CENTRAL BUREAU OF INVESTIGATION vs SHRI JYOTI RANJAN KANUNGO
- Court
- Calcutta High Court
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
APPELLATE SIDE
PRESENT:
THE HON’BLE JUSTICE UDAY KUMAR
CRR 4653 OF 2022
CENTRAL BUREAU OF INVESTIGATION
-VS-
SHRI JYOTI RANJAN KANUNGO
For the Petitioner : Mr. Amajit De, Learned Special P.P.
For the Opposite Party : Mr. Aritra Bhattacharya, Ld. Adv.
Mr. Saptarshi Basu, Ld. Adv.
Mr. Suman Dutta, Ld. Adv.
Reserved on : 14.10.2026
Pronounced on : 12.11.2026
UDAY KUMAR, J.: –
1. The petitioner CBI, by the instant revisional application under Section
397 read with Section 482 of the Cr.P.C., has challenged the
correctness, legality and propriety of Order No. 26 dated 29.09.2022
passed by the learned Special Judge, CBI Court No. 2, Calcutta, in
Special (CBI) Case No. 02/22 (arising out of FIR No. RCBSK 2017E0001
dated 28.03.2017) whereby the learned trial court was pleased to
discharge the Opposite Party herein, Shri Jyoti Ranjan Kanungo
(Accused No. 3), the Chief Manager and Relationship Manager at the
State Bank of India (SBI), Industrial Finance Branch (IFB), Kolkata.
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2. This criminal proceeding originates from a formal written complaint
lodged by Shri Supriya Basu, General Manager (MC-II) of State Bank of
India, on 27.01.2017, alleging a colossal financial fraud, systemic
siphoning, and fraudulent misappropriation of public banking funds to
the tune of Rs. 164.99 crores. The M/s. Shree Mahalaxmi Corporation
Pvt. Ltd. (hereinafter referred to as SMCPL or A-2), originally
incorporated in August 2001 and renamed in September 2010, steered
by its prime directors and promoters, including Shri Gopal Kumar
Agrawal (A-1) and Shri Brahmanand Agrawal (A-4), is the principal
corporate borrower company. It maintained credit accounts with the
Commercial Branch, Ballygunge, of SBI from 2004, which was
subsequently migrated in the year 2009 to the specialized Industrial
Finance Branch (IFB) at Kolkata. It is fact that under an extensive
consortium arrangement comprising SBI, State Bank of Travancore,
and IDBI Bank, the borrower company availed massive fund-based and
non-fund-based credit facilities. Specifically, SBI’s individual share of
the sanctioned credit limit eventually stood at a staggering Rs. 142.89
crores, encompassing a Cash Credit limit of Rs. 75 crores, Working
Capital Term Loans, Letters of Credit, Foreign Currency Demand Loans,
and a specialized local cheque collection facility under the Cash
Management Product (CMP) carrying an Rs. 8 crore sub-limit.
3. During the operational span of these credit lines between 2011 and
2013, the borrower company, acting in active criminal conspiracy with
its directors and a syndicate of associate business entities including
M/s. Rajputana General Commercial Corporation Pvt. Ltd. (A-7), M/s.
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Arvind Trading Co. (A-6), and transport fronts like M/s. Shree Mahabir
Roadways (A-8), unleashed a meticulously planned financial fraud upon
SBI, IFB, Kolkata, culminating in an astronomical wrongful loss
exceeding Rs. 164.99 crores. The core modus operandi heavily featured
the systematic abuse of the Cash Management Product (CMP) facility
through "kite flying" wherein high-value cheques drawn on associate
shell companies with insufficient funds were deposited to claim
immediate advance credits, cycling fresh cheques perpetually to mask
structural overdues and keep a dying account artificially afloat.
4. Furthermore, six Letters of Credit (LCs) amounting to Rs. 18.48 crores
were fraudulently engineered using fake proforma invoices, bills of
exchange, and fabricated transport receipts bearing vehicle registration
numbers of agricultural trailers, motorbikes, and buses entirely
unsuited for heavy steel transport. The discounted LC proceeds were
subsequently layered through front companies like M/s. Shree
Padmawati Metaliks Pvt. Ltd. (A-10) and M/s. Surabhi Tradecom Pvt.
Ltd. (A-11) to artificially service and reduce overdue cash credit
balances, while falsified monthly stock and book-debt statements were
submitted to illegally inflate drawing powers. Consequentially, the
borrower’s account hit the Non-Performing Asset (NPA) milestone on
30.06.2013 and was formally branded as "Fraud" on 25.06.2015.
5. Upon registration of FIR No. RCBSK 2017E0001 on 28.03.2017, the
Central Bureau of Investigation (CBI) conducted an exhaustive, multi-
year probe, culminating in the submission of Charge Sheet No.
07/2019 on 30.12.2019 against eleven accused persons encompassing
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private corporate entities, directors, and the public servant, the
Opposite Party herein, Shri Jyoti Ranjan Kanungo (A-3), for commission
of offenses punishable under Section 120B read with Sections 420, 468,
and 471 of the IPC, along with Section 13(2) read with Section 13(1)(d)
of the Prevention of Corruption Act, 1988. As against the Opposite Party
(A-3), who served as the Chief Manager and Relationship Manager of
the said fraud-tainted loan account during the critical window of 2010
to June 2013, the investigation unearthed direct, tangible evidence of
active internal facilitation, detailing hereinbelow:
I. Despite explicit sanction terms mandating the instant
withdrawal of the CMP facility upon the return of cheques
unpaid for want of funds, A-3 permitted its continuous,
uninterrupted operation through months of chronic, recurring
cheque bounces (with overdues peaking at Rs. 41.24 crores), in
flagrant violation of core sanction covenants;
II. A-3 verified foreign currency demand loans in core banking
systems with nil drawing power reductions, thereby enabling
unlawful "double-dipping" and allowing the borrower to exceed
sanctioned limits while drawing powers were artificially pushed
to over Rs. 85 crores.
III. A-3 executed unauthorized inter-company fund transfers, such
as the direct surreptitious transfer of Rs. 14.89 crores on
19.04.2012 from associate entity A-10 to the borrower's cash
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credit account without any customer request or underlying
trade transaction.
IV. To cover up an illegal exposure, A-3 clandestinely opened an
unauthorized cash credit account (No. 32684148930) on
30.11.2012 solely to siphon and square off an unbacked Rs. 15
crore RTGS exposure extended to M/s. Emami Biotech Ltd.
when the current account balance was a mere Rs. 5,117.
V. A-3 systematically prepared and signed monthly irregularity
reports dispatched to regional authorities that deliberately
underreported actual outstandings to shield a failing, fraudulent
account from premature NPA categorization.
6. Despite the voluminous documentary evidence, system logs, vouchers,
and systemic audit trails gathered by the investigating agency, the
learned trial court, vide the impugned Order No. 26 dated 29.09.2022,
proceeded to discharge the Opposite Party (A-3) under Section 239
CrPC. The trial court reasoned that the CMP monitoring was handled by
a separate branch cell, that internal departmental proceedings
concluded with a minor administrative warning, that senior executives
countersigned reports, and that the materials failed to disclose direct
criminal intent or personal financial enrichment.
7. Opening the arguments on behalf of the petitioner, Central Bureau of
Information, Mr. Amajit De, the learned Special P.P., CBI vehemently
contended that the impugned order of discharge passed by the learned
trial court suffers from a fundamental perversity of approach, having
fundamentally misconstrued the statutory threshold mandated under
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Section 239 of the Code of Criminal Procedure. He further urged that
the learned trial court completely lost sight of the fact that at the pre-
charge stage, a meticulous evaluation, sifting, and weighing of evidence
is impermissible, and that the court is duty-bound to accept the
prosecution materials at face value to ascertain whether a prima facie
case is made out or a strong and grave suspicion is disclosed.
8. Mr. De meticulously took this Court through the voluminous
documentary evidence, system logs, vouchers, and audit trails gathered
during the investigation, emphasizing that the Opposite Party (A-3),
while functioning as the Chief Manager and Relationship Manager at
the State Bank of India, Industrial Finance Branch, Kolkata, during the
relevant period, did not merely commit passive supervisory oversights
or routine administrative lapses. On the contrary, A-3 acted as an
active, conscious internal facilitator of a multi-crore public banking
fraud.
9. Expanding upon the specific overt acts, the learned counsel for the CBI
highlighted that A-3 deliberately and flagrantly bypassed mandatory
sanction covenants by permitting the continuous, uninterrupted
operation of the Cash Management Product (CMP) facility despite
chronic, recurring cheque bounces that witnessed structural overdues
peaking at Rs. 41.24 crores. He further submitted that A-3 verified
foreign currency demand loans in core banking systems with nil
drawing power reductions, thereby enabling unlawful "double-dipping"
and allowing the borrower company (SMCPL / A-2) to massively exceed
sanctioned credit ceilings while artificially inflating drawing powers to
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over Rs. 85 crores. Particular emphasis was laid on the grave illegalities
committed by A-3 in executing unauthorized, unbacked inter-company
fund shuffles, such as the surreptitious transfer of Rs. 14.89 crores on
19.04.2012 from associate entity A-10 to the borrower's cash credit
account without any customer requisition or underlying trade, as well
as the clandestine creation of an unauthorized cash credit account (No.
32684148930) on 30.11.2012 solely to siphon and square off an
unbacked Rs. 15 crore RTGS exposure extended to M/s. Emami
Biotech Ltd. when the current account balance stood at a bare Rs.
5,117.
10. Finally, Mr. De submitted that A-3 systematically prepared and signed
monthly irregularity reports dispatched to superior regional and central
authorities that deliberately underreported actual outstandings, thereby
acting as a smokescreen to shield a failing, fraudulent account from
premature Non-Performing Asset (NPA) classification. It was forcefully
argued that in a multi-party economic offense involving an overarching
criminal conspiracy, the overt acts of an insider public servant cannot
be compartmentalized or severed from the fraudulent manoeuvres of
the private borrowers. Discharging the key internal banking facilitator
while keeping the private beneficiaries on trial creates an irreconcilable
legal anomaly and fractures the integrity of the prosecution case,
thereby warranting immediate revisional interference to set aside the
flawed discharge order.
11. Per contra , Mr. Aritra Bhattacharya, the learned counsel appearing on
behalf of the Opposite Party (A-3) strenuously supported the legality,
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soundness, and unassailable reasoning of the impugned discharge
order dated 29.09.2022, contending that the learned trial court
exercised its statutory discretion under Section 239 CrPC with utmost
circumspection upon finding the charges to be completely groundless. It
was submitted at the outset that the Opposite Party discharged his
official duties as a Relationship Manager with unblemished professional
integrity and that the borrower company, M/s. Shree Mahalaxmi
Corporation Pvt. Ltd., had maintained a long-standing banking
relationship with SBI since 2004, well prior to the migration of its
accounts to the IFB branch in 2009. He emphasized that A-3 had no
pre-existing nexus, personal acquaintance, or criminal meeting of
minds with the private directors or beneficiary entities, and all credit
appraisals and restructuring proposals processed by him were strictly
within the framework of institutional guidelines and were transparently
countersigned and approved by senior executive authorities, including
the Deputy General Manager (CSW-61).
12. Addressing the specific allegations regarding the Cash Management
Product (CMP) facility, Mr. Bhattacharya argued that the operational
monitoring and control of CMP transactions vested exclusively in a
separate Cash Management Cell situated in a completely different
branch (Commercial Branch, Kolkata), and A-3's role was merely
confined to issuing standard communication letters. Furthermore, as
soon as A-3 independently became aware of operational stress, he
proactively and immediately stopped the CMP facility on 11.11.2011, an
action duly noted and appreciated by the Reserve Bank of India during
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its statutory inspection. It was strongly underscored that the charge
sheet itself formally admitted that the initial allegation of a Rs. 164.99
crore loss solely via CMP misuse was completely unsubstantiated.
13. Regarding the foreign currency demand loans and drawing power
entries, Mr. Bhattacharya contended that core banking systems operate
on automated validation layers where manual overriding is impossible,
and all systemic entries were verified in accordance with established
banking protocols.
14. Crucially, Mr. Bhattacharya placed heavy reliance on the internal
departmental proceedings conducted by SBI, wherein the competent
departmental authority thoroughly examined A-3's conduct and
completely exonerated him of any corrupt practice, fraud, or criminal
connivance, concluding the inquiry with a minor administrative
warning and treating his period of suspension as "Officer on Duty."
15. It was further submitted that as late as March 2013, exhaustive
internal reports prepared jointly by A-3, senior credit analysts, and the
DGM established that the account’s stress was purely a commercial
casualty of cash-flow mismatches, power bill burdens, and delayed
receivables, which culminated in a formal restructuring proposal
approved by the Wholesale Banking Credit Committee-1 (WBCC-I).
16. Lastly, Mr. Bhattacharya urged that to sustain a charge under Section
13(1)(d) of the Prevention of Corruption Act or Section 420 IPC, the
foundational requirement of mens rea and direct personal monetary
enrichment ( kickbacks or illegal gratification) must be established; in
the total absence of any material showing that A-3 derived personal
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financial gain from the borrower company, prosecuting a public servant
for bona fide administrative decisions is an abuse of the judicial
process, rendering the trial court's order of discharge fully justified and
legally impregnable.
17. Having heard the extensive submissions advanced by the respective
learned counsels for the parties and upon meticulously perusing the
trial court records, charge sheet materials, and judicial precedents, the
following questions arise for determination:
(i) Whether the learned trial court committed a patent
jurisdictional error by conducting an impermissible "mini-
trial" and evaluating evidentiary credibility at the stage of
considering an application for discharge under Section 239
CrPC?
(ii) Whether the materials collected during investigation, when
taken at face value, disclose a prima facie case or raise a
"strong and grave suspicion" of criminal conspiracy and
abuse of official position against the Opposite Party (A-3)?
(iii) Whether the impugned order of discharge suffers from
perversity, requiring revisional intervention under Section
397 read with Section 482 of the CrPC?
18. It is well-settled that a criminal trial is governed by strict legislative
parameters designed to filter out groundless accusations while ensuring
that individuals against whom a genuine cloud of criminalities are put
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on trial. For a warrant case instituted on a police report, Section 239 of
the Cr.P.C. mandates:
" 239. When accused shall be discharged.
If upon considering the police report and the documents sent
with it under section 173 and making such examination, if any,
of the accused as the Magistrate thinks necessary and after
giving the prosecution and the accused an opportunity of being
heard, the Magistrate considers the charge against the accused
to be groundless, he shall discharge the accused, and record
his reasons for so doing."
19. The statutory expression used in the text is "consider the charge... to be
groundless." It does not mean that the court must evaluate whether the
material is sufficient to secure a conviction, nor does it empower the
judge to act as a trial court by weighing the comparative strengths of
rival evidentiary claims before a single witness step into the box.
20. It is the specific contention of the learned counsel for the petitioner that
impugned order was passed in violation of this statutory boundary.
Instead of testing whether the charge sheet materials (such as system
logs, vouchers, unbacked fund transfers, and signed irregularity
reports) disclosed a prima facie case or a grave suspicion, the learned
trial court waded deep into sifting witness statements (specifically
referencing CSW-61, Pradip Kumar Dutta), interpreting internal audit
notes, and assessing the evidentiary weight of internal departmental
warnings, constitutes an impermissible "mini-trial."
21. The learned counsel for the Opposite Party defended the impugned
order by emphasizing that the power of a judge, while considering an
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application under Section 239 CrPC is not that of a mere post office,
but is fully entitled to evaluate these records to prevent an abuse of
process and protect an honest public servant from the ordeal of a
frivolous trial, where documents such as internal audit notes, RBI
inspection reports, and departmental exoneration orders clearly
establish that A-3 acted within administrative norms and that CMP
monitoring was handled by a separate branch cell.
22. Let me consider the precedents defining the parameters for the
discharge of an accused at the stage of framing of charges under
Sections 239/240 of the Cr.P.C. In State of Tamil Nadu v. N. Suresh
Rajan & Ors. , [(2014) 11 SCC 709], the Apex Court exhaustively
analyzed the scope of Sections 239/240 CrPC and cautioned courts
against embarking upon a premature evaluation of evidence,
particularly in the matters concerning corruption and economic
offences. It has been held that at the stage of framing of charges, the
court has to examine the materials only with a view to be satisfied that
a prima facie case of commission of an offense is disclosed, not to
adjudge the truthfulness, sufficiency, or acceptability of the materials,
and at paragraph 29 of the report, expressed that:
" 29. …... True it is that at the time of consideration of the
applications for discharge, the court cannot act as a mouthpiece
of the prosecution or act as a post office and may sift evidence
in order to find out whether or not the allegations made are
groundless so as to pass an order of discharge. It is trite that at
the stage of consideration of an application for discharge, the
court has to proceed with an assumption that the materials
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brought on record by the prosecution are true and evaluate the
said materials and documents with a view to find out whether
the facts emerging therefrom taken at their face value disclose
the existence of all the ingredients constituting the alleged
offence. At this stage, probative value of the materials has to be
gone into and the court is not expected to go deep into the
matter and hold that the materials would not warrant a
conviction. In our opinion, what needs to be considered is
whether there is a ground for presuming that the offence has
been committed and not whether a ground for convicting the
accused has been made out. To put it differently, if the court
thinks that the accused might have committed the offence on
the basis of the materials on record on its probative value, it
can frame the charge; though for conviction, the court has to
come to the conclusion that the accused has committed the
offence. The law does not permit a mini trial at this stage.”
23. Laying down the foundational principles for evaluating discharge
petitions in complex conspiracy and criminal cases, the Hon’ble
Supreme Court in Sajjan Kumar v. CBI , [(2010) 9 SCC 368] held that if
the materials placed before the court disclose grave suspicion against
the accused which has not been properly explained, the court is fully
justified in framing charges and proceeding with the trial:
"21. On consideration of the authorities about the scope of
sections 227 and 228 of the Code [pari materia with Sections
239/240 CrPC], the following principles emerge:
(i) The Judge while considering the question of framing the
charges under Section 227 CrPC has the undoubted power to
sift and weigh the evidence for the limited purpose of finding
out whether or not a prima facie case against the accused has
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been made out. The test to determine prima facie case would
depend upon the facts of each case.
(ii) Where the materials placed before the court disclose grave
suspicion against the accused which has not been properly
explained, the court will be fully justified in framing a charge
and proceeding with the trial.
(iii) The court cannot act merely as a post office or a mouthpiece
of the prosecution but has to consider the broad probabilities of
the case, the total effect of the evidence and the documents
produced before the court, any basic infirmities, etc. However,
at this stage, there cannot be a roving enquiry into the pros and
cons of the matter and weigh the evidence as if he was
conducting a trial.
(iv) If on the basis of the material on record, the court could form
an opinion that the accused might have committed offence, it
can frame the charge, though for conviction the conclusion is
required to be proved beyond reasonable doubt that the
accused has committed the offence.
(v) At the time of framing of the charges, the probative value of
the material on record cannot be gone into but before framing a
charge the court must apply its judicial mind on the material
placed on record and must be satisfied that the commission of
offence by the accused was possible.
(vi) At the stage of Sections 227 and 228, the court is required
to evaluate the material and documents on record with a view
to find out if the facts emerging therefrom taken at their face
value disclose the existence of all the ingredients constituting
the alleged offence. For this limited purpose, sift the evidence
as it cannot be expected even at that initial stage to accept all
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that the prosecution states as gospel truth even if it is opposed
to common sense or the broad probabilities of the case.
…….”
24. Furthermore, the Hon’ble Apex Court in Captain Manjit Singh Virdi v.
Hussain Mohammad Shattaf & Ors. , [(2023) 7 SCC 633], held that a
discharge hearing cannot be converted into an exhaustive "mini-trial":
" ...It is settled law that at the stage of consideration of an
application for discharge, the court has to proceed with an
assumption that the materials brought on record by the
prosecution are true and evaluate the said materials only to
determine whether the ingredients of the offence are disclosed.
The court cannot conduct a pre-trial or a mini-trial by
appreciating the evidence and accepting the defense version at
the threshold."
25. I have distinguished the facts of the decisions of the Hon’ble Supreme
Court in C.K. Jaffer Sharief v. State through CBI , [(2013) 1 SCC 205],
and V. Venkata Subbarao v. State , [(2006) 13 SCC 305], which were
referred by the Learned counsel for the Opposite Party in support of the
contention that where a public servant acts without mens rea or where
departmental proceedings exonerate him, criminal prosecution cannot
be sustained. Those cases arose from distinct factual matrixes where,
upon a holistic and undisputed perusal of records at the conclusion of
trial or under exceptional Section 482 petitions, it was transparently
clear that the public servant derived zero benefit and had no structural
nexus with any wrongdoing. On the contrary, in the present case, the
investigation has unearthed concrete, contemporaneous documentary
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exhibits specifically system logs of unauthorized cash credit account
creation (No. 32684148930), unbacked inter-company fund shuffles
(Rs. 14.89 crores and Rs. 15 crores), and signed irregularity reports
that actively concealed outstandings. These are not allegations of minor
clerical errors; rather of active overt acts.
26. Evaluating whether these documents were executed innocently or as
part of a design requires a full-fledged trial where oral testimony and
cross-examination can test their veracity. By accepting the defence
interpretation of these documents and relying on departmental
warnings at the pre-charge stage, the learned trial court directly
violated the ratio of N. Suresh Rajan (supra) and Sajjan Kumar (supra) .
Accordingly, Question No. 1 is decided in the affirmative and in favour
of the Petitioner (CBI).
27. Now I have taken the next question as to whether the materials
comprising core banking records, system logs, vouchers, unbacked
fund transfers, and signed regulatory reports, satisfy the benchmark of
"strong and grave suspicion" required under Section 239 CrPC to
warrant the framing of charges under Section 120B/420 IPC and
Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption
Act, 1988. It is well-established that "suspicion" at the stage of charge
should not be a vague conjecture; rather it must be founded upon
materials that, if unrebutted, lead a reasonable judicial mind to connect
the accused with the alleged crime. Where an insider public servant is
linked to a multi-crore economic offence and public banking fraud, the
court must evaluate whether their official actions crossed the line from
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administrative negligence into active facilitation and criminal
conspiracy.
28. It is the contention of the learned counsel for the CBI that the
investigation unearthed a web of specific, overt, and conscious acts of
commission by the Opposite Party (A-3), such as permitting the
continuous operation of the CMP facility despite chronic cheque
bounces peaking at Rs. 41.24 crores, verifying foreign currency demand
loans with nil drawing power reductions to facilitate illegal double-
dipping, executing unauthorized inter-company fund shuffles (Rs. 14.89
crore transfer on 19.04.2012), clandestinely opening an unauthorized
cash credit account (No. 32684148930) solely to square off an illegal Rs.
15 crore RTGS exposure to M/s. Emami Biotech Ltd., and signing false
monthly irregularity reports to conceal defaults.
29. Conversely, the learned counsel for the Opposite Party maintains that
none of these actions point toward criminality, contending that CMP
operations were monitored by a separate branch cell, that loan
verifications were system-driven, that fund transfers were part of
routine commercial restructuring, and that in the total absence of
personal monetary enrichment ( mens rea ), no charge under Section
13(1)(d) of the PC Act, 1988 can be sustained.
30. To evaluate whether the established facts cross the threshold of grave
suspicion warranting framing of charge, this court is bound to consider
the authoritative judicial pronouncement of the Hon’ble Apex Court in
State of Maharashtra v. Ishwar Piraji Kalpatri & Ors. , [(1996) 1 SCC
542], wherein it has been observed that at the stage of framing of
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charge, the court has to see whether there is prima facie material
against the accused. The court is not required to appreciate evidence to
conclude whether the materials produced are sufficient or not for
convicting the accused. If the materials disclose a grave suspicion,
charges must be framed.
31. Similarly, in Sajjan Kumar (supra) , the Hon’ble Supreme Court held:
“21. ….(vii) If two views are possible and one of them gives rise
to suspicion only, as distinguished from grave suspicion, the
trial Judge will be empowered to discharge the accused and at
this stage, he is not to see whether the trial will end in
conviction or acquittal.”
It has been held that if the materials placed before the court disclose
grave suspicion against the accused which has not been properly
explained, the court is fully justified in framing a charge and
proceeding with the trial. At this stage, the court is not to see whether
the trial will end in conviction or acquittal.
32. The learned advocate for the Opposite Party heavily relies on the
precedent of C.K. Jaffer Sharief (supra) to argue that absence of
personal gain or dishonest intent vitiates corruption charges. The
Hon’ble Supreme Court, in the said decision recognized that mere
technical or administrative aberrations, unaccompanied by criminal
intent or dishonest misappropriation for personal gain, may not
constitute an offence under Section 13(1)(d) of the PC Act and observed
that if the core element of dishonest intention or misfeasance is
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missing, a public servant cannot be dragged through the rigors of a
criminal trial merely on account of administrative impropriety.
33. While the principle in C.K. Jaffer Sharief (supra) is sound, its
application depends entirely on the factual texture of the case. In C.K.
Jaffer Sharief (supra) , the public servant acted under administrative
pressure for departmental utility without any clandestine manoeuvring.
In stark contrast, the factual matrix of the present case reveals a
completely different reality, attributable to the acts of the public servant
(A-3) herein:
(1) opening a clandestine, unauthorized cash credit account (No.
32684148930) specifically to absorb and square off an illegal
Rs. 15 crore RTGS exposure to a third party (Emami Biotech)
when the current account balance was Rs. 5,117 is an
extraordinary structural manoeuvre designed to mask a massive
financial anomaly;
(2) systematically signing false irregularity reports that hid
outstandings of over Rs. 41 crores provided the necessary
internal shield to keep a fraudulent borrower afloat; and
The statutory wording of Section 13(1)(d)(ii) of the PC Act explicitly
penalizes a public servant who, by abusing their official position,
secures for any other person any pecuniary advantage without public
interest.
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34. Personal monetary enrichment or direct kickbacks are not an inflexible
sine qua non under this provision. Where a bank official acts in active
tandem with private fraudsters to funnel public funds and artificially
sustain an NPA, the statutory ingredients of abuse of position to grant
pecuniary advantage to the borrower (SMCPL) are prima facie satisfied.
35. Upon a holistic appraisal of the charge sheet materials, system logs,
unbacked fund transfers, and regulatory submissions, this Court has
no hesitation in holding that the prosecution evidence establishes a
strong and grave suspicion of criminal conspiracy, cheating, and abuse
of official position against the Opposite Party (A-3). The trial court
patently erred in treating these active overt acts as innocuous
administrative oversights. Accordingly, Question No. 2 is also decided in
the affirmative and in favour of the Petitioner (CBI).
36. Finally, addressing the third and final question regarding propriety,
scope, and necessity of exercising revisional jurisdiction, this Court
notes that under Section 397 read with Section 401 of the Code of
Criminal Procedure, 1973 ( pari materia to Section 438 read with Section
442 of the Bharatiya Nagarik Suraksha Sanhita, 2023), the High Court
is vested with supervisory and revisional powers to correct patent
illegalities, gross procedural perversities, misinterpretations of statutory
thresholds, or failures of justice committed by subordinate courts.
Furthermore, the inherent powers saved under Section 482 CrPC
reinforce the authority of this Court to prevent the abuse of the process
of any court and to secure the ends of justice.
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37. The learned counsel for the petitioner strongly contends that the
impugned order dated 29.09.2022 is a textbook instance of a perverse
judicial adjudication. By brushing aside substantive documentary
evidence, such as system logs, unbacked fund transfers, and signed
irregularity reports and resting its conclusions on premature defence
pleas and departmental warnings, the learned trial court abdicated its
legal mandate. It is urged that leaving a key public servant unpunished
in a multi-crore public banking fraud while his co-conspirators face
trial creates a gross legal anomaly and a miscarriage of justice,
compelling this Court's intervention in the instant revisional
application.
38. On the contrary, the learned counsel for the Opposite Party contends
that revisional jurisdiction is extraordinary and discretionary, and
should not be exercised merely because a different view of the evidence
is possible. It is submitted that since the learned trial court exercised
its judicial discretion under Section 239 CrPC and arrived at a plausible
finding of fact regarding the absence of mens rea and the existence of
administrative processes, this Court sitting in revision ought not to
substitute its own view for that of the trial court.
39. While revisional jurisdiction is discretionary and should not be
exercised merely because a different view is possible, where a trial
court's order suffers from patent illegality, perversity, or
misinterpretation of statutory provisions resulting in a miscarriage of
justice, interference becomes mandatory, as underscored in Munna Devi
v. State of Rajasthan & Anr., [(2001) 9 SCC 631] and State of Rajasthan
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v. Fatehkaran Mehdu , [(2017) 3 SCC 198], wherein it has been observed
that while the revisional court cannot be converted into an appellate
court, however, where the trial court has completely misdirected itself,
ignored vital material-on-record, or applied an incorrect legal standard
resulting in a grave miscarriage of justice, the High Court is fully
empowered and duty-bound to set aside the order in exercise of
revisional jurisdiction.
40. Reiterating the grounds for setting aside an order of discharge in
revisional proceedings, the Hon’ble Supreme Court, in Fatehkaran
Mehdu (supra), at paragraphs 26 and 27 of the report observed thus:
“ 26. …. the scope of interference under Section 397 CrPC at a
stage, when charge had been framed, is also well settled. At
the stage of framing of a charge, the court is concerned not with
the proof of the allegation rather it has to focus on the material
and form an opinion whether there is strong suspicion that the
accused has committed an offence, which if put to trial, could
prove his guilt. The framing of charge is not a stage, at which
stage final test of guilt is to be applied. Thus, to hold that at the
stage of framing the charge, the court should form an opinion
that the accused is certainly guilty of committing an offence, is
to hold something which is neither permissible nor is in
consonance with the scheme of the Code of Criminal Procedure.
27. Now, reverting to the limit of the scope of jurisdiction under
Section 397 CrPC, which vests the court with the power to call
for and examine the records of an inferior court for the purposes
of satisfying itself as to the legality and regularity of any
proceedings or order made in a case. The object of this
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provision is to set right a patent defect or an error of jurisdiction
or law or the perversity which has crept in the proceeding.”
41. When the impugned Order No. 26 dated 29.09.2022 is tested against
these authoritative parameters, it is transparently clear that the learned
trial court's adjudication suffers from foundational legal infirmities, a
perversity of approach in evaluating defence explanations at the pre-
charge stage, a complete omission to consider substantive incriminating
materials, and an unsustainable legal anomaly that severs the insider
public servant from the overarching criminal conspiracy involving
private borrowers.
42. By weighing witness statements and evaluating defence explanations at
the pre-charge stage, the trial court acted in direct contravention of the
binding mandates laid down in Sajjan Kumar (supra) and N. Suresh
Rajan (supra) . The learned trial court glossed over concrete,
contemporaneous records such as the creation of unauthorized cash
credit account No. 32684148930 to absorb the illegal Rs. 15 crore
exposure and the systematic signing of false irregularity reports by the
opposite party. In a multi-party economic crime, severing the insider
public servant from the private beneficiaries on the basis of premature
departmental warnings fractures the core narrative of the criminal
conspiracy and causes a severe miscarriage of justice.
43. Thus, the impugned order crosses the threshold of mere error and
enters the domain of patent perversity and jurisdictional failure,
making it a fit case for active revisional intervention. Accordingly,
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CRR 4653 OF 2022
Question No. 3 is also decided in the affirmative and in favour of the
Petitioner (CBI).
44. As this Court reaches the culminating phase of the present
adjudication, a retrospective overview of the foundational matrix, the
rival submissions, and the meticulous statutory evaluations
undertaken under Question Nos. 1, 2, and 3 reveals an unmistakable
picture of judicial overreach by the Learned Trial Court, set against the
backdrop of a colossal economic offense. The Central Bureau of
Investigation has invoked the revisional jurisdiction of this Court to
challenge Order No. 26 dated 29.09.2022 passed by the learned Special
Judge, CBI Court No. 2, Calcutta, whereby the Opposite Party (A-3)
public servant who functioned as the Chief Manager and Relationship
Manager at the State Bank of India, Industrial Finance Branch,
Kolkata, was discharged from a multi-crore public banking fraud
exceeding Rs. 164.99 crores.
45. This Court has conclusively established that the learned trial court
committed a fundamental jurisdictional error by embarking upon a
premature, exhaustive marshalling and sifting of evidence at the
threshold stage of Section 239 CrPC. By weighing witness statements,
interpreting internal audit nuances, and evaluating the evidentiary
worth of departmental warnings, the trial court violated the settled
binding dicta of the Hon'ble Supreme Court in N. Suresh Rajan (supra) ,
Sajjan Kumar (supra) , and Captain Manjit Singh Virdi (supra) , converting
a discharge hearing into an impermissible mini-trial.
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CRR 4653 OF 2022
46. This Court has found that the evidentiary materials collected during the
statutory investigation specifically comprising system logs of
unauthorized account creation (No. 32684148930), unbacked inter-
company fund shuffles (the Rs. 14.89 crore transfer and the Rs. 15
crore RTGS exposure absorbed for Emami Biotech), and signed monthly
irregularity reports that actively concealed massive overdues go far
beyond vague conjecture. They establish a strong and grave suspicion
of active complicity, criminal conspiracy, cheating, and abuse of official
position against the Opposite Party under Section 13(2) read with
Section 13(1)(d) of the Prevention of Corruption Act, 1988.
47. This Court has determined that the impugned discharge order is
patently perverse, suffering from gross illegalities, a misinterpretation of
statutory thresholds, and an unsustainable isolation of the public
servant from the overarching criminal conspiracy involving private
borrowers. In accordance with the principles enunciated by the Hon’ble
Supreme Court in Munna Devi (supra) and Fatehkaran Mehdu (supra) ,
this Court's revisional intervention is both mandatory and fully
warranted to prevent a grave miscarriage of justice.
48. In light of the comprehensive discussions, established legal principles,
and patent perversity vitiating the impugned adjudication, this Court is
of the firm and unhesitating view that the revisional application must
succeed.
49. Accordingly, it is ordered that:
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CRR 4653 OF 2022
a. The criminal revisional application being C.R.R. No. 4653 of
2022 is hereby allowed.
b. The impugned Order No. 26 dated 29.09.2022 passed by the
learned Special Judge, CBI Court No. 2, Calcutta, discharging
the Opposite Party / Accused Shri Jyoti Ranjan Kanungo (A-3),
is hereby set aside and quashed.
c. The matter is remanded back to the learned trial court with a
direction to restore Special (CBI) Case No. 02/22 to its original
file qua the Opposite Party (A-3).
d. Upon the formal submission of the prosecution sanction order (if
awaited) or in accordance with law, the learned trial court shall
proceed forthwith to frame formal charges against the Opposite
Party (A-3) under the appropriate provisions of the Indian Penal
Code and the Prevention of Corruption Act, 1988, and conduct
the trial jointly along with the remaining co-accused persons.
50. Interim orders, if any, stand vacated.
51. Pending Connected application(s), if any, are also disposed of
accordingly.
52. There shall be no order as to costs.
53. Let a copy of this judgment along with the Trial Court Records (T.C.R.)
be transmitted to the learned Trial Court forthwith for necessary
information and compliance.
54. Case diary, be returned to the Learned Counsel for the State.
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55. Urgent photostat certified copy of this judgment, if applied for, be
supplied to the parties upon compliance with all requisite formalities.
(Uday Kumar, J.)