Viswanathan vs State Superintendent of Police, Commercial Crime Investigation Wing, Nagapattinam

M.N. Mouthy, J.—The petitioner in these petitions, Viswanathan, was President of Nannilam Cooperative Agricultural Bank Limited and he

has filed these petitions under S. 482, Crl. P.C. for quashing the criminal proceedings launched against him before the learned S.D., J.M.

Nagapattinam, in C.C. Nos. 159, 158 and 157 of 1979.

Crl. M.P. No. 2569 of 1979 arises out of C.C. No. 159 of 1979 in which the petitioner herein is the first accused. He along with A2, the

Secretary of the Bank is being tried for offences under Ss. 409, read with 34, I.P.C. and S. 477(A), read with 34, I.P.C.

The allegation against the accused is, the petitioner, namely Al, the President, and A2 the Secretary, misappropriated between 6th October,

1969 and 10th October, 1975 a sum of Rs. 40,463 and thereby committed criminal breach of trust punishable under S. 409, read with 34, I.P.C.

The second charge against them is that they made false entries in the accounts of the said Co-operative Bank and thereby committed an offence

punishable under S. 477(A), read with 34, I.P.C.

A2, the Secretary, received two payment orders on State Bank of India, Nannilam Branch, on 12th September, 1975 and 27th September,

1975 for Rs. 30, 850 and Rs. 9,613 respectively. He has encashed the payment orders on 13th September, 1975 and 4th October, 1975. These

amounts were not brought into the cash book. When on 7th October, 1975, A2 was required to remit funds for fortiliser sale proceeds at the

Kumbakonam Cooperative Central Bank Branch at Nannilam, he found there was no adequate cash (sic) as he had not brought into account the

payments received from State Bank of India, Nannilam. with the assistance of one Hariharan, Attender, A2 inserted two receipt entries in the cash

book of the Bank for Rs. 30,851 on 13th September, 1975 and Rs. 9,613 on 4th October, 1975 and altered the closing balances on the above

days so as to adjust the receipt entries made. The original closing balance of Rs. 9,411.80 on 8th October, 1975 has been altered as Rs.

19,024.80 Thus the allegation against A2 is that he had committed falsification of account and temporarily misappropriated the funds of the Bank

to the tune of Rs. 40,463 with the collusion of the attender Hariharan. Thus, as far as the allegations of misappropriation of the funds and

falsification of the accounts are concerned, they are. leveled against A2 directly. V. Rajendran, another attender, was all along writing the accounts

of the Bank and he is also stated to be responsible for misappropriation in collusion with the Secretary. As far as the President, Viswanathan, A2 is

concerned, he stands charged for ignoring his statutory responsibilities cast upon him under Bye-law 27(1) in having allowed the Secretary and

other employees of the Bank to act according to their whims and fancies without any check or restraint by the President. Al is also responsible for

the cash balance of Rs 11,560.20 representing the closing balance on 11th October, 1975 as he is the ex-officio Treasure of the Bank as per Bye-

law No. 27 (1) and as he is the Custodian of the cash and responsible for all the properties of the Society as laid down under Bye-law 27(1)(a)(e).

At has failed to discharge his obligations and he has not even cared to sign the cash book on some relevant dates.

No doubt, according to the Bye-laws of the, Bank the President is the Custodian of the cash and he is responsible for all the properties of the

Society. At is charged for committing breach of trust and falsification"" of accounts in connivance with A.2. As far as this, charge, is concerned

there is no"" evidence"" to connect the petitioner, A1, with the actual committing of misappropriation ""or being a party to the falsification of the

accounts. Nor is these are evidence to show that he connived with A2 and others to commit the offences There it no evidence, as is sought to be

made out against Secretary, A2 Secretary, A2 that the petitioner was leading a luxurious life or appending liberally on his associates to infer sudden

acquisition of wealth. There has been nothing produced to show. that he lived beyond his legitimate means of income. It is staled against A2 that he

was reported to be absconding with cash. Rajendran, another attender, has stated that A2 had asked the other attender, Hariharan to correct the

chitta book which was done, According to Rajendran , he corrected the entries in the cash book as per the instructions of A2 and the cash would

be in the custody of a clerk, by name Rajimanickam. He admits that he has manipulated the account on 13th September, 1975 in the chitta

regarding the entry of Rs. 30.850. None of the witnesses in the charge-sheet has implicated the President either directly or indirectly. At the worst,

he may be negligent or not careful in the discharge of his statutory duties, as President of the Society. As for as this case is concerned with

reference to Al, regarding the charge of misappropriation and falsification, they are liable to be quashed.

Crl. M. P. No. 2574 of 1979 relates to C. C. No. 158 of 1979 wherein the, petitioner along with two others, accused 2 and 3 who are

Secretary and Supervisor, is charged for committing criminal breach: of trust in respect of a sum of Rs. 9,000 an offence punishable under S. 409,

read with 34, l.P.C. The other charges are under Ss. 467 and 471 read with 34, I.P.C.

The allegations against the accused in CC. No. 158 of 1979 are that A2 issued a loan of Rs. 4,500 to one T. Gunasekaran of Salapery, and Rs.

4,500 to V. Mahalingam of salipery on 3rd August, 1974. These two members deny having received any loan either, in cash or kind from the

Bank and they also disowned their signatures in the books of the Bank. Hence A2 in collusion with another clerk, Rajamanickam, is stated to have

committed misappropriation of Rs. 9,000.

The procedure for issuing loan by the Bank is , the Bank prepares annual credit limit for the ryots residing in its areas of operation based on the

certificate of the village Karnam in the register of ryots regarding the extent and pattern of order raised by the member. After the Section co-

operative Central Bank, Kumbakonam, it prepares drawl applications after getting the signature of members. The Board authorises the President

and two directors to draw and disburse the sanctioned loan to the members. The responsibility of actual disbursement vests, with the Secretary

who is a co-operative trained band and the President. The Circle Supervisor is also to attend to the disbursement of the loans. The said members,

Gunasekaran and Mahalingam, deny having received any loan and they disown their signatures in the account books of the Bank. Subramanyara,

Karnam of Salpery, has stated that he has not furnished any certificate for these two persons from the Register of Ryots regarding cultivation of

lands. The allegation is that A has prepared all the entries falsely and these loans were created by issuing loans on fictitious names, preparing false

vouchers by forgery and by falsification of accounts The allegation against Al, the petitioner, is that he being the President of the Bank, is the

custodian of cash and other pro-pities as per the Bye-laws of the Society. He has allowed the employee to commit the fraud, because of his

negligence of duties. There is no doubt that the petitioner was grossly negligent in discharging his duties property as President of the Bank. There is

no evidence as such against the petitioner by the said Gunasekeharan and Mahalingam that their names were entered benami in the account books

All the impugned entries are made by A 2 and others. Merely because some of the employees have committed this fraud, it cannot be said that the

offence took place at the instance of the petitioner. None of the witnesses cited in the above case implicates the President. either directly or

indirectly in the said offence. Hence, these charge''s against the petitioner are also liable to be quashed.

Crl. M.P. No. 2581 of 1979 Originates from C.C. No. 157 of 1979 in which case the petitioner, along with two others, is charged for criminal

breach of trust in a sum of Rs. 29, 359 between 6th October, 1969 and 10th October, 1975, and for forget of registers in the Bank with intent to

defraud. They were charged under S. 409 read with 34, I.P.C. and Ss. 467 and 471 with I.P.C.

The allegations against the accused in C.C. No. 167 of 1979 ate that loans were issued to Pannerselvam, Gurusamy Mudaliar, Haja-Shetiff

and Hyderali and some others for Rs. 46,999 totally under fictitious names. The Karnams of Salipery and Vazhkai were examined. The Karnam of

Saliperi has deposed that Pannersdvam and Gurusamy Mudaliar are not residents of Salpery Village, they are neither pattadars nor tenant

cultivators and the signatures found in the Ryotwari register of the Bank are not his own. The Karnam of Vazhkai Village deposed that Haja Sheriff

and Hyderali do not have any lands in Vazhkai village and the certificate furnished in the Ryotwari register is false. Moreover, the signatures of the

above persons as found in the various accounts books differed from one another. A2 who is responsible for proper maintenance of books of

accounts has manipulated the account books and created bogus persons and misappropriated bank''s funds to the extent of Rs. 46,999 under the

said eleven loans.

It is the duty of A 2 to prepare all the relevant documents is of the members for the purpose of issuing loans to them. Though the loans to

eleven persons mentioned are proved to be benami ores, the entire materials on the side of the prosecution admissions are only against A2. It is

also further alleged that the Rajamanickam, clerk, connived with A 2. As in the other two cases already dealt with, the petitioner stands charged

for willful negligence of his duties and for having allowed the Secretary and other employees to have a free play in the affairs of the society. The

petitioner has not checked the entries in the account rooks and the empire affairs of the Bank had been left at the mercy of the Secretary and other

staff at the Bank. Rajendran, an attender of the Bank, was one of the persons who was writing the accounts in the Bank and he is stated to have

colluded with A2 There is no doubt that it was because of the negligence of the petitioner, some of the loans were made to appear genuine though

issued to non-existing persons. A2 was in a position to commit these"" frauds, because A1, the petitioner, was not verifying things. A2 mismanaged

the affairs of the Bank by not bestowing that amount of diligence that was essential. No doubt, the petitioner, on some entry in the cash book

signed blindly without verifying whether it was correct or not. He has signed, for instance, the loans verification report on 17th September, 1975.

This report contains the names of as many as 59 persons and Al signed it on 17th September, 1975 with regard to the benami loans of the seven

persons concerned in the above case, These persons were given loans by means of cheque and the savings bank ledger of the Bank and the loan

ledger would prove it. Curiously, the impugned report of loan verification is signed by two Directors and also by one Supervisor who is not an

officer of the Bank and whose duty is to verify the correctness of the entries. This would only go to show that proper care was not taken before

the report was passed off. when entries of number of persons are there, it may not be possible to check each and every entry by the President

himself. In this case also none of the witnesses implicates the President directly or indirectly with any criminal offences. This charge in so far as it is

against the petitioner is liable to be quashed.

The Learned Counsel appearing for the petitioner cited before me the decision in Shripad Shivram Kulkarni Vs. State of Maharashtra, to lend

support to his contention that the prosecution case as far as his client is concerned rests wholly on circumstantial evidence and those circumstances

should be firmly established and there should be a definite pointer towards the guilt of the accused.

The Learned Counsel for the petitioner, relying on the decision in R. P. Kapur v. State of Punjab 1961 (1) S.C.J. 59 next contended that the

allegation in the F.I.R., and the materials available on the side of the prosecution, even if they are taken at their face value and accepted, do not

constitute the offence alleged against his client and it would be manifestly unjust to allow the prosecution to continue against him as it would amount

to abuse of process of court.

The Learned Counsel next referred to the decision in State of Karnataka Vs. L. Muniswamy and Others, for the proposition that when there is

no material on record on which any Tribunal could reasonably convict the accused for any offence, it should not be permitted to continue and the

proceedings are to be quashed.

There is considerable force in the contentions raised on behalf of the petitioner. All the materials available including the statements given under

S. 161, Crl. P.C. by the witnesses examined the Investigating Officer, have not implicated the petitioner in any manner. Even if the entire allegations

in the F.I.R. are admitted, the statements recorded under S. 161 , Crl. P.C. are taken to be true in to, it cannot be said that a case can be made

out against the petitioner for any of the charges framed. The petitioner is one of the founders of the Nannilam Co-operative Agricultural Bank

Limited and he has been its President from its inception in the year 1957 to 1979 without interruption. It should be noted that even after the

misappropriation came to light in 1975, the petitioner was allowed to be its President for four more years till 1979. There is no whisper anywhere

that he has shared in the booty. A man who comes from affluent circumstances and who has been the President with an unblemished record and

without a break from 1957 till 1979 can also fall a prey to the temptation of mis-appropriation of the society funds. It is possible, but it is not

probable. No doubt, the High Court ought not to interfere ordinarily by way of quashing the charges but when all the necessary materials are

available and the charges seem to be prima facie groundless, it is an obvious duty to interfere without subjecting a person to the unnecessary agony

of a trial. The case was fully argued on both sides and after giving my best consideration, I am of opinion that this is a fit matter where I ought to

interfere. It is not easy to gauge the injury likely to be inflicted on a person by a vexatious and protracted criminal trial. It may be that ultimately the

accused will be acquitted. That is not a sufficient ground for not rescuing him from what I consider to be a groundless and vexatious prosecution.

Since prevention is better than care. I quash the proceedings pending against the petitioner in C.C. Nos. 159, 158 and 157 of 1979 on the file of

the S.D.J.M., Nagapattinam. In the result these petitions. viz.. Crl. M.P. Nos. 2569, 2574 and 2522 of 1979, are allowed,

The observations made in these petition should not in any way prejudice the case of the other accused.