B. RAGHUVIR ACHARYA vs. CENTRAL BUREAU OF INVESTIGATION

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1001 OF 2001 B. RAGHUVIR ACHARYA … APPELLANT VERUS CENTRAL BUREAU OF INVESTIGATION … RESPONDENT WITH CRIMINAL APPEAL NO.1226 OF 2001 HITEN P. DALAL … APPELLANT VERUS CENTRAL BUREAU OF INVESTIGATION … RESPONDENT JUDGMENT J U D G M E N T SUDHANSU JYOTI MUKHOPADHAYA, J. These two appeals under Section 10 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as the ‘Act, 1992’) are preferred by accused Nos.1 and 3 against the judgment and order 1 Page 1 th dated 6 September, 2001 passed by the Special Court in Special Case No. 8 of 1994 in [RC5(BSC)/93-Bom], convicting and sentencing them.

In September, 1991, an investment of Rs.65 crores came to be made by four subscribers, who applied for purchase of CANCIGO units floated by (Canbank Mutual Fund (hereinafter referred to as ‘CMF’), a fund created by Canara Bank. The Andhra Bank and Andhra Bank Financial Services Limited (‘ABFSL’ for short) made an investment of Rs. 33 crores. Two other transactions were made by the Sahara India and Industrial Development Bank of India (‘IDBI’ for short) worth Rs.32 crores. 3. During the said period, accused No.1-B.Raghuvir Acharya was the Trustee and General Manager, accused No.2- T.Ravi was the Fund Manager and accused JUDGMENT No.3- Hiten P. Dalal was the approved broker of CMF. 4. Further case of the prosecution is that accused No.3 got Andhra Bank to subscribe for the CANCIGO units of Rs.11 crores and got ABFSL to subscribe for the CANCIGO units of Rs.22 crores. The above CANCIGO units worth Rs.33 crores were purchased in the name of Andhra Bank and ABFSL though the consideration amount for purchase of such 2 Page 2 units was paid by accused No.3. Accused No.3 got the CANCIGO units purchased in the name of Andhra Bank and ABFSL so as to ensure that he could claim brokerage falsely from CMF. Further, the case of the prosecution is that although

the applications were affixed in order to induce CMF to pay brokerage to accused No.3. The said accused No.3 applied for brokerage as a broker in the said transaction of Rs.33 crores when, in fact, he was not so appointed either by Andhra Bank or by ABFSL. The investment of Rs.33 crores came from accused No.3 for which he was not entitled to claim brokerage as he had not acted as a broker for the said transactions. Similarly, in September, 1991, accused No.3 did not procure business from Sahara India and IDBI and, yet, he claimed and received the brokerage in conspiracy with accused No.1 and accused No.2. It was alleged that accused No.3 never acted as broker in any of the aforesaid transactions but claimed JUDGMENT and received the brokerage in conspiracy with the rest two accused. 5. All the three accused were charged for the offences of criminal conspiracy, conspiracy to commit offences of cheating/criminal breach of trust; receiving stolen property and falsification of accounts under Section 120-B, Section 420/409, Section 411, and Section 477-A of Indian Penal Code. Accused No.1 and accused No.2 being public servants were also charged for the offences of criminal misconduct under Section 13(1)(d) read with Section 13(2) of the Prevention of 3 Page 3 Corruption Act, 1988. All together 12 charges were framed jointly and severally vide Ex.3. 6. The prosecution had led evidence of 12 witnesses apart from a number of

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8. During the trial the Special Court raised 30 points and determined most of them against accused No.1 – B. R. Acharya and accused No.3 – Hiten P. Dalal. The points raised against accused No.2 – T. Ravi, Fund Manager in CMF were answered in his favour and he was acquitted. 5 Page 5 9. As against accused No.1, learned Special Court held that the prosecution th proved beyond reasonable doubt that letter dated 9 March, 1992 of accused No.3 claiming brokerage was received by accused No.1; endorsement on the letter dated

endorsement accused No.1 acting as the General Manager instructed accused No.2 to pay brokerage of Rs. 32.50 lakhs to accused No.3. There was criminal conspiracy between accused No.1 and accused No.3 to procure the brokerage which was not due and payable to accused No.3. Accused No.1 being the General Manager and Trustee of CMF dishonestly and fraudulently induced CMF to part with Rs.32.50 lakhs by authorizing payment of brokerage in favour of accused No.3 knowing fully well that accused No.3 had not acted as a broker in the above said transactions. Accused No.1 acted dishonestly and in breach of Exs.84 and 85 being minutes of the Board Meetings prescribing the mode of payment of JUDGMENT brokerage, and thereby committed offence of criminal breach of trust under Section 409 of IPC. There was a criminal conspiracy in the matter of disbursement of brokerage of Rs.32.50 lakhs between accused No.1 and accused No.3 and thereby committed offence under Section 120-B of IPC read with Sections 409, 411 and 477-A of IPC. Accused No.1 thereby committed the offence of criminal misconduct under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988. 6 Page 6 10. Learned counsel for accused No.1 submitted that main allegation against th accused No.1 is based on presumption that the endorsement on letter dated 9 March, 1992[Ext.17(i) ] was in the handwriting of accused No.1. Such finding has

Mathija. Learned counsel pointed out that there exists inherent contradiction between the evidence of PW-4 and PW-5 and as PW-5 is not a competent witness under Section 47 of the Indian Evidence Act to provide evidence regarding the handwriting of accused No.1, no reliance can be made on the statement made by him. PW.5 was not familiar with the handwriting of accused No.1 in the course of his business as he was neither from the same department (CANCIGO), nor he worked under accused No.1. Moreover, PW.5 had neither seen accused No.1 writing the endorsement nor was PW.5 recipient of any correspondence himself. 11. As against accused No.3, apart from the allegation of conspiracy between JUDGMENT accused No.1 and him, learned Special Court further held that the prosecution has proved beyond reasonable doubt that accused No.3 was not the broker in two transactions of Andhra Bank and ABFSL. It was also proved that accused No.3 did not act as a broker in the transactions of IDBI and Sahara India as well. In spite of th this, accused No.3 made false representation by writing letter dated 9 March, 1992 under his own signatures claiming brokerage on the investments of Rs.65 crores knowing that he had not acted as a broker and he was not entitled to 7 Page 7 brokerage. Accused No.3 thereby induced CMF to part with payment of Rs.32.50 lakhs and thereby he committed an offence punishable under Section 411 of IPC apart from offence under Section 409 read with 120-B of IPC and 477-A of IPC.

brokerage under Rule 36 of the Scheme with respect to investment made by Andhra Bank and ABFSL. It was further contended that he was also entitled for brokerage for the investment made by IDBI and Sahara India as well. As per Rule 36 brokerage can be claimed for ‘subscribing or procuring the investment in CANCIGO’. Accused No.3 subscribed and procured the investment of Rs.65 crores including Rs.33 crores invested for Andhra Bank and ABFSL. 13. He further submitted that none of the witnesses (PW.4, 5 & 11) positively stated that accused No.3 was not entitled to brokerage on the investment made by JUDGMENT Andhra Bank and ABFSL. The Auditors have never raised any dispute as to payment of brokerage to accused No.3. The Trustees and the Board have neither discussed nor have they repudiated the payment of brokerage made to accused No.3. The Bank, which was allegedly put to wrongful loss never filed a complaint against accused No.3. The Board never addressed any letter to accused No.3 calling upon him to explain the payment of brokerage made to him. In fact, the unequivocal stand of PW.11 is that the CMF did not raise queries with regard to 8 Page 8 the payment of brokerage on Rs.65 crores to accused No.3 possibly because they may be aware accused No.3 had procured business of Rs.65 crores.

/ABFSL had invested the said amounts on behalf of accused No.3 and the same was in the nature of a constructive trust has been accepted by this Court in the case of Canbank Financial Services v.The Custodian and others, (2004) 8 SCC 355. In the said case, this Court has held the said arrangement to be legal. In that view of the matter, the mere fact that Andhra Bank/ABFSL applied for CANCIGO units on behalf of accused No.3 does not show any sort of deception. The CMF itself has found no illegality or deception in the application by Andhra Bank/ABFSL. It is clear from the fact that the CMF has not claimed refund of the brokerage claimed by accused No.3 on the investment made by Andhra Bank /ABFSL. JUDGMENT 15. It was also contended that none of the witnesses of the CANCIGO (PW.4, 5 and 11) have come out with a positive assertion that accused No.3 made a fraudulent and/or dishonest representation to CANCIGO which was acted upon by the institution/CMF to its detriment which caused wrongful loss. There is no evidence as to who acted on the representation made by accused No.3. 9 Page 9 16. It was further contended that the applications of Andhra Bank and ABFSL were duly stamped and Ex.19 clearly states that the applications were on behalf of accused No.3. The Investigating Officer (hereinafter referred to as ‘IO’) has

written instruction, payment of brokerage in good faith and in due course would not amount to an offence. On the other hand it was also admitted by the IO in his cross-examination that it was not the case of the prosecution that any sort of deception was practiced on the trustees and payment was made by them. The IO, therefore, submitted that “there was no question of deception of the Trustees. They have, in fact, authorized accused No.1 and 2 to deal with the funds and pursuant to which Rs.32.50 Lakhs came to be paid”. 17. In so far as IDBI and Sahara’s investments are concerned, it is contended on behalf of accused No.3 that the accused No.3 was entitled to brokerage because of JUDGMENT the tripartite arrangement between CMF, Citibank and accused No.3. The tripartite agreement entailed accused No.3 and the Citi Bank for procuring investment for CANCIGO. CMF would lend 80% of the amount of subscription to Citi Bank @ 15% for one year and accused No.3 would get brokerage on the investment so procured. PW.11 admits that the scheme was in a financial crunch and it was only because of accused No.3 the money was infused in the financially starved scheme. The material on record also establishes that investment by IDBI and Sahara was at 10 Page 10 the instance of Citi Bank. The witnesses examined on behalf of IDBI and the Board note Ex.84 clearly show that the said investment was brought about as a result of the efforts on part of Citi Bank. The money so infused in CANCIGO

nominal rate of interest for a year. 18. The witness PW.11 in his cross-examination had admitted that CMF as a matter of fact lent 80% of the amount to Citi Bank for one year at the rate of 15% per year even when rate of interest was fluctuating between 20% to 50%. The amount given to Citi Bank over one year was 80% of entire amount i.e 80% of Rs.65 crores which included Rs.33 crores by and on behalf of the appellant. 19. According to the learned counsel for accused No.3, the said accused cannot be held guilty of cheating under Section 420 IPC. The prosecution case is that the letter Ex.17 was placed before accused No.1, who in turn made his purported JUDGMENT endorsement and thereby committed the offence of cheating in conspiracy with accused No.2 and accused No.3. It was submitted that it was not the case of the prosecution that accused No.1 or for that matter anyone else in the CANCIGO mutual fund was cheated by accused No.3 by virtue of representation through Ex.17. 11 Page 11 20. It is further contended that the Institution, CMF, is a juristic entity, akin to a Company and it acts through its human agencies. Therefore, for fastening criminal liability onto a Company, the criminal intent of the human agencies of the

is a ‘victim’ of cheating then somebody acting for/on behalf of the institution must state how and/or in what manner the institution has been cheated/put to wrongful loss. 21. It was submitted that the transactions with regard to Andhra Bank /ABFSL were considered by a three Judge Bench of this Court in the case of S. Mohan v. Central Bureau of Investigation, (2008) 7 SCC 1 wherein it was held that: “18. It is not disputed that CANCIGO units  worth Rs.33 crores were purchased by Andhra  Bank   or   Andhra   Bank   Financial   Services  Limited by making use of the money owned by  the   appellant   Hiten   P.Dalal.   These   two  financial   institutions   impliedly   agreed   to  lend   their   name   and   allowed   the   appellant  Hiten P. Dalal to purchase CANCIGO units in  their name.   It is also important to note  that interest due on the CANCIGO units worth  Rs.33   crores   received   from   CBMF   by   Andhra  Bank and Andhra Bank Financial Services Ltd.  were   credited   to   the   account   of   the  appellant Hiten P. Dalal. Therefore, it is  clear   for   all   practical   purposes   that   the  CANCIGO   units   worth   Rs.33   crores   were  purchased   by   the   appellant   Hiten   P.   Dalal  and   he   transferred   these   units   to   CANFINA  and   CBMF   did   not   raise   any   objection   in  respect of transfer of the CANCIGO units by  the appellant Hiten P. Dalal. If at all, it  was for CBMF to raise any objection but they  JUDGMENT 12 Page 12 did not raise any objection to the transfer  of the CANCIGO units. xxx xxx xxx xxx    xxx    xxx    xxx    xxx

22. According to learned Senior Counsel for accused No.3, the prosecution has JUDGMENT failed to produce any evidence documentary or testimonial to make out a case of cheating against accused No.3 with respect to the Institution/CMF. There is no material to convict accused No.3 under any of the charges. 23. Mr. Sidharth Luthra, learned Additional Solicitor General, appearing on behalf of CBI submitted that accused No.1 was aware of receipt of Rs.65 crores into the funds of CANCIGO as stated by PW.11 and the payment of brokerage th showing the payment of Rs.32.50 lakhs to accused No.3 under application dated 9 13 Page 13 March, 1992, (Ex.17) though accused No.3 was not entitled to receive brokerage. In fact, accused No.1 had personally forwarded the applications of Sahara India to PW.4, as stated by PW.4 and he was the only trustee who was personally looking

No.1 by his omissions led brokerage of Rs.32.50 lakhs be paid to accused No.3 by accused No.2. The handwriting of accused No.1 [Ex.17(i)] has been proved by PW.5. 24. It is further submitted that the parties accept about the fact that accused No.3 claimed and received brokerage of Rs.32.50 lakhs from CMF on account of CANCIGO scheme receiving an amount of Rs.65 crores as investment (Exts.61 and 62) and Section 313 Cr.P.C. statement of accused No.3 also indicates the same. The issue, however, is whether accused No.3 was entitled to the brokerage amount of Rs.32.50 lakhs and if not, then under what circumstances was the JUDGMENT payment made to accused No.3 by accused No.1 and accused No.2 on behalf of the bank. Referring to the impugned judgment passed by the learned Judge, Special Court, it was contended that the mere fact of acquittal of accused No.2 will have no effect, in view of the decision of this Court in Devender Pal Singh v. State of NCT of Delhi and Anr., (2002) 5 SCC 234 and Brathi alias Sukhdev Singh v. State of Punjab, (1991) 1 SCC 519; that the evidence against accused No.2 can be relooked afresh by the Appellate Court and for seeing the role of accused No.1 and 14 Page 14 accused No.3 and the acquittal of accused No.2 would not prejudice the prosecution case.

March, 1992 in respect of Andhra Bank, ABFSL, IDBI and Sahara India. 26. The prosecution has proved beyond reasonable doubt that accused No.3 th made false representation by writing letter dated 9 March, 1992, (Ex.17) under his own signatures. He claimed brokerage for transactions for which he did not act as a broker. In spite of knowing that he was not entitled to brokerage to the said transactions, he induced CMF to part with payment of Rs.32.50 lakhs. 27. According to the counsel for the CBI, accused No.3 did not produce any witness in his defence to prove that he was in fact the broker who brought about the purported tripartite agreement with Citi Bank. No official of Citi Bank was JUDGMENT named, nor examined in this regard, by accused No.3. 28. Learned ASG on behalf of CBI submitted that assuming that this Court were to disagree with the Special Court and hold that evidence against accused No.1 is lacking, this Court can convict accused No.3 for the charge of conspiracy read with Section 409 IPC with unknown persons or with accused No.2 if so established from the available evidence. Alternatively, accused No.3 can be convicted under 15 Page 15 Section 420 IPC for which a substantive charge has been framed against accused No.1. 29. On hearing learned counsel for the parties, several facts appear to be admitted on record. These facts are: The Andhra Bank and ABFSL invested Rs. 33 cores and purchased CANCIGO units floated by CMF. Accused No.3 accepted that the amount of Rs.33 crores was subscribed by him to procure CANCIGO units in the name of Andhra Bank and ABFSL. Accused No.3 was an approved broker for CMF. He claimed that he procured the investments of Rs.65 crores including Rs.33 crores of Andhra Bank and ABFSL and Rs.32 crores invested by IDBI and Sahara India. th 30. Accused No.3 made a representation by writing letter dated 9 March, 1992 (Ex.17) under his own signatures claiming brokerage on investment of Rs.65 th crores. On the basis of the said letter dated 9 March, 1992 (Ex.17) and an JUDGMENT endorsement made thereon [Ex.17(i)] CMF had to part with payment of Rs.32.50 lakhs which was received by accused No.3. 31. Learned Judge, Special Court by the impugned judgment held that accused No.1 being the General Manager and Trustee of CMF having dominion over the th funds of CMF made false endorsement on the letter dated 9 March, 1992 authorising payment of brokerage favouring accused No.3 by getting the Fund 16 Page 16 Manager signed on the worksheet (Ex.16) containing details regarding brokerage which was made to his knowledge. On the basis of such endorsement made on the th letter dated 9 March, 1992 [Ex.17(i)] the Special Court held that accused No.1

accused No.1 thereby committed offence of criminal breach of trust under Section 409 IPC. It was also held that accused No.1 and 3 were involved in criminal conspiracy regarding disbursement of brokerage of Rs.32.50 lakhs and thereby they committed offence under Section 120-B IPC read with Section 409, 411 and 477-A IPC and accused No.1 being a public servant committed the offence of criminal misconduct by dishonestly providing undue pecuniary advantage to accused No.3 to which accused No.3 was not entitled and thereby committed an offence under Section 13(1)(d) of the Prevention of Corruption Act, 1988. 32. The main allegation against accused No.1 is that he made endorsement on JUDGMENT th letter dated 9 March, 1992 [Ex.17(i)] in his hand-writing. The prosecution relied on the evidence of PW.5 to prove the said allegation. 33. PW.5-Rajesh Pitamberdas Bhathija claimed to be conversant with the hand- writing of accused No.1 because of some purported/alleged correspondence. The witness contradicted himself whereby in an answer to a previous question he asserted that there was no correspondence with accused No.1. The witness-PW.5 failed to specify as to with whom accused No.1 was in correspondence with. The 17 Page 17 said witness employs an all encompassing generic term “we had entered into correspondence” which raised doubt. Importantly, no such specific correspondence or material has been placed by the prosecution in support of its bald allegation.

held that in scenarios where there is an absence of expert opinion, a second screening in the form of the court’s assessment is essential to ascertain the authorship of document. “ 12 ….There   may   be   cases   where   both   sides  call experts and two voices of science are  heard.   There   may   b   e   cases   where   neither  side   calls   an   expert,   being   ill   able   to  afford   him.   In   all   such   cases,   it   becomes  the plain duty of the court to compare the  writings   and   come   to   its   own   conclusion.  The   duty   cannot   be   avoided   by   recourse   to  the statement that the court is no expert.  Where there are expert opinions, they will  aid   the   court.   Where   there   is   none,   the  court will have to seek guidance from some  authoritative   textbook   and   the   court’s   own  experience   and   knowledge.   But   discharge   it  must,   its   plain   duty,   with   or   without  expert, with or without other evidence. We  may   mention   that   Shashi   Kumar   v.   Subodh  Kumar and Fakhruddin v. State of M.P. were  cases   where   the   Court   itself   compared   the  writings.” JUDGMENT 35. In the present case what the prosecution ought to have produced is the alleged material on the basis whereof PW.5 claimed familiarity with the 18 Page 18 handwriting of the author. In absence thereof, the Special Court was precluded from having any independent assessment.

handwriting of accused No.1. Section 47 of the Indian Evidence Act reads: “ Section   47   ­   Opinion   as   to   handwriting,  when relevant .­ When the Court has to form  an   opinion   as   to   the   person   by   whom   any  document was written or signed, the opinion  of   any   person   acquainted   with   the  handwriting   of   the   person   by   whom   it   is  supposed to be written or signed that it was  or was not written or signed by that person,  is a relevant fact. Explanation.­A   person   is   said   to   be  acquainted   with   the   handwriting   of   another  person when he has seen that person write,  or when he has received documents purporting  to be written by that person in answer to  documents   written   by   himself   or   under   his  authority and addressed to that person, or  when,   in   the   ordinary   course   of   business,  documents purporting to be written by that  person   have   been   habitually   submitted   to  him.” JUDGMENT 37. This Court in Fakhruddin v. State of M.P., AIR 1967 SC 1326 has held that the premise of the witness claiming familiarity with the handwriting of the author must be tested. 19 Page 19

38. The prosecution’s failure to produce material before the Special Judge on which PW.5 claimed familiarity with the handwriting of accused No.1 is fatal. It can safely be stated that the prosecution has failed to establish the premise of witness in order to allow the Special Court to appreciate the veracity of assertions made by PW.5. JUDGMENT 39. In Mobarik Ali Ahmed v. State of Bombay., (1958) SCR 328 at page 342 this Court held as follows: “….It may be proof of the handwriting of  the contents, or of the signature, by one  of the modes provided in ss.45 and 47 of  the Indian Evidence Act. It may also be  proved by internal evidence afforded by  the contents of the document. This last  mode of proof by the contents may be of  considerable   value   where   the   disputed  document purports to be a link in a chain  of   correspondence,   some   links   in   which  20 Page 20

40. The question for our consideration is whether there is any credibility in the evidence of PW.5. Admittedly, PW.5 was not posted in CANCIGO. He came from CANGILT for the purpose of auditing in April, 1992 i.e after the payment of th brokerage (paid on 10 March, 1992).Therefore, the question arises whether PW.5 was familiar with the handwriting of accused No.1 in the course of his business as JUDGMENT he was neither from CANCIGO nor was working under accused No.1. PW.5 had neither stated that he had seen accused No.1 writing the endorsement nor he himself was the recipient of any correspondence made by accused No.1. Therefore, it is clear that PW.5 had no prior knowledge of the handwriting of accused No.1 or the signatures of the author, and he was not a part of the chain of correspondence to speak of its authors. It can be safely stated that PW.5 does not come within the 21 Page 21 ambit of Section 47 of the Indian Evidence Act to provide evidence regarding the handwriting of accused No.1.

the same letter by her as deposed by PW.5. She was a member of the secretarial staff and was a link in the chain of correspondence in order to qualify under Section 47 of the Indian Evidence Act to depose as to the authorship of the endorsement. She was a crucial witness; however, for the reasons best known to prosecution they have chosen not to examine Suchaita Vaidya though she was cited as a witness. 42. PW.4- Rajesh Chandrakant Pawar, was transferred in June, 1991from CANGROWTH to CANCIGO. He was aware of the scheme and worked under JUDGMENT accused No.2. In his deposition PW.4 stated that the endorsement [Ex.17(i)] was in the handwriting Mr. Anil Narichania, AGM. For the reason best known to the prosecution, they have not cited Mr. Anil Narichania as one of the witnesses. Though PW.4, in his examination-in-chief specifically stated that the endorsement [Ex.17(i)] was in the handwriting of Mr. Anil Narichania, he was not declared hostile. We find a blatant contradiction and discrepancy in the evidence of PW.5 22 Page 22 who attributes the endorsement to accused No.1 and, therefore, it will not be desirable to rely on his evidence.

many unsatisfactory features which renders it clearly unreliable and in any case inadequate to establish the charges levelled against accused No.1. On a close scrutiny of the entire material on record, we have no hesitation to hold that the learned Special Court was not correct in taking the view that the prosecution has successfully established the charges against accused No.1 and wrongly held him guilty for the same. 44. The evidence on record shows that in September, 1991 CMF received, broadly, four applications for purchase CANCIGO units from Andhra Bank, ABFSL, IDBI and Sahara India to the tune of Rs.65 crores. At that time accused JUDGMENT No.1 was the General Manager. He was also the Trustee and author of Ex.84. He also took the decision as one of the Trustees in the meeting of the Board on Ist November, 1990 to pay brokerage. The evidence also shows that the applications were routed to PW.4 through the General Manager. PW.4 in his evidence deposed that the applications of Sahara India were routed through the General Manager but th there is nothing on the record to show that letter dated 9 March, 1992 (Ex.17) was th received by accused No.1. The finding of the Special Judge that the letter dated 9 23 Page 23 March, 1992 was received by accused No.1 is not based on evidence, therefore, such finding cannot be upheld. In any case mere receiving of a letter cannot be a ground to hold that the endorsement at Ex.17(i) was made by accused No.1.

Court fell into a manifest error in coming to a conclusion with regard to accused No.1, as reflected in the judgment under appeal, which cannot be sustained. The appeal (Criminal Appeal No.1001 of 2001), therefore, succeeds and is allowed and the appellant – B.R. Acharya is acquitted of all the charges, his bail bonds shall stand discharged. 46. It is the case of prosecution that for various acts done by accused No.3, he used accused No.1, the Trustee and General Manager of CMF to commit criminal breach of trust in respect of funds of CMF. In this context, it was submitted that under the general charge of criminal conspiracy, all those acts also constitute JUDGMENT cheating and criminal breach of trust. 47. The evidence of PW.11 shows that accused No.3 was the broker for CMF. He was also a member of the Stock Exchange. He had an account in Andhra Bank. In the case of Andhra Bank and ABFSL, Rs.33, crores invested by them in CMF belonged to accused No.3. This is also evidenced by the two cheques (Ex.29 and Ex.30). It was the accused No.3 who induced Andhra Bank and ABFSL to apply 24 Page 24 for allotment of CANCIGO units as apparent from the applications (Ex.19 and Ex.15) which had been signed by the two officers-Dhankumar and Kalyanaraman, who were accused in some other matter. This position is not even disputed by

and ABFSL to apply. The IO has rightly pointed out in his evidence, repeatedly, that accused No.3 was not concerned with the generation of funds in this case. Applications for allotment were made by Andhra Bank and ABFSL but no entry regarding the transactions were made in the books of Andhra Bank and ABFSL. Therefore, it is clear that accused No.3, to whom Rs.33 crores belongs got Andhra Bank and ABFSL to apply for the units but kept the said matter hidden by not recording the same. In September, 1991, accused No.3 affixed the brokers stamp on the applications (Ex.19 and Ex.15). Knowing fully well that the investors were not Andhra Bank and ABFSL, he had got officers of Andhra Bank and ABFSL to JUDGMENT sign the application forms. Both these officers are accused in other cases. By affixing the rubber stamp of the broker, accused No.3 falsely represented to CMF that he had brought subscriptions from Andhra Bank and ABFSL as a broker and, accordingly, claimed brokerage. Even before September, 1991, he wrote a letter (Ex.18) to Andhra Bank to the effect that units worth Rs.11 crores would be given to Andhra Bank and ABFSL. They were offered as security for ready forward transaction with ABFSL as evident from the statement of PW.11. From the 25 Page 25 evidence of PW.11 it is clear that the entire record of CMF shows that pursuant to the applications (Ex.19 and Ex.15) made by Andhra Bank and ABFSL, accounts were opened in the names of Andhra Bank and ABFSL as subscribers. The names

Ex.39(i)] and also Investors Fund Ledger [Ex.A3(35)(2) and Ex.A3(37)(1)]. Thereby CMF had recognized only Andhra Bank and ABFSL as their investors and the units could be redeemed only by Andhra Bank and ABFSL. The brokers stamp was affixed on them by accused No.3 only with a view to claim brokerage. Although he was aware that the total amount of Rs.33 crores was invested by him. Even the half yearly interest which was paid on the investments of Rs.33 crores on th 8 January, 1992 by CMF was only in the names of the subscribers- Andhra Bank and ABFSL. The evidence further shows that after receiving the income distribution cheques, Andhra Bank and ABFSL transferred the amount to the JUDGMENT th account of accused No.3 pursuant to his letter (Ex.12). This was on 9 January, 1992 and, yet, accused No.3 made an application vide Ex.17 claiming brokerage from CMF as a broker and not as an investor. Accused No.3 never objected to allotment of units in favour of Andhra Bank and ABFSL. In his statement under Section 313 of the Criminal Procedure Code stated that he was aware of CMF simultaneously deploying 80% of Rs.65 crores at 15% per annum in Citi Bank. Yet, accused No.3 concealed the true nature of the transactions of Rs.33 crores in 26 Page 26 th the names of Andhra Bank and ABFSL though it was known to him on 9 March, 1992 that the half yearly interest came to him not from CMF but from Andhra Bank and ABFSL. In view of the aforesaid evidence if learned Judge, Special

from CMF by putting brokers stamp and by disguising his investment of Rs.33 crores on Ex.19 and Ex.15, no interference is called for against such finding. 48. In September, 1992, after the scam became public, the interest warrants were returned by Andhra Bank and ABFSL disclaiming their investments. With regard to the rest of two transactions of Sahara India and IDBI, the evidence on record shows firstly, that on applications of IDBI and Sahara India there is no brokers stamp. Despite there being no brokers stamp on these applications accused No.3 th had wrongfully and dishonestly claimed brokerage on 9 March, 1992. 49. It was the case of accused No.3 that there was prior agreement between him, JUDGMENT CMF and Citi Bank under which Citi Bank got the units purchased in the names of Sahara India and IDBI. What is relevant is allotment of units in favour of Andhra Bank, ABFSL, Sahara India or IDBI. It is to be noticed that the ownership of the units is with Andhra Bank, ABFSL, Sahara India or IDBI. It is evident from CANCIGO Certificates that at the expiry of one year, Sahara India and IDBI got CANCIGO units encashed and they have received the entire money in their accounts on the basis that they were the owners of the units. The evidence of 27 Page 27 PW.2, PW.6 and PW.7 on behalf of IDBI and Sahara India, shows that no broker was involved in the transactions involving purchase of CANCIGO units of Rs.32 crores face value. The case of the prosecution is very simple that out of four

applications of Sahara India and IDBI did not bear rubber stamp. The case of the prosecution is that brokerage was dishonestly claimed by accused No.3 with full knowledge that he has not acted as a broker. 50. In cross-examination, the defence examined PW.11 extensively in support of their case that brokerage was payable to accused No.3 even if there was no brokers stamp affixed on the applications in cases where the officer paying the brokerage is satisfied that the business was procured by the broker. It was contended on behalf of accused No.3 that brokerage was payable even on self investments. However, PW.11 in his cross-examination has deposed that even in cases where JUDGMENT the brokers stamp does not find place on the applications for allotment of units, the broker was required to forward the applications for allotment under his covering letter to CMF. In this case, the defence has not produced any such covering letter in support of their case. Similarly, they have not produced any correspondence with CMF claiming brokerage on that basis. Therefore, it is clear that accused No.3 was not the broker with regard to four investments in question. 28 Page 28 51. PW.2, PW.6 and PW.7, employees of IDBI and Sahara India were extensively cross-examined by the defence and, yet, no case was made by the defence from any of the three witnesses regarding any correspondence between

CMF between September, 1991 and March, 1992. Therefore, the prosecution has proved that accused No.3 is guilty of making a false representation to CMF with full knowledge and it was so made to deceive CMF to part with an amount of Rs.32.50 lakhs. th 52. On 9 March, 1992 accused No.3 knew that Andhra Bank and ABFSL were not the actual investors. He also knew that brokerage was payable only if the business was procured for CMF as he was aware of the decision of Board. He was the approved broker of CMF and had bought the units in the names of Andhra Bank and ABFSL, which is admitted. He knew that that as the subscriber of units, JUDGMENT he was not entitled to brokerage yet, he claimed brokerage as a broker vide Ex.17. Therefore, it is clear that both the transactions of Andhra Bank and ABFSL got disguised. Their true nature was suppressed. Though no brokerage was payable on such transactions, Ex.17 was written by accused No.3 with dishonest intention. Without Ex.17, accused No.3 could not have succeeded in obtaining from CMF an amount of Rs.32.50 lakhs. 29 Page 29 53. Now the question arises as to what will be the effect of acquittal of co- accused Nos.1 and 2 on the case of accused No.3. According to the appellant if co- accused No.1 is acquitted and in view of acquittal of co-accused No.2 no charge

cannot be punished with the aid of Section 120-B IPC. 54. Per contra, according to the learned counsel for the CBI, even if this Court disagrees with the Special Court and holds that the that evidence against accused No.1 is lacking, this Court can convict accused No.3 for the charges of conspiracy read with Section 409 IPC with unknown person or accused No.2 if so established from the available evidence. Alternatively, accused No.3 can be convicted under Section 420 IPC for which a substantive charge had been framed against him. 55. This Court in Devender Pal Singh(supra), held that acquittal of one accused JUDGMENT does not raise doubt against conviction of another accused person. A plea that acquittal of the co-accused has rendered the prosecution version brittle has no substance. Acquittal of co-accused on the ground of non-corroboration has no application to the accused himself. 56. The question arises whether accused No.3 can be convicted for the alternative charge under Section 420 of the IPC for which a substantive charge had been framed against him. In this connection we may refer to decision of this Court 30 Page 30 in Satyavir Singh Rathi v. State through CBI, (2011) 6 SCC 1, wherein this Court held:

JUDGMENT 31 Page 31 57. In Sunil Kumar Paul vs. State of West Bengal, AIR 1965 SC 706, the accused was charged for the offence under Section 409 IPC. In the said case the Court held that the accused could have also been charged for the offence under Section 420 IPC and held: “( ).   It   is   urged   for   the   appellant   that  15 the provisions of s. 236 Cr.P.C. would apply  only to those cases where there be no doubt  about the facts which can be proved and a  doubt   arises   as   to   which   of   the   several  offences   had   been   committed   on   the   proved  facts. Sections 236 and 237 read :  "236. If a single act or series of acts  is   of   such   a   nature   that   it   is   doubtful  which   of   several   offences   the   facts   which  can be proved will constitute, the accused  may be charged with having committed all or  any of such offences, and any number of such  charges may be tried at once; or he may be  charged   in   the   alternative   with   having  committed some one of the said offences.  Illustrations JUDGMENT (a) A is accused of an act which may  amount   to   theft,   or   receiving   stolen  property,   or   criminal   breach   of   trust   or  cheating.   He   may   be   charged   with   theft,  receiving   stolen   property,   criminal   breach  of trust and cheating, or he may be charged  with   having   committed   theft,   or   receiving  stolen property, or criminal breach of trust  or cheating.  x x x x x x 237.   If,   in   the   case   mentioned   in  section 236, the accused is charged with one  offence, and it appears in evidence that he  committed a different offence for which he  32 Page 32 might have been charged under the provisions  of that section, he may be convicted of the  offence which he is shown to have committed,  although he was not charged with it.  Illustration

The framing of a charge under s. 236 is, in  the nature of things, earlier than the stage  when   it   can   be   said   what   facts   have   been   proved,   a   stage   which   is   reached   when   the  court   delivers   its   judgment.   The   power   of  the   Court   to   frame   various   charges  contemplated   by   s.   236   Cr.P.C.   therefore  arises   when   it   cannot   be   said   with   any  definiteness, either by the prosecutor or by  the Court, that such and such facts would be  proved. The Court has at the time of framing  the   charges,   therefore   to   consider   what  different offences could be made out on the  basis   of   the   allegations   made   by   the  prosecution   in   the   complaint   or   in   the  charge submitted by the investigating agency  or   by   the   allegations   made   by   the   various  prosecution witnesses examined prior to the  framing   of   the   charge.   All   such   possible  offences   could   be   charged   in   view   of   the  provisions of s. 236 Cr.P.C. as it can be  reasonably said that it was doubtful as to  which of the offences the facts which could  be   ultimately   proved   would   constitute.   The  facts which must have been alleged prior to  the stage of the framing of the charge in  the   present   case   must   have   been   what   had  been stated in the charge­sheet submitted by  the   Investigating   Officer,   24­Parganas,  which   is   printed   at   p.   3   of   the   appeal  record.   This   charge­sheet   narrates   in   the  JUDGMENT 33 Page 33 column   meant   for   the   name   of   offences   and  circumstances connected with it : 

It   is   practically   on   these   facts   that   the  conviction of the appellant for an offence  420 under   s.     I.P.C.   has   been   founded.   It  follows   that   the   Special   Court   could  420 therefore have framed a charge under s.   I.P.C. at the relevant time if it had been  of the opinion that it was doubtful whether  these facts constitute an offence under s.  409   I.P.C. as stated in the charge­sheet or  420 an offence under s.   I.P.C.  420 (16 ). When a charge under s.   I.P.C.  could have been framed by the trial Court by  virtue of s. 236 Cr.P.C. that Court or the  appellate   Court   can,   in   law,   convict   the  appellant   of   this   offence   instead   of   an  offence under s.  409  I.P.C. if it be of the  view that the offence of cheating had been  established.   This   would   be   in   accordance  with the provisions of s. 237 Cr.P.C.  JUDGMENT (17) It is then urged for the appellant  that under the proviso to s. 4 of the Act,  the Special Court can try any other offence  only when the accused is specifically charge  with   that   offence.   The   language   of   the  proviso does not lead to such a conclusion.  It provides for the trial of the accused for  any other offence provided the accused could  34 Page 34

( 24 ) The ingredients of two offences must be  different   from   one   another   and   it   is  therefore not necessary to consider whether  the ingredients of the two offences are in  any way related. The Court has to see, for  the   purpose   of   the   proviso,   whether   the  accused   could   be   charged   with   any   offence  other   than   the   one   referred   to   in   the  allotment order, in view of the provisions  of the Code. There is nothing in the proviso  which   could   lead   to   the   construction   that  any limitations other than those laid down  by   the   provisions   of   the   Code   of   Criminal  Procedure were to affect the nature of the  offence which could be tried by the Special  Court.  JUDGMENT   We are therefore of opinion that the  (25.) Special   Court   could   try   the   appellant   for  420 the   offence   under   s.     I.P.C.   and   that  therefore   the   High   Court   was   right   in  altering his conviction from that under s.  409  to s.  420  I.P.C.” 35 Page 35 58. In this case the prosecution proved that the accused  th  No.3 deceived CMF by making a false representation dated 9 March, 1992 and dishonestly induced the official of CMF to 

Section  420  IPC.  Accused  No.3 was originally  charged  for  the   offence   of   cheating,   criminal   breach   of   trust   for  receiving   stolen   property/falsification   of   accounts   under  Section   120­B,   Section   420/409   of   the   IPC   apart   from  Section 411 and Section 477­A of the IPC. We, therefore,  alter   his   conviction   from   that   of   under   Section   409   to  Section   420   of   the   IPC   and   convict   him   for   the   offence  under Section 420 of the IPC and sentence him to undergo  rigorous imprisonment for three years. JUDGMENT 59. Further, as the prosecution successfully established the ingredients of theft for receiving stolen property from Canara Bank i.e. Rs.32.50 lakhs against accused No.3, we uphold the order of his conviction and sentenced passed by the Special Court under Section 411 of the IPC. However, in view of the acquittal of accused Nos.1 and 2, the order of conviction of accused No.3 under Section 477-A is set aside. The judgment dated 36 Page 36 th 6 September, 2001 passed by the learned Special Judge is affirmed with modification as mentioned above. The appeal (Criminal Appeal No.1226 of 2001) filed by the appellant-Hiten P. Dalal is dismissed. The bail bonds of the appellant –

into custody to serve out the remainder of the sentence. …..…………………………………………….J. ( G.S. SINGHVI ) …..…………………………………………….J. ( SUDHANSU JYOTI MUKHOPADHAYA) NEW DELHI, JULY 1, 2013. JUDGMENT 37 Page 37