Sanjay Kishan Kaul, J.@mdashThe Central Bureau of Investigation (for short ''CBI'') is aggrieved by the impugned order dated 12.4.2005 passed
by the learned Special Judge discharging the accused/respondents for offences under Sections 120B/409 of the IPC read with Section 13(2) and
13(1)(d) of the Prevention of Corruption Act 1988.
2. The case in question was registered on 27.7.1998 by the CBI in respect of transaction during the period of 1994-95. It was alleged that Shri
K.S. Bains, the then Chairman and Managing Director of Punjab & Sind Bank (hereinafter referred to as the Bank) was a member of criminal
conspiracy with Shri Gurpal Singh, the then General Manager (Operations) of the Bank, Shri H.S. Pall, the then Branch Manager of the Bank, Shri
A.S. Roy, Managing Director of M/s. Jayanti Business Machines Limited, Mumbai (for short ''M/s. JBML''), M/s. Prasad & Company (share
broker) and M/s. JBML to cheat the Bank in the matter of purchase and sales of shares of M/s. JBML and sanction of limits for the said company.
Shri K.S. Bains was alleged to have passed an order dated 23.12.1994 after meeting with Shri A.S. Roy for purchase of shares worth Rs. 2.00
crore on firm allotment basis and in pursuance to the said order a note was moved by the Funds Management Department of the Bank to the
Investment Committee. The Investment Committee in its meeting held on 9.1.1995 rejected the proposal on the ground that it was not possible to
book profits for the Bank for the financial year ending 31.3.1995. Shri Gurpal Singh was, however, alleged to have submitted a note dated
18.1.1995 without referring to the earlier decision of the Investment Committee in respect of purchase of shares to the extent of Rs. 2.00 crore at
a premium of Rs. 70.00 per share. This note dated 18.1.1995 was placed before the Investment Committee, which approved the same on
20.1.1995 and the proposal was subsequently approved by the Board of the Bank on 2.3.1995. The Bank purchased 2.50 lakh shares and paid
Rs. 2.00 crore and thus violated the Reserve Bank of India (RBI) guidelines stipulating that the banks could invest up to five (5) per cent of its
incremental deposits in shares and debentures. The investment under the head was stated to be more than the permissible limit. The shares were
sold by the Bank through M/s. Prasad & Company at rates lower than the prevailing market rates and the share broker was allowed to retain the
proceeds from the sale of shares for about six (6) months causing wrongful pecuniary gain to the company and the share broker to the extent of
Rs. 2,49,062.00 with corresponding loss to the bank.
3. It was also alleged that the Bank extended underwriting support of Rs. 1.00 crore to the Company, which was sanctioned by Shri K.S. Bains
and approved by the Management Committee on 17.2.1995. Shri Gurpal Singh, however extended the underwriting support by Rs. 1.25 crore
which was post facto approved by Shri K.S. Bains on 30.5.1995 and the enhancement of underwriting support by Rs. 25.00 lakh to the Company
was not reported to the Management Committee of the Bank. Shri Gurpal Singh also alleged to have made available bank funds by sanctioning
limits to an associate company for purchase of shares and also sanctioned limits by arranging a proposal within his powers though the proposal for
a higher limit which was beyond his powers was pending at the Headquarters.
4. On completion of investigation charge sheet was filed only against Shri Gurpal Singh, General Manager (Operations) of the Bank, Shri A.S.
Roy, Managing Director, M/s. JBML and M/s. JBML through its Managing Director, the respondents herein. The allegations forming the basis of
the charge sheet are that a proposal for purchase of shares of the company to the tune of Rs. 2.00 crore had earlier been rejected by the
Investment Committee on 9.1.1995. The charge sheet was based on the crucial fact that Shri Gurpal Singh in pursuance to the criminal conspiracy
submitted the subsequent note dated 18.1.1995 concealing the fact that the proposal had already been rejected by the Investment Committee on
9.1.1995 and subsequently the Investment Committee approved the proposal on 2.3.1995. It may be noticed that this proposal was based on the
fact that the shares would be disposed of before 31.3.1995 which would result in the profit for the financial year ending in question. There was,
thus, a violation of the RBI guidelines.
5. The Funds Management Committee in its meeting held on 6.3.1995 authorised Shri Gurpal Singh to sell shares of M/s. Punwire Limited to bring
the investment of the Bank in the shares and debentures within the permissible limit of the RBI but he failed to take any action to sell the shares of
M/s. Punwire Limited and paid Rs. 2.00 crore to M/s. JBML for investment in their shares on 18.3.1995.
6. The sanction of Rs. 4.00 crore under funded limit and Rs. 3.00 crore under non-funded limit for the Company was placed before Shri Gurpal
Singh on 18.1.1995 and Shri Gurpal Singh sanctioned Rs. 2.00 crore under the funded limit which was conveyed to the concerned branch. This
funding was stated to be compensation to the Managing Director Shri A.S. Roy for the amount to be paid by him towards cost of shares. Shri
Gurpal Singh had invested Rs. 11.50 lakh in the name of his school going daughter, Ms. Ranjeeta K. Singh in M/s. Vihanga Finance Pvt. Ltd., an
associate company of the said company on 19.10.1994 by obtaining a loan of Rs. 6.00 lakh from Citibank/Standard Chartered Bank against
shares and Rs. 6.00 lakh from Shri Labh Singh, Chairman of M/s. Tex India Silk Mills Limited, which had been shown official favour from time to
time by Shri Gurpal Singh. Thus, Shri Gurpal Singh had received Rs. 12.90 lakh from M/s. Vihanga Finance Pvt. Ltd. Which included Rs. 1.40
lakh being interest within a short period alleged to quid pro quo as investment of Rs. 11.50 lakh for about two (2) months.
7. The statements of the prosecution witnesses have been examined in depth by the Special Court and it was found that the allegation against Shri
Gurpal Singh that he put up the proposal in the Investment Committee on 20.1.1995 without referring to the earlier decision dated 9.1.1995 was
baseless. Shri Gurpal Singh was not present in the meeting of the Investment Committee on 9.1.1995 and the Minutes of this meeting never
reached him because they were not signed by the Directors and they were never received by the Funds Management Department from where they
were rejected. The Special Court has observed that even if it is assumed that Shri Gurpal Singh was aware of the position of 9.1.1995 on account
of one of the witnesses deposing that he had told Gurpal Singh about the same, the important factor which could not be lost sight of was that there
was only a lapse of time of about ten (10) days between the rejection of the first proposal and the acceptance of the second one by the Investment
Committee. It could, thus, hardly be said that the Investment Committee was unaware of the earlier decision taken by it ten (10) days ago. In fact,
the testimony of the witnesses is said to support an apparent interest of Shri K.S. Bains in the clearance of the proposal though he was not named
in the FIR and no evidence was produced to put him for trial. Not only that, the evidence collected showed that the shares of the company could
not be sold by 31.3.1995 but were ultimately sold by the Bank at a profit and the Bank suffered no loss.
8. Insofar as the sale of shares of M/s. Punwire Limited is concerned it was found that a decision was taken to sell the shares even at a loss but the
action of Shri Gurpal Singh of not complying with this decision could be a dereliction of duty which may have resulted from a better sense of
business and economics rather than any criminal conspiracy.
9. The most important aspect is what is noted in paragraph 17 of the impugned judgment/order that the learned PP himself during the course of
arguments admitted that there was no evidence that M/s. Vihanga Finance Private Limited is a sister concern of M/s. JBML or that Shri A.S. Roy
was connected with the investment in the name of the daughter of Shri Gurpal Singh in the finance company. The two transactions could not be
connected.
10. The allegation about the advance allowed by Shri Gurpal Singh was again found to be without basis because what he had sanctioned was
within his financial powers.
11. Learned Counsel for the petitioner again sought to emphasise the same aspects which have been dealt with by the Special Court.
12. It is trite to say that in exercising the revisionary jurisdiction this Court has to only examine the legality or propriety of the finding in the order
and not to sit as a court of appeal. It is within the said parameters that the rationale of the impugned order has to be scrutinized.
13. In respect of the aforesaid, the Special Court record has been perused and the submissions of the petitioner based on the same lines as before
the Special Court do not have any merit.
14. The first aspect relating to the proposal itself shows that the matter at both stages was initiated by Shri K.S. Bains, yet no material was brought
against him. It is only the respondents, who were charged as accused. The role of Shri Gurpal Singh was limited to putting up the note on the
second occasion without mentioning the factum of rejection of the first proposal. It is not as if the Investment Committee was unaware of the
rejection of the first proposal simply for the reason that the time lapse is only ten (10) days between the rejection of the first proposal and the
acceptance of the second proposal. The respondents were not present at the meeting when the first proposal was rejected. The Special Court has
rightly observed that even if the testimony of one of the witnesses who has stated that he had informed Shri Gurpal Singh is assumed to be correct
it would have no material significance for the reasons recorded aforesaid. This reasoning can hardly be faulted.
15. Shri Gurpal Singh is also not charged with violating the sanction limit beyond his authority. All that is stated is that while the sanction for a
higher limit was pending Shri Gurpal Singh sanctioned a limit within his authority. This again can hardly be faulted. An important aspect is that the
Bank never suffered a loss and has in fact gained profits as noted in the impugned order.
16. The only aspect on which Shri Gurpal Singh can be faulted is not selling the shares of M/s. Punwire Limited to bring the investment in the
relevant category within the permissible limits of the RBI guidelines but as the Special Court has observed that it can at best be an irregularity and
can also be better sense of business and economics since the shares were to be sold even at a loss. This can hardly be a ground to charge Shri
Gurpal Singh. The allegation against the other respondents is only of conspiracy with Shri Gurpal Singh.
17. In view of the aforesaid, I find no merit in the Revision Petition.
18. Dismissed.