Pankaj Jain, Ashok Kumar Jain, A. Vneesh Garg,
Vandana Anand, Bijoy Kumar Jain, Jana Kalyan Oas, Avijeet
Bhujabai, for the Appellant.

A. Mariarputham, A. Suba Rao, AT. Rao, T.A. Khan, B.K. G
Prasad, P. Parmeswaran D.S. Mahra for the Respondent.

The Judgment of the Court was delivered by

H
136 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A S.B. SINHA, J. 1. These five appeals, arising out of a
judgment and order dated 19/10/2004 passed by the Special t-
Court constituted under the Special Court (Trial and Offences
related to Securities) Act, 1992 (for short "the Act"), were taken
up for hearing together and are being disposed of by this
__B common judgment.

BACKGROUND FACTS

2. Andhra Bank is a Scheduled Nationalised Bank. It has it.
a branch at Mumbai known as the Fort Branch. Out of five
c appellants before us, Accused Nos. 1, 2, 4 and 5 were officers
of the said Branch of the Andhra Bank. Accused No. 1 was the
Manager of Funds, Accused Nos. 2 and 4 were Junior
Management Officers of the Funds Department, and Accused
No. 5 was the Assistant Manager, Debit Section. Accused
D No.3, Hiten Dalal, was at all relevant times and still is a broker ~
and, inter alia, deals in securities.

Accused Nos. 1, 2, 4 and 5, in their capacity as public
servants, were working in the Fort Branch of Andhra Bank.

E They were charged with abuse of their position and acting
dishonestly and fraudulently, as a result whereof undue
pecuniary advantage is said to have been procured by
Accused No. 3 by way of crediting bankers' cheques without
them having been presented or sent for clearance and, thus,
F cheating Andhra Bank and dishonestly permitting substantial
withdrawals from his current account by the Accused No. 3. They
are said to have prepared false documents and used them as
genuine ones, with the intention to defraud and falsify entries
in the books of accounts of the Bank. They are also charged
G with entering into the criminal conspiracy, as they, having been
entrusted with the property of the Andhra Bank, prepared credit
and debit vouchers in favour of Accused No. 3 authorizing credit
of amounts of various cheques to the account of Accused No.
3 without having actually received any bankers' cheques.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 137

~ Indisputably, the Reserve Bank of India appointed a A
Committee known as the Jankiraman Committee whence the
..
alleged security scam came to light. It submitted a report, a
portion of which was marked as Exhibit 334 before the learned
Special Judge wherein certain irregularities in the functions of
Andhra Bank were pointed out, the relevant portion whereof B
reads as under:

x "(6) It was obseNed on a scrutiny of the current account of
H.P. Dalal that the branch has accommodated the broker
by affording credit of some of the banker's cheques C
received from other banks to his account one working day
prior to the day on which the instruments were sent for
clearing, with a view to avoiding overdrawings in the
account on these days. The funds so credited have been
utilized by the broker either for purchase of securities or
making some other payments. Instances noticed are given D
in the annexure. It will be seen therefrom that in the case
of item No. (i) the branch had afforded the credit even
· before the actual date of the instrument."

(Emphasis added) E

It was also pointed out how Accused No.3 had received
financial benefit out of the said transactions.

FIRST INFORMATION REPORT
F
3. Relying on, or on the basis of, the Jankiraman
Committee Report, a First Information Report was lodged by
PW-25 Sitaram Premaram Paladia on or about 02/06/1993
(Exhibit 333), initially against the accused Nos. 1, 2 and 3.

No further preliminary inquiry was conducted before G
lodging the said First Information Report. Ten rnstances of grant
of credit to Accused No. 3 were detailed therein, in respect of
the cheques received or those yet to be received ·from four
banks, namely Bank of Karad, ANZ Grindlays Bank, Canara
H
13.8. SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A Bank and Standard Chartered Bank (hereinafter referred to as +-
"the drawer banks"), without presenting or sending them for
clearance.

PW-26 Mr. Waydande while making investigation into the
said offence, allegedly found involvement of Accused Nos. 4
8
and 5 as well, who had prepared debit and credit vouchers, and
made entries in the transfer scroll, BCR Registers, Cheque
Clearing and Receiving Registers, etc. They were thereafter *
made accused in the said case.

C PROSECUTION CASE
4. The prosecution contends that the appellants herein
entered into a conspiracy with each other with the object of
giving undue pecuniary advantage to Accused No. 3, and for
0 the said purpose, the bank officers had misused their position \r
as public servants, forged documents and used them as
genuine ones for the purpose of falsification of accounts.

The prosecution case is that such credits should not have
been given until the amount of the cheques was realized. Ifwas
E furthermore alleged that credit had been given even though the
said cheques had not actually been received in the Fort Branch
of Andhra Bank. The aforementioned acts on the part of the
officers of Andhra Bank constituted criminal breach of trust and .~
forgery, as well as offences under the Prevention of Corruption
F Act, 1988.

PROCEEDING BEFORE THE SPECIAL COURT

5. As many as ten transactions were in question before
G the learned judge. Separate charges were framed in respect
of each of the aforementioned ten transactions. Before the
learned Special Court, 26 witnesses were examined by the
prosecution.

PWs 1 to 10 were employees/officers working in the
H drawer bank along with four officers from the Funds and
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 139

_.... Investment Department. A
PWs 11 to 19 and 22 to 24 were working in the Andhra
Bank. PW-11 Hemlala G. Nair and PW-12 Rajinderkumar and
cne Rane, were working as clerks in the Funds and Investment
Department, Andhra Bank. Rane died in 1993 and thus, could B
not be examined as a witness. PW-13 Sunil Pore and PW-14
Dilip Gursahani were working as typist and Clerk-cum-Cashier
;f respectively in the Clearing Department, Andhra Bank. PW-17
Katta Hari Babu and PW-18 Ramesh G. Ramteke were officers
in the Current Account Department, Andhra Bank. PW-19 S.
Ganavinayagam was the Manager (Operational) in the Current C
Account Department and PW-22 J.S. Sastry was working as
Chief Officer, at the Head Office of Andhra Bank, Hyderabad.
PW-23 G.D. Bhalla was working as Chief Manager in Fort
_,. Branch, Andhra Bank, Mumbai. PW-24 C. Raja Rao was
working as General Manager (Personnel) at the Head Office, D
Andhra Bank, Hyderabad. PW - 20 Anand Sinha and PW-21
M. Mahajan were officers working in the Reserve Bank of India.

JUDGMENT OF THE SPECIAL COURT.
E
6. In respect of transaction no. 1, the Special Court noted
that the account of A3 was credited on 18/05/1991, whereas
the cheque is dated 20/05/199·1. As Accused No.1 and 2
authorized the credit vouchers to the Current Accounts
Department, allowing it to credit an amount of Rs.2 crores
indicated therein to the account of Accused 3, without having F
in their possession the cheque for the said amount, A 1 and A2
were guilty of criminal breach of trust as also for creating false
documents.

In respect of transactions no. 2 and 3, the Special Court G
held that though the cheque dated 05/07/1991 was received
on 06/07/1991, the credit therefor had been given on 05/07/
1991; the cheque amount was realized only on 06/07/1991. As
A 1 and A2 prepared debit and credit vouchers and ensured
credit to the account of A3, even without having in their H
140 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A possession the corresponding cheque and, thus, they were +-
guilty of criminal breach of trust and also falsifying documents.

In respect of transaction No. 4, the Special Court held that
though the cheque dated 17/09/1991 was received on 18/09/
1991, the credit was given one day prior thereto, i.e., on 17/
8
09/1991 and the cheque amount was realized only on 18/09/
1991. Hence, on the day on which the credit was given, the
cheque was not in possession of the A 1 and A2., and, thus, by ~
issuing credit voucher on 17/09/1991, A1 and A2 committed
criminal breach of trust and falsification of documents.
c
In respect of transactions no. Sand 6, it was held by the
Special Court that the cheque dated 06/11/1991 was supposed
to have received on 06/11/1991, but credit thereof was availed
by him on 06/11/1991 although the cheque was realized on 08/
D 11/1991; 07/11/1991 being a holiday. Hence, -on the day on ¥
which the credit was given, the cheque was not in the hands of
the A2. and A4; and by issuing the credit voucher on 06/11/91,
they have committed the offence of criminal breach of trust as
also falsification of documents.
E
It was also held in respect of transaction no. 7, that the
cheque dated 13/11/1991 was received on that date and the
credit was given on 13/11/1991, although the cheque amount
was realized only on 14/11/1991. The cheque was not sent for
clearing on 13/11/1991 and therefore, by issuing credit voucher
F on that day, A 1, A2 and A4 had committed criminal breach of
trust and were also guilty of preparing false documents.

So far as transaction No.8 is concerned, the Special Court
held that the cheque dated 04/12/1991 was received on OS/
G 12/1991 and the credit was given on 04/12/1991, despite the
amount was realized only on OS/12/1991. Evidence on record
has clearly proved that the cheque in question was not received
in the Funds Department on 04/12/1991, although A 1 and AS
authorised crediting the cheque amount into A3's account on
H that day and therefore A 1 and AS were guilty of criminal breach

•
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 141

of trust as also making of false documents in respect of the said A
-+ transaction.

- In respect of transaction no. 9, it was held by the Special
Court that the cheque dated 16/12/1991 was received on 16/
12/1991, the credit is given and availed on 16/12/1991 and the 8
cheque was actually realized only on 17/12/1991. The cheque
was not sent for clearing on 16/12/1991 and therefore, by
issuing credit voucher on that day, A 1 and A2 were guilty of
criminal breach of trust and of making of false documents in
furtherance thereof.
c
In respect of transaction no. 10, the Special Court held that
the cheque dated 07/04/1992 was received on 08/0411992, and
the credit was given on 07/04/1992 even though the cheque
was realized only on 08/04/1992. As on the day on which the
credit was given, the cheque was not in the hands of A2, by D
issuing the credit voucher on 07/04/1992, A2 was guilty of
criminal breach of trust and also guilty of making false
documents in furtherance of this transaction.

It was also recorded by the Special Court that the
E
pecuniary advantage had illegally been given to A3; and thereby
A2 and A4 have committed an offence under Section 13 (2)
read with 13 (1) (c) and 13 (1) (d) of the Prevention of
Corruption Act. It was also held that since the credit was illegally
given to A3, they have committed criminal breach of trust, and
that by issuing a credit voucher without the cheque having been
F
realized, A2 and A4 have prepared false documents and
thereby committed forgery. It was also held that A2 and A4
entered into criminal conspiracy with A3 and other accused
persons for the purpose of giving illegal credit to A3 and thus
securing a pecuniary advantage for him. G
~-
ADMITTED FACTS:
...
7. Before adverting to the rival contentions raised before
us by the parties, we may, at the outset, notice the following:
H
142 SUPREME COURT REPORTS [2009} 13 (ADDL) S.C.R.

A (i) All the cheques involved are banker's cheques.

(ii) Payments under the banker's cheques are
guaranteed. .
(iii) Cheques received by the Bank are dealt with by the
B Funds Department, Current Account Department,
Clearing Department and Day Book Department.

(iv) The Current Account, Clearing and Day Book
Departments operate under the Operation
c Department of the Fort Branch, Andhra Bank

(v) In addition thereto, there is a service centre of the
Bank which is situated in separate premises. It is
responsible for sending the banker's cheques to
the Reserve Bank of India for clearance.
D
(vi) It was not proved that the bank officers received
any pecuniary advantages for themselves but by
their action pecuniary advantages were received by
Accused No. 3.
E
(vii) Whereas there are no guidelines for operation of
the Funds Department, guidelines have been
issued by the Andhra Bank for other connected
departments, viz., Current Account Department,
Clearing Department and Day Book Department.
F
(viii) It is also not in dispute that a machine known as
I

Advance Ledger Posting Machine (ALPM) was
installed in the Current Account Department which·
was possible to be operated manually. We will
G highlight the operational details of the said machine
at an appropriate stage.
+
SUBM\SSIONS OF LEARNED SENIOR COUNSEL. "'

8. Mr. Naphade, Mr. C. Mukund and Mr. Das, learned
H
MIR NAGVI ASKARI v. C.8.1. [S.B. SINHA, J.] 143

counsel appearing on behalf of the accused nos. 1, 2, 4 and 5 A
~
urged:

(i) Since the First Information Report was lodged only
on the basis of the report of the Jankiraman
Committee without any further preliminary enquiry, B
the entire proceeding is vitiated in law.

~ (ii) Jankiraman Committee having only pointed out
irregularities committed both by the Current as well
as the Clearing Department, appellants cannot be
said to have been involved in commission of any c
offence, as alleged or at all.

(iii) There is no evidence to show that the appellants had
any dominion over the property of the bank at any
point of time, and/ or they were ultimately D
responsible for the disposal thereof in violation of
any direction of law.

(iv) Since the purported guidelines [Exhibit 3221 have
·- no force of law, no offence of criminal breach of
trust can be said to have been committed in terms E
of Section 405, read with Section 43 of the Indian
Penal Code.

(v) Further, the guidelines purportedly issued by the
Bank, in any event, have no nexus with the F
functioning of the Funds Department being
applicable in respect of securities transactions; the
impugned judgment of the Special Court is wholly
unsustainable.
G
(vi) Appellants, having scrupulously followed the
-+ prevailing bank practices and furthermore having
complied with all the procedures laid down therefor,
cannot be said to have committed any offence.

(vii) The job of the Funds Department was only to H
144 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A prepare credit and debit vouchers on receipt of the t--
Banker's Cheque and to forward the same to the
Current Accounts Department and it was the
officers of the Current Accounts Departrment have
both a duty, as well as the authority to scrutinize,
B verify and process these vouchers resulting in
l•ltimate clearance thereof and in that view of the
matter, no offence can be said to have been
committed by the appellants alone.

(viii) Even assuming that the appellants are party to any
c conspiracy but the same by itself cannot yield any
result, viz., ultimate benefit to)he Accused No. 3,
as the clearance of the cheques was in the hands
of some other officers and as such the impugned
judgment is liable to be set aside.
D
(ix) Since the banking practice in regard to grant of
instant credit to the· holder of a negotiable
instrument is an accepted one, meant for the benefit
of the customers, there can be no rationale that such
E benefits though required to be given to the
customers, would be withheld unless the actual fund
is received from the drawer bank. Although there
existed guidelines only for the Current Account and
other Departments, there existed no guidelines as
F regards the grant of instant credit which had come
to be established based on the internal practice
followed by the banks. Accordingly, no case for the
commission of an offence of criminal breach of trust
. had been made out.
G (x) It being not the case of the prosecution that the
procedures in respect of the said transactions were +
totally disregarded and only because the scam
broke out, faults were sought to be found without
rectifying the said procedure and in that view of the
H matter, the functionings of the appellants could not
MIR NAGVI ASKARI v. C.8.1. [S.8. SINHA, J.] 145

have been questioned. A
~
(xi) The veracity or the existence of the documents
being not disputed, the judgment of the Special
Court as regards actual date of receipt of the
cheques were wholly unjustified, particularly in view 8
of the statements made by the witnesses examined
on behalf of the drawer banks who had
categorically stated that no cheque was ante-dated.

(xii) The Andhra Bank not being involved in the security
transactions wherein only the drawer banks were c
involved, the Special Court had no jurisdiction to try
the alleged offence.

(xiii) Even if the findings of the Special Court that some
i documents did not contain all the details is held to D
be correct, all the officers concerned, from receiving
the cheque to clearance thereof (including the
clearance of the Funds Department) should be held
to be liable therefor and not the appellants alone.

(xiv) In view of the pressure of work on all the employees E
being admitted, and as all entries in the registers
were required to be done on tha same day which
having substantially been complied with, inadvertent
+ errors on the part of employees cannot be
considered to be acts of illegality. F

(xv) Since the current account credit vouchers were
released by the accused persons in discharge of
their official duties, the allegation that they had
prepared any false document and, thus, committed G
acts of forgery, must fail.
~
(xvi) The banker's cheques having been admittedly
100% guaranteed and the bank having not suffered
any monetary loss and ha-ving also not filed any
complaint, the impugned judgment cannot be H
{
146 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A sustained.

(xvii) Appellants having followed' the established and
longstanding banking practices, deviation
therefrom would only amount to misconduct, as no
B mens rea can be attributed to them.

(xviii) The transactions in question being exceptional in
nature, which according to PW-17, Katta Hari Babu,
would mean "it involves large credits and large
debits"; some priority was required to be given
c thereto

(xix) When cheques are posted (which means the
amount is credited into the account), the customer
becomes entitled to utilize the same, which is not
D subject to the clearance of the banker's cheque
wherewith the accused had no role to play; and
hence the impugned judgment is wholly
unsustainable.

(xx) In view of the fact that Sh. Ramesh G. Ramteke,
E PW-18, both had the authority to verify the
transaction, as well as discovered discrepancies in
the date of the cheque and/or the credit and the
debit voucher for which he went back to the Funds
Department, but no action was taken therefor would
F clearly go to show that he satisfied himself that only
a wrong date has been mentioned, which was
otherwise usual.

(xxi) Appellants not being the authorized officers of the
G bank, could not be said to have any dominion over
the property of the bank and thus no offence can
be said to have been committed. +
(xxii) PW-19, S. Ganavinayagam having testified that
accused No.3, Hiten Dalal used to receive
H preferential treatment and for whom only the
-.
MIR NAGVI ASKARI "v. C.B.I. [S.B. SINHA, J.] 147

guidelines Ex.322 had been issued, any action A
taken pursuant thereto or in furtherance thereof must
be held to be legal and within the framework of law
particularly when in relation to bankers' cheques, as
was admitted by PW-20,. Anand Sinha, an officer
of the ReseNe Bank of India that no guidelines had B
been issued therefor.

(xxiii) from the deposition of prosecution witnesses,
particularly those who are high ranking officers
including PW-23, Sh. G. Bhalla, Chief Manger of C
Andhra Bank, it would be evident that the
appellants had followed the usual banking practice.
It has also been admitted that any transaction
carried out was subject to scrutiny, as the Funds
Department used to send a daily report to PW-23.
D
(xxiv) Accused No.5 having been shown to be involved
in respect uf only two transactions, namely
transaction Nos. 8 and 9, and as in respect
transaction of No.9, he had not been found guilty,
for the self-same reasons he should have been E
found to be not involved in respect of transaction
No.8 as well.

(xxv) There being no independent material on record to
show conspiracy between A-1, A-2, A4 and A-5 on
the one hand and A-3 on the other the appellants F
could not have been convicted for commission of
an offence under Sections 120-A and 120-8 of the
Indian Penal Code 1860.

(xxvi) As conspiracy is a separate and distinct offence G
under the Indian Penal Code, and the original
agreement between the accused is a sine qua non
therefor, mere knowledge of conspiracy by itself
cannot be said to be sufficient in arriving at a finding
of guilt in respect thereof. H
148 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A Mr. U.U. Lalit, learned senior counsel appearing on behalf
of accused No.3 would contend:

(i) As no material of either any meeting or any
conversation having been brought on record, the
question of holding him guilty of commission of an
8
offence of conspiracy does not arise.

(ii) The bankers' cheques having been issued by the
banks for utilization of the amounts thereof by
accused No.3 and he being beneficiary thereof,
c there was no question of his being benefited by
entering into any conspiracy with anyone.

(iii) Charges alleged made by the prosecution being
confined to non realization of the bankers cheques
from the Reserve Bank of India at the end of the day, )"
D
although credit thereof had been given in the ·I

account of accused No.3, the irregularity in respect
thereof was to be dealt with by different branches '
of the banks wherewith accused No.3 was not
concerned and, thus, he cannot be said to have
E
committed any offence.

(iv) Even assuming that irregularity had been committed
in the matter of realization of the amount under the
bankers' cheques from the Reserve Bank of India,
+
F the same by itself would not lead to an inference of
commission of an illegal act and consequently, an
offence of conspiracy.

Mr. A Mariarputham, learned counsel appearing on behalf
of the Central Bureau of Investigation, on the other hand,
G
submitted:
.,.
(i) Although there is no direct evidence of conspiracy,
in view of the materials brought on record by the
prosecution, accused Nos. 1, 2, 4 and 5, who
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 149

authorized crediting of the amounts of the bankers' A
cheques for the benefit of accused No.3 must be
held to have misused their position so as to cause
wrongful loss to the bank and wrongful gain to
accused No.3, and, thus, have clearly committed
the offence of criminal breach of trust within the B
meaning of Section 405 of the Indian Penal Code
1860.
-';
(ii) Circular dated 5th December, 1990 issued by the
Andhra Bank (Ext. 322) specifically providing that
the transaction may be carried out in the case of
c
Hiten Dalal (accused No.3) and the commission to
be charged therefor having been prescribed and,
thus, no exception having been made granting him
1 the facility of over draft, charging of interest on any
't'
advance or over draft etc., the officers of the banks D
4

having not taken the requisite precautions by them
in regard to receipt of any cheque and, thus, have
violated the directions as the account of accused
No.3 was credited much before the Bank received
credit in respect of the said cheques in the account E
maintained with the Reserve Bank of India.

(iii) The cheques/transactions would fall into three
+ ;
categories, namely - (1) post dated cheques and
credit given therefor earlier; (2) cheques although F
not in physical possession of Andhra Bank, but
credit was still given to the account of accused
No.3; and (3) cheques presented for clearance the
next day, but account of accused No.3 was credited
the previous day, all of which were wholly illegal.
G
-+ (iv) From a bare perusal of the findings of the learned
Special Court it would appear that in regard to
~
transactions 1, 2, 3, 4, 7, 8 and 10 the cheques
were not in physical possession of Andhra Bank at
the time when the account of accused No.3 was H
150 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A credited, altnough in respect of transaction No.1 the
cheque might have been with the Andhra Bank and,
thus, the ch~rge against the appellant must be held
to have been established.

(vi) In so far as the first transaction is concerned,
B
account of accused No.3 was credited on 18th May, ~
1991 but the cheque was dated 20th May, 1991
which clearly shows the intention on the part of the
appellants to confer an illegal benefit to accused
No.3, to which he was not otherwise entitled to.
c
(vii) In respect of transaction No.10, although the
account of accused No.3 was credited on 7th April,
1992 for an amount of Rs. 4 crores, the materials
on record clearly show that although the cheque
~-
D was dated 7th April, 1992, it was issued/forwarded
only on 8th April, 1992 which is clearly ~·
demonstrative of the fact that the accused had dealt
with the said cheque without there any forwarding
letter having been issued by the transferee bank
E stating that accused No.3 was the beneficiary
thereof, the criminal misconduct on the part of the
accused must be informed.

(viii) So far as transaction Nos. 2, 3, 4, 7 and 8 are +
concerned, it is borne out from the record that the
F cheques had not been received by the Andhra
Bank and in any event the same having not been
sent for clearance on the dates they were purported
to have been received, wherefor the bank did not
receive any credit from the Reserve Bank of India,
G the findings in the impugned judgment in this behalf
are unassailable. ......

;
(ix) So far as transaction No.7 is concerned, it is
established that a credit of Rs.1.5 crores had been
H given although the actual figure mentioned in the
MIR NAGVI ASKARI v. C.B.L [S.B. SINHA, J.] 151

cheque was Rs.2,37,29,750/- which is beyond A
anybody's comprehension as a partial credit is not
given in any banking transactions.

(x) The learned Special Judge having dealt with each
of the transactions separately showing in details as
8
to how, and on what basis his conclusions were
arrived at in regard to the fact that the cheques
involved in seven transactions were not with Andhra
Bank when the account of accused No.3 was
credited; the impugned judgment should not be
interfered with.
c
(xi) It is clear from the findings of the learned Special
Judge that but for the credit given on the relevant
dates, the account of accused No.3 would have
'f been overdrawn i.e. money in the account No.3 D
would not have been sufficient to honour cheques
issued by him and presented for payment on these
days, and thus, the appellants have rightly been
found guilty for commission of the said offence.
E
(xii) Even for a banking branch to grant immediate credit
to the account of accused No.3; as at least in
respect of 5 cheques, the conditions required
therefor, namely the physical availability of bankers'
cheques with the Andhra Bank, having been found
to be missing at the point of time when the credit F
was given to the account of accused No.3, the
appellants must be held to have committed the
offence under Section 409 read with Section 120-
B of the Indian Penal Code.
G
(xiii) When an account holder is permitted to draw
money in excess of the amount in his account, it
would be an over-draft or an advance or loan from
the bank to the account holder, wherefor interest
would become chargeable and as no interest has H
152 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A been charged, the same would amount to giving
undue benefit to the account holder, and loss to the
bank, particularly when in the circular letter (Ext.
322) there was no exception made in favour of
accused No.3.
8
(xiv) As Accused No.3 had no overdraft facility or
overdraft limit sanctioned to him, he could not have
indirectly obtained the facility at the behest of
accused Nos. 1, 2, 4 and 5.

C (xv) In a situation of this nature, the Court is required to
take a holistic view of the matei and for the said
purpose the materials brought on record to prove
the ingredients may have to be considered from
different angles, namely- (a) if a cheque had been
D received the entire procedure for grant of credit had
been rushed through beyond the normal banking
hours so that credit may be given to the account of
accused No.3; (b) the cheques are of one date and
the forwarding letters of the next date, the credit and
E debit vouchers in the name of accused No.3 could
not have been prepared in absence of the
forwarding letters; (c) the requirements of accused
No.3 must be held to be known to the officers of the
bank, as against the cheque amount of
Rs.2,37,29,750/- credit for a sum of Rs. 1.5 crores
F
could not have been granted, which clearly goes to
show that even if cheques were received later the
amounts were credited to the account of accused
No.3 so as to enable him to meet his other
obligations and in the process, money belonging to
G
the bank was being used by Accused No.3
facilitated by officers of the bank using their
authority.

(xvi) Appellants have not offered any explanation as to
H why details had not been entered in such a large
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 153

number of documents, although the register must A
~
show as to who is the beneficiary of the cheques
and the amount therefor, hence the impugned
) judgment should not be interfered with.

(xvii) Banking norms, for the purpose of attracting B
ingredients of Section 405 of the Indian Penal
Code, are binding on its officers and for giving any
-ti
undue facility given to accused No.3, the appellants
could be found guilty.

JURSIDICTION OF THE SPECIAL COURT c
'9. It is well known that during the period for April 1992 to
June 1992, certain large scale irregularities and malpractices
were detected in certain security transactions which were
alleged to have been carried on by some promtnent brokers o
in collusion with employees of various public sector banks and
financial institutions. To deal with the situation and to ensure the
speedy recovery of the huge amount involved, the Parliament
enacted the Special Court (Trial of offences relating to
transaction in Securities) Act, 1992, "the Act" establishing the
E
Special Courts from whose judgment this appeal comes before
us.

The question which now arises for our consideration is
whe.ther having regard to the peculiar facts and circumstances
of the case the Special Courts so constituted had jurisdiction F
to try this matter.

Indisputably Section 7, read with sub section 2 of Section
3 of the Special Courts Act, limits the jurisdictioR--Of-Special
Courts only to offences relating to transactions in securities after G
the 1st day of April, 1991 and before 6 June 1992.

Further Section 8 provides that the special courts shall
have jurisdiction to try any person concerned for the offence
referred to in sub section 2 of Section 3 either as a principal,
conspirator or abettor and accused persons can be jointly tried H
154 SUPREME COURT REPORTS [2009] 13 (AOOL.) S.C.R.

A at one time, in accordance with CrPC.
~
Since we have already dealt with the issue as to the ambit
of jurisdiction of the Special courts in R Venkatkrishnan v.
Central Bureau of Investigation (Criminal Appeal No: 76 of
\
2004 decided today), it is not necessary to deal with this aspect
B
of the matter o.nce again.

Indisputably the jurisdiction of the Special Court is wide in
:i,..
nature. The provisions of the Act need to be interpreted keeping
in mind its object and purport. The Act being a special Act must
c be given its full effect.

It would bear repetition to state that A3 was one of the
clients of Andhra Bank dealing with the purchase and sale of
securities through the Funds Department and that he had a
D Current Account bearing No. 4819 mainly for the said purpose. +
While dealing with the securities transactions on behalf of '
A3, there used to be sale as well as purchase of securities. In
case of transaction of sale of securities, Accused No. 3 used
to receive his payments through Bankers Cheque which were
E deposited with the Funds Department, and the amount of the
Cheque in relation to sale in securities. It is the undisputed
position that the Funds Department of the Andhra Bank was
the only branch exclusively dealing with securities.
+
F Furthermore it must be noted in this respect, that Exhibit
322 Notification of the Andhra Bank dated 5.12.1990 authorized
the Fort Branch of Andhra Bank to deal with A3 in regard to
securities transactions.

Besides, as we have already noted, there is ample
G evidence of the officers and the staff members working in the
Bank of Karad, Standard Chartered Bank, Canara Bank and
ANZ Grindleys Bank that they had issued these Bankers
+-
Cheque in regard to security transactions, especially in respect
of Mr AD Narottam, who was dealing in securities.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 155

Officers who are accused in the present case A 1, A2, A4 A
and AS are officers in the Funds Department of the Andhra
Bank at its Fort Branch. As stated earlier, the said branch was
the only one dealing with security transactions on behalf of the
entire Andhra Bank.

The submission of the learned counsel for the appellants B
that the trial of offences by the Special Court is without
jurisdiction and without the authority of law would, thus, have to
be rejected and, in our opinion, the court rightly exercised
jurisdiction in the present matter. We affirm the findings of the
court in this regard. C

PROCEDURES FOLLOWED BY THE VARIOUS
DEPARTMENTS

10. In order to appreciate the issues involved in the present D
case it is necessary to set out in brief the working modalities
of the various departments of the Fort Branch of Andhra Bank,
Mumbai which were connected with transactions relating to
bankers,cheques. There are four such departments to which
we must pay special attention; namely Funds and Investment
Department (hereinafter "Funds Department"), Current Account E
Department, the Clearing Department and lastly Day Book
Department. It is also to be noted that the Funds Department
was an independent department whereas the other
+ departments namely Current Accounts Department, the
Clearing Department and the Day Book Department were F
under the Operations Department of Fort Branch of Andhra
Bank, Mumbai.

The Funds Department which was functioning at the Fort
Branch was exclusive to the said branch, and did not exist in G
any other branch of Andhra Bank throughout India. This
department was dealing in call money and securities
transactions on behalf of the bank as a whole. The functioning
of the department was directly under the supervision of the
head office of the bank, situated at Hyderabad. H
156 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A For a proper analysis of the factual matrix of the case it
would be essential to take a close look at the procedure
followed in the various departments of the Bank.

FUNDS DEPARTMENT

B 11. Bankers cheques used to first arrive at the Funds
Department of the Bank. These cheques which were received
from the drawer bank were accompanied with a forwarding
letter indicating the nature of the beneficiary and the amount of
the Cheque. On receipt of the Cheque, an entry used to be
c made in the Bankers Cheque Receivable Register [BCR
Register]. The register contain all necessary particulars with
regard to the Cheque, the name of the drawer bank, the
number, the date and amount thereof as also to whom the
amount of the Cheque was to be credited.
D
Thereafter, entries used to be made in the transfer scroll,
which contained credit as well as debit vouchers. The details
of the credit voucher are entered in the transfer scroll on the
credit side, and the details of the debit voucher are entered on
the debit side. The entries in the transfer scroll used to be made
E on the same day on which the Cheque was received.

On the credit side, the particulars of the person in favour
of whom the Cheque was received was entered, along with the
amount of the cheque. On the debit side, debit voucher entries
F were made by debiting the BCR account with the amount of
the cheque. Thereafter, the credit voucher used to be sent to
the Current Account Department for posting, i.e., giving credit
equal to the amount of the cheque directly to the account of the
beneficiary. The debit voucher was however retained in the
G Funds Department.
All these vouchers were required to be signed, which in
~
effect authorizes the credit to be given to the beneficiary of the
cheque.

H As per, the procedure followed by the department, a
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 157

- -+
consolidated credit voucher and a consolidated debit voucher
used to be prepared on the basis of the entries made in the
A

BCR Register by about 2.30 to 2.45 pm. Accordingly the
voucher contained the total of all the cheques received until
then.
B
The consolidated credit voucher was prepared, along with
a slip bearing the amounts of all the cheques. The total of the
vouchers and the total of all the cheques given on the slip should
+ tally with the total of the BCR Register.

Thereafter, the consolidated credit voucher so prepared c
along with the slip and all the cheques used to be sent to the
Clearing Department of the Bank, whereas the consolidated
debit voucher was sent directly to the Day Book Department.

CURRENT ACCOUNT DEPARTMENT D
i
12. The Current Account Department as has already been
noted came under the Operations Department of Andhra Bank.
The officers working in the Current Account Department would
check the credit vouchers received from the Funds Department
and then make posting on the computer which operated as per E
the Advanced Ledger Posting Machine [ALPM] programme.
The amount shown in the credit voucher would, through the
posting, be credited to the account of the client indicated on
~
the credit voucher. At the end of the day two lists used to be
generated through the ALPM system from the computer. The F
first list concerned Exceptional Transactions of the day which
were transactions involving amounts of more than one lakh. The
second list, namely the transaction listing, was for all the
transactions handled by the Current Account Department on
that day. G

.-4 CLEARING DEPARTMENT

13. As has already been noted, the Clearing Department
used to receive the consolidated credit vouchers along with the
slip bearing the amounts of the various cheques, along with the H
158 SUPREME COURT REPORTS [2009] 13 (ADDL..) S.C.R.

A cheques themselves from the Funds Department. These
cheques, thereafter, were bifurcated ban~-wise and accordingly ;..
a bank-wise slip, for the purpose of preparing the bank
schedule, was made. Mr Sarkar [PW 15] used to verify the
entries made in the bank schedule along with the cheques
B before sending them to the service centre for clearance.

A clearing rubber stamp along with the date would be put
on each Cheque as well as the consolidated credit voucher.
The date of the stamp would be the. date on which the Cheque ~

was received in the Clearing Department and sent to the service
c centre for realization. It was the job of the service centre to send
the cheques to the RBI where the amount of the cheque would
be credited in the account of Andhra Bank with RBI.

The cheques would then go back to the drawer bank and
D the bank schedule would be sent back to the service centre. In t
case a cheque was dishonored, it used to come back to the
Clearing Department through the service centre. If no Cheque
was received back by the Clearing Department from the service
centre by 4.00 pm, then it meant that all the cheques had been
E cleared. ~

Subsequently, the consolidated credit voucher would be
sent from the clearing department to the Day Book Department.

';JAY BOOK DEPARTMENT ...
F
14. Day Book Department used to ultimately receive both
.the consolidated credit voucher as well as the consolidated
debit voucher. Though it used to receive the credit voucher from
the Clearing Department, the debit voucher used to be directly
G received by it from the Funds Departments. Since both the
vouchers were prepared from the BCR Regjster they would
both tally with each other. Accordingly it was in this department ~
that all the transactions of the day of Fort Branch of Andhra
Bank used to be consolidated. Mr Mukesh [PW 16) used to
handle the consolidation.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 159
..
It wa5 his duty to consolidate the data in the Day Book A
~
Register. It must be noted that a day book register is like a
balance sheet showing the assets and liabilities of the bank on
that day. Accordingly a Bankers Cheque which remained to be
realized at the end of the day would be shown as an debit
excess under the head of 'Bankers Cheque receivables' B
A similar balance sheet through the General Ledger
Balance [GLB] used to be generated through the ALPM
-+
system. This GLB gave a snapshot of the assets and liabilities
on a particular day.
c
GUDELINES FOR BANKERS CHEQUES

15. Let us now consider the relevant guidelines which
relate to the dealing of the Bankers Cheques.
4 D
Mr. Sastry, the Assistant General Manager and the Chief
t
Officer in the Central Accounts Department at the head office
of Andhra Bank at Hyderabad, stated in his testimony that the
head office had issued guidelines for the operation of securities
transactions of constituents at Fort Branch , Bombay dated
5.12.1990 [Exb. 322]. E

In his testimony, he further clarified that the intention behind
issuing the guidelines was to ensure that the purchase price
+- for the transaction would be made only after ensuring that.the
sale proceeds of the transaction are credited in the RBI to F
Andhra Bank.

As per him, the Funds Department would receive the
bankers cheques on account of sale transactions of the clients
and enter the particulars of these instruments and send them
to the SeNice centre for being forwarded to the RBI for crediting G

. ...4. the amount to Andhra Bank's account.

Guideline 12 of Exhibit 322 [Operations of Security
Transactions for Constituents at Fort Branch, Bombay]
specifically provides: H
160 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
~

A "Please ensure that all the cheques received towards sale ,._
transactions will be presented in Special Clearing for
interbank cheques and ensure that the credit is afforded
to our Bank with RBI on the same day."

It had also been vehemently submitted before the Special
B Court that the said guidelines were not in respect of the Funds
Department. It was furthermore contended that guideline itself
does not indicate that they were pertaining to the Funds
~
Department. The learned special judge rightly rejected the said
arguments.
c
These guidelines were issued by the Head Office. They
were issued for the purpose of operation of security transaction
at Fort, Bombay Branch of Andhra Bank. The guidelines
moreover specify that permission had been granted to Hiten
D P Dalal (A3) for the purpose of securities transactions. +-

Therefore, these directions were obviously binding on the
persons who were working in the Funds Department. These
guidelines were exclusively meant for the Funds Department
for handling securities transactions, and there was no other
E department or branch of Andhra Bank anywhere in India which
was handling such securities transactions. As such, they were
binding on the accused persons.
-t
THE PRESENT CASE
F
16. In the aforementioned backdrop of events, let us now
analyse the transactions involved herein. Ten transactions
relating to drawer's -cheques are in question, the details whereof
are ·as under:

G
>--
...
H
MIR NAGVI ASKARI v. C.8.1. [S.B. SINHA, J.] 161

Tran. Date of Amt. Date of Actual date A
NO. Credit Credited to realisation of cheque
ale of A3 of cheque
1 18.05.91 2 crore 20.05.91 20.05.91

2 05.07.91 29 lacs 06.07.91 05.07.91 B

3 05.07.91 71 lacs 06.07.91 05.07.91
+ 4 17.09.91 61,84,925.59 18.09.91 17.09.91

5 06.11.91 86,62,500 08.11.91 06.11.91 c
6 06.11.91 75 lacs 08.11.91 06.11.91

7 13.11.91 1,50,00,000 14.11.91 13.11.91

8 04.12.91 7 crores 05.12.91 04.12.91 D

9 16.12.91 8,80,95,890 17.12.91 16.12.91

10 07.04.92 4 crore 08.04.92 07.04.92

Accused No.1 is involved in all the transactions ; Accused E
No.2 is said to be involved in eight transactions, i.e., transaction
Nos. 1 to 6, 9 and 1O; while Accused No.4 is allegedly involved
in four transactions, transaction Nos.4 to 7. Accused Nos. 2 and
4 are jointly involved in transaction Nos. 4 to 7.
F
Accused No.5 has not authorised any payment. He is said
to be involved in transaction Nos.8 and 9 only. However,
Accused No.5 has been given benefit of doubt in respect of
the 8th transaction. We are, therefore, concerned herein with
his involvements in the 8th transaction. G

We have discussed the functioning of different
departments at some length only to highlight the submissions
of learned counsel appearing on behalf of the appellants that
the prosecution has not been able to prove the charge of H
162 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A conspiracy as without involvement of other departments, it was
~
not possible for accused No.3 to obtain any pecuniary gain out
of the said transactions at all, if any.

We must also notice that the functioning of the different
departments has not been seriously disputed.
B
The functioning of the Funds Department has been proved
by PW 2, Sampada S. Amre, and the other departments'
~
functionings by PW 11, Hemlata Nair. The same would also be
apparent from the entries made in the BCR register, marked
c as Ext.111. So far as the functioning of the Clearing Department
is concerned, the same has been proved by PW 13, Sunil Pore.
Therein, cheques are segregated bank-wise and amount wise.
There appears to be some controversy as to at what time
cheques are sent out for clearance. According to the appellants,
D the Funds Department is bound to receive cheques up to 3.00 ~
p.m. However, according to the prosecution a consolidated
statement of the cheques received upto 2.30 p.m., after
preparing bank schedule by the Clearing Department are sent
at about 2.45 p.m. to the service centre and the R.B.I. Appellants
E contend that any cheque received after the prescribed hours
i.e. 2.30 - 2.45 p.m., is sent with a single voucher to another
department.

It is accepted by PW 13, Sunil Pore that any cheque -+
received up to 3.00 p.m. is also entertained wherefor a
F separate voucher is prepared, and the same is sent to the
Current Account Department. This voucher may not be sent on
that date, but must be sent on the day after.

It is also contended that in regard to the processing of the
G cheque for giving credit or making entries, the Funds
Department evidently had no access. It is also admitted that
)..
the Funds Department personnel have no access to the ALPM
machine. It also appears from the evidence of PW-7, K. Hari
,,,
Babu, that the crucial function of operating the machine is of
'
H the Current Account Department. Before signing the document
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 163

relating to the posting of the cheque, an officer of the Current A
....
Department only would verify the entries made in the computer
on the basis of which a print out would be tar<en out which is
considered to be a document authorization in respect thereof.

The said witness further states that the credit granted are B
of two types, namely cleared credits and uncleared credits. This
would be known from the vouchers received from the Funds
Department.
+
Before us, the aforementioned procedural aspect is not at
all in dispute. What is in dispute is what is meant by c
authorisation.

Our attention has also been drawn to certain flaws in the
system pertaining to the working of the various departments but'
t we are not much concerned with them herein D
'\
According to the prosecution, as instructions are received
by the Current Account Department from the Funds Department
by way of credit vouchers, signing of the same by the officer
would itself amount to authorization whereas according to the
accused, posting of the vouchers for clearance would amount E
to authorization.

The learned Special Judge in his judgment has dealt with
+ each transaction in great details. He has considered both the
aspects of the matter in respect of each of the transactions. The F
learned Judge, however, found that apart from three
transactions, being transaction Nos. 5, 6 and 9, physical
possession of the cheques might have been established, but
in respect of other transactions either vouchers had been
prepared before receipt of the cheques, or post dated cheques G

.. ~
issued by the drawer banks have been entertained, in violation
of the guidelines issued by the Bank. Credit had been given
on the basis of post dated cheques. Two cheques were not in
the physical possession of the Andhra Bank. Although the
cheques were presented for clearance on the next date, the
H
-1
164 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A account of Accused No.3 was credited on a previous day. _.._

Although we have been taken through the depositions of
all important witnesses, as regards the functioning of the Bank,
which includes not only the internal functioning of its different
departments but also the banking practice developed over the
B ~
years for grant of instant credit to its customers including
Accused No.3, it may not be necessary to delve thereto in
details. -t-
In our considered opinion, we may proceed on the
c assumption that the transactions in question are exceptional
transactions and a banking practice had developed for grant
of advance credit to some of the customers of the Bank,
including Accused No.3.

D It is not in dispute that the guidelines issued by Andhra t·
Bank (Ext. 322) do not relate to Bankers Cheques. It is also
not in dispute that the payment under the Bankers Cheques is
guaranteed. It is furthermore admitted that the Funds
Department used to receive cheques along with a forwarding
letter mentioning in whose account the same it is to be credited
E
and upon verification thereof, it would be sent to the Clearing
Department. The cheques used to be received by the officer
of the Funds Department and on the instructions of these
officers that the credit vouchers were to be prepared. After -+-
preparation, the vouchers were to be handed over to the officers
F who, by signing them, used to authorise the transaction.

As per PW 23, Mr. G.H Bhalla, the cheques used to be
sent to the Clearing Department, which in turn was responsible
for sending them to the service centre.
G
Similarly, according to PW 12, Mr. Rajinderkumar, the debit
vouchers were retained in the Funds Department and credit )..
vouchers were sent to the Operational Department. It was on ..,J
t
the basis of credit vouchers that entries were made in the
Current Account of the Customer.
H
.J_ ·-
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 165

Mr. Katta Hari Babu's (PW 17) responsibility was to verify A
+ the signature of -the officer on the credit vouchers after they were
received by him whereafter he used to give it to his operator
with an instruction for posting.

During daily proceedings, the Bank Schedules were made B
ready by 2.30 p.m everyday. Separate vouchers were made
for cheques that were received after the consolidated voucher
had been prepared.
-+-
The banker's cheques, since they related to daily
transactions would never be post dated. No credit was to be c
given on the basis of post dated Cheque. Bankers Cheques
used to be accompanied by a Covering letter, which was in the
form of a letter of Authorization of the issuing bank containing
details of the beneficiary of the said cheques.
t D
PW 23, Mr. G.H. Bhalla, further elaborates that giving
immediate credit meant preparing the credit voucher on the
receipt of the banker's cheque and sending the said voucher
to the Current Account department for posting credit to the
customer's account. However, customers who had deposited
E
banker's cheques could not demand the credit as a right on
the same day before the realization. Since Officers of the Funds
Department had the ultimate responsibility to give credit, they
used to exercise considerable discretion in the matter. It was
+ the concerned officers' responsibility to satisfy himself that the
F
credit should come on the same day.

He further goes on to say that Accused No.3 had only a
Current Account in the Branch. He did not enjoy any overdraft
facility. It was the Funds and Investment Department's
responsibility to carry out sale and purchase of received G
banker's cheques on his behalf.
~
CRIMINAL CONSPIRACY

17. Appellants were charged for entering into a criminal
conspiracy in the matter of commission of several offences. H
166 SUPREME COURT REPORTS [2009] 13 (ADDL) S.C.R.

A Criminal conspiracy, it must be noted in this regard, is an
independent offence. It is punishable separately. A criminal
conspiracy must be put to action; for so long as a crime is
generated in the mind of the accused, the same does not
become punishable. Thoughts even criminal in character, often
B involuntary, are not crimes but when they take a concrete shape
of an agreement to do or caused to be done an illegal act or
an act which-is not illegal, by illegal means then even if nothing
further is done, the agreement would give rise to a criminal
. conspiracy.
c The ingredients of the offence of criminal conspiracy are:

(i) an agreement between two or more persons;

(ii) an agreement must relate to doing or causing to be
D done either (a) an illegal act; (b) an act which is not
illegal in itself but is done by illegal means.

Condition precedent for holding the accused persons to
be guilty of a charge of criminal conspiracy must, therefore, be
considered on the anvil of the fact which must be established
E by the prosecution, viz., meeting' of minds of two or more
persons for doing or causing to be done an illegal act or an
act by illegal means.

The courts, however, while drawing an inference from the -t
F materials brought on record to arrive at a finding as to whether
the charges of the criminal conspiracy have been proved or not,
must always bear in mind that a conspiracy is hatched in
secrecy and it is difficult, if not impossible, to obtain direct
evidence to establish the same. The manner and circumstances
G. in which the offences have been committed and the accused
persons took part are relevant. For the said purpose,_ it is
necessary to prove that the propounders had expressly agreed
to it or caused it to be done, and it may also be proved by
adduction of circumstantial evidence and/ or by necessary
H implication. [See Mohammad Usman Mohammad Hussain
MIR NAGVI ASKARI v. C.8.1. [S.B. SINHA, J.] 167

Maniyar & Ors. v. State of Maharashtra ( 1981) 2 SCC 443] A
-+ The following passage from Russell -0n Crimes (12th Edn.
Vol 1) cited by Jagannatha Shetty, J in Kehar Singh and Ors.
v. State (Delhi Administration), [1988 (3) SCC 609 at 731]
brings out the legal position succinctly:
B
"The gist of the offence of conspiracy then lies, not in
doing the act, or effecting the purpose for which the
conspiracy is formed, nor in attempting to do them, nor in
inciting others to do them, but in the forming of the scheme
or agreement between the parties. Agreement is c
essential. Mere knowledge, or even discussion, of the plan
is not, per se enough"

Further it was noted in Kehar Singh (supra) that to
establish the offence of criminal conspiracy '[i]t is not required D
t that a single agreement should be entered into by all the
conspirators at one time. Each conspirator plays his separate
part in one integrated and united effort to achieve the common
purpose. Each one is aware that he has a part to play in a
general conspiracy though he may not know all its secrets or
E
the means by which the common purpose is to be
accomplished.'

In some cases, in~ent of unlawful use being made of the
+ goods or services in question may be inferred from the
knowledge itself. F

This Court in State of Maharashtra v. Som Nath Thapa
[(1996) 4 sec 659] opined that it is necessary for the
prosecution to establish that a particular unlawful use was
intended, so long as the goods or services in question could G
not be put to any lawful use, stating:

"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
H
168 SUPREME COURT REPORTS (2009] 13 (ADDL.) S.C.R.

A legal act by illegal means is necessary. In some cases,
intent of unlawful use being made of the goods or services +
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 service
in question could not be put to any lawful use. Finally, when
t
B
the ultimate offence 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
c would do, so long as it is known that the collaborator would
put the goods or service to an unlawful use."

[See also K.R. Purushothaman v. State of Kera/a (2005)
12 sec 631]

D Since we have dealt with the law with respect to criminal
conspiracy in detail in R. Venkatkrishnan v. Central Bureau +
of Investigation (Criminal Appeal 76 of 2004 decided today)
we need not deal with it hereat once again.

We may however notice that this court most recently in
E
Mohmed Amin @ Amin Choteli Rahim Miyan Shaikh and
Anr. v. C.8.1. through its Director, 2008 (14) SCALE 240 after
taking recourse to law governing the field noted thus:

"55. The principles which can be deduced from the above +
F noted judgments are that for proving a charge of
conspiracy, it is not necessary .that all the conspirators
know each and every details of the conspiracy so long as
they are co-participators in the main object of conspiracy.
It is also not necessary that all the conspirators should
G participate from the inception of conspiracy to its end. If
there is unity of object or purpose, all participating at
different stages of the crime will be guilty of conspiracy."

TRANSACTIONS
H 18. To properly appreciate the prosecution's case. we must
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 169

.;._ A
deal with all the ten transactions in some details hereinafter.

FIRST TRANSACTION

19. The first transaction relates to a bankers cheque
bearing No. 56643 dated 20.05.1991 for a sum of Rs. 2 crores
issued by the Bank of Karad in favour of Andhra Bank. B
Admittedly, the account of Accused No. 3 was credited with the
said amount on 18.05.1991 itself even though the Cheque
bears the date the 2oth, on the basis of the credit voucher
signed by Accused 1 and Accused 2.
c
The said credit voucher had been prepared by Kamble
(PW 12). Mr Ramtake (PW 18) who at the relevant time was
working in the Current Account department had received the
said voucher on the 18th and had accordingly made the posting
+ of Rs. 2 crore in the account of Accused 3. D
It appears that while making the posting in the current
account of Accused No. 3, PW 18 entertained a doubt. He
verified from the Transfer Scroll and from the consolidated
credit voucher the dates of the bankers cheques, since though
the date on the bankers cheque was 20/05/1991 however the E
credit voucher had been received on the 18th itself.

+ The learned Special Judge in his impugned judgment
opined that the cheque was not in physical possession of
Andhra Bank. Reference in this regard must also be made to F
Exhibit 27 which was prepared in the Bank of Karad, which
also goes to show that the cheque was issued on 20/05/1991.
This banker's cheque had been issued at the instance of AD.
Narottam and his account was debited on 20/05/1991. If the
Cheque had been issued by Andhra Bank on the 20th, serious G
doubt arises as to how the credit voucher for the same could
have been prepared on 18/05/1991.

Mr. Sastry (PW 22) in his evidence categorically stated that
the bankers' cheques are never post-dated since they relate
only to that particular days transaction. The evidence_ of Mr. H
170 SUPREME COURT REPORTS [2009] 13 (ADDL.) $.C.R.

A Bhalla (PW-23) is in the following terms: ~·

"Post dated banker's cheque cannot be issued as per the
practice followed in the Andhra Bank."

Kamble (PW 12) in his evidence stated that neither in the
B BCR Register of 20/05/1991 nor in the Transfer Scroll of the
said date, he found any entry made as regams the
aforementioned cheque for the credit or debit voucher for Rs. ~
2.00 crores. In the transfer scroll of 20/05/1991 as also the debit
voucher, details of the said cheque were not found. They could
c be found only in the Transfer Scroll of 18/05/1991. The debit
voucher also bore the same transfer scroll number being
number 21 .

.. --lndisputab1¥-!b.e.. Tran§fer Scroll Register (Ex.bibit 140) as
---- - ·--- -· ·- - .,..,.,,..,...
+
D also the credit voucher, show that the amounrwas to be credited
to the account of Accused No. 3. The credit vouchers, therefore,
were prepared on 18.05.1991 although it bore the date
20.05.1991. Even the BCR Register for 20.05: t991 (Exhibit
139) does not show receipt of the cheque.
E Appellants, however, contend that although the cheque was
dated 20.05.1991, the same had been received on 18.05.1991
on the basis of which the credit voucher was prepared and sent
for the purpose of posting, as per the practice of giving instant ...
credit which, in our opinion, is not worth any
I
credence. It is not
F in dispute that the normal banking pradice is that an entry of
each cheque would be made immediately in the BCR Register.
Had, thus, the cheque been received on 18.05.1991, mention
of it should have been found therein. There are no details in
the entry as to whom the credit should be given to or the name
G of the drawer bank, the cheque number or the date of the
cheque, which admittedly are required to be entered into the ~
register on receipt of a Bankers Cheque. Such details were
furnished only in the BCR Register dated 20.05.1991. The
credit and debit vouchers, thus, should have contained the
H details of the cheque. Credit Voucher (Exhibit 136) and Debit
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 171

Voucher (Exhibit 137), however, do not contain such details, A
and even the name of the drawer bank does not find mention.
The only thing which has been mentioned is that the amount of
the bankers cheque is to be credited to the account of Accused
No. 3 Hiten P. Dalal.
B
Mr. Raje (PW-3), who was heading the Securities
Department in the Bank of Karad, categorically stated that the
cheque was issued on 20.05.1991, under his signature. The
credit voucher of Bank of Karad is also dated 20.05.1991.
Sampada Ambre (PW-2) in his evidence stated that the entry C
with regard to the said cheque was made in the DD Sold
Register only on 20.05.1991. Sarmalkar (PW-5), who was also
an officer of Bank of Karad, and who had made an entry as
regards the said cheque in the account of Mr. A.O. Narottam
(Exhibit 73(1 )) made a similar statement that his account had
been debited for Rs. 2 crores on that date. D

Our attention, however, was drawn to a purported
admission made by Mr. Raje that sometimes, Mr. Narottam
used to give post-dated cheques and the staff would prepare
the required documents on the next day. Mr. Narottam has not E
been examined by the defence. As the witness categorically
stated that the said cheque was issued on 20.05.1991 itself,
after making an entry in the DD Sold Register and debiting it
in the account of Mr. Narottam, the question of issuance of the
post dated cheque would not arise. The said purported F
admission does not relate to the cheque in question.

Moreover, as indicated hereinbefore, the entries made in
the BCR register, consolidated credit voucher (Exhibit 132) are
clear pointers to the fact that the cheque was received by
Andhra Bank only on 20.05.1991. The cheque for a sum of Rs. G
2 crores of Bank of Karad also finds mention in the bank
schedule dated 20.05.1991 and not in the Bank Schedule dated
18.05.1991. It would bear repetition to state that PWs 22 and
23, furthermore stated that bankers cheques are never post
dated. H
172 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A Moreover, if an account is overdrawn, it amounts to and _,
overdraft and for the same, the account holder is liable to pay
interest. No interest was charged from the account of A 3 in
this regard. Loss to the bank on account of interest was Rs.
20,274/-
B
Therefore, we are of the opinion that the involvement of
Accused Nos. 1, 2, and 3 as regards the said transaction has
sufficiently been established by the prosecution.

SECOND AND THIRD TRANSACTION
c
20. So far as the 2nd and 3rd transactions are concerned
they involve bankers cheques bearing Nos. 664786 dated 5/
7/1991 amounting to Rs.29 lac and 664785 dated 5/7/1991 for
Rs. 71 lac issued by the Bank of Karad in favour of Andhra
D Bank. +
lndipsutably a single credit voucher for Rs. 1 crore
authorising the crediting of the said amount into the account of
accused No.3 was issued by accused No.2. The corresponding
debit voucher dated 05.07.199_1 wasaTso for Rs. 1 crore and
E it was in the handwriting of Accussed No. 2 and signed by both
accused No. 1 and 2. This transaction was also included in the
list of exceptional transactions for 05.07.1991. Therefore, it is
clear that on 05.07.1991 Accused No. 2 authorised the current
ale department to give credit of the amount of Rs. 1 crore to
F the ..account of Accused No. 3.

The finding of the learned Special Judge, relying on or on
the basis of the evidence of PW-2, Sampada S. Amre, that the
said cheques were received on only 6/7/1991 in the clearing
department and sent for clearance on that day, even though the
G
amount had been credited with A3 on the 5th itself, cannot be
sustained. A

The question before the judge was whether the said 4
Cheque had really been received by the Funds department on
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 173

the 07/07.1991. For this the learned Special Judge also found A
that in the BCR Register dated 5/7/1991 as also the transfer
scroll, no details of the said cheques had been given, although
in the BCR Register dated 6/7/1991 two separate entries of
the cheques giving details like name of the bank, cheque
numbers, dates and amounts had been mentioned. The B
forwarding letter of the drawer bank has not been exhibited.
From the daily register it appears that the cheque for Rs. 29
lacs and 71 lacs appear as the last entries [Exts. 28(1) and
28(2)]. The transfer scroll also show that the said banker
cheques were sent at the end of the day. They find mention in c
Exhibit 153 at the places marked Exts. 153(1) and 153(2).
Even in Ext. 0-28 of Andhra Bank dated 5th July, 1991 they
had been shown as the last entries. From Exts. 153(1) and 153
(2) it further appears that the transactions in relation to the said
t cheques were entered into on 5th July, 1991 as the last D
transactions of the day. They had been forwarded to the current
account department as has been mentioned earlier. The
amount of both the cheques were clubbed together to make it
Rs. 1 crore in toto. From these documents, it is evident that
proceeds of the cheques were credited to the account of
E
accused No.3 on 5th July, 1991 itself. From Ext. A-1 (14),
Current Ale. Register, ALPM 11, it would furthermore appear that
posting of the cheques was done by the Current Department
at SI. 179.

The fact that the cheques were dated 5th July, 1991 is not F
in dispute. It is also not disputed that the voucher Ext.151 was
prepared on 5th July, 1991.

PW-15, Ragvinder Sarkar, stated:-

"Unless and until the cheque issued in favour of Party are G
...... cleared, in clearing and the account of the drawee with the
,, RBI is credited to the account of that bank with RBI, credit
. of the amount of that cheque is not given to the account of
' that party."
H
174 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A Although according to him, the said cheques were not sent
for clearance on that date as per the schedule, in his cross-
examination he stated:-

"20. [ ... ]The amount is credited to the account of the client
by making entry in his current account. We ao not mafritain .,
B
any Clearing Register in Clearing Department with regard
to the cheques received from the Funds and Investment
Department. There was no procedure to maintain such ~
Register."

c He further accepted that there was no practice of issuing
acknowledgement to the Funds Department for receiving
cheques from them or vice versa.

According to him the Clearing Department does not
D accept cheque from the Funds Department once the bank
-t
schedule is sent to the Service Centre. He furthermore stated
-
"Functioning of the clearing department was to send for
clearing whatever cheques are received from the Funds
E and Investment Department or from other department. No
department can get the cheque cleared by sending them
directly to the service centre by-passing the Clearing
Department."

F The Learned Special Judge should have given proper
attention to the evidence of Mr Kher (PW 1) an agent, Mr Raju
(PW 3) who was working as the Manager, and Sudhakar Ali
(PW 4) the clerk working with the Bank of Karad which show
that both these cheques had been prepared and issued as per
G the instrctions of AD Narottam on 05.05.1991. The learned
Spe~ial Judge placed unnecessary reliance on the entries in
the BCR Register of Andhra Bank to prove the fact that the ~

H
cheques had not been received on 05.05.1991.

Only because the total amount of the cheques and the •
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 175

name of the drawer bank had been entered without the cheque A
numbers, this by itself would not lead to the conclusion that the
cheques were not received on the day as it has not been
disputed that the cheques used to be received by the Funds
Department upto 3.00 p.m. The learned Special Judge-in
arriving at the said finding ignored the working of the Current B
Account Department. It furthermore failed to make a distinction
between cleared credit and uncleared credit. Those credits
which come within the purview of cleared credit would be
known only at the end of the day as all transfers which come
within the purview of the "exceptional transactions" were known c
to the high ups of the bank. The practice of instant credit stands
accepted.

The current account officers knew the distinction between
-t cleared credit and uncleared credit. If the credit was uncleared,
it would be posted as such and no withdrawal would· be D
permittoo--unless there was authorization by officers and
managers of the operation. The funds department indisputably
does not control the posting of credit (both as cleared and
uncleared credit) and also does not control withdrawal against
uncleared credit. These functions are discharged by the Current E
Account Department.

The guilt of the appellants must be adjudged on the basis
of all the materials brought on record. The only lacunae which
has been pointed out that the details of the cheques had not F
been mentioned in the BCR Register and the amount of both
the cheques had been clubbed together.

PWs. 11 and 12 were the best persons to state before the
Court as to whether the said cheques were received on those
days or not. PW-13, Sunil Pore, Clerk in the Clearing G
~ Department and PW-15, Ragvinder Sarkar, Office in the
Clearing Department stated that they had no knowledge as to
when the cheques were received. The prosecution, thus, failed
to bring on record any clinching evidence to show that the
H
176 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A cheques were received only on 6th July, 1991 and not a date ~-
prior thereto.

We may at this stage also notice the statement of PW-4,
Sudhakar A Ail, Clerk in the Securities Department, Bank of
Karad, which reads :-,
B
"I do not know when ~r. Raje handed over the cheque and
the covering letter, Ex. 12 and 17 to Mr. Narotam. It is not -t
correct to say that Mr. Raje used to comply with the
directions of Mr. Narotam giving go by to the Banking rules
c and regulations."

PW-12, Rajendrakumar V. Kamble had made the said
entry. According to him it came within the purview of the bank
practice. He further stated that as the Clearing Department
refused to accept the cheques on 5th July, 1991 they were t
D
returned to the Funds Department where they were separately
recorded and a separate BCR was prepared and sent to the
Clearing Department. According to the said witness it was a
practice of the bank to send refused cheque through a separate
voucher so as to make it distinct.
E
It is furthermore important to note that because of the
urgency, details, such as the cheque number, date and
beneficiary remained to be entered in the BCR Register.

F The learned Special Judge has also ignored the
documents on ~ecord which demonstrate that in respect of
several other transactions the authenticity and bona tides of
which are not in dispute, the details of the RBI cheque were
not to be found in the BCR Register. This is apparent from
G Exhibits [141, 154, 146] and hence absence of certain details
by itself may not give rise to an inference that the cheque had
)._
not been received. ..,

Moreover if mere absence of details in the current account
credit voucher was enough to give rise to an inference that the
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 177

cheque in fact had not been received, the officers of the current A
+- account department would have raised a query thereabout and
would not have authorized posting credit in the dients accounts.

In our opinion the learned judge erred in coming to the
conclusion that the total amount of the two cheques was written B
in the BCR Register and in the current account credit voucher
and the two cheques were in fact not received on 05.07.1991.
He ignored that some times, the total amount of the cheques
~ was written without specifying the amount of the individual
cheque.
c
It has been ignored by the special judge that had the Fu_nds
Department sent the current account credit voucher without
there being a cheque, the same could have been easily
discovered as the cheque in question facilitated high value
transactions. In respect of high value cheques a separate D
-t
record in the form of "Exceptional transactions" is maintained.
The Exceptional transactions are verified and signed by the
Chief Manager, Bhalla and also verified and signed by the
Current Account officer. Had there been any irregularity on the
... part of the Funds Department the same would have been noted E
·both by the current account officers and the Chief Manager,
Bhalla and they would obviously have rais,ed an objection.

The learned judge of the Special Court has wrongly not
+ attached any importance to the exceptional transactions record
F
on the ground that there are too many transactions and
therefore officers concerned are not ecpected to scrutinize the
said iist. This inference was against the evidence on record
which show that there used to be only a few exceptional
transactions every day (at the most 7 to 8 in a day) and it is
impossible that the officer signing the said note would not note G
the transactions in question.
~
..,. The learned judge seems to have mixed the exceptional
transactions with the transaction listing, which contains all the
transactions of the day sent to the current account department. H
178 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A However exceptional transactions are very few in number and
the very purpose of maintaining separate vouchers for such
~
transactions is to bring to the attention of the superior officers
for their authorization.

The ALPM manual clearly requires the manager to
B
scrutinize the exceptional transactions to ensure that there has
been no unauthorized use of discretionary power and to sign
the exceptional transactions list after proper scrutiny.

The Special Court, in our opinion, committed an error in
c opining that the cheques were not received on 5th July, 1991.
Furthermore the Current Account Department, could not have
given credit for the two cheques since the computer system had
an inbuilt mechanism which would not allow credit therefor
before the clearance. It was, thus, for the Current Account
D Department to take necessary steps either for obtaining proper
authorisation or to deny mutual operation in respect thereof. t

It is, therefore, evident that the prosecution has merely
shown some irregularities. The learned Special Judge has
drawn inference, although there exists a missing link as regards
E ~
the date of receipt of the cheques and the date of preparation
of the vouchers. It must be borne in mind that we are dealing
with a case where conspiracy is alleged.

There is no direct evidence of conspiracy, there are only
F circumstancial evidence. The approach of this court for
recording an order of guilt against an accused on the basis of
circumstantial evidence is well known.

In C. Chenga Reddy v. State of A.P., [ (1996) 10 SCC
G 193 ], this Court held :-
"46. [ ... ]In our opinion none of the circumstances relied
upon by the prosecution connect the appellants with the )..
crime alleged against them. The circumstances have not
been proved beyond a reasonable doubt and the
-
H circumstances taken collectively cannot be said to be
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 179

compatible only with the hypothesis of the guilt of the A
appellants and totally incompatible with their innocence.
Under the circumstances we are of the opinion that the
prosecution has not established the case against the
appellants beyond a reasonable doubt. "
B
This Court further held :-

"52. [... ]There have been some irregularities committed
in the matter of allotment of work to the appellant or breach
of codal provisions, circulars and departmental
instructions, for preparation of estimates etc. and those C
irregularities give rise to a strong suspicion in regard to
the bona tides of the officials of the department and their
link with the appellant, but that suspicion cannot be a
substitute of proof. The courts below appear to have drawn
inferences by placing the burden of proving innocence on D
the appellant which is an impermissible course. In our
opinion none of the circumstances relied upon by the
prosecution against the appellant can ·be said to have been
proved satisfactorily and all those circumstances, which
are not of any clinching nature, even if held to be proved E
do not complete the chain of evidence so complete as to
lead to an irresistible conclusion consistent only with the
hypothesis of the guilt of the appellant and wholly
inconsistent with his innocence. The prosecution has not
established the case against the appellant beyond a F
reasonable doubt."

Thus, as the fact that the cheques were not received on
5th July, 1991 has not been proved , there is no reason as to
why benefit of doubt should not be given to the accused herein.
G
Moreover in our opinion the practice of instant credit
stands accepted.

The practice has been established though the evidence of
Sastry (PW 22) and of (PW 23) Bhalla. Thier evidence clearly H
180 SUPREME COURT REPORTS [2009) 13 (ADDL.) S.C.R.

A shows that this practice was known to the head office and to
all the superiors officers of the Bank . .It is also not in dispute
that the payment against Bankers cheques is 100%
guaranteed. The accused have followed the practice that was
in vogue for a long time.
B
The learned Special Judge has ignored and has not taken
into account the documentary evidence on record, which shows
that the cheques in respect of transaction 2 and 3, were
received on the dates on which the transaction was made. We
are therefore of the opinion of giving the benefit of doubt should
c be given to all the accused as regards transaction Nos.2 and
3.

FOURTH TRANSACTION

D 21. The fourth transaction relates to bankers cheque
No.078398 dated 17.09.1991 amounting to Rs.61,84,925.59
ps. which was issued by Canbank Financial Services Limited,
a sister concern of Canara Bank in favour of Andhra Bank. As
per the evidence of PW 10 Vernekar on 17.09.1991 Canbank
Financial Services Limited of Banglore purchased 11 % Bihar
E
Loan for a total amount of Rs. 6184925.59/- from the Andhra
Bank, Fort Branch, Mumbai. A 3 was the broker for this
transaction. CANFIN had issued Bankers Cheque dated
17.09.1991 for the aforesaid amount in favour of Andhra Bank;
A3 being the beneficiary thereof. +
F
. The credit voucher for the said sum for the purpose of
crediting the amount in the account of accused No.3 was signed
by accused No.2. The amount was credited in his account on
the basis thereof. Bankers cheque, however, was received in )
;
G the Clearing Department on 18th September, 1991. .,.
;

The learned Special Judge noticed that there was no entry
of the said cheque in the Bank Schedule dated 17th
September, 1991 and entry of the said account is contained
""
in Bank Schedule dated 18th September, 1991. On the basis
H
MIR NAGVI ASKARI v. C.B.I. [S.S. SINHA, J.] 181

of the said purported irreguiarity it was found by the learned A
Special Judge that the bankers cheque in question was not in
physical possession of Andhra Bank.

We may, however, notice that PW-11, Hemlata G. Nair, in
her evidence categorically stated that entries in respect of B
bankers cheques were made on that date and the debit and
credit vouchers are prepared and a consolidated debit voucher
!-- was also prepared on that date. She further stated that entries
were made in due course of business on 17th September,
1991. Ext.163, the clearing schedule which was prepared on
18th September, 1991 shows that the same was presented in
c
high value clearing at 12·noon. The Special Judge ignored the
practice that in the event the cheque had not been sent to the
Service Centre for clearance the same used to be returned to
the Funds Department and used to be sent again on the next
t D
day with a separate voucher.

The BCR Register dated 17.09.1991 indicated that there
was an entry with regard to the said Cheque not only as to the
amount of the Cheque but also of the Cheque number, date and
name of the A3 being the beneficiary thereof. Furthermore there E
was no entry of the said Cheque 09 the 18.09.1991.

·The learned Special Judge could not have rejected the
-+ defence of the accused that the Cheque had in fact been
received very late on 17.09.1991 and was therefore sent along
F
with a single credit voucher to the clearing department but the
clearing department returned it and therefore it was sent on
18.09.1991 i.e on the next day to the clearing department again
with a single credit voucher. The only ground on which the
learned judge rejected the defence was that in the normal
course of the banking business tile Cheque should have been G
included in the very first consolidated credit voucher which was
sent to the clearing department on the 18.09.1991 but it was
sent along with a single credit voucher which goes on to show
that it had been received quite late on 18th itself.
H
182 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A The said reasoning in our opinion is not acceptable.
~
The learned judge has overlooked the fact that the said
cheque was sent in high value clearing i.e at 12 O'clock on
18.09.1991, i.e., before 2.45 pm. The clearing schedule of the
high value clearing is at [Exhibit 163]. Therefore, with respect,
B
the learned Judge wrongly held that the cheque dated
17.09.1991 was received on 18.09.1991 at 2.45 pm. The
learned judge had also ignored the material brought on record
that on 18.09.1991 there was no entry of the said cheque in
the BCR Register, and therefore it stands established that the
c cheque was sent to clearing department on 17.09.1991. The
clearing department could not present the said cheque on
17.09.1991 but had presented it on 18.09.1991 in the high value
clearing. Hence, the single BCR credit voucher was
resubmitted on 18.09.1991 upon intimation by clearing
D department of presentation of the said cheque in high value t
clearing.

We have noticed in some details hereto before the
functionings of the departments of the bank and the banking
E practice. on the basis thereof the learned judge should have
given benefit of doubt to the accused with respect to this
...
transaction too.

FIFTH AND SIXTH TRANSACTIONS +
F 22. These two transactions relate to the cheques for Rs.
75 lacs from the Bank of Karad and Rs. 86,62,500/- from ANZ
grindleys Bank. Both the said cheques are dated 6.11.1991.
They were realized only on the 8.11.1991; 7.11.1991, being a
Bank holiday,
G
PW2 Sampada Ambre states that the first bankers cheque
was issued on 6.11.1991 at the request of Sri AD Narottam >--
by debiting his account with Rs. 75 lacs as per his statement
of account pertaining to the securities transaction.
H
MIR NAGVI ASKARI v. C.8.1. [S.B. SINHA, J.] 183

To the similar effect is the evidence of Kanchan (PW 9) of A
the Standard Chartered Bank which shows that the cheque for
Rs.86,62,500/- was issued by the ANZ Grindlays Bank in favour
of Andhra Bank relating to the transaction of Mr BR Chhada
who had purchased five lacs equity shares of HCL limited from
A3. B

The BCR Register in this regard discloses all the requisite
details including the cheque number. The voucher made in
regard to the said cheque was signed by accused No. 4. The
debit voucher was signed by Accused Nos. 1 and 2.
c
We need not go into the details of the said transaction
since the learned Special Judge has already given the benefit
of doubt to the accused that the said cheques had been
received in the funds department on 06.11.1991 on the basis
of clear enteries made in the BCR Register and the transfer D
scroll giving the details of the cheque. We do not find any
reason to interfere with the said finding. We agree with the
observations of the Special Judge that all the evidence on
record would only go on to show that the cheques had in fact
been received on the 6.11.1991. E

The next question which arises for our consideration is as
to whether the said cheque had been sent for the clearing
department on the date of its receipt itself or on 08.11.1991.

The learned Special Judge in regard to the said question F
has clearly held that the two cheques were sent to the clearing
department on the 8th only and not on the 6th.

The learned Special Judge, however, in our opinion,
erroneously rejected the argument advanced on behalf of the G
appellant that the said cheques were sent along with a single
voucher but they were returned and therefore were again sent
back to the clearing department on 08.11.1991. As long as
there is the slightest opportunity of two views possible, in our
opinion, the one in favour of the accused must be adopted.
H
184 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A All the materials on record were required to be considered
~-
having regard to the fact that 7.11.1991 was a bank holiday and
accordingly the credit voucher could only have been sent on the
8.11.1991

In our opinion, the learned Special Judge was, with
B
respect, wrong in concluding that even though the two cheques
were probably received on 06.11.1991, they were not sent for
clearing on 06.11.1991.

In our considered opinion, despite evidence leading to the
c effect that cheques were received on 06.11.1991, the finding
to the contrary was clearly erroneous. We are, therefore, of the
opinion that the prosecution has not been successful in
establishing the involvement of the accused as regards these
transactions.
D
SEVENTH TRANSACTION

23. So far as the seventh transaction is concerned, a
bankers cheque bearing No. 22687 dated 13.11.1991 for a
sum of Rs. 2,37,29,750/-was issued by the Standard Chartered
E Bank in favour of Andhra Bank. Although a credit voucher for
the entire sum should have been prepared, a credit voucher only
a
for sum of Rs. 1.50 crores authorizing the amount to be
credited in the account of Accused No. 3 was prepared. It was
signed by Accused No. 4 Ramesh Vardraya Shenoy. The --+
F Current Account of the Accused No. 3 was credited on the
same day on the basis of the said credit voucher. The said
amount was duly credited in his account, as would appear from
Exhibit 195.

It is not in dispute that the credit of Rs. 1.50 crores was
G
given on an ad hoc basis. Had such credit not been given, the
account of Accused No.3 would have stood overdrawn,by Rs.
1,39,86,304/-. The amount of difference, viz., 87,29,750/, ""
however, was credited on the next day, i.e., on 14.11.1991. The
credit voucher was again signed by Accused No. 4.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 185

.,.
.
Indisputably, the said bankers cheque was received on .
A
14.11.1991 and sent for clearance on the same day. No interest
was charged thereupon. In the said transaction, bank suffered
a loss of Rs. 9,760.27 by way of interest.

A finding of fact has been arrived at by the learn~d Special B
Judge that the bankers cheque was not in physical possession
of the officers of the Andhra Bank on 13.11.1991 stating:

"58. From this evidence, it clearly appears that the Cheque
I Pay Order [Exhibit - 40] was not received in the Andhra
Bank on 13.11.1991 and the same was not forwarded to c
the Clearing Department for clearance i.e. for ensuring the
credit of that cheque. On 14.11.1991 there is entry in the
B.C.R. Register of the entire amount of the cheque i.e. Rs.
23729750/-. On that day credit voucher [Exhibit - 78] was
--/ prepared for the amount of the difference between the D
amount of the cheque and the amount of Rs. 1.5 crores
which was credited on 13.11.1991 to the account of Hiten
P. Dalal. The credit voucher, therefore, is for Rs. 872975/

E
No adequate or sufficient explanation in regard thereto
was furnished by the concerned appellants. Admittedly, there
was no entry in the BCR register with regard to the said
cheque. There are no details in the Current Account Credit
Voucher.
F
It has been submitted by the learned counsel appearing
on behalf of the appellants that the cheque was received late
on 13.11.1991 but was not sent for clearance. It was
furthermore submitted that the BCR Register was not exhibited
in the evidence. G

From the records as also the findings of the learned
Special Judge, it is evident that the cheque was not received
in the Funds Department on 13.11.1991. The entry of this
cheque finds place as per Exhibit 77 only on 14.11.1991. The
H
186 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A details of the said transaction shows that the beneficiary thereof
~-
was the Accused No. 3 and other details have also been
mentioned therein. The credit voucher, according to Hemlata
Nair (PW-11) was sent to the Current Account Department
under the signature of the Accused No. 4. Ordinarily, it should
B have contained the details, but, as noticed hereinbefore, it was
only for a sum of Rs. 1.50 crores. A debit voucher (Exhibit 75)
was issued wherein it was stated:
~
"To receive 1.50 crores cheque, but received cheque for
Rs. 23929750 - erroneously not presented in the clearing.
c Presented on 14.11.1991."

Mention of both the credit and debit vouchers finds place
in Scroll Register (Exhibits 76(1) and 76(2)). The Transfer Scroll
entries (Exhibits 76(3) and 76(4)) also show that the credit as
D against the cheque at Exhibit 40, that was given to the account )-
of Accused No. 3, was only Rs. 1.50 crates although the
cheque was for a sum of Rs. 2,37,29, 750. Although the cheque
was not sent to the clearing department for clearance on
13.11.1991, a pay order/ cheque (Exhibit 82) was issued in
E favour of Standard Chartered Bank for and on behalf of
Accused No.3 upon debiting ·the amount mentioned therein.

In the aforementioned state of affair, the learned Special
Judge rightly arrived at the conclusion that. the cheque might
not have been in the physical possession of Andhra Bank on
F
13.11.1991. Even Sunil Pore (PW-13) in his evidence
categorically stated that the consolidated credit voucher was
received from the Funds Department on 13.11.1991 (Exhibit
128) in terms whereof 14 instruments had been received from
the Funds Department. The bank schedule which was marked
G as Exhibit 159 showed that the total amount of the said
transaction tallied with the consolidated credit voucher (Exhibit
128). However, the bank schedule also did not include the
amount of the cheque I pay order of the Standard Chartered
Bank.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 187

It is difficult to conceive that such a transaction could be A
cleared by the Accused bonafide. It was evidently done with an
object of giving an ad hoc credit of Rs. 1.50 crores to Accused
No.3 which he must have badly needed on 13.11.1991.
Otherwise, as it would appear not only from the evidence of Ms.
Hemlata Nair (PW-11) but also from that of Mr. Ramteke (PW- B
18), that his account would have been overdrawn on that day
by Rs. 1,39,86,304.44. Mr. Bhalla (PW-23) in his evidence
stated that no reference in relation to the transaction was made
to him. Mr. Sastry (PW-22) also in his evidence categorically
stated that the amount was overdrawn, and therefore,· it c
attracted levy of interest.

The debit voucher dated 13-11-1991 is for 1.5 crores and
is signed by both A-1 and A-4. It is not difficult to infer that A 1
has also played an equally active role in ensuring an ad-hoc
credit of Rs. 1.5 Crore into the Account of Accused No. 3. In D
her evidence, Ms. Hemlatha Nair has identified the signature
of A 1 in the debit voucher (Ext. - 75). Therefore, it is not difficult
to perceive that A-1 is involved in this transaction.

The learned counsel for the appellant would contend that E
the error was an inadvertent one and as the said error was
detected, it was re-submitted on the next day. We do not think
that the said explanation is sufficient. We, therefore, are of the
opinion that the involvement of the concerned appellants -
Accused No. 3 and 4 is established beyond any doubt with F
regard to the said transaction.

EIGHTH TRANSACTION

24. The Eighth transaction pertains to Cheque No. 193889
dated 04-12-1991 for Rs. 7 Crore issued by Bank of Karad, G
Fort Branch, Bombay. [Ext.32] PW2, Ms. Sampada Ambre,
who was working in Bank of Karad during the time of the
transaction, in her evidence, affirms that she had prepared the
said Cheque and that was signed by PW-5, Mr. Sarmalkar.
H
188 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A It is being claimed on behalf of the Petitioners that the said
Cheque was received by Andhra Bank on 04-12-1991.

A perusal of the record reveals that the Cheque was dated .....
04-12-)991. The amount for the same was credited to the
Account of Accused on 04-12-1991 but the Cheque was
B
presented for clearing only on 05-12-1991. However the
irregularities in the records should have been subjected to close
scrutiny to determine collusion, if any, between the Accused
persons for the purpose of serving a common object.

c In her deposition, Mrs. Hemalatha Nair, (PW-11) Clerk,
Funds Department of Andhra Bank, Fort Branch, states that
she had prepared the Credit Voucher [Ext. 85] dated 04-12-
1991 for R$. 7 Crore favoring C.D. No. 4819 and the Debit
Voucher [E}(t. 86] dated 04-12-1991 for the same amount on
'D being instructed by her officer.

Curiously, both the entries only mention of a Cheque
received from Bank of Karad, without any reference to its
number or date. She also deposed that the vouchers were
scrolled at Serl. No. 12 on Pg. No.90 of the Transfer Scroll
E
Register [Ext 88(1) and (2)] and authorized by Accused No.1.

As per Katta Hari Babu [PW-17], on the basis of the same
credit voucher, he credited to the account of Accused No.3, an
amount of Rs.7 crores. The same is corroborated by his
F Statement of Account of the same date. [Ext. 195 (11)]
However, according to Mr.. Sun ii Pore, PW-13, in the Bank
Statement dated 04-12-1991, no entry of the said Cheque may
be found. Similarly, a perusal of the Cheque Clearance
Register of Andhra Bank Dt. 04-12-1991 also reveals that there
G is no mention of the Cheque issued by Bank of Karad in it.

Further in her deposition, Ms. Hemalatha Nair, (PW-11)
states that the said Cheque was received by Andhra Bank only
on 05-12-1991 and that at Pg. 122 of the BCR Register, dated
05-12-1991, an entry with all the details of the said Cheque was
H
MIR NAGVI ASKARI v. C.B.I. [S.S. SINHA, J.] 189

made: A
+
As per her evidence, on 05-12-1991, the consolidated
Credit Voucher which included the Cheque amount of 7 Crores
was prepared by Shailendra Rane and was sent to the Clearing
Dept. for clearing. The BCR Regi$ter, dt. 05-12-1991, which 8
tallied with the Consolidated Credit Voucher prepared by Sri.
Shailendra Rane on the same day, was initialled by Accused
No. 2.

She deposed further that on 05-12-1991, as per the
instructions of accused No. 2 and 5, she prepared the BCR C
Debit Voucher which does not include the Cheque amount of
Rs. 7 Crore. She identified the handwriting, signatures and
initials of herself, Accused No.1, 2 and 5.

Had the said credit been not given, the account of the D
Accused No. 3 would have been overdrawn by
Rs.3,01,92,461.90. No interest was charged as a result
whereof the bank suffered a loss of Rs. 45,547.90.

Thus, it is evident that the amount of the cheque was
credited to the account of Accused No.3 on 04-12-1991, even E
without having the same in the possession of the bank. It is also
clear from the perusal of the records that certain irregularities
are present in the records pertaining to the cheque which,
undoubtedly involved Accused No. 1 and 2. We are, thus, of
the opinion that Accused No.1 and 2 have undoubtedly assisted F
in ensuring the credit of Rs. 7 Crore in the account of Accused
3.

The allegation against Accused No.5 is only regarding
signing by him the Consolidated Debit Voucher for a lesser G
amount even when it was not tallying with the total amount of
the cheques recorded in the BCR Register on 05-12-1991.

Accused No. 5, contended that he had done so because
the amounts were not tallying with and was less by seven
H
190 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A Crores. His further contention was that the Consolidated Credit
Voucher was prepared by Ms. Hemalatha Nair and put up to --+
him for his signature, and he signed it keeping with the
requirements of double entry system and to avoid double debit .,
.

as the same had already been debited on 04-12-1991.
B
We may also notice that accused No.5 was acquitted by
the Trial Court in respect of transaction dt. 16-12-1991 despite
the Consolidated Debit Voucher not tallying with the total as
~
reflected in the BCR Register. Thus, being only involved in
these two transactions having similar facts, and being acquitted
c in one, he is, in our view, entitled to the same benefit in the other
transaction too. Benefit of doubt given in respect of one
transaction would apply on all fours to the other, as both of them
are of similar nature. Further, it also needs to be considered
that the prosecution has not been able to produce any evidence
D to prove Accused no.S's involvement in the conspiracy. ~

Therefore we are of the opinion that the learned Special Judge
erred in holding that accused no.5 was a party to the conspiracy
with regard to the instant transaction.

E NINTH TRANSACTION
....
25. It related to a bankers cheque bearing No. 231381
dated 16.12.1991 for a sum of Rs. 8,80,95,890.41 drawn on
the Standard Chartered Bank in favour of Andhra Bank. The ~
entry in BCR Register of 16-12-1991 (Ext. 91) has an entry with
F full details of the said cheque including the cheque number and
the date. However, the beneficiary is shown as "Current Account
ABFS" instead of Accused No.3. A credit voucher was
prepared for the aforementioned sum which was signed by
Accused Nos. 1 and 2. Accused No. 3's account was credited
G on 16.12.1991. The banker's cheque, however, was received
in the Clearing Department on 17.12.1991 and sent for clearing
on that day. Had the credit of Rs. 8,80,95,890.41 not been ~
given, the Accused Nos. 3's account would have been
overdrawn by Rs. 3,88,54,765.49.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 191

The evidence brought on record clearly indicate that the A
cheque was received on 16.12.1991. It is possible that the
cheque was received late and the same was sent with a single
credit voucher. As the Clearing Department refused to accept
the same, it was once again sent to the Clearing Department
with the consolidated voucher (Exhibit 122) on 17.12.1991. The B
!earned Special Judge opined that if the cheque was received
on 16.12.1991, the same should have been sent to the Clearing
Department for clearance on the same day and as such the
learned Judge has inferred that the cheque must have not been
received before 3.00 p.m. Had the credit voucher been returned, c
as has been contended, it was obligatory on the part of the
concerned appellants to intimate the Current Account
Department so as to enable them to, through posting of the
credit voucher give credit to the account of the Accused No. 3.
It was evidently not done. In the said transaction, loss of interest
D
to the bank was for Rs. 57,324.

The learned trial judge has rejected the contention of the
accused that the cheque was received late and it was sent to
,_ the clearing department with a single credit voucher and since
the clearing department refused to accept the same, it was once E
again sent to the clearing department with a consolidated credit
voucher (Ext. - 122) on 17-12-1991 on the grounds that even if
it was true, it was the duty of the accused No. 1 and Accused
No. 2 to immediately intimate the Current Accounts department
to withhold posting of the credit voucher for giving credit in the F
Accused 3's account.

In relation to this transaction also, it appears to us that the
learned Special Judge failed to consider the practice of "Clear''
and "UncleQr Credit" to which we have already made reference
G
hereinbefore and for the sake of brevity, we restrain ourselves
A; from elaborating thereon once again.
,.,..
However, we are constrained to mention that is difficult to
accept that a mere failure to intimate the current accounts
H
192 SUPR.EME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A department to withhold posting when there existed a
mechanism of clear and unclear credits, would be sufficient to ~
establish conspiracy. We do not, therefore, agree with the
learned special judge's finding with respect to this transaction
also and, therefore, of the opinion that benefit of doubt should
B be given to all the accused herein.
TENTH TRANSACTION

26. The tenth transaction related to a banker's cheque ~

bearing No. 102956 dated 7.04.1992 for a sum of Rs. 4.00
c crore drawn on Bank of Karad Ltd. in favour of Andhra Bank.
The credit voucher was prepared for the aforementioned sum
which was signed by the Accused No. 2. Accused No. 3's
account was credited on 7.04.1992. The bankers cheque was
received on 8.04.1992 in the Clearing Department and was
D sent for clearing on the same day. Had credit of Rs. 4.00 crore
not be~n given, Accused No. 3's account would have been
overdrawn by Rs. 2,77,95,280.95. Loss to the bank on account
of interest was Rs. 26,027.

The finding arrived at by the learned Special Judge is that
E
the cheque was issued on 8.4.1992. It appears that on the day
on which the cheque was issued, there was no sufficient
balance in the account of Shri AD. Narottam. His account was
debited only on 8.4.1992.

F The evidence of Mr. Raje (PW-3) is that he had signed the
cheque on 7.4.1992. He also signed the forwarding letter (which
was marked as Exhibit 17) on the same day. Credit voucher
was, however, prepared by Sudhakar Ali (PW-4) on 8.4.1992.

It is not in dispute that this transaction pertained to
G
purchase of securities from Andhra Bank for Mr. AD. Narottam,
who was a share broker. As would appear from the evidence ~
of Sudhakar Ali (PW-4), an inter-bank credit voucher was
prepared on the same day on which the cheque was issued.

H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 193

In his evidence, Mr. Sarmalkar (PW-5) also stated that as A
Mr. Narottam did not have sufficient amount in his credit, the
cheque as also the forwarding letter was actually issued on
8.4.1992 although they were bearing· the date 7.4.1992.

The BCR Register (Exhibit 105) also did not show that B
there was any entry in regard to the said cheque on 7.4.1992.
No such entry is found even on 8.04.1992. The rubber stamp
of Clearing Department, however, showed the date to be
"' 8.04.1992. The corresponding debit voucher (Exhibit 98) also
provides the details of the said cheque. The credit voucher
(Exhibit 100) on the basis whereof the said sum of Rs. 4.00
c
crores was credited to the account of Accused No. 3 on
7.04.1992, however, did not mention the other details of the
cheque of Bank of Karad. It mentioned the name of the bank
as Standard Chartered Bank which is evidently not correct. The
--{
said credit voucher was signed by Accused No. 2. Therefore, D
the basis on which the credit voucher was prepared on
7.04.1992 has not been explained.

Contention of the appellant that in the credit voucher, the
"-·
name of the bank was wrongly mentioned as the Standard E
Chartered Bank in stead and place of Bank of Karad cannot
be accepted. Even the BCR Register does not show that a
cheque for the aforementioned amount has been received. The
~ bank schedule dated 7.04.1992 also does not indicate receipt
of such a cheque from either of the said banks on 7.04.1992. F
The consolidated credit voucher also does not bear any entry.
It, therefore, appears that the said credit voucher was wrongly
prepared for a sum of Rs. 4.00 crores mentioning the name of
the drawer bank as Standard Chartered Bank. False entry was
also made in the Transfer Scroll (Exhibit 102) showing the name
G
of the drawer bank as Reserve Bank of India. Even in the BCR

• Register of 8.04.1992, no entry is found as regards the said
cheque (Exhibit 12). The amount of the said cheque was,
however, included in the consolidated voucherdated 8.04.1992
(exhibit 106) which was sent to the Clearing Department. The
H
194 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A bank schedule dated 8.04.1992 also shows the receipt of the
cheque which was forwarded for clearance on the same day.
-t

It is, therefore, evident that the concerned accused were
not aware about exactly where the money came from. It is wholly
unlikely that the experienced bank officers would make such a
B
glaring mistake with regard to the name of the bank as credit
vouchers and debit vouchers are prepared only on the basis
of the cheque as also the forwarding letter.

Katta Hari Babu (PW-17) in his deposition stated that had
c the said amount not been credited, Accused No. 3's account
would have been overdrawn by the amount of Rs.
2,77,95,280.95.

Thus, it is evident that Accused 2 prepared the credit
D vouch_er dated 07-04-1992 [Ext. -100] for the purpose of giving 'r
credit to the account of Accused 3 for the furtherance of the
objectives of the conspiracy between them.

APPLICATION OF THE PRINCIPLES OF CRIMINAL
CONSPIRACY ··'
E
27. Applying the said principles to the facts and
circumstances of the present case it must be held that with
respect to the transactions involved in the present case, the
ultimate beneficiary was Hiten P. Dalal (Accused No.3). Amount
F received from different banks by the Andhra Bank were credited
to his account as a result whereof the cheques issued by him
in favour of third parties could be honoured. But for the said
credits made in his account, it would have been overdrawn on
a few occasions.
G The nature of transactions, the manner in which the same
had been dealt with, and the fact that some of the officers of ;A
the Andhra Bank, employed in the Funds Department and
authorized to get the amounts in question credited to the
account of Hiten P. Dalal, had facilitated the same although the
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 195

bankers' cheques in question had in some cases not even been A
.... received by the Bank clearly establish the factum of conspiracy.

An officer of a bank holds a position of trust. Each one of
them, keeping in view the nature and extent of duties required
to b.e performed, is expected to do so not only in terms of
B
statutory directions, but as also the directions issued by the
Reserve Bank of India and his own employer. Documents for
the purpose of giving credit in the account of a customer would
"' indisputably be required to be prepared on the basis of the
cheque receipts. It cannot be prepared in anticipation of receipt
of a cheque; firstly, because the amount of the cheque, the
c
name of the drawee and other particulars would not be known
to them; secondly, the bank is required to maintain a large
number of registers to put in place a sound banking system.
_, All precautions must be taken to prevent a fraud or deceit on
the part of a customer. D

Therefore, the fact that, credit and debit vouchers were
prepared and other registers were filled up, although the
cheques were not in physical possession of the bank, in our
....,,,.
opinion, clearly establishes the existence of a criminal E
conspiracy between the ultimate beneficiary, on the one hand,
and some of the officers of the bank, on the other.

~ A debit or credit voucher furthermore is not prepared in
piecemeal or in instalments. Bank officers are not supposed
to know the immediate requirement of an account holder. F

An analysis of the facts of the case clearly demonstrates
that a conspiracy had been hatched between the accused 1,2,
3 and 4 its object being that accused Nos.1, 2 and 4 who were
the manager and officers working in the Funds Department and G
had dominion over the funds of Andhra Bank connived with A3
• to prepare credit and debit vouchers authorising the Current
Account department to credit those cheques to the account of
Accussed No.3 and, thus, affording him to take pecuniary
H
196 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A advantage of the public money of the Bank, without some of
~
the cheques in question having even been received by the bank
and thus dishonestly enabling A3 to make withdrawals from his
account No.4819 against the said credit afforded to his
account. Such things would not have been possible but for
B meeting of mind amongst the accused involved herein.

It is not in dispute that A3 was a broker in securities
transaction through the Funds and Investment Department of ~
Fort Branch, Andhra Bank. From these circumstances it is clear
that there existed a conspiracy between A 1, A2 and A4 the
c object of which was to obtain undue pecuniary advantage for
A3. The said act of the accused had been in violation of the ~
guidelines issued by Andhra Bank.

As we have noted hereinbefore on a thorough discussion,
D in relation to all the ten 'transactions in detail we have not been
able to find any conclusive evidence as regards the "
involvement of Accused No. 5 in the offence of criminal
conspiracy.

The conduct of the accused, keeping in view the .....
E
aforementioned finding of fact, being clear and expricit; in our
opinion, the ingredients of conspiracy as enumerated under
Section 120A of the Indian Penal Code must be held to have
been clearly established only against A 1, A2, A3 and A4. ~

F PREVENTION OF CORRUPTION ACT

28. Further A 1, A2, A4 and AS have also been charged
and convicted for the offence under s. 13(1)(c) and s. 13 (1)
(d) of the Prevention of Corruption Act by the special court
G below. It is undisputed that accused No. 1 was working as
Manager and others accused as· officer in the Funds
Department of the Fort Branch. Andhra Bank is a Nationalised
Bank and, therefore, they are 'Public servants' within the
• -,
meaning of section 21 of the IPC.
H
MIR NAGVI ASKARI v. C.8.1. [S.S. SINHA, J.] 197

The Accused, particularly A 1 and A2 had dominion over A
1'-
the funds of the Bank, and they misappropriated the funds of
Andhra Bank by issuing credit vouchers to the current account
( department for getting the amounts credited to the account of
A3, in some cases when the cheques were not received or sent
for clearance. 8
Prevention of Corruption Act, 1988 replaced the prevention
of Corruption Act, 194 7. The new Act was enacted 'to
f
consolidate and amend the law relating to the prevention of
corruption and for matters connected there with. Relevant
portions of S. 13 which provide for Criminal Misconduct by a
c
public servant read as under:

"13. Criminal misconduct by a public servant.

(1) A public servant is said to commit the off~ce of criminal D
misconduct, - Co

[... ]

(c) If he dishonestly or fraudulently misappropriates or
otherwise converts for his own use any property entrusted E
to him or under his control as a public servant or allows
any other person so to do; or

(d) If he,-[ ... ]

(ii) By abusing his position as a public servant, obtains for F
himself or for any other person any valuable thing or
pecuniary advantage; or

[ ... ](2) Any public servant who commits criminal
misconduct shall be punishable with imprisonment for a G
term which shall be not -less than one year but which may
~ extend to seven years and shall also be liable to fine."

Section 13 in general lays down that if a public servant
obtain for himself or for any other person, any valuable thing or
H
198 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A pecuniary advantage he would be guilty of criminal misconduct
~
and sub-section (2) thereof prescribes of the punishment for
such misconduct.
~
The ingredients of clause (c) of the said section are that
the public servant must dishonestly or fraudulently
B
misappropriate or otherwise convert to his own use or allow any
other person to misappropriate or otherwise convert for his own
use any property. Such property must have been entrusted to
~
such public servant or must be in the alternative under his
control as a public servant. Further such conversion or
c misappropriation must be done with a dishonest or fraudulent
intention. If the said three conditions have been satisfied then
the public servant would be guilty of an offence under clause
(c) of the section 13(1). That is to say that if there is a dishonest
or fraudulent intention on the part of a public servant and he with
D that intention misappropriates or otherwise converts for his own
use or allows any one else to misappropriate or otherwise
convert for his own use, any property which has been entrusted
to him or is under his con.trol as a public servant.

E Further clause (d) of the said section of which the accused
herein have also been charged deals with a similar kind of a
situation. The public servant must in this case by abusing his
position as a public servant, obtain for himself or for any other
person any valuable thing or pecuniary advantage to be liable
F for criminal misconduct under the section.

The accused in the present case indisputably had dominion
over the funds of the bank. They through their acts facilitated
misappropriation of the funds to the account of A3. Without the
assistance provided by the other accused, the main accused
G herein A3 would not have been able to withdraw from his
account amounts of money to which he was not entitled to under
law. The accused herein being public servants had an additional
responsibility of ensuring that the funds of the public were not
misappropriated in any manner or form, what so ever.
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 199

A3 did not have over draft facility or any overdraft limit A
sanctioned to him. A3 could not have overdrawn his account
he was facilitated to do s.o by A 1, A2 and A4.

Since we have not been able to find adequate evidence
of the involvement of A 5 in the transactions we hereby acquit
8
him of all charges under the Prevention of Corruption Act.

It is, therefore, beyond the purview of any doubt that A 1,
A2 ar:id A4 being public servants were guilty of offences under
s. 13(1)(c) r/w 13(2) as also s. 13(1) (d) r/w 13(2) of the said
M C
OFFENCES RELATING TO MAKING OF FALSE
DOCUMENTS

29. The learned special judge has also charged all the
accused A1, A2 , A4 and AS for offences under s. 467, 471 0
and 477 A of the IPC. S. 467 deals with the forgery of valuable
securities and wills etc. and is reproduced below:

"467. Forgery of valuable security, will, etc.-Whoever
forges a document which purports to be a valuable security E
or a will, or an authority to adopt a son, or which purports
to give authority to any person to make or transfer any
valuable security, or to receive the principal, interest or
dividends thereon, or to receive or deliver any money,
moveable property, or valuable security, or any document F
purporting to be an acquittance or receipt acknowledging
the payment of money, or an acquittance or receipt for the
delivery of any moveable property or valuable security, shall
be punished with imprisonment for life, or with
imprisonment of either description for a term which may G
extend to ten years, and shall also be liable to fine."

Section 471 which deals with using as genuine a forged
document has been reproduced below:

H
200 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A "471. Using as genuine a forged document or electronic
record-Whoever fraudulently or dishonestly uses as ~
genuine any document or electronic record which he
knows or has reason to believe to be a forged document
or electronic record, shall be punished in the same manner
B as if he had forged such document or electronic record."

Section 477 A reads as under:

"477A. Falsification of accounts.-Whoever, being a clerk,
officer or servant, or employed or acting in the capacity of
c a clerk, officer or servant, willfully, and with intent to defraud,
destroys, alters, mutilates or falsifies any book, electronic
record, paper, writi~]. valuable security or account which
belongs to or is in the possession of his employer, or has
been received by him for or on behalf of his employer, or
D willfully, and with intent to defraud, makes or abets the
making of any false entry in, or omits or alters or abets the
omission or alteration of any material particular of any
material particular form or in, any such book, electronic
record, paper, writing], valuable security or account, shall
E be punished with imprisonment of either description for a
term which may extend to seven years, or with fine, or with
_both.

Explanation-It shall be-sufficient in any charge under this
section to allege a general intent to defraud without
F naming any particular person intended to be defraud
without naming any particular person intended to be
defrauded or specifying any particular sum of money
intended to be the subject of the fraud, or any particular
day on which the offence was committed."
G
These three offences deal with substantially what is known
as forgery, defined in Section 463 or making of a false
document which is provided under Section 464. It is reproduced
'*
heretobelow:
H
MIR NAGVI ASKARI v. C.8.1. [S.B. SINHA, J.] 201

"Section 464. Making a false document-A person is said A
to make a false document or false electronic record-
First-Who dishonestly or fraudulently-

(a) Makes, signs, seals or executes a document or part
of a document; B
(b) Makes or transmits any electronic record or part of any
electronic record;

(c) Affixes any digital signature on any electronic record;
c
(d) Makes any mark denoting the execution of a document
or the authenticity of the digital signature,

With the intention of causing it to be believed that such
document or part of document, electronic record or digital
signature was made, signed, sealed, executed, D
transmitted or affixed by or by the authority of a person by
whom or by whose authority he knows that it was not
made, signed, sealed, executed or affixed; or

Secondly- Who, without lawful authority, dishonestly or E
fraudulently, by cancellation or otherwise, alters a document
or an electronic record in any material part thereof, after it
has been made, executed or affixed with digital signature
either by himself or by any other person, whether such
person be living or dead at the time of such alteration; or
F
Thirdly- Who dishonestly or fraudulently causes any person
to sign, seal, execute or alter a document or an electronic
record or to affix his digital signature on any electronic
record kn~wing that such person by reason of
unsoundness of mind or intoxication cannot, or that by G
~
reason of deception practised upon him, he does not know
the contents of the document or electronic record or the
nature of the alterations.[ ... ]"

A person is said to make a false document or record if H
202 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A he satisfies one of the three conditions as noticed hereinbefore
~
and provided for under the said section. The first condition
being that the document has been falsified with the intention of
causing it to be believed that such document has been made
by a person, by whom the person falsifying the document
B knows that it was not made. Clearly the documents in question
in the present case, even if it be assumed to have been made
dishonestly or fraudulently, had not been made with the intention
of causing it to be believed that they were made by or under
the authority of some one else.
..
c The second criteria of the section deals with a case where
a person without lawful authority alters a document after it has
been made. There has been no allegation of alteration of the
voucher in question after they have been made. Therefore in
our opinion the second criteria of the said section is also not
D applicable to the present case.

The third and final condition of Section 464 deals with a
document, signed by a person who due to his mental capacity
does not know the contents of the documents which were made
E i.e because of intoxication or unsoundness of mind etc. Such
is also not the case before us. Indisputably therefore the
accused before us could not have been convicted with the
making of a false document.

The learned Special Judge, therefore, in our opinion, erred
F
in holding that the accused had prepared a false document,
which clearly, having regard to the provisions of the law, could
not have been done.

Further the offence of forgery deals with making of a false
G document with the specific intentions enumerated therein. The
said section has been reproduced below. ,._
"463. Forgery.-Whoever makes any false documents or
electronic record part of a document or electronic record
with, intent to cause damage or injury), to the public or to
H
MIR NAGVI ASKARI v. C.8.1. [S.B. SINHA, J.] 203

any person, or to support any claim or title, or to cause any A
person to part with property, or to enter into any express
or implied contract, or with intent to commit fraud or that
fraud may be committed, commits forgery."

However, since we have already held that the commission
B
of the said offence has not been convincingly established, the
accused could not have been convicted for the offence of
forgery. The definition of "false document" is a part of the
definition of "forgery". Both must be read together. [Or. Vim/a
v. Delhi Administration, [1963] Supp 2 SCR 585]
c
Accordingly, the accused could not have been tried for
offence under Section 467 which deals with forgery of valuable
securities, will etc. or Section 471, i.e., using as genuine a
forged document or Section 477-A, i.e, falsification of accounts.
-1 The conviction of the accused for the said offences is D
accordingly set aside.

-CRIMINAL BREACH OF TRUST

30. The next charge we shall deal with is one arising under
Section 409 of the !PC with which the accused herein have E
also been convicted of by the special judge. The punishment
for criminal breach of trust by a public servant is provided under
Section 409. However we must herein make reference of
+ definition of criminal breach of trust simplicitor which reads as
under Section 405: F

"405. Criminal breach of trust.-Whoever, being in any
manner entrusted with property, or with any dominion over
property, dishonestly misappropriates or converts to his
own use that property, or dishonestly uses or disposes of G
that property in violation of any direction of law prescribing
the mode in which such trust is to be discharged, or Of any
legal contract, express or implied, which he has made
touching the discharge of such trust, or willfully suffers any
other person so to do, commits 'criminal breach of trust'."
H
204 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A The punishment for criminal breach of trust is provided in
Section""" 406. Punishment for aggravated forms of criminal -....
breach of trust is provided in Section 407 to Section 409.

The terms of the section are very wide. It applies to one
who is in any manner entrusted with property or dominion over
8
property. The section does not require that the trust should be
in furtherance of any lawful object. The section provides inter
alia, that if such a person dishonestly misappropriates or
converts to his own use property entrusted to him he commits
criminal breach of trust. There are separate offences by which
C criminal breach of trust may be committed. This section requires

( 1) Entrusting any person with property or with dominion
over property.
D
(2) That person entrusted (a) dishonestly
misappropriates or converting to his own use that
property; or (b) dishonestly using or disposing of
that property or willfully suffering any other person
so to do in violation -
E
(i) of any direction of law prescribing the mode in
which ~uch trust is to be discharged, or

(ii) of any legal contract made touching the discharge
F of such trust.

In Onkar Nath Mishra and Ors. vs. State (NCT of Delhi)
and Anr., [(2008) 2 sec 561] this court noted that in the
commission of the offence of criminal breach of trust, two
distinct parts are involved. The first consists of the creation of
G an obligation in relation to the property over which dominion or
control is acquired by the accused. The second is
misappropriation or dealing with the property dishonestly and
contrary to the terms of the obligation created.

H Criminal breach of trust by a public servant has been dealt
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 205
I

with under Section 409 which reads as under: A
~
"409. Criminal breach of trust by public servant, or by
banker, merchant or agent.-Whoever, being in any
manner entrusted with property, or with any dominion over
property in his capacity of a public servant or in the way B
of his business as a banker, merchant, factor, broker,
attorney or agent, commits breach of trust in respect of that
property, shall be punished with 1[imprisonment for life],
or with imprisonment of either description for a term which
may extend to ten years, and shall also be liable to fine."
c
Since we have dealt with the said issue in detail in K
Venkatkrishnan v. Central Bureau of Investigation (Criminal
Appeal 76 of 2004 decided today), we need not deal with it
here again.
-1 D
However, it is important to mention here that more recently
this court in State of Punjab v. Pritam Chand and Ors., 2009
(2) SCALE 457 opined:

) "The ingredients of offence under Section 405 are (i)
entrusting any person with property or with dominion over E
the property, (ii) the person entrusted (a) dishonestly
misappropriated or converted to his own use the property
or (b) dishonestly used or disposed of the property or
willfully suffered any other person so to do in violation (i)
of any direction of law prescribing mode in which such F
mode is to be discharged or (ii) of any legal contract made
touching the discharge of trust."

Further, more the court in Sharon Michael and Ors. v.
State of Tamil Nadu and Anr., 2009 (1) SCALE 627 noted thus: G
"Ingredients of Section 409 of IPC read as under:
'i-
(i) The accused must be a public servant;

(ii) He must have been entrusted, in such capacity, with H

-
206 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

"
A property.
i
(iii) He must have committed breach of trust in respect of
such property." "'

Therefore, in view of the principles of law extracted above
B in our opinion there is no doubt that the offences relating to
criminal breach of trust stands established against the accused.
They were the officers in the Funds Department of Andhra
Bank. In the said capacity they had been entrusted with the
funds of the Bank. !n that sense they had dominion over a thing.
c The money which was transferred to the account of A3 was the
money belonging to the Bank. Only the said accused had the
power to transfer it to the account of A3.

In the present case, the same has been done dishonestly
D to cause wrongful gain to A3 and in the process wrongful loss ...
has been caused to the Bank. The instruments based on which
the funds of Andhra Bank were transferred to the account of
A3 were not physically available with Andhra Bank at the time
the accused persons authorized the transfer of the funds of
Andhra Bank to the account of A3.
E
A3 also utilized the said credit given and accordingly even
cheques issued by him were honoured. Had it not been for the
credits given on the relevant dates his account would have been
overdrawn. Interest was not charged from A3 and was not +
F debited from his account and loss was therefore caused to the
bank.

Moreover, it must be noted in this respect that Banking
norms and est.ablished practices and procedures would contain
G directions of law prescribing the mode in which the trust is to
be discharged. The expression direction of law in the context
of sections 405 and 409 would include not only legislations pure _..,...

and simple but also directions, instruments and circulars issued
by an authority entitled therefor.
H

-
MIR NAGVI ASKARI v. C.B.I. [S.S. SINHA, J.] 207

The trust in this regard would therefore have to be A
discharged in terms of such directions. Acting in violation
thereof causing wrongful gain to A3 and loss to the Bank would
bring the action within Section 409 IPC.

Established banking norms are binding on an officer of the
8
Bank in the matter of discharge of the trust i.e. in dealing with
the money entrusted to him. He is required to follow the same
and that would be an impHed term of his contract of service as
an officer of the bank. The accused before us here acted in
breach of the same.
c
We are therefore of the opinion that the prosecution has
sufficiently been able to prove the involvement of A 1, A2 and
A4 as regards the offence of criminal breach of trust.

i OFFENCE RELATING TO RECEIVING STOLEN D
PROPERTY

31. The main accused herein, Hiten P Dalal, has in
addition also been convicted u/s 411 which deals with
dishonestly receiving stolen property. The said section has
been reproduced below: E

"411. Dishonestly receiving stolen property. ....:..Whoever
dishonestly receives or retains any stolen property,
knowing or having reason to believe the same to be ~tolen
property, shall be punished with imprisonment of either F
description for a term which may extend to three years, or
with fine, or with both.

Stolen property as used in this section has been defined
in section Section 41 O:
G
"410. Stolen Property-Property, the possession whereof
has been transferred by theft, or by extortion, or by robbery,
and property which has been criminally misappropriated
or in respect of which criminal breach of trust has been
committed, is designed as "stolen property", whether the H
208 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A transfer has been made, or the misappropriation or breach
of trust has been committed, within or without India. But, if
i
such property subsequently comes into the possession of
a person legally entitled to the possession thereof, it then
ceases to be stolen property."
B
Section 410 accordingly defines stolen property. A property
is stolen for the purpose of this section when its possession is
transferred by theft, extortion, robbery, dacoity or criminal ~
breach of trust or which was obtained under misappropriation
committed whether in India or outside.
c
An extended meaning is given to the words 'stolen
property' which are used in the four subsequent sections. Not
only things which have been stolen, extorted or robbed but also
things which have been obtained by criminal misappropriation
D or criminal breach of trust are within the meaning assigned to ~
these words.

We will not delve into this matter in detail because, as has
already been noted, Accused A 1, A2 and A4 here, were
involved in the offence of criminal breach of trust and
E
accordingly the funds which were transferred to the account of
A3 falls within the definition of stolen property.

Section 411 provides punishment to the person who
dishonestly receives stolen property. The person must have the
F knowledge that it is a stolen property.

We must bear in mind that A3 had entered into a criminal
conspiracy with A 1, A2 and A4. He would in that respect be
deemed to have known that the property in question was stolen
property.
G
This section as also the succeeding sections are directed
not against the principal offender e.g. a thief, robber or
misappropriator but against the class of persons who trade in
stolen articles and are receivers of stolen property. Principal
H
MIR NAGVI ASKARI v. C.B.I. [S.B. SINHA, J.] 209

offenders are therefore outside the scope of this section. A
Accordingly the conviction of the principal offender is also not
a prerequisite to the conviction of the receiver of stolen property
under this section. However in the present case the principal
offender i.e. A 1, A2 and A4 have been held guilty of a 'criminal
breach of trust' therefore the conviction of A3 would be even B
more clearly established from the facts and circumstances of
the present case.
, It must be noted in this respect that this section requires
two essentials:
c
(a) Dishonest receipt or retention of stolen property.

(b) Knowledge or reason to believe at the time of
receipt that the property was obtained in the ways
. specified in the section D
The offence of dishonest retention of property is almost
contemporaneous with the offence of dishonestly receiving
stolen property. A person who dishonestly receives property and
retains it, must obviously continue to retain it.
E
~

It is the duty of the prosecution in order to bring home the
guilt of a person under Section 411 to prove:

(1) that the stolen property was in the possession of the
...
accused.
F
(2) That some person other than the accused had
possession of the property before the accused got
possession of it and

(3) That the accused had knowledge that the property G
was stolen.
'j-
It has therefore in our opinion been conclusively
established by the prosecution that the A3 was guilty of an
offence under Section 411, since he had dishonestly received
H
210 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A stolen property.
of
SENTENCING AND CONCLUSION

.32. We may also place on record that as the CBI has not
preferred any appeal against the quantum of sentence, this
B Court cannot impose a higher sentence.

Since we have acquitted accused No. 5 Mir Nagvi Askari
of all the charges against him the order of sentence passed ·~
against him is hereby quashed.
c Since we have acquitted all the accused of offences under
Section 467 read with Sections 120, 471 read with Section
1208 as well as section 477A read with 120-B of the Indian
Penal Code, the sentence passed by the learned Special

D
Judge against all the accused as regards the said offences is
hereby quashed. ..
The Main accused herein A 3, Hiten P Dalal has been
found guilty of offences punishable under Section 1208 and
411 read with Section 1208. He is hereby sentenced to suffer
E rigorous imprisonment for 6 months and to pay a fine of Rs.
50,000 and in default to suffer Rigorous imprisonment for one
month.

So far as the sentence for the offences punishable under
s. 409 r/w section 109 of the Indian Penal Code and Section
..
F
13 (1) (c) and Section 13(1 )(d) read with 13(2) of the
Prevention of Corruption Act read with Section 109 of the Indian
Penal code is concerned, we agree with the conclusion arrived
at by the learned Judge that no special sentence needs be
passed against him in this respect.
G
We affirm the sentence imposed by the learned Special
Judge with regard to the offence under the Prevention of ~

Corruption Act.

H Accused 1, Rachakonda Dhankumar, Accused 2, Suratkal
MIR NAGVI ASKARI v. C.8.1. [S.8. SINHA, J.] 211

Kamat, and Accused 4 Ramesh Vardaya Shenoy are A
-t sentenced to suffer RI for one month each and to pay Rs. 1000/
- in fine and in default to suffer RI for seven days each for the
offences punishable under Section 13(1 )(c) read with Section
13(2) of the Prevention of Corruption Act read with Section 120-
8 of the IPC. 8
Similarly, the accused are also sentenced to suffer RI for
one month and to pay a fine of Rs. 1000/- each in default to
~
suffer RI for seven days each for offences punishable under
Section 13( 1)( d) read with Section 13(2) of the Prevention of
Corruption Act read with Section 1208 of the IPC. c
'

Further Accused 1, Rachakonda Dhankumar, Accused 2,
Suratkal Kamat, and Accused 4 Ramesh Vardaya Shenoy are
sentenced to suffer RI for 6 months each and to pay fine of Rs.
5000/- each , and in default to suffer RI for one month each for D
offences punishable under Section 1208 and Section 409 read
with Section 1208 of the IPC.

All substantive sentences are directed to run concurrently.
~.
Each accused should be given the benefit of set off for the
period for which he has already undergone imprisonment in this E
case. So far as the payment of fine is concerned, a period of
2 months time is given to all accused persons, to deposit the
same.

G.N. Appeals disposed of. F