M.V.S. Patrudu vs State of A.P.

This appeal is directed against the Judgment dated 15-4-1995 rendered in CC No.9 of 1993 on the file of the Special Judge for CBI Cases, Visakhapatnam, under which the appellant (accused) herein has been convicted for offences under Sections 409, 420 & 477A of IPC and 5(1)(c) and 5(1)(d) read with 5(2) of Prevention of Corruption Act and has been sentenced to undergo R.I. for one year for each of the said offences and to pay a fine of Rs.500/- each and in default of payment to undergo rigorous imprisonment for a period of three months for each of the said offences.

The facts relating to this appeal may be stated briefly as follows:

The accused (Appellant) was working as Assistant Accountant in the State Bank of India at Anakapalli Branch during the period between 14-7-1986 and 10-3-1987. On receipt of some complaints of irregularities in the said Branch, PW1 (M.V.R. Sainatha Raa) the then Branch Manager of State Bank of India, Visakhapatnam, was entrusted by the Regional Manager to investigate into the said alleged irregular transactions at State Bank of India, Anakapalli Branch. After investigation PW1 gave his report-Ex.Pl. According to PW1 and PW2 the accused was attending to the work of incoming and outgoing telegraphic transfers including affixing check signal code, passing relevant vouchers, decoding inward telegraphic transfers and passing relevant vouchers. He was also authorised to purchase instruments, such as cheques in the accounts division. He was also attending to issuing and payment of D.Ds and banker''s cheques. The accused was also authenticating and making entries in the relevant registers after passing the vouchers. He was also attending to the work of current account and other accounts and was authenticating the making of entries in the relevant registers. It is stated that the duties of the accused included payment of cash also.

During his investigation, PW1 came across among others, three irregularities which are germane to this case.

PW2, the Manager of SBI Anakapalli Branch lias also deposed to these irregularities. According to PW2, Ex.P2 is the copy of transfer order, under which he was posted at Anakapalli Branch. Ex.P3 is the copy of the office order indicating duties of the accused. The modus operandi of the accused was, he used to make entries in the relevant records on receipt of fictitious non-existing telegraphic transfer remittances either in his name or in the name of others. The accused had entered the T.Ts. in the telegraphic transfer register as if such transfer remittances were received and transferred the amounts either to his account or to the account of some others. In either case, it resulted in loss to the bank and gain to the accused.

Each of the three transactions shall now be examined. It is in the evidence of PW2, the then Manager, SBI Anakapalli branch that the accused showed as if T.T. Order was received from Palakol Branch of SBI. The accused made entries as if telegraphic transfer remittance order for Rs.4,000/- in his favour was received. On that assumption he made the entry in l.B.l.T. register of that branch at Page-71 in Ex.P 5(A). Accordingly, he credited this amount to his own savings bank account No.46, by showing entry in the ledger sheet under Ex.P 5(B). There is no reason to disbelieve the evidence of PW2 when he said that he was acquainted with the hand writing and signatures of the accused inasmuch as the accused had worked with him in that bank. It appears that a consolidated credit slip was prepared by the accused for the amounts said to have been received under telegraphic transfer orders for a total extent of Rs.1,11,950/-. On the reverse side of this voucher, Ex.P4 there is a mention of Rs.4,000/-pertaining to this transaction. The relevant debit voucher, according to PW2, is Ex.P5 for a total amount of Rs.16,000/- which is said to include an amount of Rs.4,000/-under this transaction its mentioned in Ex.P5. The evidence of hand writing expert, PW9 discloses that the questioned signature of the accused on Ex.P5 tallies with the specimen signature of the accused which was obtained on Ex.P8. Thus, it is seen that the amount was credited as well as debited in the name of the accused himself. The extract of ledger account of the accused, Ex.P5 (B) shows that a sum of Rs.4,000/-was deposited in the account of the accused on the relevant date by telegraphic transfer.

PW4, the then Additional Accountant in SBI Palakol branch has stated that on 14-7-1986 no telegraphic transfer remittance order was issued from their branch. Ex.P 12 is the letter written from their branch to this effect. According PW4, Ex.P12 A is a photostat copy of telegraphic transfer despatch sheet (2 sheets) of their branch at Palakol, which was enclosed to Ex.Pl2. Ex.P12A shows that no such telegraphic transfer remittance order was issued. Thus, from this evidence it is obvious that the accused on the basis of a non-existing telegraphic transfer remittance order made credit entries in the accounts books of SBI Anakapalli branch and got money transferred to his own account.

The next transaction pertains to a sum of Rs.6,000/- said to have been received on 7-11-1986 by way of telegraphic transfer remittance to Anakapalli branch from Kovvur branch of SBI in favour of G. V. Ramana Rao. According to PW2, the accused prepared an application for pay order under Ex.P7 for banker''s cheque for Rs.6,000/-. Accordingly, a banker''s cheque was issued to the accused under Ex.P7A by the Bank. The relevant entry in the register is Ex.P7B. PW2 has wrongly described the register as telegraphic transfer payable register. However, PW6, Assistant Manager, SBI Kowur Branch has stated that no telegraphic transfer for Rs.6,000/- was issued on 7-11-1986, as seen from the relevant register of their bank, Ex.P13B. A letter to that effect was given by the Branch Manager, Kovvur branch to Branch Manager, Anakapalli branch, under Ex.P13A. It is, however, significant to nole that the prosecution has not brought on record any entries either in I.B.I.T. register or in telegraphic transfer payable register to show that the accused made any entries showing as if the telegraphic transfer remittance was received for Rs.6,000/-. It, however, appears that the accused issued bankers cheque on the basis of an application said to have been given by G. V. Ramana Rao. There is no evidence to show that Rs.6,000/- was not supported by any payment or that it was merely based on the alleged telegraphic transfer remittance. In the absence of such link material the accused is entitled to benefit of doubt and it must be held that the prosecution has failed to prove their case in respect of this transaction.

The third transaction pertains to 10-3-1987 involving an amount of Rs.2,500/-. According to PW2, the accused made an entry in the telegraphic transfer payable register, Ex.P6 B showing as if a telegraphic transfer was received from SBI Rajahmundry branch in favour of one Sat Kwnar. It is also in the evidence of PW2 that the accused issued banker''s cheque for Rs.2,500/- in favour of Saikumar on the basis of alleged receipt of telegraphic transfer payable register. According to PW7, Chief Manager of SBI Rajahmundry no such telegraphic transfer was issued on the relevant date, as per the records. The letter Ex.P14 was issued from their branch along with Ex.P14A, photostat copy of the entries in the telegraphic transfer register. There is no reason to disbelieve the evidence of PW7. This evidence establishes that on the basis of a fictitious telegraphic transfer, the accused made entries in the telegraphic transfer payable register, Ex.6 B, regarding receipt of Rs.2,500/-by telegraphic transfer from SBI Rajahmundry branch. The evidence is also clear that the accused issued Ex.P6 Banker''s cheque in favour of the said Saikumar to which he was not entitled. Thus, this evidence clearly proves that the accused falsified the accounts to show that telegraphic transfer remittance order for an amount of Rs.2,500/- was received from SBI Rajahmundry branch, when, in fact, no such amount was received. The accused, in fact, issued bankers cheque in the name of said Saikumar resulting in loss to the bank and gain to either the accused or the said Saikumar. Thus, the charge against the accused to the extent of transaction dated 10-3-1987 pertaining to Rs.2500-00 discussed above must be held to have been proved.

The next question is what are the offences made out against the accused in respect of transactions relating to Rs.4,000/-and Rs.2,500/- discussed above.

In regard to second charge for an offence u/s 420 of Indian Penal Code (for short ''IPC'') it is in respect of transactions for Rs.6,000/- under second charge and Rs.2,500/- under 3rd charge. It has already been held, as seen above, that the prosecution has not made out a case for any irregularities in respect of transaction for Rs.6.000/-. However, in respect of another charge for the offence u/s 420 relating to the transaction for Rs.2,500/-discussed above. It has been held that prosecution succeeded in proving that the accused has made false entries in respect of this transactions leading to loss to the bank and gain to himself. The question is whether offence u/s 420 IPC can be said to have been made out. Cheating has been defined u/s 415 IPC.

Section 415 of the Indian Penal Code is extracted below for ready reference.

"415. Cheating :--Whoever by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any personal shall retain any property, or intentionally induces the persons so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or ommission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to ''cheat''. Explanation. A dishonest concealment of facts is a deception within the meaning of this Section."

It is necessary for the prosecution to prove the following ingredients for making out the offence of cheating as defined u/s 415 of Indian Penal Code.

(1) the accused must have deceived some person fraudulently or dishonestly;

(2) (a) such deception must have induced (he person so deceived (i) to deliver any property to any person;

or

(ii) it must have induced that person to consent that any person shall retain any property;

or

(b) intentionally induced the said person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and the act or such omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

Explanation to Section 415 IPC provides that dishonest concealment of facts amounts to deception.

Thus, what is crucial for an offence of cheating is that the person who cheated should have induced the person who was cheated to deliver some property to any person on account of fraudulent and dishonest deception practised by the person who cheated.

In the instant case, it is not the case of the prosecution that the accused in his capacity as Assistant Accountant induced the Bank Manager or any other Officer to do any act authorising the transfer of money from the Bank to the accused or to any other person at the instance of the accused. In this case, in regard to telegraphic transfer remittances, the case of the prosecution rests on the foundation that the accused as Assistant Accountant was himself authorised to receive the telegraphic transfer remittances, decode them and make the relevant entries in the registers and raise the vouchers and make payments either by cash or by Banker''s Cheque or by Demand Drafts. Thus, in this case, while the accused may fit in; the slot of one who ''cheated'' but it is not possible to identify any one who was cheated by the accused. The most important circumstance in this case is that the accused in his capacity as Assistant Accountant of the Branch was himself in the custody of the funds of the Bank. He created some fictitious documents, made certain false entries and diverted the Bank''s money for his own purpose. According to the prosecution evidence, there was no need or occasion for the accused to make any fraudulent or dishonest representation amounting to deception to any person to induce that person to part with Banks money. This is so, simply because the accused himself was in the custody of the money and he himself transferred Bank''s money to his own benefit. Under the circumstances, there was no occasion for the accused to induce any one to part with the money, and there is no identifiable person who was induced by the accused to part with the Bank''s money.

The learned Counsel Mr. Shiva Kumar Reddy representing the Senior Standing Counsel for Central Government presented a novel argument. It was contended that the accused acted in two capacities - (1) as the person who cheated and (2) as a representative of the Bank which was ultimately cheated. There is no doubt that a Bank is a juristic person and an offence of cheating can be committed against the Bank in respect of Bank''s funds, but the fact remains that in this case the accused himself was the custodian of the Bank''s funds in his capacity as the Accountant and he himself was authorised to part with the Bank''s funds. Though Bank may be a juristic person, but it can be cheated only through some person who represents the Bank. In this case, the only person who represented the Bank in these transaclions was the accused himself and he himself is alleged to have cheated. In these circumstances, the offence of cheating as defined u/s 415 of 1PC can not be said to have been made out.

A similar view appears to have been taken by the Patna High Court reported in Sheonarayan Jaiswal and Others Vs. State of Bihar, . The learned Judge observed as follows:

"It is obvious that in an offence of cheating one person cheats and another person is cheated. The person who cheats practises deception either by a dishonest concealment of facts or otherwise. Deception is, therefore, an essential ingredient of the offence. The result of the deception is to induce, fraudulently or dishonestly, the person deceived to deliver any property etc., to any person, or intentionally inducing that person to do or omit to do anything etc. ..."

Refering to the facts in that case, it was observed that in that case the persons who granted the permits as well as the persons who obtained the permits were all in the conspiracy, so that there was no question of one deceiving the other.

Thus, it has to be held that the 2nd and 3rd charges in this case i.e., for offence u/s 420 of IPC against the accused have not been made out.

The first charge framed against the accused is for the offence u/s 409 of IPC. The offence u/s 409 IPC relates to the commission of criminal breach of trust by public servant or banker etc., in respect of property entrusted to him as such public servant or banker. Criminal breach of trust has been defined in Section 405 of IPC. Section 405 of IPC is extracted below:

"Section 405: Criminal breach of trust:--Whoever, being in any manner entrusted with property or with any dominion over the property, dishonestly mis-appropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express, or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits ''Criminal breach of trust''."

For an offence u/s 409 of IPC, the ingredients stipulated in Section 405 of IPC have to be satisfied when the said offence is alleged to have been committed by the public servant. Thus, for constituting an offence u/s 409 of IPC, the following ingredients have to be established :

(i) that the accused has been a public servant or banker, etc.

(ii) that in his capacity as public servant or banker, merchant or agent he was entrusted with or with any dominion over any property;

(iii)that the accused has dishonestly misappropriated or converted to his own use that property or has disposed of that property in violation of direction of law prescribing the mode in which such trust is to be discharged or wilfully suffers any other person so to do.

In this case, it is not in dispute that the accused as Assistant Accountant of SBI was a public servant. The evidence of PW2 shows that according to the duties entrusted to the accused he was authorised to decode and make relevant enlries relating to telegraphic transfer payable register and pass payments against those transfers. Thus, the accused was authorised to appropriate bank''s funds in accordance with telegraphic transfer remittance register without reference to any other officer in the bank. In that sense it must be held that bank''s money was under his control which he was required to dispose of in accordance with rules of the bank. This leads to an inference that the accused has the custody of the bank''s money in his capacity as Assistant Accountant of the Bank. It is evident that the accused made false entries as if telegraphic transfers were received, when, in fact, no such telegraphic transfers were received. On the basis of such fictitious TTs, he transferred the funds in one case to his account. This clearly establishes the ingredients of mis-appropriation in respect of the amount entrusted to him. Thus, this material amply proves the offence u/s 409 of IPC.

The fourth charge framed against the accused is for the offence u/s 477A of the Indian Penal Code.

As noted above, it is in the evidence that the accused had wilfully and with intent to defraud, falsified the accounts of the bank viz., IBIT Registers and TT issue registers and others documents, by recording false telegraphic transfer on 14-7-1986 in the Bank''s register in his name and also recorded false telegraphic transfer orders in the names of G. V. Ramanarao and K. Sai Kumar on 7-11-1986 and 10-3-1987 respectively. Thus, there is ample evidence to prove the offence u/s 477A of the IPC against the accused.

The fifth, and sixth and the last charge framed against the accused are for offence under Sections 5(1 )(d) and 5( 1)(c) of Prevention of Corruption Act, 1947 read with Section 5(2) of the said Act. The relevant provisions u/s 5(1)(c)and 5(1 )(d) of the Prevention of Corruption Act is extracted for ready reference.

"5(1) A public servant is said to commit the offence of criminal mis-conduct -

(a) xx

(b) xx

(c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or

(d) if he-

(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

(ii) xxx

(iii) xxx

(e) xxx"

In this case, there is abundance of evidence to show that the accused created fictitious entries as if telegraphic transfer remittance letters were received and on the basis of such fictitious telegraphic transfer remittances diverted the Bank s money to his own use. It is apparent that by using corrupt and illegal means and by abusing his official position as Assistant Accountant of the State Bank of India, Anakapalli Branch he obtained for himself pecuniary advantage by way of encashment of cheques, which otherwise could not have been encashed and by diverting money for his own self by fictitious telegraphic transfer remittances, which he could do by abusing his official position as Assistant Accountant of the Branch. There can be no manner of doubt that the offence i u/s 5(1)(d) has been made out; against he accused. In view of the fact that the offence u/s 409 of IPC is made out, there is no doubt that the offence under Sections 5(l)(c) and 5(1)(d) punishable u/s 5(2) of the Prevention of Corruption Act, 1947 have also been made out.

The result of the above discussion is that the prosecution has succeeded in proving the charges against the accused for offences under Sections 409, 477A IPC and Sections 5(1)(c) and 5(1)(d) read with Section 5(2) of the Prevention of Corruption Act, beyond reasonable doubt. The convictions of the accused for the said offences are confirmed.

The accused is, however, found not guilty for the offence u/s 420 of IPC and he is acquitted of the charge u/s 420 of IPC.

Regarding the sentence, it is submitted by the learned Counsel for the appellant that transactions which are subject matter of the case pertain to the year 1986 and the prosecution itself was launched in the year 1993. However, the entire amount covered by the alleged irregular and illegal transactions have been reimbursed by way of deduction from the Provident Fund Account payable to the accused and that the accused in pursuance of the departmental proceedings has been removed from service. It is true that this circumstance appears relevant on the question of imposing sentence. The learned Trial Court seems to have taken these circumstances into account in awarding the sentence.

In the result, the Appeal is allowed in part, confirming the conviction ordered by the Court below. However, considering these circumstances, the sentence of Rigorous Imprisonment for one year for each of the offences under Sections 409, 477A IPC and 5(1)(c) and 5(1)(d) read with Section 5(2) of the Prevention of Corruption Act is reduced to six months Rigorous Imprisonment under each count. The sentence of fine shall remain unaltered. However, the conviction and sentence imposed against the appellant u/s 420 IPC arc set aside. If the fine in respect of the offence u/s 420 IPC has been paid already, it shall be refunded to the accused. The sentence, under each count, is directed to run concurrently.