S.P. Malhotra Vs U.T. Chandigarh

A.N. Jindal, J.@mdashThis judgment shall dispose of Criminal Appeal No. 420-SB of 1994 filed by the accused-Appellant S.P. Malhotra and Criminal Appeal No. 437-SB of 1994 filed by the accused-Appellants Parmod Kumar Jain and another, having been arisen out of the judgment dated 9.9.1994 passed by the learned Special Judge, Chandigarh, convicting the accused u/s 120-B read with Section 420 IPC, and further convicting accused S.P. Malhotra u/s 420 IPC and u/s 5(1)(d) of Prevention of Corruption Act punishable u/s 5(2) of the said Act. Consequently, they were sentenced as under:

2. However, all the substantive sentences were ordered to run concurrently.

3. The factual matrix of the case, leading to the culmination of the trial and disposal of these appeals is that, in the year 1982, accused S.P. Malhotra was working as Assistant Manager, Punjab National Bank, Palsora Branch, U.T. Chandigarh. At that time, he while exceeding his powers, purchased two local cheques of Rs. 19,950/- each on 29.7.1982 vide DD No. 759 and 760 and credited the amount in their Current Account No. 306 of Parmod Kumar Jain accused and Current Account No. 168 of Bishamber Das accused (since deceased). One cheque was issued by the accused Rajinder Kumar alias Rajinder Parshad out of his Saving Bank Account No. 21 of Punjab State Co-operative Bank Limited, Sector 22-C, Chandigarh and the other cheque was issued by accused Parmod Kumar Jain out of his Current Account No. 44 with the Central Bank of India, Sector 37-C, Chandigarh. The pay in slips presenting the said cheques for purchase were filled up in the hand writing of Parmod Kumar Jain accused. The said two cheques were little short of Rs. 20,000/- each and were otherwise within the loaning powers of the Branch Manager and further these cheques were not third party cheques as Parmod Kumar Jain accused and Bishamber Dass accused (since deceased), in whose favour these cheques were issued, were father and son. These cheques were not outstation cheques.

4. Accused Rajinder Kumar alias Rajinder Parshad filled in two loose cheques bearing No. 743619 and 743620 (Ex. P-1 and Ex. P-2 respectively) out of the Account No. 168 of Bishamber Dass (since deceased) and Account No. 306 of Parmod Kumar Jain accused, which were signed by the Account Holders on 29.7.1982 and the payment against both these cheques was received in cash by the accused S.P. Malhotra on 30.7.1982. It has been further unfolded by the prosecution that both these cheques so purchased under DD No. 759 and 760 on 29.7.1982, remained lying with the accused S.P. Malhotra who sent the same for realization only on 9.8.1982. But, these cheques were returned unpaid on 11.8.1982 to the bank of the accused S.P. Malhotra. However, accused S.P. Malhotra, who was required to ensure the receipt back of the said documents and to reverse the entries in the book of accounts did not do so in order to conceal the fact regarding purchase of the said cheques unauthorisedly and regarding receipt of these cheques as unpaid, managed to remove the said returned cheques. These cheques could not be traced out from the record of the bank. The prosecution also came up with the story that S.P. Malhotra accused was a partner in M/s. Luxmi Flour Oils and Rice Mill along with accused Parmod Kumar Jain and his brother Satinder Kumar Jain. Which was revealed from some letters written in the hand-writing of accused S.P. Malhotra, vide which he promised to repay certain amount to the aforesaid accused.

5. On the aforesaid allegations, FIR/RC No. 23 dated 30.7.1985, under Sections 420, 120-B IPC and Section 5(2) read with Section 5(1)(d) of the Act and 206 IPC was registered against the accused and one Bishamber Dass, who died during the trial.

6. The case was investigated; various documents were collected; and statements of the witnesses were recorded by the CBI. Ultimately the accused were challaned.

7. The accused were charged under Sections 120-B, 420 IPC and u/s 5(1)(d) of the Act punishable u/s 5(2) of the Act, to which they pleaded not guilty and claimed trial.

8. In order to substantiate the charges, the prosecution examined Bharma Dass Sharma (PW-1) who proved the relevant entries of the cheques Ex. P-1 and Ex. P-2 made in the cashier''s long book dated 30.7.1982, which were allowed by the accused S.P. Malhotra for payment and Mr. S.P. Malhotra accused received the payment.

9. PW-2 Capt. Ranbit was the formal witness in whose presence specimen handwriting and signatures of the accused Parmod Kumar Jain and Rajinder Kumar Jain were taken by the CBI Inspector on 9 sheets i.e. Ex. PW-2/1 to Ex. PW-2/9 respectively.

10. PW-3 Gurnam Singh was the Peon in Punjab National Bank, Palsora Branch, U.T. Chandigarh. He took the cheques to Punjab National Bank, Sector 32, Chandigarh and brought back the same on 11.8.1982.

11. PW-4 Vijay Dutt, Officer of the Punjab National Bank, Regional Office, Sector 17, Chandigarh, handed over documents Ex. PW-4/B and Ex. PW-4/C vide memo Ex. PW-4/A.

12. PW-5 Vimal Kumar, Clerk-cum-cashier in Punjab National Bank, Palsora Branch, U.T. Chandigarh, has proved the forwarding letters Ex. PW-5/1 and Ex. PW-5/2 which were in the handwriting of R.K. Jain and initialed by the accused S.P. Malhotra. He also proved that the cheque Nos. 954288 and 326126 along with forwarding letters Ex. PW-5/1 and Ex. PW-5/2 were handed over to him by the accused S.P. Malhotra which were sent to the Punjab National Bank, Sector 22, Chandigarh for clearance.

13. PW-6 Baldev Raj, Clerk-cum-cashier has stated that the specimen signatures of the accused S.P. Malhotra were taken in his presence by the CBI Inspector V.K. Bindal (PW-19).

14. PW-7 P.D. Gauhri, Manager, Punjab National Bank, Sector 22, Chandigarh handed over many documents to CBI Inspector. He further disclosed that the cheques were sent for clearance on the same date but they were received in the evening of the same day as unpaid due to non-availability of the funds in the account of Rajinder Kumar and Parmod Kumar Jain accused.

15. PW-8 Shashi Sachdeva, Special Assistant in Punjab National Bank, Palsora Branch, Chandigarh stated that the said two cheques were purchased by the accused S.P. Malhotra and necessary entries regarding the transaction were made at Page No. 14 in DD Purchase Register Ex. P9 and these cheques were sent for collection to Punjab National Bank, Sector 22, Chandigarh and both these cheques returned unpaid, therefore, these cheques were credited to the account of Parmod Kumar Jain and Bishamber Dass accused in their Current Account Nos. 168 and 306 respectively and a sum of Rs. 50/- was deducted as collection charges. She further proved that by using two loose cheques No. 743619 and 743620 (Ex. P-1 and Ex. P-2 respectively), a sum of Rs. 19,000/- was withdrawn on 30.7.1982 by the accused S.P. Malhotra.

16. PW-9 R.K. Jain, who remained posted as Clerk/Teller in Punjab National Bank, Palsora Branch from 1981 to 1987 also testified about the handing over the records to CBI.

17. PW-10 O.P. Khorana, was Branch Manager of the Bank, on the date of incident. He while corroborating the prosecution version further stated that accused S.P. Malhotra was the incharge of the loan section on the relevant date and he was responsible for sending these D Ds. for realization. He further testified that discretionary powers to purchase DD were vested only with the Incharge of the Branch as per circular dated 12.8.1981 with its Annexures A- 1(1)-General, Ex. P-11. He further stated that the accused was not authorised to purchase the third party local cheques when he was in attendance in the bank. He proved various documents.

18. PW-11 Tribhawan Kumar, who worked as Manager, Punjab State Co-operative Bank, Chandigarh from 1978 to 1986 proved the documents mentioned in the seizure memo Ex. PW-11/A.

19. PW-12 S.L. Bhutani, also proved the purchasing of two cheques by the accused S.P. Malhotra and crediting the proceeds of the cheques in favour of the accused Bishamber Dass and Parmod Kumar Jain. He proved the payment of two loose cheques Ex. P-1 and Ex P-2, which were allowed by the accused S.P. Malhotra on 30.7.1982. He further stated that Shashi Sachdeva (PW-8) was the incharge of the saving/current account and she could have passed these cheques but both these cheques were purchased by the accused and were received back as unpaid and their amount is now entered into protested accounts as per Entry No. 23 in the DDD register.

20. PW-13 A.K. Paliwal, proved the initials of the accused S.P. Malhotra Ex. PA-1 to PA-15.

21. PW-14 Balraj Arora and Kasturi Lal (PW-15) proved the seizure memos.

22. PW-16 Ram Niwas Sharma, Accountant also proved the transaction of the purchase of the cheques by the accused.

23. PW-17 R.K. Jain, Deputy Government Examiner of the Questioned Documents, is the expert who after examining the various hand writings of the accused and their specimen signatures on the various sheets testified that the signatures of S.P. Malhotra were compared with the specimen hand-writings.

24. PW-18 J.K. Malik is the formal witness and PW-19 V.K. Bindal, Deputy Superintendent of Police is the Investigating Officer.

25. When examined u/s 313 Code of Criminal Procedure the accused S.P. Malhotra while denying some facts, admitted about his posting in Punjab National Bank, Palsora Branch, Chandigarh in the year 1982 and about passing of the cheques No. 743619 and 743620 Ex. P-1 and Ex. P-2 respectively. He also did not deny about the duty of Gurnam Singh Peon (PW-3) and taking away of two cheques worth Rs. 39,900/- to the Punjab National Bank and dishonouring of the said cheques. He also admitted purchasing of two cheques for a sum of Rs. 19,950/- each by him on 29.7.1982 and further admitted that proceeds of both these cheques were credited in the Current Account Nos. 168 and 306 of the accused Parmod Kumar Jain and Bishamber Dass. However, he denied that he purchased the cheques vide DD No. 759 (Cheque Nos. 954288 and 326126).

26. Accused Rajinder Kumar alias Rajinder Parsad, in his statement u/s 313 Code of Criminal Procedure explained that he issued cheque No. 0326126 in favour of his father Bishamber Dass and that cheques were purchased vide DD No. 760 in the account of his father Bishamber Dass by his co-accused S.P. Malhotra. He also admitted that he had saving account No. 21 in Punjab State Co-operative Bank, Chandigarh, about which account opening form is Ex. P-11 and he also admitted his specimen signatures on the card Ex. P-12. He also admitted that his specimen signatures Ex. PW-2/6 to Ex. PW-2/9 (S.21 to Section 24) were taken by the CBI.

27. Accused Parmod Kumar Jain, in his statement u/s 313 Code of Criminal Procedure admitted that he had current account No. 306 in Punjab National Bank, Palsora and his father Bishamber Dass had current account No. 168 in the same bank and that he issued cheque No. 954288 dated 28.7.1982 which was drawn on Central Bank of India, Sector 37 and the above cheque was purchased vide DD No. 759 by his co-accused S.P. Malhotra. He further admitted that he had current account No. 44 in Central Bank of India, Sector 37, Chandigarh. He also admitted his specimen signatures on the sheets which were obtained from him by the CBI.

28. During defence, the accused examined S.N. Choudary, Agricultural Officer, Branch Office, Palsora (DW-1) but he was left and B.S. Pawar (DW-1) summoned to prove the current account statement of Bishamber Dass accused Ex. DW-1/A and statement of account of accused Parmod Kumar Jain Ex. DW-1/B.

29. DW-1 B.S. Pawar stated that the DD amount is cleared within three days if it is local. The used cheques are given only by the Manager of the bank after putting his initials along with written request of the customer. During those days, accused S.P. Malhotra purchased seven drafts under his initials. He proved copy of page No. 14 of the register Ex. DW-1/C in order to prove this fact. During cross-examination this witness stated that the accused S.P. Malhotra could purchase the drafts in the absence of the Manager or when he was on tour or on leave and the said purchase could be subjected to the entries made in the register and the same would be approved by the Manager. Unless the entry is proved by the Manager or give any noting in the register, the Manager could reject or approve the cheque on the date of presentation. He denied having knowledge about the entries made in the statement of account Ex. DW-1/A to Ex. DW-1/C.

30. On scrutiny of the entire evidence, the trial ended in conviction. Hence this appeal.

31. At the very outset, learned Counsel for the Appellants have not assailed the conviction of the accused u/s 120-B read with Section 420 IPC, however, it has been vehemently emphasized that the office u/s 5(1)(d) and 5(2) of the Act, against accused S.P. Malhotra is not made out at all. Now besides the courtesy shown by the learned Counsel for the Appellants regarding offence u/s 420 read with Section 120-B IPC, I have scrutinized the records of the case.

32. Accused S.P. Malhotra having purchased two cheques of Rs. 19,950/- each on 29.7.1982 vide DD No. 759 and 760, after crediting the same in the current account Nos. 306 and 168 of Parmod Kumar Jain and Bishamber Dass accused respectively passed the said cheques for crediting the same in their accounts without inquiring about the honouring of those cheques by the drawee bank. Bharma Dass Sharma (PW-1) has testified that these cheques were allowed for payment and S.P. Malhotra accused obtained the payment of these bearer cheques by writing the dates. It is also amply proved on the record that the later on these cheques were dishonoured by the drawee bank for want of "sufficient funds". Similarly, P.D. Gauhri (PW-7) has testified that these cheques were sent by S.P. Malhotra accused for passing on 10.8.1982 and the same were dishonoured by the drawee bank on 11.8.1982. All this goes to show that S.P. Malhotra accused dishonestly without inquiring the validity of those cheques purchased the same without authority particularly when the Branch Manager (an authorised officer) was present in the bank. It is something different that amount of these cheques was later on deposited in the bank which is clear from seizure memo Ex. PW-14/B. Since the account of the accused Parmod Kumar Jain and Bishamber Dass was instrumented by the accused S.P. Malhotra for receiving the amount illegally, therefore, offence u/s 420 IPC is clearly made out against the accused. The cheques appear to have been presented by the accused Parmod Kumar Jain and Bishamber Dass on the misrepresentation that those will be honoured and similarly, payment of these cheques has been received by S.P. Malhotra without making any inquiry regarding the validity of the cheque, therefore, ingredients of cheating are established. Similar view was taken by the Madras High Court in case State Vs. Ramados Naidu and Others, , wherein their Lordship observed as under:

... Firstly, there has to be practice of deception by the offender. Then on account of the deception there must be fraudulent or dishonest inducement so as to make the person deceived to deliver any property or to do something or omit to do something etc. Lastly, by reason of delivery of the property or the doing of a thing or the omission to do a thing, there must be the causing of or the likelihood of the causing of damage or harm to the person deceived in body, mind, reputation or property. Thus, as a result of the dishonest inducement of a person, there can be either wrongful loss to the person deceived or wrongful gain to another including the person practicing the deception. Whenever any one of these results follow on account of the deception practiced by a person, then the offence of cheating would be complete. The learned Magistrate is not, therefore, correct in having taken the view that since no damage or harm had been caused to the person deceived, to wit the Bank, the offence of cheating has not been committed.

33. As regards offence u/s 5(1)(d) of the Act, it may be observed that lot of evidence has come to the surface that the accused purchased the cheques and the cheques when returned from the drawee bank as dishonoured, the amount so drawn against the cheque so purchased was redeposited, therefore, it could not be said that the accused obtained any pecuniary advantage out of the transaction. Consequently, it would be observed that mens rea to cause wrongful to the bank is missing. No evidence has been led on the record to prove that the accused S.P. Malhotra had any nexus with Parmod Kumar Jain and Bishamber Dass accused and he wanted to cause them any benefit out of the said transaction by any corrupt or illegal means. No evidence of any illegal transaction by way of illegal means between S.P. Malhotra and other accused has been brought to the surface. While taking the case from another angle, the accused was tried departmentally for the misconduct committed by him and he has been punished by terminating his services. The amount of cheques was immediately deposited on coming to know that the aforesaid cheques were dishonoured. As such the offence u/s 5(1)(d) and 5(2) of the Act cannot be said to be made out.

34. Now coming to the quantum of sentence, it may be observed that the accused were between 34-46 years old in the year 1982 when the offence is said to have been committed by them. They have suffered lot of agony of protracted trial and due to the pendency of the appeal in this Court. Accused S.P. Malhotra has already been terminated for his illegal acts. The bank has not suffered any pecuniary loss as the amount of cheque has already been re-deposited by the accused, therefore, it would not be appropriate to send the accused in prison at this stage.

35. Thus, taking stock of the situation in this case, the accused deserve to be shown some leniency in the quantum of sentence.

36. Consequently, the Criminal Appeal No. 437-SB of 1994 preferred by the accused Parmod Kumar and Rajinder Parshad is dismissed, whereas, the Criminal Appeal No. 420-SB of 1994 is partly accepted to the extent that he is acquitted of the charges u/s 5(1)(d) and 5(2) of Prevention of Corruption Act and convicted u/s 420 read with Section 120-B IPC. However, the sentence awarded against the accused is modified to the extent that they be released on probation u/s 4(1) of the Probation of Offenders Act, 1956 on their executing a bond in the sum of Rs. 5,000/- with one surety in the like amount each to the satisfaction of the trial Court, for a period of one year, within which period they shall continue to be of good behaviour and keep peace and in case of breach of conditions of the bond, they will be ready to serve the remaining part of sentence as and when called for.