# MIR NAGVI ASKARI + v. C.B.I

- **Citation:** [2009] 13 S.C.R. 124
- **Court:** Supreme Court of India
- **Decided:** 2009-08-07
- **Case number:** Criminal Appeal No. 1477 of 2004
- **Bench:** S.8. 51.Nha, Cyriac Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mir-nagvi-askari-v-c-b-i-25147
- **Pages:** 88

## Headnote

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
E involvement of A-5 - A-5 also acquitted of all charges under
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
F
the context of Sections 405 and 409 /PC includes not only
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
1
....
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
8
issued by Reserve Bank and his own employees.
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
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
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,
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
E
F
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
c and K.R. Purushothaman v. State of Kera/a (2005) 12 SCC
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

## Text

_Characters 0–39,630 of 159,281. This is a partial read: ask again with offset=39630 for what follows._

[2009] 13 (ADDL.) s.c:R. 124
A
MIR NAGVI ASKARI
+
v.
C.B.I.
(Criminal Appeal No. 1477 of 2004)
B
AUGUST 7, 2009
[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
E involvement of A-5 - A-5 also acquitted of all charges under
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
F
the context of Sections 405 and 409 /PC includes not only
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
1
....
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
8
issued by Reserve Bank and his own employees.
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
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
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,
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
E
F
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
c and K.R. Purushothaman v. State of Kera/a (2005) 12 SCC
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.
E Amount 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. The
F nature of transactions, the manner in which the same had
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
G
bankers' cheques in question had in some cases not
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]
F
C. Chenga Reddy v. State of A.P., (1996) 10 SCC 193,
referred to.
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
--f
with the intention of causing it to be believed that such
.D
document has been made by a person, by whom the
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
B of a false document with the specific intentions
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
c definition of "false document" is a part of the definition
~
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
D
a forged document or Section 477-A, i.e, falsification of
raccounts. The conviction of the accused for the said
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
_;-
F of Andhra Bank. In the said capacity they had been
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
G
power to transfer it to the account of A3. [Para 30] [206-
'
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
,.
r
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-DH]
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 A 1, 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
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
fB 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. An extended meaning is
'1--
given to the words 'stolen property' which are used in the
four subsequent sections. Not only things which have
I
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 A 1, 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]
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
A
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
B 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-B of the IPC. [Para 32) [210-H;
c 211-A-B]
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
~
F of set off for the period for which he has already
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
H
(1996) 4 sec 659
relied on
Para 17
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
A
__ B
c
D
136 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
S.B. SINHA, J. 1. These five appeals, arising out of a
judgment and order dated 19/10/2004 passed by the Special
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
common judgment.
BACKGROUND FACTS
2. Andhra Bank is a Scheduled Nationalised Bank. It has
a branch at Mumbai known as the Fort Branch. Out of five
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
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
tit.
~
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
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.
F
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
8 said offence, allegedly found involvement of Accused Nos. 4
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. If was
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.
PWs 11 to 19 and 22 to 24 were working in the Andhra
Bank. PW-11 Hemlala G. Nair and PW-12 Rajinderkumar and
A
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.
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
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.
E
F
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/
8
1991, the credit was given one day prior thereto, i.e., on 17/
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
E
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.
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
F
that by issuing a credit voucher without the cheque having been
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
G
securing a pecuniary advantage for him.
~-
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.
.
B
(iii)
Cheques received by the Bank are dealt with by the
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
D
the Reserve Bank of India for clearance.
(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,
F
Clearing Department and Day Book Department.
(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.
"'
H
8. Mr. Naphade, Mr. C. Mukund and Mr. Das, learned
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.
(vi)
Appellants, having scrupulously followed the
G
-+
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.
c
(viii) Even assuming that the appellants are party to any
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
D
judgment is liable to be set aside.
(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
H
complaint, the impugned judgment cannot be
{
A
B
c
D
E
F
G
146 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
sustained.
(xvii) Appellants having followed' the established and
longstanding banking practices, deviation
therefrom would only amount to misconduct, as no
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
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
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.