Central Bureau of Investigation v. James Mathew, Jais Mathew, Jins Mathew, Jojo Mathew, Litty James and Union Bank of India (Kattapana Branch)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR THURSDAY, THE 12TH DAY OF SEPTEMBER 2013/21ST BHADRA, 1935 Crl.MC.No. 1428 of 2013 () CC 2/2007 ON THE FILES OF COURT OF SPECIAL JUDGE-II, ERNAKULAM PETITIONER(S)/ACCUSED NOS. 2 TO 6: 1. JAMES MATHEW, AGED 38 YEARS - S/O.SHRI.K.M.MATHEW, KANDAMUNDAYIL HOUSE, VALLAKADAVU KANDAMAKUZHI.P.O., KATTAPANA-685 508, IDUKKI. 2. JAIS MATHEW , AGED 42 YEARS S/O.SHRI.K.M.MATHEW, KANDAMUNDAYIL HOUSE, VALLAKADAVU KANDAMAKUZHI.P.O., KATTAPANA-685 508, IDUKKI. 3. JINS MATHEW AGED 40 YEARS S/O.SHRI.K.M.MATHEW, KANDAMUNDAYIL HOUSE, VALLAKADAVU KANDAMAKUZHI.P.O., KATTAPANA-685 508, IDUKKI. 4. JOJO MATHEW, AGED 45 YEARS S/O.SHRI.K.M.MATHEW, KANDAMUNDAYIL HOUSE, VALLAKADAVU KANDAMAKUZHI.P.O., KATTAPANA-685 508, IDUKKI. 5. LITTY JAMES AGED 35 YEARS W/O.SHRI.JAMES MATHEW, KANDAMUNDAYIL HOUSE VALLAKADAVU, KANDAMAKUZHI.P.O., KATTAPANA-685 508 IDUKKI. BY ADVS.SRI.SHAJI P.CHALY SMT.K.S.SUMITHA SMT.K.JASMIN BABY SRI.R.SANJITH SMT.C.S.SINDHU KRISHNAH SMT.S.SIMY RESPONDENT(S)/COMPLAINANT: 1. CENTRAL BUREAU OF INVESTIGATION CBI, TRIVANDRUM UNIT, TRIVANDRUM REPRESENTED BY THE SUPERINTENDENT OF POLICE CENTRAL BUREAU OF INVESTIGATION, KOCHI. 2. UNION BANK OF INDIA, KATTAPANA BRANCH, KATTAPANA-685 508, IDUKKI DISTRICT, REPRESENTED BY ITS SENIOR MANAGER. BY ADV. SRI.P.CHANDRASEKHARA PILLAI, C.B.I. THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 12-09-2013, ALONG WITH CRMC. 1445/2013, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Crl.MC.No. 1428 of 2013 () --------------------------- ## APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------ ANNEXURE A1- TRUE COPY OF THE FINAL REPORT ALONG WITH THE LIST OF WITNESSES AND LIST OF DOCUMENTS SUBMITTED BY THE IST RESPONDENT. ANNEXURE A2- TRUE COPY OF THE CERTIFICATE ISSUED BY THE BANK CLOSING THE LOAN OF THE IST PETITIONER DATED 14.03.2013. ANNEXURE A3- TRUE COPY OF THE CERTIFICATE ISSUED BY THE BANK CLOSING THE LOAN OF THE 2ND PETITIONER DATED 14.03.2013. ANNEXURE A4- TRUE COPY OF THE CERTIFICATE ISSUED BY THE BANK CLOSING THE LOAN OF THE 3RD PETITIONER DATED 14.03.2013. ANNEXURE A5- TRUE COPY OF THE CERTIFICATE ISSUED BY THE BANK CLOSING THE LOAN OF THE 4TH PETITIONER DATED 14.03.2013. ANNEXURE A6- TRUE COPY OF THE CERTIFICATE ISSUED BY THE BANK CLOSING THE LOAN OF THE 5TH PETITIONER DATED 14.03.2013. RESPONDENT(S)' EXHIBITS:NIL ----------------------------------- //TRUE COPY// P.A.TO JUDGE ## **C.T. RAVIKUMAR, J. ========================== Crl.M.C. Nos.1428 & 1445 OF 2013 ==========================** Dated this the 12[th] day of September, 2013 ## **ORDER** Accused Nos. 2 to 6 in C.C.No.2 of 2007 on the files of the Court of Special Judge-II for CBI cases, Ernakulam are the petitioners in the former petition arising from crime No.R.C.9/A/2006 of CBI/SPE/Kerala and accused Nos.2 and 3 in C.C.No.16 of 2006 on the files of the same Court arising from the same crime are the petitioners in the latter petition. In both the cases, the erstwhile Manager of Kattappana Branch of the Union Bank of India is arraigned as the first accused. The damnation against the petitioners in both the petitions as well as against the first accused is one of commission of offences punishable under section 120B read with section 420 of the Indian Penal Code and section 13(2) read with 13 (1)(d) of the Prevention of Corruption Act, 1988. The aforesaid crime **Crl.M.C.1428 & 1445 of 2013** 2 was registered based on source information on 18.4.2006 and investigation was conducted after registering FIR RC9/A/06. After investigation, Annexure-A final reports have been laid, in both the cases, with serious accusations against the petitioners. The gist of the accusation in the former petition is that the first accused while officiating as Senior Manager of the second respondent-bank during the period from 17.5.2004 to 7.5.2005 conspired with the petitioners with an intention to cheat the Union Bank of India in the matter of sanction and disbursement of housing loans and in furtherance of the said conspiracy, the first accused, by corrupt and illegal means and in violation of the banking norms and by abusing his official position as public servant dishonestly sanctioned and disbursed housing loans amounting to Rs.10 lakhs each in the name of the petitioners without ensuring the end use of the housing loans so sanctioned and thus by his acts he facilitated the petitioners to misappropriate the funds of the second respondent bank for purposes other than for construction of houses. It is also alleged that the first accused without obtaining **Crl.M.C.1428 & 1445 of 2013** 3 proper documents disbursed the loan amounts within a short period rather than releasing the same in a phased manner according to the progress in works placed on record and passed sanction report stating that the construction work was in progress when, in troth, no construction was actually taking place, and in pursuance of the said criminal conspiracy, the housing loan amounts were utilised by the petitioners for purposes other than the purpose for which it was sanctioned. It is also therefore alleged that accused Nos.1 to 6, caused a wrongful loss to the tune of Rs.50 lakhs to the second respondentbank and corresponding wrongful gain to the accused persons. In fact, eight charges are alleged against the accused in respect of their transactions with the second respondent-bank. According to the petitioners, the charges in nutshell is as follows:- The accused 1 to 6 entered into a criminal conspiracy to cheat the second respondent-bank and to obtain undue pecuniary advantage to themselves and in furtherance of the said criminal conspiracy, the first accused filled up application forms for housing loans in the **Crl.M.C.1428 & 1445 of 2013** 4 petitioners' names knowing fully well that the said housing loans are not required for them as already the proposed houses were constructed in the names of the petitioners. In pursuance of the said conspiracy, petitioners signed the loan applications and submitted the plans and estimates of the existing houses and knowing fully well that those were the plans and estimates of existing buildings. The first accused illegally and abusing his official position as public servant violated the guidelines of the bank and sanctioned five housing loans of Rs.10 lakhs each to the petitioners on 29.12.2004, 2.9.2004, 14.7.2004, 3.9.2004 and 26.2.2005 respectively and in fact, that was the maximum amount that could have been sanctioned by the first accused in respect of a single housing loan. The further allegation is that the petitioners have dishonestly collected the bills showing the purchase of various construction materials in pursuance of the conspiracy to misrepresent the bank and the first accused allowed the first petitioner to purchase cardamom land in his name utilising the loan amount and the loan amount sanctioned were used by all the **Crl.M.C.1428 & 1445 of 2013** 5 petitioners for purposes other than the purpose for which the loans were granted. The second charge is regarding the commission of offences under section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act. Charge Nos.4 to 8 are founded on the allegations that the first accused in conspiracy with the petitioners as narrated under charge No.1, cheated the second respondent by dishonestly inducing the bank to deliver the total amount of Rs.50 lakhs as housing loans. The said loan amounts were not required for making any construction as claimed and made the bank to release an amount of Rs.50 lakhs in the names of the petitioners and thereby committed offences punishable under section 420 IPC. The contention of the petitioners in the former petition is that essentially, the allegation is one of diversion of housing loans sanctioned by the first accused for purposes other than for which they were granted. The further contention is that the allegation that the bank had sustained a loss of Rs.50 lakhs could never be true to facts as the entire loan amount was repaid by each of the petitioners much ahead of the scheduled time in **Crl.M.C.1428 & 1445 of 2013** 6 respect of each transaction. It is also contended that though a period of 15 years was granted by the second respondent for repayment of the loan amount, the petitioners repaid the loan amounts much ahead of the scheduled period, precisely, on 14.3.2013. In the said context, it is contended that the petitioners had no intention at all to cheat the bank by not repaying the loan amount. In such circumstances, no criminal conspiracy could be attributed on the petitioners under section 120B of the IPC. Annexures A2 and A6 are certificates issued by the bank evidencing closure of the loan amounts by the petitioners. Above all, it is submitted that a perusal of Annexure-A1 report would reveal that the transaction between the petitioners and the second respondent bank is purely of civil nature of a financial, commercial and mercantile character and therefore no manner of wrongful intention could be attributed on their part for abiding the law. The contention that the amount sanctioned to them by way of housing loans was not utilised for the purposes for which they were sanctioned is not supported by any document. It is the further contention of the **Crl.M.C.1428 & 1445 of 2013** 7 petitioners that the loan amounts were paid off in full with interest by them in view of a settlement made by them and therefore, Annexure-AI final report is liable to be quashed. On account of the fact that the loan transaction of the petitioners with the second respondent bank is purely a civil transaction, the petitioners cannot be mulcted with any penal consequences especially when the entire amount payable was repaid by each of the petitioners much ahead of the scheduled time for repayment. The petitioners relied on the decisions of the Hon'ble Apex Court in **Nikhil Merchant v. Central Bureau of Investigation [(2008) 9 SCC 677]** , **B.S.Joshi v. State of Haryana [2003 (2) KLT 1062 (SC)]** and **Gian Singh v. State of Panjab [2012(4) KLT 108 (SC)]** to contend that the entire criminal proceedings in C.C.No.2 of 2007 are liable to be quashed. In the latter petition, similar accusations have been made against the petitiners and the first accused. Though the dates of transactions are different, essentially, the accusations against the petitioners are akin to the accusations made against the petitioners in the former petition. In **Crl.M.C.1428 & 1445 of 2013** 8 the latter petition, Annexure-A2 is the charge framed by the Court against the petitioners. The petitioners in the latter petition also closed the entire loan transaction with the second respondent bank much ahead of the scheduled period for repayment, with interest and according to them, they closed the said loan transaction based on the settlement arrived at with the bank and therefore, being a transaction of civil nature and taking into account the fact that the entire amount availed by way of loan was repaid with interest by each of them, criminal conspiracy or any other offences ought not to have been alleged against them. In the said circumstances that the petitioners in the latter petition are relying on **Nikhil Merchant's** case (supra), **B.S.Jos** hi's case (supra) and **Gian Singh'** s case (supra) for seeking quashment of the entire proceedings in C.C.No.16 of 2006 based on Annexure-A 1 and A2. 2. I have heard the learned counsel for the petitioners and also learned standing counsel appearing for the first respondent. **Crl.M.C.1428 & 1445 of 2013** 9 I have already adverted to the charges levelled against the petitioners in both the cases which are essentially identical in nature. It is pertinent to note that in both the petitions, the erstwhile Manager of the Kattappana Branch of Union Bank of India is the first accused and the accusation is that he along with the petitioners have committed the aforesaid offences. The first accused in both these cases is not among the petitioners in both these cases. In other words, the petitioners in these cases are the persons who availed housing loans from the second respondent bank. All the petitioners are accused of availing Rs.10 lakhs each in connivance with the first accused and the housing loans were availed by them in respect of houses which were fully constructed by the time the applications were submitted for loan and at any rate, before the sanctioning of the loan. A perusal of the contentions of the petitioners would reveal that they seek for quashment of the entire criminal proceedings against them based on Annexure-A1 final reports in the aforesaid calender cases on the ground that the transaction in question is purely of a civil nature **Crl.M.C.1428 & 1445 of 2013** 10 and that apart, based on a settlement, the petitioners have repaid the entire loan amount together with interest much ahead of the scheduled period for repayment. According to the petitioners, when that be the position, commission of any of the criminal offences could be attributed on them and criminal conspiracy as also intention would not lie against them. According to the petitioners, the finding of the Hon'ble Apex Court in **Nikhil Merchant's** case (supra) that technicality should not be allowed to stand in the way of the courts to quash criminal proceedings involving non-compoundable offences where the disputes are compromised between the parties applies to the facts and circumstances involved in these cases. It is further contended that in **Gian Singh'** s case (supra), the Hon'ble Apex Court held that the decisions in **Nikhil Merchant's** case (supra) could never be said to be decided incorrectly. Per contra, the learned standing counsel appearing for the first respondent submitted that evidently the petitioners have not disputed the allegation that the loans were availed by them in respect of houses constructed prior to the submission of **Crl.M.C.1428 & 1445 of 2013** 11 the applications and knowing fully all such aspects, the plans and estimates in respect of already built-up houses were submitted along with the applications. There is no dispute regarding the facts that the loan accounts were closed by the petitioners subsequently about six or seven years since its disbursement. In fact, the precise case of the prosecution is that the petitioners availed housing loans and that they along with first accused, in furtherance of their intention to cheat the second respondent-bank based on the criminal conspiracy hatched between them, made the bank to deliver the huge amounts. In such circumstances, it is contended that merely because the amounts were subsequently repaid the petitioners cannot wriggle out of the criminal liability contending that in such circumstances, the second respondent bank could not be said to have sustained any loss. It is contended by the learned standing counsel that merely because the fact that a settlement was arrived at between the petitioners and the bank for repaying the loan amount, taking into account the nature and serious impact which the alleged actions on the part of the petitioners had on **Crl.M.C.1428 & 1445 of 2013** 12 the society, it will not be in the interest of justice to terminate the criminal proceedings initiated against the petitioners. The learned standing counsel further submitted that nipping the criminal proceedings of this nature at the bud in such circumstances would only encourage persons to involve in such criminal activities and therefore, any interference at this juncture would result in miscarriage of justice. When the specific case is that the loan amounts were availed in such a manner as alleged, in 2004-2005, the mere fact that the said amounts were repaid prior to the expiry of the 15 years period viz., on 14.3.2013 by itself cannot be taken as a ground for interference with the criminal proceedings instituted against the petitioners. When the very case of the petitioners is that they all had repaid the entire amount covered by the concerned loan transaction with interest the allegation that they had availed loan from the second respondent bank cannot be said to be untrue. The dates of repayment in respect of each of the petitioners is after about 6 or 7 years since availing the loans, even going by the case of the petitioners. In such **Crl.M.C.1428 & 1445 of 2013** 13 circumstances, when involvement of offence of criminal conspiracy and commission of offences under the Prevention of Corruption Act are alleged the question of culpability has to be examined. In the contextual situation, the contention relying on paragraph 57 of the decision in **Gian Singh'** s case (supra) assumes relevance. It is contended that going by the decision in **Gian Singh** 's case (supra) quashing of proceedings based on settlement entered into between the parties is to be desisted not only in respect of heinous and serious offences of mental depravity or offences like murder, rape, dacoity etc. but in respect of offences under special statutes like the Prevention of Corruption Act or offences committed by public servants working in that capacity, as well. Obviously, the petitioners in these petitions have been charged for commission of offences under the Prevention of Corruption Act as well. That apart, the accusation against the first accused of criminal conspiracy and abuse of official position as public servant would lose its legs in cases of quashment of the proceedings against the petitioners as the very charge against him **Crl.M.C.1428 & 1445 of 2013** 14 is that he had done so in connivance with the petitioners it is contended. It is submitted that in the circumstances, Annexure-A1 final reports pending against the petitioners in the aforesaid calender cases are not liable to be quashed acting upon the settlement between the victim and the offenders in the light of the decision of the Hon'ble Apex Court in **Gian Singh'** s case (supra). Learned counsel further submitted that this Court would not be justified in going into the question whether the allegations of commission of offences under Prevention of Corruption Act could be sustained against the petitioners in this proceedings at this stage as also the sufficiency or otherwise of the evidence against the petitioners in respect of the other offences. 3. Essentially, the accusation against the petitioners is that such loans were availed by them in respect of already built houses and by producing the plans and estimates in respect of such completely constructed houses in pursuance of the criminal conspiracy hatched **Crl.M.C.1428 & 1445 of 2013** 15 between them and the first accused with the intention to cheat the bank. The fact that the period specified as the loan period is 15 years and that the petitioners have closed the entire loan amount prior to the expiry of the scheduled period cannot be the sole ground for invoking the inherent jurisdiction to terminate the criminal proceedings in a case of serious nature like the cases on hand. It cannot be heard to contend that in all cases involving allegation of commission of offences based on money transaction once the repayment of the entire loan amount is effected, it would make the prosecution incapable of proceeding further with such cases. I have already adverted to the charges against the petitioners and the factual aspects based on the pleadings in these petitions. Prima facie, the purpose for which the amount viz., Rs.10 lakhs each were sanctioned to the petitioners cannot be said to be for any other purposes than towards the housing loan. The serious damnation against the petitioners is that they had availed housing loans pursuant to the criminal conspiracy hatched between themselves and the first accused by producing the **Crl.M.C.1428 & 1445 of 2013** 16 plans and estimates in respect of buildings already constructed. The first accused in both the calender cases is the erstwhile Manager of the Kattappana Branch of the Union Bank of India. Essentially, the accusation is that in furtherance of criminal conspiracy hatched between them and with an intention to cheat the bank the first accused abused his official position as public servant and dishonestly sanctioned and disbursed the housing loan viz., Rs.10 lakhs each to the petitioners without ensuring the end use of the housing loan and thereby facilitated the petitioners to misappropriate the funds of the second respondent bank. The accusation is to the effect that housing loan amounts were disbursed to the petitioners within a short period instead of releasing the same in a phased manner according to the progress in the construction. When misappropriation of such huge amount of public money is one of the accusations and definite role has been attributed against each of the petitioners in respect of such a very grave offence, it cannot be said that, to secure ends of justice, taking note of the settlement between the parties and the consequential **Crl.M.C.1428 & 1445 of 2013** 17 repayment of the amount the entire proceedings have to be quashed. In fact, I am of the considered view that any such interference will not secure ends of justice and continuance of proceedings in respect of such grave charges cannot be said to be abuse of process of court. Interference with such matters would definitely be against public interest and in view of the decision in **Gian Singh'** s case (supra), merely because of the fact that there is a compromise between the victim and the offender in relation to an offence under a special statute like the Prevention of Corruption Act, the criminal proceedings are not liable to be quashed. There cannot be any doubt with respect to the fact that this Court cannot sift the evidence in this proceedings and in view of the nature of the charges the question whether the charges levelled against the petitioners under the Prevention of Corruption Act would lie or not is not a question to be considered by this Court in this proceedings at this stage. For the foregoing reasons, I am of the considered view that interference with the prosecution of the petitioners in these cases under section 482 of the Code of Criminal **Crl.M.C.1428 & 1445 of 2013** 18 Procedure would not be in the interest of justice and at the same time, would not be against the public interest. In the said circumstances, this Court has to decline exercise of inherent jurisdiction under section 482 Cr.P.C. In the circumstances, these petitions are liable to fail and accordingly, they are dismissed. It is made clear that dismissal of these petitions would not stand in the way of the petitioners to take up the plea of discharge at the appropriate stage, in accordance with law. **Sd/C.T. RAVIKUMAR (JUDGE)** ## **spc/** **Crl.M.C.1428 & 1445 of 2013** 19 **C.T. RAVIKUMAR, J.** **JUDGMENT September, 2010** # **Crl.M.C.1428 & 1445 of 2013** 20