# R. VENKATAKRISHNAN - ' Ir v. CENTRAL BUREAU OF INVESTIGATION

- **Citation:** [2009] 12 S.C.R. 762
- **Court:** Supreme Court of India
- **Decided:** 2009-08-07
- **Case number:** Criminal Appeal No.76 of 2004
- **Bench:** S.8. Sinha, Cyriac Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-venkatakrishnan-ir-v-central-bureau-of-investigation-25085
- **Pages:** 99

## Headnote

SPECIAL COURT (TRIAL OF OFFENCES RELATING
--1 •
TO TRANSACT/ON IN SECURITIES) ACT, 1992:
c
ss. 2(c), 3(2) and 7 - 'Call money' scam - Jurisdiction of
Special Court - A huge sum belonging to a Scheduled Bank
diverted as 'call money' by officials of Banks concerned to the
..
account of a broker in securities - HELD: "Call money"
D transactions are banking transactions - The transaction in
question was shown as 'call money' transaction and, therefore,
'r ...
it could not have been used for any other purpose - The act
of illegally diverting the money belonging to National
Housing Bank to the account of the broker during the period
E specified in s. 3(2) so as to enable him to enter into
transactions in securities, was an offence triable exclusively
by Special Court, which rightly exercised the jurisdiction -
Interpretation of statute - Mischief rule - Liberal construction.
•
ss. 2(c) and 3(2) - Expressions 'securities' and 'offences
F relating to transactions in securities' - Connotation of
NATIONAL HOUSING BANK ACT, 1987:
s. 14 - Violation of - HELD: Advancing of loan to an
G
individual under the disguise of 'call money' transaction is an
offence under the Act and illegal in terms of s.43 /PC - Penal
Code, 1860 - s.43.
PENAL CODE, 1860:
H
762
-
' .
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
76.3
INVESTIGATION
ss. 120-B, 405 and 409 - Criminal conspiracy, and A
criminal breach of trust by public servants - Employees of
Scheduled Banks, in connivance with a broker and his
associate diverting in the guise of "call money" a huge sum
belonging to the Bank to the account of the broker - HELD:
Even if the Banks may not have suffered ultimate loss, but if B
money has been allowed to be used il/egal/y/for illegal
purpose, s. 405 would get attracted -
Temporary
embezzlement would also attract s.405 - The charges having
been established, the Bank officials, except A-7, were rightly
convicted of offences of criminal conspiracy and criminal c
breach of trust - The employee of the broker was rightly
convicted of offence of criminal conspiracy - A-7 acquitted.
ss. 405 and 409 - Criminal breach of trust - Complainant
- HELD: Where public money is involved, criminal law can
be set in motion by anybody- In the instant case, prosecution D
was rightly initiated on the basis of the information received
by CBI.
ss:23, 24 and 43- 'Wrongful gain' - 'Dishonestly' -'Illegal'
- Connotation of.
E
PREVENTION OF CORRUPTION ACT, 1988:
•
ss. 13(1)(d)(iii) r!w s.13(2) - Criminal misconduct - 'call
)(-
money' scam - Officials of Scheduled Banks - In connivance
with a broker and his employee diverting in the guise of "call
F
money" huge sum belonging to the Bank to the account of
the broker -
HELD: Accused were guilty of criminal
misconduct u/s 13(1)(d)(iii).
ss. 19(1) and 19(3) - Sanction for prosecution of public ' G
servant - Official of RBI absorbed in National Housing Bank
- Proceedings against him to be initiated for various criminal
offences - Sanction by officer of NHB - HELD: Authority
concerned was competent to pass the order of sanction - Even
otherwise, there has been no failure of justice because of any
H
764
SUPREME COURT REPORTS (2009] 12 S.C.R.
A alleged error in the orders of sanction.
~ ""
SENTENCE/SENTENCING:
Awarding of sentence - Factors to be taken into
B
consideration - Explained - "Call money" scam - Special
Court, while awarding the sentence to one of the accused,
placing reliance on 'Jankiraman Committee' Report - HELD:
Special Court acted illegally and without jurisdiction - The
said report was not admissible in evidence - There being IJ.tide
difference in sentence imposed on the accused concemed
"' '
c and other accused persons, his sentence reduced to six
months - Sentences imposed on other accused, except the
one who has been acquitted, not interfered with - Evidence -
Committee's Report - Admissibility in evidence.
D
WORDS AND PHRASES:
Expressions 'call money', 'dishonestly', 'illegal', 'in relation
f ...
to', 'offence relating to tran

## Text

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[2009J 12 S.C.R. 762
A
R. VENKATAKRISHNAN
-
'
Ir
v.
CENTRAL BUREAU OF INVESTIGATION
(Criminal Appeal No.76 of 2004)
:
B
AUGUST 7, 2009
[S.8. SINHA AND CYRIAC JOSEPH, JJ.]
SPECIAL COURT (TRIAL OF OFFENCES RELATING
--1 •
TO TRANSACT/ON IN SECURITIES) ACT, 1992:
c
ss. 2(c), 3(2) and 7 - 'Call money' scam - Jurisdiction of
Special Court - A huge sum belonging to a Scheduled Bank
diverted as 'call money' by officials of Banks concerned to the
..
account of a broker in securities - HELD: "Call money"
D transactions are banking transactions - The transaction in
question was shown as 'call money' transaction and, therefore,
'r ...
it could not have been used for any other purpose - The act
of illegally diverting the money belonging to National
Housing Bank to the account of the broker during the period
E specified in s. 3(2) so as to enable him to enter into
transactions in securities, was an offence triable exclusively
by Special Court, which rightly exercised the jurisdiction -
Interpretation of statute - Mischief rule - Liberal construction.
•
ss. 2(c) and 3(2) - Expressions 'securities' and 'offences
F relating to transactions in securities' - Connotation of
NATIONAL HOUSING BANK ACT, 1987:
s. 14 - Violation of - HELD: Advancing of loan to an
G
individual under the disguise of 'call money' transaction is an
offence under the Act and illegal in terms of s.43 /PC - Penal
Code, 1860 - s.43.
PENAL CODE, 1860:
H
762
-
' .
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
76.3
INVESTIGATION
ss. 120-B, 405 and 409 - Criminal conspiracy, and A
criminal breach of trust by public servants - Employees of
Scheduled Banks, in connivance with a broker and his
associate diverting in the guise of "call money" a huge sum
belonging to the Bank to the account of the broker - HELD:
Even if the Banks may not have suffered ultimate loss, but if B
money has been allowed to be used il/egal/y/for illegal
purpose, s. 405 would get attracted -
Temporary
embezzlement would also attract s.405 - The charges having
been established, the Bank officials, except A-7, were rightly
convicted of offences of criminal conspiracy and criminal c
breach of trust - The employee of the broker was rightly
convicted of offence of criminal conspiracy - A-7 acquitted.
ss. 405 and 409 - Criminal breach of trust - Complainant
- HELD: Where public money is involved, criminal law can
be set in motion by anybody- In the instant case, prosecution D
was rightly initiated on the basis of the information received
by CBI.
ss:23, 24 and 43- 'Wrongful gain' - 'Dishonestly' -'Illegal'
- Connotation of.
E
PREVENTION OF CORRUPTION ACT, 1988:
•
ss. 13(1)(d)(iii) r!w s.13(2) - Criminal misconduct - 'call
)(-
money' scam - Officials of Scheduled Banks - In connivance
with a broker and his employee diverting in the guise of "call
F
money" huge sum belonging to the Bank to the account of
the broker -
HELD: Accused were guilty of criminal
misconduct u/s 13(1)(d)(iii).
ss. 19(1) and 19(3) - Sanction for prosecution of public ' G
servant - Official of RBI absorbed in National Housing Bank
- Proceedings against him to be initiated for various criminal
offences - Sanction by officer of NHB - HELD: Authority
concerned was competent to pass the order of sanction - Even
otherwise, there has been no failure of justice because of any
H
764
SUPREME COURT REPORTS (2009] 12 S.C.R.
A alleged error in the orders of sanction.
~ ""
SENTENCE/SENTENCING:
Awarding of sentence - Factors to be taken into
B
consideration - Explained - "Call money" scam - Special
Court, while awarding the sentence to one of the accused,
placing reliance on 'Jankiraman Committee' Report - HELD:
Special Court acted illegally and without jurisdiction - The
said report was not admissible in evidence - There being IJ.tide
difference in sentence imposed on the accused concemed
"' '
c and other accused persons, his sentence reduced to six
months - Sentences imposed on other accused, except the
one who has been acquitted, not interfered with - Evidence -
Committee's Report - Admissibility in evidence.
D
WORDS AND PHRASES:
Expressions 'call money', 'dishonestly', 'illegal', 'in relation
f ...
to', 'offence relating to transactions in securities', 'securities',
-
and 'wrongful gain' - Connotation of.
E
Appellant-accused-1, the Chairman and Managing
Director of UCO Bank, appellant-accused-2, its General
Manager, appellant-accused-3, the Divisional Manager of
'
Bombay Branch, UCO Bank, appellant-accused-4, a
~
broker in 'securities', appellant-accused-5, an employee
F of accused-4, appellant-accused-6 and appellantaccused-7, Assistant General Manager and Assistant
Manager, respectively, of National Housing Bank,
Bombay faced trial before the Special Court. The
prosecution case was that on 6.4.1992 National Housing
G Bank lent a sum of Rs.40 crores 'at call' to UCO Bank.
However, the said amount was credited to the account
of A-4 in UCO Bank, Hamam Street, Mumbai. This was
allegedly done under the instruction of the Head Office
in Calcutta and its Zonal Office at Bombay. Later, A-4 died
H during the trial. A-1 to A-3, A-6 and A-7 were convicted
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
765
INVESTIGATION
j
_..
and sentenced u/ss. 120-B, 409 read with s.34 IPC and A
s.13(1)(d) read with s.13(2) of the Prevention of Corruption
Act, 1988; whereas A-5 was convicted and sentenced u/
s 120-B IPC.
In the appeals filed by the accused, it was contended
B
for the appellants that the transfer of money being not
'securities' within the meaning of the provisions of
Special Court (Trial of Offences Relating to Transaction
' ~
in Securities) Act, 1992, the Special Court had no
jurisdiction to try the offences. A-6 and A-7 challenged the c
sanction orders obtained for their pro.secution. It was
contended for A-6 that he had joined NHB on deputation
from the Reserve Bank of India and, therefore, the
conditions of his service were governed by the RBI
Regulations and not those of NHB Act and in his case
D
y -f
the Governor of RBI was the only competent sanctioning
"-
authority. Similarly, the stand of A-7 was that employees
of NHB were governed by the RBI Regulations till 1995
and, therefore, the sanction by NHB was not proper. On
merits it was contended that in the case of conspiracy
active participation by each _one of the accused was
E
~
imperative and in its absence they could not be held
•
guilty of commission of any offence; that no departmental
proceedings having been initiated by the employers and
~···
neither the UCO Bank nor NHB having suffered any.Joss,
as the money had been repaid by A-4, the judgment of F
conviction for alleged criminal breach of trust was wholly
unsustainable; that accused No.5, having been acquitted
-
of the charges of criminal breach of trust, could not have
been held to be guilty of being a party to the conspiracy.
)·
Disposing of the appeals, the Court
G
HELD: 1.1. The jurisdiction of the Special Court
constituted under the Special Court (Trial of Offences
Relating to Transactions in Securities) Act, 1992 is an
H
766
SUPREME COURT REPORTS [2009] 12 S.C.R.
A exclusive one and is of wide amplitude. Section 7,
~ '
conferring jurisdiction on the Special Court constituted
under the Act, begins with a 'non-obstante' clause and
provides that the Special Court shall have jurisdiction to
.
'
try matters in respect of offences relating to transactions
.
B in securities as referred to in sub-s.{2) of s.3 of the Act.
The definition of 'securities' as provided in s.2(c) of the
Act is an inclusive one and not exhaustive. It takes within
its purview not only the matters specified therein but also
all other types of securities as commonly understood.
~ .
c The provision conferring jurisdiction on Special Court,
having regard to the peculiar nature of offences sought
to be dealt with, should receive a liberal construction.
[Para 48, 49 and 52) [808-B-D; 809-D]
D
State of Bombay and others v. The Hospital Mazdoor
Sabha and others AIR 1960 SC 610; Regional Director,
~ '(
Employees State Insurance Corporation v. High Land Coffee
Works of P.X.S. Saldanha and sons and another, (1991) 3
SCC 617; Commercial Taxation Officer, Udaipur v. Rajasthan
Taxchem Ltd. 2007 (2) SCALE 120; Karnataka Power
E Transmission Corpn. & Anr. v. Ashok Iron Works Pvt. Ltd.
(2009) 3 SCC 240; Harshad S. Mehta and others v. State of
Maharashtra, (2001) 8 SCC 257; LS. Synthetics Ltd. v.
~ •
Fairgrowth Financial Services Ltd. and another, (2004) 11
SCC 456; and Solidaire India Ltd. v. Fairgrowth Financial
F Services Ltd. and others (2001) 3 SCC 71, referred to.
1.2. "Call money" transactions are indisputably
banking transactions. In the instant case, the time period
of carrying out 'call money' transactions is not in dispute,
-
G for those transactions admittedly took place within the
time period referred to in s.3(2) of the Act. [Para 41 and
•
46) [805-G-H; 807-C-D]
1.3. Even if 'call money' transactions are held not to
be within the scope and ambit of the definition of the term
H
..
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
767
INVESTIGATION
'securities', the jurisdiction of the Special Court may be
A
invoked when an offence committed relates to
transactions in securities; the logical corollary whereof
would be that all parties connected in diverting the funds
of the public sectors and/or financial institutions would
also come within the purview thereof. For considering the
B
provisions of the Act, the object and purport thereof has
to be borne in mind. The Reserve Bank of India
constituted Janakiraman Committee for the purpose of
looking into the Securities Scam of the early 90's, and it
was on the basis of that report that the said Act was c
enacted and the Special Court was constituted. [Para 51
and 56) [809-8-C; 810-D-E]
1.4. For the purpose of determining the question as
to whether the Special Court had jurisdiction to try the
offences in question or not, the principle of purposive D
construction must be resorted to. The rule which is also
known as the 'mischief rule', simply stated, lays down
that the courts should identify the mischief which existed
before passing of the statute and then if more than one
construction is possible, favour that which will eliminate
E
the mischief so identified. The phrase 'offence relating to
transactions in securities' as used in s.3 (2) is clearly
subject to more than one meaning. For the purpose, the
meaning of the words 'in relation to' would be relevant.
Regard, therefore, in the matter of establishing and
F
constitution of the Special Court must also be had to the
object of creating the Special Court. [Para 57,58 and 60]
[810-F-H; 811-C; 812-C-D]
Bengal Immunity Co. v. State ofBihar, AIR 1955 SC 661;
G
Zile Singh v. State of Haryana AIR 2000 SC 5100; Mis.
~ Doypack Systems (Pvt.) Ltd. v. Union of India & Ors., (1988)
2 SCC 299; T.N. Kalyane Mandapam Association v. Union
of India, (2004) 5 SCC 632 and Minoo Mehta v. Shavak D.
Mehta, AIR 1998 SC 831, referred to.
H
768
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
Bismag v. Amblins (Chemists), (1970] 3 All ER 1053
(QB) ; Re National Federatino of Retail Newsagetns',
~
....
Booksellers' and Stationers Agreement (Nos.3 & 4) (1971] 1
WLR 408; and
B
Anderton v. Ryan, (1985) 2 All ER 355, referred to.
1.5. In the instant case, the money belonging to
National Housing Bank was diverted to the account of A4, who was a broker dealing in securities, so as to enable
him to enter into transactions in securities during the
-1 '
c period 1st April, 1991 and 6th June, 1992, which was an
offence triable exclusively by the Special Court. The
Special Court, therefore, rightly exercised the jurisdiction
vested in it. [Para 62] (812-G-H; 813-A]
D
2.1. All the appellants, except A-5, at the relevant point
of time being employees of UCO Bank National Housing
~ "
Bank, were public servants and, as such, were also
charged with commission of offences under the
-
Prevention of Corruption Act, 1988. The competent
E authorities accorded sanction for their prosecution as
required u/s. 19 of the 1988 Act. Though A-6 was initially
appointed by the Reserve Bank of India and was sent to
NHB on deputation in the year 1988, he was permanently
~
•
absorbed there in 1992 and the order of sanction in
F
respect of him was passed on 26th February, 1993. From
the date of his absorption the relationship of employer
and employee came into being between him and NHB,
and, therefore, the Chairman-cum-Managing Director,
being its highest authority would be competent to pass
.!
the order of sanction: [Para 63,64 and 67] [813-B-F; 814G E-G]
~
2.2. As regards A-7, even if till the framing of
Regulations by NHB, it adopted the Service Regulations
governing the employees of the RBI, the same would not
H mean that the appointing authority would also be an
•
fii
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
769
INVESTIGATION
officer of the RBI and not the appropriate authority of A
v
1
NHB. The Chairman-cum-Managing Director of NHB
being the highest executive authority, would be, subject
to any delegation of powers conferred in terms of the
· Regulations or through Resolutions adopted by the
Board of Directors, the appointing authority and,
B
therefore, will have the requisite jurisdiction to accord
sanction for prosecution of the employees. [Para 68 and
69) (814-H; 815-A-D]
.
)-
2.3. Even otherwise, what has been challenged by
both the accused is in fact the competence of the c
sanctioning authority to issue sanction orders against
them. As per s. 19(3) of the 1988 Act, 'a finding' or a
' sentence' shall not be reversed by a court of appeal on
the ground of any error, omission or irregularity in the
D
sanction order unless a failure of justice has been
,,, -1
occasioned thereby. There has been no failure of justice
in the instant case by the alleged error in the orders.
[Para 71] (816-B-D]
3.1. Criminal conspiracy in terms of s. 120B IPC is an
E
independent offence. It is punishable separately. The
~
ingredients of the offence of criminal conspiracy are: (i)
•
an ,agreement between two or more persons; (ii) the
~
agreement must relate to doing or causing to be done
'
either (a) an illegal act; or (b) an act which is not illegal in
F
itself but is done by illegal means. Condition precedent
for holding accused persons 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 point of two or more persons for doing or G
causing to be done an illegal act or an act by illegal
means. The courts, however, while drawing an inference
from the materials brought on record to arrive at a finding
as to whether the charges of the criminal conspiracy
H
770
SUPREME COURT REPORTS [2009] 12 S.C.R.
A have been proved or not, must always bear in mind that
..._,
a conspiracy is hatched in secrecy and it is, thus, difficult,
"
if not impossible, to obtain direct evidence to establish
the same. [Para 78 and 80-82] [818-F; 819-A-F]
B
3.2. The manner and circumstances in which the
offences have been committed and the level of
involvement of the accused persons therein are relevant
factors. For the said purpose, it is necessary to prove that
the propounders had expressly agreed to or caused to
"-1 •
c be done the illegal act but it may also be proved
otherwise by adduction of circumstantial evidence and/
or by necessary implication. Conduct of the parties would
also be relevant. [Para 83 and 88) [819-G; 823-8)
Mohammad Usman Mohammad Hussain Maniyar &
D Ors. v. State of Maharashtra (1981) 2 SCC 443; Kehar Singh
and Ors. v. State (Delhi Administration), 1988 (3) SCC 609
f .
at 731; State of Maharashtra v. Som Nath Thapa (1996) 4
SCC 659; K.R. Purushothaman ·v. State of Kera/a (2005) 12
SCC 631; State (NCT) of Delhi v. Navjot Sandhu @ Afsan
E Guru (2005) 11 SCC 600; Esher Singh v. State of A.P. (2004)
11 SCC 585; Yogesh @ Sachin Jagdish Joshi v. State of
Maharashtra (2008) 6 SCALE 469; Nirmal Singh Kah/on v.
'
State of Punjab and Others, 2008 (14) SCALE 639, referred
•
to.
F
Penal Law of India by Dr. Hari Singh Gour, (Vol.2, 11th
Edn. p. 1138 - referred to.
3.3. In the instant case UCO Bank in order to maintain
cash reserve ratio, as was statutorily required, used to
G participate in 'call money' transactions in the money
market, decision in respect whereof used to be taken at
its Head Office at Kolkata. For the said purpose, however,
the Head Office used to be in touch with the D.N. Road .
Main Branch in Bombay. A-2, the General Manager, at the
H
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
771
INVESTIGATION
~
~
Head Office in Kolkata, was authorized for the said
A
purpose. Again a decision taken by the General Manager
would be subject to any direction which may be issued
by A-1, the Managing Director of the Bank. The fact that
the decision had been taken by the A-2 to obtain "call
money" to the tune of Rs. 40 crores is not in dispute.
B
[Para 89, 90 and 94] [823-C-E; 824-H; 825-A]
3.4. The prosecution in view of the documentary and
' }-
oral evidence must be held to have proved the following
facts: (i) That the decisions regarding the lending or c
borrowing of "call money" were usually taken at the Head
Office in Kolkata based upon the information received
from the DN Road Branch in Bombay, (ii) These decisions
in Kolkatta were primarily taken by A-2 who at the
relevant time was the General Manager of UCO Bank,
D
~ _,
Kolkatta, (iii) The decision as to the 'call money'
borrowing on the 6th April, 1992 was also taken by A-2.
On that day he had communicated his decision of
borrowing of "call money" to PW-17, who at the relevant
time was an official there. PW-17 had noted the
information regarding the borrowings in a chit of paper
E
including 'call money' amounting to Rs. 40 crore
.f
borrowed from NHB at 26% interest,(iv) PW-17 then
)I
handed over the said chit with the 'call money'
information to PW-12 who had the responsibility of noting
the details in the 'call money' register. He accordingly
F
noted the details of the "call money" transactions of the
day, including the one from NHB worth Rs. 40 Crore.
[Para 104] [828-C-H; 829-A]
3.5. Keeping in view the statement made by P.W. 14
G
't
which was not shaken in the cross-examination, there is
no reason to disbelieve that part of the material brought
on record that 'call money' from NHB was, in fact, sought
to be cancelled. In any event, the prosecution cannot be
said to have failed to prove its case. On 6.4.1992 itself the
H
772
SUPREME COURT REPORTS [2009] 12 S.C.R.
A amount was credited to the account of A-4. It may be that
):
....
National Housing Bank is entitled to enter into the
security transactions but neither deceased A-4 nor A-5
made any attempt to show that any transaction had been
entered into by and between deceased A-4 and National
B Housing Bank. [Para 110 and 124] [831-E-F; 836-F-G]
3.6. The accused in their statements u/s. 313 of the
Cr. P.C. accepted that the transaction in question was a
routine transaction. Such a transaction indisputably was
....
<
c utilized for the personal gain of A-4. If such transaction
was a routine transaction, it goes to show the long
standing agreement between the said bank and A-4. PW5 who used to work with A-4 admitted that he knew A-6
since 1990 and the remittance facilities were available. A
D
sort of arrangement by and between the said Bank and
A-4, thus, stood established. This is one of the links in
,, ..
the chain to show how the arrangement developed so as
to bring the matter within the purview of conspiracy
amongst the accused. [Para 125 and 127] [836-H; 837-AD]
E
3.7. The transaction in question was shown to be a
'call money' transaction and, therefore, it could not have
+
been used for any other purpose. But, it was credited to
•
the account of A-4 on the very same day. Any "call
F money" operation could not have been carried out
without the knowledge and involvement of A-1 and A-2.
The involvement of the A-1 and A-2 in tandem for the
purpose of entering into such agreement, thus, stands
established. [Para 128] [837-D-G]
G
3.8. As per PW 13, A-1 had informed him that A-3 had
been authorized by him to deal with security transactions
of A-4 at the UCO Bank, Hamam Street Branch, Bombay.
It has also been emphasized by the prosecution that A-3
was present at the Hamam Street Branch on the day the
H said transaction took place. PW-18 in his testimony,
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF 773
INVESTIGATION
clarified the role of A-3 in insisting the starting up of A
.i
"\
security transactions through the account of A-4. It is
'
evident, therefore, that A3 also played an important role
in ensuring that the 'call money' from NHB which was
meant for UCO bank got transferred to account of A-4.
[Para 129-131] [837-H; 838-A-G]
B
3.9. The testimony of PW-8 also brings out the
involvement of A5 in the entire chain of conspiracy. He
knew that he was to receive 40 crores from NHB and that
. "'
is why he had on the said day gone to the Hamam Street
Branch of the Bank. [Para 136 and 138] [840-B-C; F]
c
3.10. It is pertinent to note that the money which was
supposed to be borrowed by UCO Bank as a 'call money'
was ultimately repaid by A-4 through his account in ANZ
Grindlays Bank directly. [Para 133] [839-B]
D
.. ~
3.11. It must however be noted that the entire
transaction could not have been carried out, had the
officials of the NHB not been involved. It is amply clear
from testimony of PW-6 that A-6 was the person E
responsible for the extension of the 'call money'
transaction from 1 day to 9 days and the reduction of the
-+
interest from 26% to 25%. The involvement of A-6 is also
lo
corroborated by the testimony of PW 14 where he made
reference to the fact that it was the former who had
F
informed him that the cheque from NHB worth Rs. 40
crore was to be transferred to the DN Road Branch of
UCO Bank. [Para 139, 141] [840-G; 841-E-F]
3.12. As regards involvement of the A-7 who was
working under A-6 at NHB, relia.nce has been placed by
G
the prosecution and even by the Special Court on the
testimony of PW 7 who deposed that A-7 had asked him
to go to UCO Bank, Hamam Street Branch on 16.4.1992
and collect the cheque for the return of the "call money"
advanced.Reliance on the said testimony is not enough. H
774
SUPREME COURT REPORTS [2009] 12 S.C.R.
A Just because PW-7 had been sent by A-7 is not enough
for his involvement in the criminal conspiracy which was
)<
"\-
hatched on behalf of the other accused. The burden of
proof is always heavy on the prosecution. In the instant
case, the prosecution has failed in this task with respect
B to A-7. (Para 142 and 144] (841-G; 842-C-F]
3.13. The NHB was created 'to operate as a principal
agency to promote housing finance institutions both at
local and regional levels and to provide financial and
other support to such institutions.' In terms of s. 14 of the
, .
c National Housing Bank Act, 1987, NHB could advance
loans to 'housing finance institutions' and 'scheduled
banks' or 'slum authority' constituted under a Central or
State Legislation, and in case it advances any loan to any
individual the same would amount to an offence under
D the provisions of the 1987 Act. Therefore, advancing of
loan to A-4 by NHB under the disguise of a 'call money'
~ ..
transaction amounted to an offence under the provisions
of the 1987 Act and also was illegal as defined in s.43 IPC.
The accused had knowledge of the said transaction.
E There is sufficient evidence to hold A-1 to A3, all officials
of UCO Bank, A-6, an official of NHB and A-5, who was
working under A-4, guilty of criminal conspiracy.
+
Therefore, they have been rightly convicted by the courts
•
for commission of the offence of criminal conspiracy. But
F there is not sufficient evidence to show the involvement
of A-7, the other employee of NHB in the said
transactions. [Para 149,151,153 and 154] [843-E; 844-F-G;
845-C-E]
G
4.1. Section 405 IPC, which defines criminal breach
of trust requires (1) entrusting any person with property
or with dominion over property; (2) such· person (a)
dishonestly misappropriates or converts to his own use
that property; or (b) dishonestly uses or disposes of that
H property or willfully suffers any other person so to do in
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
775
INVESTIGATION
violation - (i) of any direction of law prescribing the mode
A
in which such trust is to be discharged, or (ii) of any legal
contract made touching the discharge of such trust. [Para
157] [846-C-F]
Onkar Nath Mishra and Ors. vs. State (NCT of Delhi) and 8
Anr., (2008) 2 SCC 561; Jaikrishnadas Manohardas Desai
and Anr. v. State of Bombay, AIR 1960 SC 889, relied on.
4.2. Criminal breach of trust by a public servant is
•
i<'
dealt with uls 409, ingredients whereof are: (1) the
accused must be a public servant; (2) he must have been
C
entrusted, in such capacity, with the property ; and (3) he
must have committed breach of trust in respect of such
property. This section classes together public servants,
bankers, merchants, factors, brokers, attorneys and
agents. The duties of such persons are of a highly D
" 1
confidential character, involving great powers of control
over the property entrusted to them, and a breach of trust
by such persons may often induce serious public and
private calamity. [Para 161-163] [847-F; 848-C-D, B]
Raghunath Anant Govilkar v. State of Maharashtra and
Ors,
2008 (2) SCALE 303;
Superintendent and
Remembrancer of Legal Affairs, WB. v. S.K. Roy, (1974) 4
SCC 230; Chelloor Mankkal Narayan lttiravi Namhudiri v.
State of Travancore, Cochin, AIR 1953 SC 478 - relied on.
E
F
4.3. The accused had allowed diversion of a huge
sum of NHB meant to be used for spe~fic purpose,
namely, 'call money', to be lent to another Nationalized
Bank. Since the transaction was illegal, as a result
whereof, a private person, who was not expected to reap
G
Jthe fruit of 'call money' was allowed to retain the same
for a certain period to make an unlawful gain therefrom,
offence of criminal breach of trust must be held to have
been committed. [Para 170) [850-G-H; 851-A]
H
776
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
4.4. The plea that the Banks have not initiated any
proceedings nor have they suffered any loss and thus
the judgment of conviction and sentence for criminal
breach of trust is wholly unsustainable, cannot be
accepted. A Bank or Financial Institution may not suffer
B ultimate loss but if the money has been allowed to be
used by another person illegally for illegal purposes, the
ingredients of s. 405 IPC would get attracted. A case
involving temporary embezzlement also attracts the
ingredients of s. 405 IPC. Furthermore, in terms of the
c decisions of this Court, when a person allows others to
misappropriate the property entrusted to him, that also
amounts to criminal breach of trust It is not the law that
complaint petition under all circumstances must be made
by the Banks and Financial Institutions whose money
0 had been the subject matter of offence. It is also not the
law that suffering of loss is a sine qua non for recording
a judgment of conviction. The money involved in the
transfer is public money belonging to Public Sector
Banks. Criminal law can be set in motion by anybody. The
prosecution was initiated on the basis of the information
E received by the Central Bureau of Investigation. It would
be entitled to do so not only in regard to its statutory
powers contained in the Delhi Special Police Act but it
was also entitled to take cognizance in terms of the report
submitted by 'Janakiraman Committee'. [Para 168 and
F 169, 171, 172] [850-A, D-F; 851-B-D)
5.1. The most essential ingredient of proof of criminal
breach of trust is misappropriation with a dishonest
intention. So far as the aspect of dishonest intention is
G concerned, the term 'dishonestly' is defined by s. 24 IPC
as doing anything with the intention of causing wrongful
gain to one person or wrongful loss to another. So the
offence is completed when misappropriation of property
has been made dishonestly. Accordingly, even a
H
•
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
777
INVESTIGATION
temporary misappropriation falls within the ambit of the
A
.
)i
said offence. The term 'wrongful gain' is defined in s. 23
IPC as gain by unlawful means of property to which the
person gaining is not legally entitled. [Para 175,178 and
179) [852-A-F]
SW Pa/anikar v. State of Bihar, (2002) 1 SCC 241;
B
Kartikeshwar Nayak v. State, 1996 Cr.L.J. 2253, relied on
5.2. In the instant case A-6 parted with money of NHB,
. ,,
which was entrusted to him, so that A-4 could get it
although not entitled therefor in law. The conduct of A-6 c
was, therefore, dishonest. He is guilty of the offence of
criminal breach of trust. [Para 180) [852-G-H]
5.3. With regard to A-7 there is not enough evidence
to show his involvement in the said transactions. [Para D
-~
Ji
180] [852-G-H; 853-A]
..
5.4. So far as the involvement of accused 1 to 3 is
concerned, they also played an important role in diverting
the supposed 'call money' from NHB which was meant
E
for UCO Bank to the account of A-4. As soon as the
cheque for Rs 40 crore was received by UCO Bank the
j.
amount stood entrusted to the officials of UCO Bank. A-
~
1 to A-3 in violation of law permitted the amount to be
transferred to the account of A-4 who was not entitled to
it. Therefore, the offence of criminal breach of trust stands
F
proved against them also. [Para 181) [853-A-C]
Ram Narayan Popli v. Central Bureau of Investigation
2003) 3 sec 641, relied on.
6.1. As regards charges u/s. 13 (1) (d) (iii) read withs G
13 (2) of the Prevention of Corruption Act, 1988, the
ingredients of Sub-clause (iii) of s. 13 (1) (d) contemplate
that a public servant who while holding office obtains for
any person any valuable thing or pecuniary advantage.
H
778
SUPREME COURT REPORTS [2009] 12 S.C.R.
A without any public interest would be guilty of criminal
misconduct. For convicting the person uls. 13(1)(d)(iii),
)>,
there must be evidence on record that accused
'obtained' for any other person any valuable thing or
pecuniary advantage without any public advantage. [Para
B 184 and 185) [855-B-D]
CK Damodaran Nair v. Government of India, AIR 1997
SC 551; Dalpat Singh v. State of Rajasthan, AIR 1969 SC
17; B. Ramachandran and S.S. Abdul Hameed vs. State rep.
~ ,
c by The Inspector of Police, Special Police Establishment,
Central Bureau of Investigation, Anti-Corruption Branch, (Crl.
A. No. 553 of 2000 decided on 23.03.2007), by Madras H.C.
relied on.
6.2. A-1 to A-3 (UCO Bank officials) and A-6 (NHB
D official) were at the relevant time public servants. Each
one of them played a specific role in diversion of funds
(
from NHB to the account of A-4, all ostensibly under a
..
'call money' transaction. They thereby facilitated A-4 to
obtain pecuniary advantage within the meaning of s. 13
E of the 1988 Act. Their acts were anything but intended to
be in public interest. On the contrary, the public loss and
suffering occasioned thereby was immeasurable. Though
•
it is true that all the funds diverted have subsequently
•
been returned to NHB and no actual loss has been
F occasioned thereby either to the UCO Bank or the NHB,
but it must not be forgotten that white collar crimes of
such a nature affect the ,whole society even though they
may not have any immediate victims. A-1 to A-3 and A-6
are, accordingly, guilty of criminal misconduct uls 13 (1)
G (d) (iii) of the Prevention of Corruption Act. 1988.
However, there is no sufficient evidence to bring in the
involvement of A-7, within the fold of the said transaction.
[Para 189 and 190) [856-E-H; 857-A-B]
7.1. A sentence of punishment poses a complex
H
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
779
INVESTIGATION
problem which requires a balancing act between the
A
competing views based on the reformative, the deterrent
as well as the retributive theories of punishment.
Accordingly, a just and proper sentence should neither
be too harsh nor too lenient. In judging the adequacy of
a sentence, the nature of the offence, the circumstances
B
of its commission, the age and character of the offender,
injury to individual or the society, effect of punishment
on offender, are some amongst many other factors which
should be ordinarily taken into consideration by the
courts. It may also be placed on record that as the CBI c
has not preferred any appeal against the quantuin of
sentence, this Court cannot impose a higher sentence.
Therefore, the sentences imposed by the Special Court
on A-1 to A-3 and A-5 are not interfered with. [Para 191196) [857-C-E; 858-8-E]
7.2. The Special Court acted illegally and without
jurisdiction in relying upon the report of the
"Janakiraman Committee" while imposing the sentence
on A-6. Though, the court may refer to the constitution
D
of the Committee for the purpose of tracing the history E
for enactment of the Act, but the contents of the said
report would not be admitted in evidence in a criminal
case without proof thereof. The Committee was not a
court. It did not render any decision. It was merely a fact
finding body. It was constituted for a limited purpose. The
F
report in terms of the provisions of the Evidence Act, 1872
is not a judgment. The report may facilitate investigation
but cannot form basis of conviction and sentencing the
accused. Contents of the report, therefore, without formal
proof, could not have been taken in evidence. G
Accordingly, the Janakiraman Committee Report was not
admissible in evidence. [Para 72-73] [816-F~G; 817-A-C]
M. V. Rajwade v. Dr. S.M. Hassan, AIR 1954 Nag 71; Re.
H
780
SUPREME COURT REPORTS [2009) 12 S.C.R.
A Maharaja Madhava Singh LR (1905) 31 IA 239, referred to.
J\
Branjnandan Sinha v. Jyoti Narain (1955) S.C.R. 955;
Ram Krishna Dalmia v. Justice S.R. Tendolkar, 1959 SCR
279; Puhupram v. State of Madhya Pradesh, (1968) MPLJ
B 629; Sham Kant v. State of Maharashtra 1992 Suppl. (2)
sec 521, relied on
7.3. Though, A-6 played a very instrumental role in the
entire scheme of things and the transactions could not
have been possibly carried on without his help, but so
~
<
c long as there is doubt that the trial court was not wholly
correct in awarding the sentence as it might have been
influenced by the observations of the Janakiraman
Committee Report while awarding the sentence, this
Court would not be in a position to uphold it This is also
-
D visible from the wide difference in the sentence of
imprisonment which has been given to him as compared
t '
to other accused persons who also played an equally
instrumental role in the illegal transactions. Accordingly
the sentence imposed on A-6 is reduced to six months
E but the amount of fine which has been imposed upon
him is upheld. [Para 197] [858-F-H; 859-A-B]
Case Law Reference:
~
~
2003) 3 sec 641
relied on
para 16
F
AIR 1960 SC 610
referred to
para 50
(1991) 3 sec 617
referred to
para 50
2007 (2) SCALE 120
referred to
para 50
G
(2009) 3 sec 240
referred to
para 50
(2001) 8 sec 257
referred to
para 53
(2004) 11 sec 456
referred to
para 54
H
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF 781
INVESTIGATION
(2001) 3 sec 11
referred to
para 55
A
AIR 1955 SC 661
referred to
para 57
AIR 2000 SC 5100
referred to
para 57
1985) 2 All ER 355
referred to
para 57
B
(1988) 2 sec 299
referred to
para 59
(2004) 5 sec 632
referred to
para 59
'
[1970) 3 All ER 1053 (QB} referred to
para 59
c
[1971) 1 WLR 408
referred to
para 59
AIR 1998 SC 831
referred to
para 61
AIR 1954 Nag 71
referred to
para 74
LR (1905) 31 IA 239
referred to
para 74
D
(1955) S.C.R. 955
relied on
para 75
1959 SCR 279
relied on
para 75
1968) MPLJ 629
relied on
para 75
E
>
[1992 Suppl. (2) SCC 521 relied on
para 75
(1981) 2 sec 443
referred to
para 83
1988 (3) sec 609
referred to
para 84
F
(1996) 4 sec 659
referred to
para 86
(2005) 12 sec 631
referred to
para 86
(2005) 11 sec 600
referred to
para 87
(2004) 11 sec 585
referred to
para 87
G
•
(2008) 6 SCALE 469
referred to
para 87
H
782
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
2008 (14) SCALE 639
referred to
para 88
(2008) 2 sec 561
relied on
para 158
AIR 1960 SC 889
relied on
para 159
B
2008 (2) SCALE 303
relied on
para 164
(1974) 4 sec 230
relied on
para 165
AIR 1953 SC 478
relied on
para 166
2002) 1 sec 241
relied on
para 174
c
1996 Cr.L.J. 2253
relied on
para 179
AIR 1997 SC 551
relied on
para 184
AIR 1969 SC 17
relied on
para 187
D
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 76 of 2004.
From.the Judgment & Order dated 04.12.2003 of the
Special court (Trial of Offences Relating to Transactions in
E Securities) at Bombay in Special Case No.2 of 1993.
WITH
Crl. A. Nos. 101, 147, 164, 90 and 92 of 2004.
F
Mohan Parasaran, ASG, V.A. Mehta, Bhimrao Naik,
Bishwajit Bhattacharyya, P.S. Narasimha, Amit Sharma,
Anupam Lal Das, E.C. Agrawala, Mahesh Agarwal, Rishi
Agrawala, Nilkanta Nayar, Rajeev B. Masoodkar, S.S.
Khanduja, Aarohi Bhalla, Amit Yadav, Pramit Saxena, Sujata
G Kurdukar, Debashis Mukherjee, Ajay Singh, Ravindra Kumar,
Kamini Jaiswal, D.L. Chidananda, Gaurav Dhingra, T.A. Khan,
B.K. Prasad (for P. Parmeswaran) for the appearing parties.
The Judgment of the Court was delivered by
H
I
'
• •
•
R. VENKATAKRISHNAN v. CENTRAL BUREAU OF
783
INVESTIGATION
S.S. SINHA, J.
A
"
INTRODUCTION
1. These six appeals are directed against a judgment and
order dated 4th December, 2003 passed by the Special Court
B
in Case No.2of1993 whereby and whereunder the appellants
herein were convicted and sentenced in the following terms :-
"(a) Accused No. 1, K. Margabanthu is sentenced for
' )'
the offence punishable under Section 120-B read
with Section 409 of the Indian Penal Code read with c
Section 13(1)[d](iii) read with Section 13(2) of the
Prevention of Corruption Act to undergo R.I. for a
period of six months and to pay fine of Rs.1,00,000/
- in default S.I. for two months .
. "
j
(b)
Accused No. 2, R. Venkatkrishnan is sentenced for D
~ y
the offence punishable under Section 120-B read
with Section 409 of the Indian Penal Code read with
Section 13(1 )[d](iii) read with Section 13(2) of the
Prevention of Corruption Act, to undergo R.I. for a
E
period of six months and to pay a fine of
Rs.1,00,000/- in default S.I. for two months.
>-
.-
(c)
Accused No. 3, S.V. Ramnathan is sentenced for
the offence punishable under Section 120-B read
...
with Section 409 of the Indian Penal Code read with
F
Section 13(1)[d](iii) read with Section 13(2) of the
Prevention of Corruption Act to undergo R.I. for a
period of one month and to pay fine of Rs.10,000/
- in default S.I. for 15 days.
(d)
Accused No. 5, Atul M.Parekh is sentenced for the
G
offence punishable under Section 1208 of the
Indian Penal Code to undergo R.I. for a period of
15 days and to pay fine of Rs.10,000/-, in default
S.I. for 15 days.
H
784
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
(e)
Accused No. 6, C. Ravikumar is sentenced for the
offence punishable under Section 120-B read with
section 409 of the Indian Penal Code read with
Section 13( 1 )[ d](iii) read with Section 13(2) of the
Prevention of Corruption Act to undergo RI. for a
B
period of three years and to pay fine of
Rs.1,00,000/- in default S.I. for three months.
c
D
E
F
G
H
(f)
Accused No. 7, S. Suresh Babu is sentenced for
the offence punishable under Section 120-B read
with section 409 of the Indian Penal Code read with
Section 13(1 )[d](iii) read with Section 13(2) of the
Prevention of Corruption Act to undergo RI. for a
period of one year and to pay fine of Rs.50,000/-
in default S.I. for three months."
BACKGROUND FACTS
2. While accused No.1, K. Margabandhu, at the relevant
time, was the Chairman and Managing Director of United
Commercial Bank (UCO Bank), (a public sector b°ank),
accused No.2, Ramaiya Venkatkrishnan was the General
Manager and accused No.3, S.V. Ramnathan was the
Divisional Manager thereof of the Bombay Branch.
accused No.4, Harshad Shantilal Mehta (Harshad Mehta)
is said to be the kingpin of the whole operation.