# Surendra Kumar Shukla Revisionist v. C.B.I

- **Citation:** (2020) 11 ILRA 301
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-10-20
- **Case number:** Criminal Revision Defective No. 697 of 2020
- **Bench:** Suneet Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/surendra-kumar-shukla-revisionist-v-c-b-i-45399
- **Pages:** 7

## Headnote

A. Criminal Law - Code of Criminal
Procedure, 1973-Section 397/401 - Indian
Penal Code, 1860- Sections 120-B, 420,
467, 468, 471 - Prevention of Corruption
Act, 1988-Section 13(2) r/w 13(1)(d)-
application-rejection-challenge
to
-
discharge
application-revisionist/auditor
conspired to dupe the bank by forged and
manufactured documents along with other
accused-revisionist cannot be absolved as
the revisionist wilfully gave false opinion
and signed the document mechanicallyrevisionist acted unprofessionally with
dishonest intention to favour the accused
persons for pecuniary gain and causing
wrongful loss to the bank-trial court
committed no error in rejecting the
application.(Para 3 to 27)

B. Turning to charge u/s 120-B IPC, an
agreement between two or more persons
to do or cause to be done an illegal act or
an act which is not illegal, by illegal
means. It differs from the other offences
in that mere agreement is made an
offence even if no step is taken to carry
out the agreement. A conspiracy from its
very nature is generally hatched in
secret. It is, therefore, extremely rare
that
direct
evidence
in
proof
of
conspiracy can be forthcoming. But like
other offences criminal conspiracy can be
proved
by
circumstantial
evidence.
Indeed, in most cases proof of conspiracy
is largely inferential though the inference
must
be
founded
on
solid
facts,
surrounding
circumstances
and
antecedent
and
subsequent
conduct,
amongst
other
factors,
constituting
relevant material. The agreement or
understanding
may
be
proved
by
necessary implication to do an unlawful
act by unlawful means.(Para 24)

The revision is dismissed. (E-6)

List of Cases Cited:-
302 INDIAN LAW REPORTS ALLAHABAD SERIES

## Text

11 All. Surendra Kumar Shukla Vs. C.B.I.
301

17. The power confered to the trial
court to summon an accused under Section
319 Cr.P.C. is an extra-ordinary power and
it should be used very sparingly and not be
applied mechanically. In the present case
the trial court has not committed any
illegality or infirmity in rejecting the
application after prima-facie satisfaction
that
the
evidence
adduced
by
the
prosecution
did
not
establish
the
involvement of opposite party nos.2 to 5 in
the crime. The evidence brought on record
during trial does not prima facie show the
complicity of opposite parties no.2 to 5 in
the occurrence and the trial court has
rightly refused to summon them as accused.

18. After considering the rival
submissions of the parties as well as
material brought on record, the impugned
order does not suffer from any illegality or
irregularity and the learned trial court has
not committed any error in rejecting the
application filed by revisionist under
Section 319 Cr.P.C. The revisionist has
failed to point out any infirmity or illegality
in the order. The present criminal revision
lacks merits and deserves to be dismissed.

19. Accordingly, the criminal revision
is dismissed.
----------
(2020)11ILR A301
REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 20.10.2020

BEFORE
THE HON'BLE SUNEET KUMAR, J.

Criminal Revision Defective No. 697 of 2020

Surendra Kumar Shukla ...Revisionist
Versus
C.B.I. ...Opposite Party

Counsel for the Revisionist:
Sri Mehul Khare, Sri Prakash Sinha

Counsel for the Opposite Party:
Sri Sanjay Kumar Yadav, Sri Gyan Prakash

A. Criminal Law - Code of Criminal
Procedure, 1973-Section 397/401 - Indian
Penal Code, 1860- Sections 120-B, 420,
467, 468, 471 - Prevention of Corruption
Act, 1988-Section 13(2) r/w 13(1)(d)-
application-rejection-challenge
to
-
discharge
application-revisionist/auditor
conspired to dupe the bank by forged and
manufactured documents along with other
accused-revisionist cannot be absolved as
the revisionist wilfully gave false opinion
and signed the document mechanicallyrevisionist acted unprofessionally with
dishonest intention to favour the accused
persons for pecuniary gain and causing
wrongful loss to the bank-trial court
committed no error in rejecting the
application.(Para 3 to 27)

B. Turning to charge u/s 120-B IPC, an
agreement between two or more persons
to do or cause to be done an illegal act or
an act which is not illegal, by illegal
means. It differs from the other offences
in that mere agreement is made an
offence even if no step is taken to carry
out the agreement. A conspiracy from its
very nature is generally hatched in
secret. It is, therefore, extremely rare
that
direct
evidence
in
proof
of
conspiracy can be forthcoming. But like
other offences criminal conspiracy can be
proved
by
circumstantial
evidence.
Indeed, in most cases proof of conspiracy
is largely inferential though the inference
must
be
founded
on
solid
facts,
surrounding
circumstances
and
antecedent
and
subsequent
conduct,
amongst
other
factors,
constituting
relevant material. The agreement or
understanding
may
be
proved
by
necessary implication to do an unlawful
act by unlawful means.(Para 24)

The revision is dismissed. (E-6)

List of Cases Cited:-
302 INDIAN LAW REPORTS ALLAHABAD SERIES
1. CBI , Hyderabad Vs K. Narayana Rao, (2012)
9 SCC 512

2.
Kehar
Singh
Vs
St.(Delhi
Administration),(1988) 3 SCC 609

3. Noor Mohammad Mohd. Yusuf Momin Vs St.
of Mah., 1971 AIR 885

(Delivered by Hon'ble Suneet Kumar, J.)

1. The matter is taken up through
video conferencing.

2. Heard Mr. Sri Prakash Sinha,
Advocate, assisted by Sri Mehul Khare,
learned counsel for revisionist; and, Sri
Gyan Prakash, learned Addl. Solicitor
General of India, assisted by Sri Sanjay
Kumar Yadav, Advocate, appearing for
C.B.I.

3. The instant revision has been filed
seeking following reliefs:

"It is therefore, most respectfully
prayed that this Hon'ble Court may kindly
be pleased to set-aside the judgment and
order dated 15.07.2019, as well as
judgment and order 09.08.2019, passed by
the
Learned
Special
Court,
Anti
Corruption, CBI, Ghaziabad in Special
Case No. 10/2012 (CBI Vs. Manoj
Srivastava Etc.)

It is further prayed that this
Hon'ble Court may be pleased to stay the
effect and operation of the orders dated
15.07.2019 and 09.08.2019, passed by the
Learned Special Court, Anti Corruption,
CBI, Ghaziabad in Special Case No.
10/2012 (CBI Vs. Manoj Srivastava Etc.)
as well as to stay the proceedings of
Special Case No. 10/2012 (CBI Vs. Manoj
Srivastava Etc.), under Sections 120-B IPC
r/w 420, 467, 568, 471 IPC and 13(2) r/w
13(1)(d) Prevention of Corruption Act,
1988, pending before Learned Special
Court, Anti Corruption, CBI Ghaziabad
during the pendency of the present criminal
revision before this Hon'ble Court, and/or
pass such other and further order which
this Hon'ble Court may deem fit and proper
under the circumstances of the case."

4. The revisionist, a Chartered
Accountant, is aggrieved by rejection of the
discharge application filed before the court
below.

5. The facts, stated briefly, is as
follows:

6. A case came to be registered by
C.B.I., Ghaziabad, on 14.12.2010 on a
written complaint of the Union Bank of
India, Branch Noida, wherein it was
alleged
that
Sri
Manoj
Srivastava
functioning as Branch Manager of SSI,
Noida Branch, during May 2007 to May
2008, abusing his position as a public
servant entered into criminal conspiracy
with Proprietors of several (six) nominated
firms/companies,
thereby
dishonestly
causing loss to the bank and corresponding
gain to the Proprietors and himself.

7. During investigation it was found
that co-accused Manoj Srivastava entered
into criminal conspiracy with Sri Kaushal
Kishore
Sharma,
Proprietor
of
M/s
Surendera Electricals, whereby, accepting
the audit reports, balance-sheets, trading
account, profit and loss account as on
31.03.2006, 31.03.2007 and 31.03.2008,
forged statement of account of Corporation
Bank, Janakpuri, New Delhi, and forged
sale-tax returns to obtain loan, thereby,
caused loss to the bank. It is further alleged
that these financial papers were prepared
by the revisionist in conspiracy with the
borrower.
11 All. Surendra Kumar Shukla Vs. C.B.I.
303

8. Upon investigation charge sheet
dated 29.09.2012 was filed, revisionist was
made an accused. The Special Judge took
cognizance of the offence on 19.10.2012.
The challenge to the charge-sheet and
cognizance before this Court and the
Supreme
Court
failed,
consequently
revisionist
filed
discharge
application
which came to rejected by the impugned
order dated 15.07.2015. Hence, the present
revision.

9. It is submitted by learned counsel
for revisionist that the revisionist had
specifically pleaded in the discharge
application that he had audited the financial
statements (balance-sheets, trading account
and profit and loss account) of the firm
whose Proprietor is a co-accused. The audit
was done in compliance of Section 44 AB
of Income Tax Act, 1961, and thereon he
had given his opinion which is the audit
report. It was further contended that the
audit report is an opinion of the auditor and
such an opinion may be a wrong opinion
but certainly is not a false opinion.
Revisionist cannot be charged for the
opinion given as a professional. In support
of his submissions, reliance has been
placed
on
Central
Bureau
of
Investigation,
Hyderabad
Vs.
K.
Narayana Rao, (2012) 9 SCC 512.

10. Reliance is also placed on
Chartered Accountants Act, 1949, and the
Auditing
and
Assurance
Standards-2
(hereinafter referred to as "AAS-2") issued
by Council of Institute. It is submitted that
according to AAS-2, responsibility of
financial
statements
rests
upon
the
entity/enterprise and the objective of audit
is to enable the auditor to express an
opinion on such financial statement. The
auditor can draw a reasonable conclusion,
but an absolute certainty in audit is rarely
attainable. Reference has been made to the
relevant contents of AAS-2.

11. It is further urged that revisionist
was admitted as an Associate of the
Institute on 07.04.1995 and since then is a
practising
Chartered
Accountant.
No
complaint in regard to his professional
conduct as an auditor has ever been made
by any bank or entity. It is further urged
that allegation in the charge-sheet with
regard to preparing false financial papers is
without any evidence. The allegations,
noted in the final report (charge-sheet)
insofar it relates to the revisionist reads as
under:

"Investigation
has
further
revealed that Shri Manoj Srivastava, in
furtherance of the said criminal conspiracy
with Shri Kaushal Kishore Sharma Prop. of
M/s Surindera Electricals and by abusing
his official position as a public servant,
accepted the false Audit Reports, Balance
Sheets, Trading Profit and Loss accounts
as on 31-03-2006, 31-03-2007, 31-032008, forged statement of account of
Corporation Bank, Janakpuri, New Delhi,
and forged sale tax return submitted by the
borrower. The false financial papers were
prepared by Shri Surendra Kumar Shukla,
Chartered Accountant, in conspiracy with
the borrower."

12.
Learned
counsel
for
the
revisionsit
submits
that
taking
the
allegations in the F.I.R./charge-sheet and
the material/ evidence in support thereof,
on face value, the ingredients of the
offence against the revisionist is not
made out; revisionist has been made an
accused for merely giving an opinion in
the capacity of an auditor which is based
on the financial statements supplied by
the firm.
304 INDIAN LAW REPORTS ALLAHABAD SERIES

13. In rebuttal, learned counsel
appearing for C.B.I. submits that the
allegation against revisionist is that of
conspiracy; revisionist conspired with the
proprietor of the firm and bank officials in
preparing false report and fudging the
financial statements, thereby, dishonestly
causing wrongful gain and commensurate
wrongful loss to the bank. The revisionist
wilfully and deliberately failed to give an
adverse opinion/report suggesting that
documents relied upon in the financial
statement is manufactured and forged,
therefore,
the
auditor
disclaims
the
financial statements for want of relevant
documents or sufficiency of the contents of
the documents.

14. I have considered the rival
contentions and perused the charge-sheet
and material placed on record with the
assistance of learned counsels.

15. The AAS-2 mandates to
establish standards on the forms and
contents of auditor's report issued as a
result of audit performed by an auditor on
financial statements of an entity. Auditor
is required to review and assess the
conclusion drawn from the audit evidence
obtained as the basis for the expression of
an opinion on the financial statements.
The review and assessment involves
considering whether a financial statement
has been prepared in accordance with an
acceptable financial reporting framework
applicable to the entity under audit. It is
also
necessary
to
consider
whether
financial statements comply with the
relevant statutory requirements. Upon
audit, the auditor's report should contain
a clear written expression of opinion on
financial statements taken as a whole,
whether it is clean or clarificatory or does
not agree.

16. The financial statements are the
representations of the management of the
entity. The preparation of such statements
requires management to make significant
account estimates and judgments, as well
as, to determine the appropriate accounting
principles and methods used in preparation
of the financial statements. In contrast, the
auditor's responsibility is to audit these
financial
statements
based
on
audit
evidence in order to express an opinion
thereon.
The
auditor's
report
should
describe the scope of the audit by stating
that the audit was conducted in accordance
with the auditing standards generally
accepted in India. The auditor's report
should describe the audit as including; (a)
examining, on a test basis, evidence to
support the amounts and disclosures in
financial statements; (b) assessing the
accounting
principles
used
in
the
preparation of the financial statements; (c)
assessing the significant estimates made by
management in the preparation of the
financial statements; and, (d) evaluating the
overall financial statement presentation.
Thereupon, the auditor's report should
express the auditor's opinion "give a true
and fair view". The term "give a true and
fair view" indicates amongst other things,
that the auditor considers only those
matters that are material to the financial
statements.

17. In view thereof, it is evident that
the financial statement is based on the
books of accounts, vouchers, ledgers etc.
which the auditor is required to examine
and then base his opinion as per the
auditing standards. In other words, the
auditor is not required to mechanically
accept financial statement of the entity on
face value but the financial statement must
be examined with the corresponding
vouchers, books of accounts, ledgers etc. as
11 All. Surendra Kumar Shukla Vs. C.B.I.
305
a trained professional, and thereafter
express his candid opinion. The auditor
cannot escape his liability by merely stating
that the financial statement was supplied by
the entity and he signed it mechanically.
The allegation against the revisionist is that
he conspired to prepare the false financial
statement
based
on
manufactured
documents.

18. It is pleaded and submitted that
revisionist has been made an accused for
merely signing the audit report, whereas,
allegation against the revisionist is that of
conspiracy entered with the Proprietor and
bank official in preparing the false financial
statement to dupe the bank. The auditor is
not merely a countersigning professional
but has to examine that the financial
statements of the entity is based on relevant
material relied upon by the entity/firm upon
which the financial statement rests and that
the auditor has examined the statements;
ledgers, vouchers, books of accounts etc
before recording his opinion.

19. The stand of C.B.I. taken in the
counter affidavit filed in an earlier petition
(Application
No.
39089
of
2012),
pertaining to quashing of the charge-sheet,
is being relied upon in the present case. It is
categorically
stated
that
revisionist
prepared
false
balance-sheet;
trading
account, profit and loss account of the firm
for the financial years 2005-06, 2006-07
and 2007-08 to cheat the bank; revisionist
acted unprofessionally becoming a parter to
the fraud and conspiracy with dishonest
intention to favour the accused persons for
pecuniary gain and causing corresponding
loss to the bank. It is further stated that
balance-sheet of the firm/company is
reflection of the credit worthiness of the
entity; sanction of the loan rests on the
balance-sheets. In the instant case the
balance-sheet was not supporting the
growth of the delinquent firm. The coaccused, proprietor of the firm, during
investigation never produced any book of
accounts
to
substantiate
the
figures
reflected in the balance sheet. All financial
papers viz. sale tax acknowledgement,
statement of account of previous bank
submitted with the bank for the purpose of
loan was found to be manufactured and
forged documents. It is alleged that all the
forged documents are the brainchild of the
revisionist, a professionally trained auditor,
in conspiracy with the proprietor and
manager of the bank. The balance-sheet,
profit and loss account was prepared by the
revisionist without there being any books
of account.

20. Reverting to the case of K.
Narayana Rao (supra), the facts therein is
not applicable to the instant case. The case
pertains to false legal opinion submitted by
a panel advocate of the bank in respect of
housing loan. The only allegation against
the advocate is that he submitted false legal
opinion about the genuineness of the
property in question. Advocate's name was
not mentioned in the F.I.R. and the opinion
was based on the photocopy documents
pertaining to the property provided by the
bank. The Court upon examining the facts
was of the opinion that liability against an
opining advocate arises only when the
lawyer was an active participant in a plan
to defraud the bank. In the given facts of
the case, there was no evidence to prove
that the advocate was abetting or aiding the
original conspirators. In the facts of the
instant case, revisionist is an auditor and
responsibility of an auditor is not that of an
opining advocate. Further, it is specifically
and categorically alleged that revisionist in
conspiracy with the proprietor of the firm
actively participated and prepared false
306 INDIAN LAW REPORTS ALLAHABAD SERIES
finance documents in connivance with the
bank officials. The ratio of K. Narayana
Rao (supra) is distinguishable and not
applicable to the facts of present case.

21. Ingredients of the offence of
criminal conspiracy is that there should be
an agreement between the persons who are
alleged to have conspired and the said
agreement should be for doing an illegal act
or for doing by illegal means an act which
by itself may not be illegal. In other words,
the essence of criminal conspiracy is to do
an illegal act in furtherance of an
agreement and such an agreement can be
proved either by direct evidence or
circumstantial evidence or by both. It is a
matter of common experience that direct
evidence to prove conspiracy is rarely
available,
accordingly
circumstances
proved, before and after the occurrence,
have to be considered to decide about
complicity of the accused.

22. In the facts of the case in hand the
revisionist is charged, inter alia, for the
offence under Section 120B I.P.C. For the
purposes of conspiracy the allegations in
the charge sheet has to be read as a whole.
A single paragraph of the charge-sheet
cannot be relied upon by the revisionist to
contend that there is no allegation against
him except of signing the audit report. The
assertions in the charge-sheet, read as a
whole,
spells
out
the
circumstances
pointing to the conspiracy (agreement)
between the proprietor of the firm, manager
of the bank and the revisionist. The loan of
the firm was processed on forged, fudged
and manufactured documents upon which
rests the financial statements of the firm. It
is categorically stated that revisionist
entered into criminal conspiracy with
others by preparing false financial papers
as an auditor/chartered accountant in
conspiracy
with
the
co-accused
proprietor/borrower. The other accused
persons, i.e., manager of the bank ignored
the variation in financial figures available
in the balance sheets, statement of account
and other financial papers. Further, the
manager of the bank accepted the forged
statement of account and false financial
figures as genuine, thereby allowing the
diversion of cash credit (CC) limit. The
revisionist admits of auditing the financial
statements of the firm, but at the same time
in
the
backdrop
of
manufactured
documents did not give adverse opinion.
The allegation is that the revisionist was a
party
to
the
forged,
manufactured
documents upon which the loan was
processed.

23. Section 120B I.P.C. deals with the
punishment for criminal conspiracy. The
offence of "criminal conspiracy" is defined
under Section 120A I.P.C. The most
important
ingredient
of
the
offence
"criminal conspiracy" is the agreement
between two or more persons to do an
illegal act or an act not illegal by illegal
means. (Refer: Kehar Singh Vs. State
(Delhi Administration), (1988) 3 SCC
609). The offence of conspiracy
is
complete when two or more conspirators
have agreed to do or cause to be done an
act which is itself an offence, in which case
no overt act need be established. In Noor
Mohammad Mohd. Yusuf Momin Vs.
State of Maharashtra, 1971 AIR 885, the
Supreme Court considered and laid down
the distinction between Section 34, Section
109 and Section 120B I.P.C. Section 34
embodies the joint liability in doing a
criminal act, the essence of the act being
the
existence
of
common
intention,
participation in the commission of the
offence in furtherance of the common
intention invites its application. On the
11 All. Shubham @ Kalua Vs. State of U.P. & Anr.
307
other hand Section 109 may be attracted
even if the abettor is not present when the
offence abetted is committed provided that
he has instigated the commission of the
offence or has engaged one or more
persons in a conspiracy to commit an
offence and pursuant to that conspiracy
some act or illegal omission takes place or
has intentionally aided the commission of
an offence by an act or illegal omission.

24. Turning to charge under Section
120B I.P.C., criminal conspiracy postulates
an agreement between two or more persons
to do or cause to be done an illegal act or
an act which is not illegal, by illegal means.
It differs from the other offences in that
mere agreement is made an offence even if
no step is taken to carry out the agreement.
A conspiracy from its very nature is
generally hatched in secret. It is, therefore,
extremely rare that direct evidence in proof
of conspiracy can be forthcoming. But like
other offences criminal conspiracy can be
proved by circumstantial evidence. Indeed,
in most cases proof of conspiracy is largely
inferential though the inference must be
founded
on
solid
facts,
surrounding
circumstances
and
antecedent
and
subsequent conduct, amongst other factors,
constituting
relevant
material.
The
agreement or understanding may be proved
by necessary implication to do an unlawful
act by unlawful means.

25. Having considered the scope and
ambit of the offence under Section 120B
I.P.C. and applying it on the allegations/
facts, it is categorically alleged that the
accused persons conspired to dupe the bank
by
illegal
means
based
on
forged,
manufactured documents and financial
statements, alleged to have been prepared
by the revisionist. The allegations have to
be proved during trial. The Court while
framing the charge is required to prima
facie assess that the allegations and the
evidence links the accused to the offence.

26. It is settled principle of law that the
Court in exercise of its inherent power under
Section 482 Cr.P.C. would not enter into the
merits of the evidence in support of the charge.
At this stage, only a prima facie opinion is to
be formed whether the ingredients of the
offence alleged against the revisionist is made
out from the material placed on record. The
accused/auditor cannot be absolved of the
offence of conspiracy with the other coaccused of giving an opinion based on
manufactured documents to dupe the bank. It
is a matter to be seen and examined during
trial.

27. Learned counsel for the revisionist
failed to point out any illegality, irregularity or
jurisdictional error in the order impugned.

28. In view thereof, I find no reason to
interfere with the impugned order.

29. The application, being devoid of
merit, is accordingly dismissed.
----------
(2020)11ILR A307
REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 14.10.2020

BEFORE
THE HON'BLE SHAMIM AHMED, J.

Criminal Revision No. 1161 of 2020

Shubham @ Kalua ...Revisionist
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Revisionist:
Sri Ajay Singh, Sri Amarendra Nath Singh

Counsel for the Opposite Parties: