# N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI

- **Citation:** [2021] 12 S.C.R. 57
- **Court:** Supreme Court of India
- **Decided:** 2021-12-13
- **Case number:** Criminal Appeal No. 5 of 2010
- **Bench:** N. V. Ramana, Surya Kant, Hima Kohli
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/n-raghavender-v-state-of-andhra-pradesh-cbi-35177
- **Pages:** 37

## Headnote

Prevention of Corruption Act, 1988 - s.13(2) r/w s.13(1)(d)
- Penal Code, 1860 - ss.409, 420, 477A - Criminal breach of trust
by public servant or Banker - Strong suspicion short of conclusive
proof - Case of prosecution that accused no.3-brother-in-law of
appellant-Branch Manager opened an account of the Academy of
which he was Treasurer - Allegedly, appellant and the other coaccused also working in the Bank conspired with accused no.3 by
allowing withdrawal of amounts from the said account, despite
insufficient funds - Appellant was further accused of pre-maturely
encashing two FDRs belonging to a customer which amount was
transferred to the aforesaid account - Co-accused acquitted by
Trial Court - Appellant held guilty concurrently - On appeal, held:
Material on record does not disclose conspiracy between the accused
persons - Further, there were sufficient funds in the account for
passing the three cheques in question - Mere issuance of the
aforesaid loose cheques, not sufficient to conclude that the appellant
acted unlawfully or committed criminal misconduct - There is also
serious dispute on the factum of whether or not the customer had
sought the premature withdrawal and subsequent transfer of the
proceeds of FDRs to the account of Academy - He was the best
person to throw light on the said fact, but he was not examined
which is materially fatal to the prosecution's case - On facts, no
financial loss was caused to the Bank/customer - Direct and relevant
evidence being withheld, benefit of doubt extended to appellant -
Prosecution failed to prove charges u/ss.409, 420 & 477A, IPC
against the appellant beyond reasonable doubt - Conviction u/
s.13(2) r/w s.13(1)(d), PC Act also cannot be sustained.
Criminal Law - Mixed questions of law and facts - Concurrent
view taken by Courts below - Scope of interference - Discussed.
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SUPREME COURT REPORTS
[2021] 12 S.C.R.
Penal Code, 1860 - ss.409, 420 and 477A - Charges under
- Necessary ingredients to prove - Discussed.
Criminal Law - Mens rea - Held: Crucial word used in s.405,
IPC is 'dishonestly' - It pre-supposes the existence of mens rea -
Penal Code, 1860 - s.405.
Penal Code, 1860 - s.405 - 'Entrustment of property' -
Burden to prove - Initial burden; shifting of burden - Discussed.
Banking/Banks - Conventional bank transactions -
Relationship between the Bank and the Customer - Discussed.
Criminal Law - Standard of proof - Domestic enquiry vis-àvis criminal charge - Discussed.
Words & Phrases- 'intent to defraud' u/s.477-A - Elements
of - Discussed - Penal Code, 1860 - s.477-A.
Disposing of the appeal, the Court
1. Section 409 IPC pertains to criminal breach of trust by a
public servant or a banker, in respect of the property entrusted
to him. The onus is on the prosecution to prove that the accused,
a public servant or a banker was entrusted with the property
which he is duly bound to account for and that he has committed
criminal breach of trust. The entrustment of public property and
dishonest misappropriation or use thereof in the manner
illustrated under Section 405 are a sine qua non for making an
offence punishable under Section 409 IPC. The crucial word used
in Section 405 IPC is 'dishonestly' and therefore, it pre-supposes
the existence of mens rea. The second significant expression is
'mis-appropriates' which means improperly setting apart for ones
use and to the exclusion of the owner. Unless it is proved that
the accused, a public servant or a banker etc. was 'entrusted'
with the property which he is duty bound to account for and that
such a person has committed criminal breach of trust, Section
409 IPC may not be attracted. 'Entrustment of property' is a wide
and generic expression. While the initial onus lies on the
prosecution to show that the property in question was 'entrusted'
to the accused, it is not necessary to prove further, the actual
mode of entrustment of the property or misappropriation thereof.
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Where the 'entru

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[2021] 12 S.C.R. 57
57
N. RAGHAVENDER
v.
STATE OF ANDHRA PRADESH, CBI
(Criminal Appeal No. 5 of 2010)
DECEMBER 13, 2021
[N. V. RAMANA, CJI, SURYA KANT AND
HIMA KOHLI, JJ.]
Prevention of Corruption Act, 1988 - s.13(2) r/w s.13(1)(d)
- Penal Code, 1860 - ss.409, 420, 477A - Criminal breach of trust
by public servant or Banker - Strong suspicion short of conclusive
proof - Case of prosecution that accused no.3-brother-in-law of
appellant-Branch Manager opened an account of the Academy of
which he was Treasurer - Allegedly, appellant and the other coaccused also working in the Bank conspired with accused no.3 by
allowing withdrawal of amounts from the said account, despite
insufficient funds - Appellant was further accused of pre-maturely
encashing two FDRs belonging to a customer which amount was
transferred to the aforesaid account - Co-accused acquitted by
Trial Court - Appellant held guilty concurrently - On appeal, held:
Material on record does not disclose conspiracy between the accused
persons - Further, there were sufficient funds in the account for
passing the three cheques in question - Mere issuance of the
aforesaid loose cheques, not sufficient to conclude that the appellant
acted unlawfully or committed criminal misconduct - There is also
serious dispute on the factum of whether or not the customer had
sought the premature withdrawal and subsequent transfer of the
proceeds of FDRs to the account of Academy - He was the best
person to throw light on the said fact, but he was not examined
which is materially fatal to the prosecution's case - On facts, no
financial loss was caused to the Bank/customer - Direct and relevant
evidence being withheld, benefit of doubt extended to appellant -
Prosecution failed to prove charges u/ss.409, 420 & 477A, IPC
against the appellant beyond reasonable doubt - Conviction u/
s.13(2) r/w s.13(1)(d), PC Act also cannot be sustained.
Criminal Law - Mixed questions of law and facts - Concurrent
view taken by Courts below - Scope of interference - Discussed.
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SUPREME COURT REPORTS
[2021] 12 S.C.R.
Penal Code, 1860 - ss.409, 420 and 477A - Charges under
- Necessary ingredients to prove - Discussed.
Criminal Law - Mens rea - Held: Crucial word used in s.405,
IPC is 'dishonestly' - It pre-supposes the existence of mens rea -
Penal Code, 1860 - s.405.
Penal Code, 1860 - s.405 - 'Entrustment of property' -
Burden to prove - Initial burden; shifting of burden - Discussed.
Banking/Banks - Conventional bank transactions -
Relationship between the Bank and the Customer - Discussed.
Criminal Law - Standard of proof - Domestic enquiry vis-àvis criminal charge - Discussed.
Words & Phrases- 'intent to defraud' u/s.477-A - Elements
of - Discussed - Penal Code, 1860 - s.477-A.
Disposing of the appeal, the Court
1. Section 409 IPC pertains to criminal breach of trust by a
public servant or a banker, in respect of the property entrusted
to him. The onus is on the prosecution to prove that the accused,
a public servant or a banker was entrusted with the property
which he is duly bound to account for and that he has committed
criminal breach of trust. The entrustment of public property and
dishonest misappropriation or use thereof in the manner
illustrated under Section 405 are a sine qua non for making an
offence punishable under Section 409 IPC. The crucial word used
in Section 405 IPC is 'dishonestly' and therefore, it pre-supposes
the existence of mens rea. The second significant expression is
'mis-appropriates' which means improperly setting apart for ones
use and to the exclusion of the owner. Unless it is proved that
the accused, a public servant or a banker etc. was 'entrusted'
with the property which he is duty bound to account for and that
such a person has committed criminal breach of trust, Section
409 IPC may not be attracted. 'Entrustment of property' is a wide
and generic expression. While the initial onus lies on the
prosecution to show that the property in question was 'entrusted'
to the accused, it is not necessary to prove further, the actual
mode of entrustment of the property or misappropriation thereof.
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Where the 'entrustment' is admitted by the accused or has been
established by the prosecution, the burden then shifts on the
accused to prove that the obligation vis-aÌ-vis the entrusted
property was carried out in a legally and contractually acceptable
manner. [Paras 41-43, 45][81-D-F; 82-C-D, G-H; 83-A-B]
Sadupati Nageswara Rao v. State of Andhra Pradesh
(2012) 8 SCC 547 : [2012] (6) SCR 1143 - relied on.
2. In order to attract the provisions of Section 420 IPC, the
prosecution has to not only prove that the accused has cheated
someone but also that by doing so, he has dishonestly induced
the person who is cheated to deliver property. There are, thus,
three components of this offence, i.e., (i) deception of any person,
(ii) fraudulently or dishonestly inducing that person to deliver
any property to any person, and (iii) mens rea of the accused at
the time of making the inducement. For the offence of cheating,
fraudulent and dishonest intention must exist from the inception
when the promise or representation was made. The phrase
'dishonestly' emphasizes a deliberate intention to cause wrongful
gain or wrongful loss, and when this is coupled with cheating and
delivery of property, the offence becomes punishable under
Section 420 IPC. For the purpose of holding a person guilty under
Section 420, the evidence adduced must establish beyond
reasonable doubt, mens rea on his part. Unless the complaint
showed that the accused had dishonest or fraudulent intention
'at the time the complainant parted with the monies', it would not
amount to an offence under Section 420 IPC and it may only
amount to breach of contract. [Paras 47, 48][83-D-H]
3. In an accusation under Section 477A IPC, the prosecution
must prove- (a) that the accused destroyed, altered, mutilated or
falsified the books, electronic records, papers, writing, valuable
security or account in question; (b) the accused did so in his
capacity as a clerk, officer or servant of the employer; (c) the
books, papers, etc. belong to or are in possession of his employer
or had been received by him for or on behalf of his employer; (d)
the accused did it wilfully and with intent to defraud. [Para 50]
[84-D-E]
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
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4. 1 The High Court held that the actions of the Appellant
were not to his benefit, but to the advantage of his brother-inlaw, i.e., Accused No. 3. The Brother-in-law of the Appellant was,
however, acquitted by the Trial Court and no appeal was preferred
by the State against his acquittal. The findings in respect to his
innocence have attained finality. There is no doubt that amongst
the three accused persons, the Appellant being the Branch
Manager, had the sole authority to issue and pass the three loose
cheques. Since no explicit prohibition on issuing of loose cheques
has been proved, the mere fact that the Appellant issued those
loose cheques, is not sufficient to conclude that he acted
unlawfully or committed a 'criminal misconduct'. The case of the
Prosecution rested heavily on the premise that the three cheques
in question, i.e., Ex. P25 to P27, were passed even though there
weren't adequate funds in account No. 282. On perusal of the
Current Account Ledger for account No. 282 (Ex P23) it appears
that there were sufficient funds in account No. 282 for passing all
the three cheques in question. So far as this part of the transaction
is concerned, the Bank did not suffer any loss. In order to
substantiate the charge under Section 477-A IPC, the primary
contention of the Prosecution is that despite passing the three
cheques, the Appellant did not make the relevant entries into
the Current Account Ledger (Ex P23) of account No. 282. This
was allegedly done to conceal the withdrawals as there were
insufficient funds in the account of the Academy. The expression
'intent to defraud' as given under Section of 477-A, contains two
elements, deceit and injury. So far as the second element is
concerned, as already noted no financial injury was caused to the
Bank. With respect to the question of 'deceit', the depositions
of PW-2 (the Auditor) and PW-6 (an Accountant at the Branch)
unveil that though the relevant entries were missing in the
Current Account Ledger, they do find a mention in the other ledger
sheets maintained by the Bank, namely, the Officer's Cash Scroll
and the Cashier Payment Register. PW-6 has further deposed
that the entry relating to Ex P25, has been mentioned in the
Current Account Ledger. The ledger- Ex P23 does reveal that
there is some truth in the deposition of PW-6. There is an entry
made with a pencil for an amount of Rs. 2.5 lakhs and the relevant
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cheque number of Ex P25 has also been recorded. Two other
entries marked as Ex D3 and Ex D4, pertaining to the other
amounts of Rs. 4 Lakhs and Rs. 3.5 Lakhs have also been
inserted, but here the relevant cheque numbers have not been
recorded. When this is viewed in the light of the deposition of
PW-2, non-production of the other relevant ledgers cannot be
overlooked. Since the direct and relevant evidence has been
withheld, the benefit of doubt for such failure ought to be accorded
to the Appellant. [Paras 38, 55-59][81-A-B; 85-G, H; 86-A, B-H;
87-A-E]
4.2 To prove the charge under Section 409 IPC, the
prosecution need not prove the exact manner of misappropriation.
Once the 'entrustment' is admitted or proved, as has been done
in the present case, the onus lies on the Accused to prove that
the entrusted property was dealt by him in an acceptable manner.
Thus, misappropriation with this dishonest intention is one of
the most important ingredients of proof of 'criminal breach of
trust'. There is a serious dispute on the factum of whether or not
the customer had sought the premature withdrawal and the
subsequent transfer of the proceeds of FDRs to the account of
Academy. The best person to clear the air would have been the
customer himself, but neither was he associated during the course
of inquiry/audit or the investigation nor was he examined as a
prosecution witness in the trial. Further, there is also no written
or oral complaint made by the customer against the Appellant or
other officials of the Bank accusing them of misusing his FDRs
or causing any financial loss to him. On the contrary, the Appellant
has produced on record two letters (ExP6 and ExP7) purportedly
written by the customer for premature encashment of his FDRs
and to deposit the amount in the account of the Academy. These
written requests have gone unrebutted. The prosecution has
surely proved payment of interest on those FDRs to the customer
even after pre-mature closure thereof, but that payment was made
by the Appellant from his personal account and no public fund
has been divested for such payment. There is indeed no quarrel
that no financial loss was caused to the customer. [Paras 62, 64
and 65][88-D-E; 89-D-F; G-H; 90-C-D]
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
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SUPREME COURT REPORTS
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4.3 The non-examination of the customer has been
materially fatal to the case of the prosecution. Some of the proven
facts, like deposit of interest amount from the account of the
appellant to that of the customer, do create a strong suspicion
against the Appellant, but suspicion cannot take the place of proof,
howsoever, strong. The best and the only person who could throw
light on whether or not he had voluntarily agreed to transfer his
FDR amount in the account of the Academy or there was an
element of inducement, cheating or a false promise, was the
customer himself who has chosen not to enter the witness box.
Though there is a strong suspicion of criminal breach of trust,
cheating and/or fabrication of the Bank records against the
Appellant, but such suspicion falls short of a conclusive proof to
hold him guilty of the criminal charges. The best evidence having
been withheld by the prosecution, the benefit of doubt must be
extended to the Appellant. Non-production of the records of the
Bank also adversely comments on the fairness and independence
of the investigation conducted in the instant case. [Paras 66, 67
and 70][90-F-G; 91-A-B; 92-C-D]
4.4 The record does not indicate that any pecuniary loss
was caused to 'BSR'-the customer or to any other customer of
the Bank. The material does not disclose any conspiracy between
the accused persons. In the absence of any reliable evidence
that could unfold a prior meeting of minds, the High Court erred
in holding that Appellant and other accused orchestrated the
transactions in question to extend an undue benefit to Accused
No.3. The prosecution has failed to prove the charges under
Sections 409, 420 and 477A IPC against the Appellant beyond
reasonable doubt. As a necessary corollary, his conviction under
Section 13(2) read with Section 13(1)(d) of the PC Act can also
not be sustained. The Appellant is guilty of gross departmental
misconduct, for which the punishment of dismissal from service
was adequately awarded. [Paras 71, 72][92-E-G; 93-A-C]
Prabhat & Ors v. State of Maharashtra (2013) 10 SCC
391; Mahak Chand & Ors v. State of U.P. (2019) SCC
OnLine All 4044; Hari Sao & Anr v. State of Bihar
(1969) 3 SCC 107 : [1970] 2 SCR 823; Mohd. Ibrahim
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& Ors v. State of Bihar & Anr (2009) 8 SCC 751 :
[2009] 13 SCR 1254; Samsul Haque v. State of Assam
(2019) 18 SCC 161; N.V. Subbarao v. State (2013) 2
SCC 162 : [2012] 12 SCR 701; Vinayak Narayan
Deosthali v. Central Bureau of Investigation (2015) 2
SCC 553 : [2014] 12 SCR 308; Neera Yadav v. Central
Bureau of Investigation (2017) 8 SCC 757 : [2017] 8
SCR 498 - referred to.
Case Law Reference
[1970] 2 SCR 823
referred to
Para 23
[2009] 13 SCR 1254
referred to
Para 23
2012] 12 SCR 701
referred to
Para 33
[2014] 12 SCR 308
referred to
Para 34
2017] 8 SCR 498
referred to
Para 34
[2012] 6 SCR 1143
relied on
Para 34
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No.5 of 2010.
From the Judgment and Order dated 18.06.2009 of the High Court
of Andhra Pradesh at Hyderabad in Crl. A. No.337 of 2002.
Sidharth Luthra, Sr. Adv., Somiran Sharma, Ms. Shubhangi Jain,
Pankaj Singhal, Advs. for the Appellant.
Jayant K. Sud, ASG, Ms. Sonia Mathur, Sr. Adv., Ms. Priyanka
Das, Anmol Chandan, Ms. Snidha Mehra, Arvind Kumar Sharma,
Randeep Sachdeva, Harish Nadda, Mukesh Kumar Maroria, Advs. for
the Respondent.
The Judgment of the Court was delivered by
SURYA KANT, J.
1. Appellant is aggrieved by the judgment dated 18th June, 2009
passed by Andhra Pradesh High Court, dismissing his criminal appeal
against the judgment and order dated 28th March, 2002 of the Special
Judge, CBI Cases, Hyderabad whereby he was held guilty of the
offences under Sections 409, 420, and 477A of the Indian Penal Code
(for short, "IPC") and Section 13(2) read with Section 13(1)(d) of the
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
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SUPREME COURT REPORTS
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Prevention of Corruption Act, 1988 (for short, "PC Act") and sentenced
to a total of five years of rigorous imprisonment with various fines for
each offence. Accused Nos. 2 and 3 who were also tried along with the
appellant, were, however, acquitted of all the charges.
Facts:
2. The brief facts germane to the appeal are as follows:
The Appellant- N. Raghavender worked as a Branch Manager in
Sri Rama Grameena Bank, Nizamabad Branch from May, 1990 to
September, 1995. A. Sandhya Rani, Accused No. 2 worked as a Clerkcum-Cashier in the same Bank from 1991-1996 and she also attended
day-to-day transactions in current and savings accounts relating to
preparation of credit and debit vouchers. C. Vinay Kumar, Accused No.
3 was the Treasurer of the Nishita Educational Academy (for short, "the
Academy") and is the brother-in-law of Appellant (Accused no. 1).
Accused No. 3 opened Current Account No. 282 in the afore-said Bank
in his capacity as an authorized signatory of the Academy. The account
was opened with an initial deposit of Rs. 5,00,000/-. The prosecution
case is that the Appellant and Accused No. 2 abused their respective
position in the Bank and conspired with Accused no. 3 by allowing
withdrawal of amounts up to Rs. 10,00,000/- from the account of the
Academy, notwithstanding the fact that the account did not have the
requisite funds for such withdrawal.
3. The alleged modus operandi of the accused persons was that
the Appellant, in his capacity as a Branch Manager, issued loose-leaf
cheques on 23.04.1994 and thereafter, for a sum of Rs. 2,50,000/-, and
despite withdrawal of the said amount, the debit was deliberately not
entered into the ledger book. After that, another such transaction took
place on 30.06.1994 for a sum of Rs. 4,00,000/-, and once again, the
debit was not entered into the ledger sheet of the Bank. This was followed
by the Appellant issuing another cheque on 30.07.1994, of a closed
account for withdrawal of Rs. 3,50,000/-. The endorsement on the third
cheque issued by the Appellant showed the payment in favour of Accused
No.3; however, the signature on the cheque did not tally with that of
Accused No.3. The Appellant was further accused of pre-maturely
closing two FDRs on 24.02.1995 and 25.02.1995, which were for a sum
of Rs. 10,00,000/- and 4,00,000/- respectively, and stood in the name of
one B. Satyajit Reddy. As per the vouchers issued by the Bank, a total
of Rs. 14,00,000/- were credited to account No. 282 but only Rs. 4,00,000/
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- were shown in the ledger. The remaining Rs. 10,00,000/- were allegedly
adjusted towards the secret withdrawal from account No. 282 during
the year 1994. It is the prosecution's case that the Appellant, Accused
No.2 and Accused No.3, worked in tandem to engineer these
transactions, which resulted in a wrongful loss to the Bank and its
Depositors.
4. Eventually, the Auditor (PW-2) began to notice the irregularities.
The Appellant was thereafter shifted from the above-stated Branch to
the Head Office, and an internal inquiry was ordered. The said inquiry
prompted the Chairman of the Bank (PW-1) to make a written complaint
dated 27.11.1995 (Ex P1) to the Superintendent of Police, Central Bureau
of Investigation at Hyderabad (for short, "CBI"), the relevant extracts
whereof being highly relevant, reads as under:
"Our Grameena Bank is established in February 1985 under
the Regional Rural Bank Act of Parliament, and sponsored
by State Bank of Hyderabad. The Bank is a scheduled bank
and its area of operation is restricted to the district of
Nizamabad with its headquarters at Nizamabad town. We have,
as of now, 26 branches operating in the district. The branch
at Nizamabad is one of the 26 branches.
2. The branch during the period 1990 to 1995 was headed
by one Shri N. Raghavender as the Branch Manager.
3. During the course of audit of the branch certain
transactions of seriously irregular in nature, put through by
the Branch Manager with the connivance and co-operation
of certain members of staff and customers have come to
surface. Some of the transactions are considered to be very
serious and were put through by the Branch Manager,
bypassing the laid down instructions and norms for conducting
such transactions, with an intent to pass on undue monitory
benefit to certain customers who are his near relatives
including his wife. The transactions of the above nature are
large in number. However, one such transaction is detailed
hereunder for your considering an investigation.
UNAUTHORISED ENCASHMENT OF TERM DEPOSITS NO.
0257120 AND 0257121 FOR RS.10.00 LACS AND RS.400
LACS RESPECTIVELY.
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
[SURYA KANT, J.]
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[2021] 12 S.C.R.
The laid down procedure for such transactions warrant
that if and when the depositor desires premature withdrawal
he should present to the branch, the term deposit in question
duly discharged along with written request for premature
withdrawal of deposits. Thereupon, the Branch Manager, after
duly verifying the genuineness of the signature of the depositor
and the deposit receipts may permit premature payment. In
respect of fixed deposits where interest is paid periodically
will be worked out and adjusted from the interest payable on
such deposits and net amount of interest payable and the
principle will be released to the depositor. As per the Income
Tax rules any such amount exceeding Rs.20,000/- is to be
paid either by crediting to the depositor's account with the
branch or paid by way of Banker's Cheque in the name of
depositor "crossed account payee".
xxx
xxx
xxx
Unauthorised payment of deposit came to light on 12.9.1995
when the depositor called on the branch for drawing interest.
From the scrutiny of records it is found that even though the
deposits are terminated in February 1995, periodical interest
continued to be credited to the depositor's Savings Bank A/c
No.5520 by remitting cash and also transfer from the joint
account of Branch Manager and his wife bearing SB A/c
No.5555, apparently to make the depositor believe that the
deposit is intact.
After unearthing of these transactions Shri
Raghavender, who was relieved of the branch charge,
managed with the depositor and produced predated letter and
relative deposit receipts with the apparent intent to regularize
the transaction. The relative term deposit receipts are clean
and without any endorsements or stamps on the face of the
receipts. Thereby even though the Bank did not incur any
minority loss under this transaction, the Branch Manager
misusing his official position and passing on benefit to the
tune of Rs.14.00 lacs to the firms having substantial interest
of his near relatives is considered an act calling for
investigation.
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Further investigation into the transactions at the branch
is in progress and report when received will indicate further
the fraudulent transactions if any put through by the then
Branch Manager Shri N. Raghavender.
The Branch Manager wields considerable influence with local
leaders, officials and other VIPs. The departmental enquiry
by the Bank may not be very effective in safeguarding the
interests of the Bank in its totality, since investigation into the
transactions warrants contacting various outside parties to
whom access of the Bank is not likely to be possible.
xxx
xxx
xxx"
5. CBI registered case No. RC7(A)/96-CBI/Hyderabad under
Sections 409, 477(A), and 120B IPC, and Section 13(2) read with 13(1)(c)
& (d) of the PC Act. Investigation was held; charge-sheet was filed and
the learned Special Judge, CBI, framed the following charges against
the Appellant and his co-accused:
"CHARGE NO.1:
That, all of you i.e., A.1 to A.3 during the years 1994-95,
while A.1 and A.2 were under employment of M/s. Sri Rama
Grameena Bank, Nizamabad, and A3 as Treasurer, Nishita
Educational Academy, agreed to do or caused to be done an
illegal act to wit to cheat Sri Rama Grameena Bank,
Nizamabad in the matter of allowing withdrawals of amounts
to the tune of Rs.10.00 lakhs in current A/c No.282 of Nishita
Educational Academy, Nizamabad without having sufficient
funds, in pursuance of the agreement and thereby committed
an offence punishable U/Sec. 120-B I.P.C. and within my
cognizance.
CHARGE NO.2:
That all of you i.e., A.1 to A.3 as stated above, cheated by
dishonestly and fraudulently inducing the said bank to deliver
Rs.10 lakhs to you and which was the property of the said
Bank and that you thereby committed an offence punishable
U/Sec.420 IPC and within my cognizance.
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[SURYA KANT, J.]
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CHARGE NO.3:
That all of you as stated above (Charge No.1) and being in
such capacity entrusted with certain property committed
criminal breach of trust in respect of that property, and thereby
you committed an offence punishable U/Sec.409 IPC and
within my cognizance.
CHARGE NO.4:
That all of you during the same course of transaction as stated
in Charge No.1 being in such capacity wilfully and with intent
to defraud, fabricated certain papers, writings and accounts
of Srirama Grameena Bank, Nizamabad and Nishitha
Educational Academy, and you thereby committed an offence
punishable U/Sec.477-A IPC and within my cognizance.
CHARGE NO.5:
That A.1 and A.2 of you being public servants employed as
formerly Manager, Sri Rama Grameena Bank, Nizamabad
(A.1) and formerly Clerk-cum-Cashier, Sri Rama Grameena
Bank, Nizamabad (A2) respectively during the year 1994-95
by corrupt or illegal means or by otherwise obtained for
yourself a pecuniary advantage of Rs.10 lakhs from Sri Rama
Grameena Bank, Nizamabad and thereby committed an
offence punishable U/Sec.13(2) r/w 13(1)(c) & (d) of P.C.
Act, 1988 and within my cognizance."
6. In the aftermath trial, a total of eleven witnesses, PW-1 to PW11, were examined by the Prosecution and documentary evidence
comprising Exhibits P-1 to P-68 were also put forth. The Accused on
their part, were examined under Section 313 of Code of Criminal
Procedure (in short, 'Cr.P.C'), but no other defence witness was brought
forward. The Accused did produce documentary evidence Exhibits D-1
to D-6 in their defense.
7. To substantiate the charges against the present Appellant, the
case of the prosecution rested heavily upon circumstantial and
documentary evidence. Bhaskar Reddy (PW-1), Chairman of the Bank,
deposed that in November, 1994, Badam Swamy (PW-2) conducted an
audit of the Nizamabad Branch and some irregularities were found to
have been committed by the Branch Manager N. Raghavender.
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Thereafter, he ordered a detailed audit. During the course of the audit,
PW-1 called upon the Appellant and questioned him about the said
irregularities. PW-1 further deposed that when he asked the Appellant
as to how he had allowed the premature closing of the two FDRs
bypassing the prescribed procedure, the Appellant produced two letters
(marked as Ex P6 & Ex P7), purportedly written by B. Satyajit Reddy to
the Bank Manager. Vide the aforesaid letters, B. Satyajit Reddy had
authorized premature withdrawal of FDRs with a request to the Bank
Manager to transfer the amounts into the account of Nishita Educational
Academy. PW-1 stated that the standard procedure for prematurely
closing an FDR required the FDR holder/depositor to present the receipt
of the FDR along with a written request seeking premature payment.
He explained that in the present case, the FDRs remained with the
depositor and no specific request was received. He further explained
that the alleged premature payment was permitted by the Branch Manager
by using general debit vouchers instead of term deposit receipts. PW-1
in his cross-examination, while admitting that he never received any
complaint from Mr. Reddy regarding the premature closure, disputed
the genuineness of Ex P6 & P7. So far as the allegation regarding the
unlawful withdrawal of Rs. 10 Lakhs from account No. 282 is concerned,
PW-1 deposed, "The account holder is required to utilize the cheques
issued to him only. In cases of certain contingencies he may request
the Branch in writing to issue a loose cheque leaf for operating the
account. Such a request in writing is to be approved by the Branch
Manager when he may issue a loose leaf making appropriate
endorsement on the cheque form itself and on application". PW-1
additionally clarified that, "There is no prohibition for re-using cheque
books of loan A/cs if they are sufficient in number to be used as
loose leaves provided they are recorded as such in the cheque book
issue register." Lastly, PW-1 acknowledged that during the period the
Appellant was the Branch Manager, the business of the Bank had grown
and the Bank was recategorized from Scale-I to Scale-II.
8. The deposition of Badam Swamy (PW-2), Auditor, is crucial to
the Prosecution's case. He deposed that under instructions of PW-1, he
had conducted a special audit of the Nizamabad branch in the year 1995.
PW-2 in his deposition explained that he scrutinized two sets of
transactions, the first being the premature closing of the two FDRs in
the name of B. Satyajit Reddy, and the second being the transactions
relating to withdrawal of Rs. 10 Lakh from account No. 282. So far as
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
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the first set of transaction is concerned, PW-2 deposed that B. Satyajit
Reddy had purchased two FDRs for 4 Lakhs (Ex P4) and Rs. 10 lakhs
(Ex P5) respectively, and in addition to these, Mr. Reddy had also opened
S.B. Account No. 5520 (marked as Ex P11). The FDRs, Ex. P4 and Ex.
P5, were purchased in January, 1995 for a period of 12 months. PW-2
explained that in the present transaction, the Branch, as per the
instructions of the party/depositor, had to credit a monthly interest in
S.B. Account No. 5520. PW-2 alleged that the Appellant, without the
knowledge of the party and without any authorization, withdrew the FDR
amounts from the Bank by raising two debit vouchers (marked Ex P29
and Ex P30). These vouchers were prepared by Accused No.2 and
were passed by the Appellant. The withdrawn amount was thereafter
credited to a third-party account, i.e., account no. 282 of the Nishitha
Educational Academy. PW-2 alleged that there was nothing in the records
to show that either Mr. Reddy had surrendered the FDRs or that he had
moved any application for payment of the FDRs. PW-2 further deposed
that even after the FDRs were withdrawn, the monthly interest of Rs.
11,570/- payable to Mr. Reddy continued to be credited into his S.B.
Account No. 5520. It was alleged that in order to transfer Rs. 11,570/-,
debit vouchers bearing S.B. Account No. 5555 were raised. The said
S.B. Account No. 5555 stood in the name of the Appellant and his wife.
9. With respect to the second set of transactions, PW-2 deposed
that in the year 1994, an amount of Rs. 10,00,000/- was 'fraudulently'
withdrawn from account No. 282 by passing three cheques (Ex P25, Ex
P26 & Ex P27) which were signed by Accused No.3. However, neither
did the signature on the three cheques tally with that of Accused No.3
nor were these transactions reflected in the concerned ledger sheet (Ex
P23). PW-2 alleged that the ledger sheet- Ex P23 was intentionally illmaintained to suppress these transactions. PW-2 further alleged that
while there was balance in account no. 282 when Ex P25 was presented,
there were insufficient funds when the other two cheques were passed.
Thus, according to PW-2, the Appellant had allowed withdrawal of Rs.
10,00,000/- from account No. 282, even though there were insufficient
funds in the said account. It was also pointed out that the Appellant had
also permitted overdrawing of another Rs. 4 lakhs from account No.
282. PW-2 alleged that in order to cover up these withdrawals and to
adjust the amounts, the Appellant withdrew the amount of Rs. 14 Lakhs
pertaining to the FDRs of B. Satyajit Reddy.
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10. During his cross-examination, PW-2 deposed that he had never
personally enquired from B. Satyajit Reddy about the premature closure
of his FDRs, instead, he claimed that PW-1 had spoken to Mr. Reddy.
PW-2 further admitted that despite knowing that the signature on the
three cheques did not match with that of Accused No.3, he never enquired
about the transactions from Accused No.3 directly. PW-2 shed light on
the fact that beyond the account ledger sheet (Ex P23), the Bank also
maintained three other ledgers, i.e., the Officer's Cash Scroll, Transit
Voucher Register and the Cashier Payment Register. PW-2 deposed
that he had examined these three ledgers, but these were not filed before
the Court. PW-2, however, admitted that the three cheques in question
were reflected in the Officer's Cash Scroll. He further admitted that
entries relating to cheques Ex P25 and Ex P26 were duly mentioned in
the Bank Payment Register maintained for the period from 23.04.1994
to 21.07.1994.
11. The Manager of the Bank, Mr. D. Ram Mohan Rao, appeared
as PW-3. While he mainly deposed about the various standard operating
procedures at the Bank, it is relevant to note that he too testified about
the uncommon but acceptable practice of issuing loose cheque leaves
upon the request of a customer. He further deposed that "Sometimes
the important customers sit in the cabin of the manager and their
cheques are sent to the counter for encashment, and at times cash
is delivered to the customer in the manager cabin."
12. B. Chandrasekhar (PW-4), Cashier, deposed that Accused
No.3 was an important customer of the Bank. He stated that the three
cheques in question were taken by the Appellant personally and handed
over to Accused No. 3, and then the Appellant had passed those cheques.
He further stated that the amounts relating to the cheques, Ex P25 to
P27 were handed over by him to the appellant, and then the appellant
handed it over to Accused No.3. He too deposed that entries relating to
Ex P26 and Ex P27 were not found in the concerned ledger sheet- Ex
P23. In his cross-examination, he stated, "It is true that Ex P25 contains
the signature of N. Lalitha on its reverse side. The signature of the
person who receive the amount will be obtained on the reverse of
cheque in token of receipt of the said amount. The signature on the
reverse of Ex P-26 is not that of A1. It is also true that the signature
of A1 is also not there on the reverse of Ex. P27".
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
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13. The evidence of Mallikarjun Sanne, PW-5, is of no consequence
as he was not personally aware of any of the facts relating to the case.
Next comes the deposition of B. Ganagaram (PW-6), who worked as
an Accountant at the Nizamabad Branch. He testified that loose cheque
leaves could be issued by the Bank, provided that the record of the same
was maintained. He went on to depose that, "It is true that there was
sufficient amount in a/c No. 282 to meet the cheque amount of Rs.
2.50 Lakhs.There was a balance of Rs. 4,78,480/- was the balance
in the A/c of 282 as on 30.06.1994 and I have authenticated the
said balance on the same day. It is true that there was sufficient
amount to meet the cheque of Rs. 4 lakhs on 30.06.1994. The balance
amount available in the said A/c No. 282 on 28.07.1994 was Rs.
12,12,830/-. It is true that an entry with pencil was made between
the lines debiting a sum of Rs. 3.50 Lakhs to A/c No. 282. The said
entry is now marked as Ex D3" (sic). He lastly stated, "There is a
possibility of missing certain entries in posting the same in the ledger
entry due to rush of work. But they will be rectified at the time of
balancing the amount. See Ex P8, it is balancing register. It was
maintained by A2."
14. J. Madhusudhan (PW-7), Second Officer of the Nizamabad
Branch, deposed that B. Satyajit Reddy had approached him in the first
week of September 1995 with a request to credit the interest accrued in
the two FDRs into his S.B. A/c 5520. He stated that when he inspected
the FDR register, he found that the two FDRs had been prematurely
closed. He then brought this to the notice of Mr. G. Nagesh Reddy, the
then Manager. He testified that the Appellant had signed the entries
relating to those closures as is evident from the Term Deposit Register
(Ex P9). He further stated that he had not seen any letters written by B.
Satyajit Reddy for closing of the FDRs or for transferring the said amount
to account no. 282. He, however, could not testify as to at whose instance
the two FDRs were prematurely closed. G. Nagesh Reddy (PW-8), was
appointed the Branch Manager after the Appellant was shifted to the
Head Office. PW-8 also deposed that he did not find any letter by B.
Satyajit Reddy requesting the Branch to transfer the amounts from his
FDR into account No. 282. PW-8 further stated that, "Our bank has
not suffered any loss due to the transaction involved in the present
case". B. Satyanarayana, PW-9, was a formal witness who accorded
the sanction for prosecution of the Appellant and Accused No. 2.
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15. Amar Singh (PW-10), was the handwriting expert who
examined the various cheques, vouchers and other relevant documents
in the present case. According to PW-10, the questioned signatures were
freely written in normal hand. He stated that one of the signatures on Ex
P27 matched the specimen signature of the Appellant, but the purported
signatures of Accused No.3 on the three cheques did not tally with his
specimen signature. He further opined that the disputed signatures on
the two letters (Ex P6 and Ex P7) were tallying with the specimen
signatures of B. Satyajit Reddy. S. Vadyanathan (PW-11), is the
Investigating Officer in the present case. PW-11 collected various
documents from the Bank and Nishita Educational Academy. He also
collected the sanction order from PW-9 for prosecution of the Appellant
and Accused No.2. We may also note that PW-11 stated that the
specimen signature of the Appellant was not taken before any Judicial
Authority though it was obtained before independent witnesses.
16. The Appellant, in his statement recorded under Section 313
Cr.P.C., denied the prosecution case. When confronted with the
allegations levelled by PW-1 regarding the unauthorized premature closure
of the two FDRs, the Appellant stated that he had done so, "With the
request in writing, of depositor only premature payment was
permitted. As depositor requested that he had misplaced FDRs and
could not trace them out. As he is V.I.P. customer, I obliged." The
Appellant (Accused No.1) categorically denied the allegation that
premature withdrawal had been done without the consent or knowledge
of B. Satyajit Reddy. He further stated that it was on the request of B.
Satyajit Reddy that Rs. 4 Lakhs were transferred to the account of the
Academy, i.e., account No. 282. When asked about the withdrawal of
Rs. 10,00,000/- from account No. 282 in the year 1994, he disputed the
version put forth by the prosecution, and stated, "As there was balance,
I passed the cheque and paid the amount to A3." Lastly, the Appellant
claimed that he had been falsely implicated due to the rivalries between
the two Bank Unions.
17. We may, at the outset, clarify that the learned Special Judge in
paragraph 50 of his judgment dated 28.03.2020 has unequivocally
acquitted all the accused of offences under Section 120B IPC and under
Section 13(2) read with Section 13(1)(c) of the PC Act. Accused No.2
and Accused No. 3 were further acquitted of all the other charges as
well. The Appellant, however, was held guilty of offences punishable
under Sections 420, 409 and 477A IPC as also under Section 13(2) read
N. RAGHAVENDER v. STATE OF ANDHRA PRADESH, CBI
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with Section 13(1)(d) of the PC Act. It is useful to reproduce paragraph
50 of the judgment of the Special Judge which reads as follows:
"50. The same thing can also be stated about A.3. Though
A.3 credited amount to A/c No. 342 of Nishita Builders instead
of A/c No. 282 of Nishita Educational Academy but it has by
no way resulted in having benefit to A.3 either directly or
indirectly. It is A.1 who has deposited interest in his account
though the F.D.Rs. were prematuredly encashed that too
without proper authority of Satyajit Reddy. As started earlier
Satyajit Reddy has not given evidence in favour of A.1 as he
was not aware about premature payment of F.D.Rs. by A.1.
There are no specific overact of A.3 to say that he
conspired with A.1 to cheat the bank or caused wrongful loss
to bank and corresponding wrongful gain to himself.