High Court of KeralaSingle Judge2018-10-11Revision petition allowed; charge discharged; o...

K.S. Ramakrishna Iyer v. Central Bureau of Investigation (CBI)

Case / Petition Number:Crl.Rev.Pet.No. 926 of 2018

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: B. Sudheendra Kumar
Judgment Date: 2018-10-11
Court Decision / Holding: The revision petition stands allowed and the order impugned stands set aside and the revision petitioner stands discharged.
Final Disposition: Revision petition allowed; charge discharged; order impugned set aside.

Parties to the Case

Appellants / Petitioners

K.S. Ramakrishna Iyer

Respondents

Central Bureau of Investigation (CBI), Tiruvananthapuram Unit

Legal Representation & Advocates

Counsels for Petitioners

• Sri. C.S. Manu
• Mrs. Sreelakshmy
• Smt. V. Saritha
• Sri. C. Y. Vijay Kumar
• Sri. S. K. Premraj

Counsels for Respondents

• Sri. Sastamangalam S. Ajithkumar, Spl. P.P. for CBI

Case Synopsis & Summary

This is a criminal revision petition filed by the fifth accused, K.S. Ramakrishna Iyer, challenging a discharge order in Crl. Rev. Pet. No. 926 of 2018 arising from CC No. 40 of 2011 before the Special Judge (SPE/CBI), Thiruvananthapuram. The prosecution alleges a criminal conspiracy under Sections 120B and 420 IPC and offences under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, for overvaluing 54.67 acres of land in South Veeranallur and Pudukudi Villages to obtain a loan from a bank, thus causing loss to the bank. The petitioner, a professional valuer, contends that there can be no prosecution merely on the basis of his valuation report; reliance is placed on the Supreme Court's Narayana Rao decision, which holds that professionals such as lawyers and valuers are liable only when they actively participate in a plan to defraud, not merely for negligence or lack of skill. The High Court examined the valuation reports CW15 and CW16 and found that they were not prepared by an approved valuer and did not disclose a reliable method or yardstick for valuation. It observed that the loan was sanctioned and disbursed prior to the valuation report and that there was no tangible material linking the petitioner to the alleged conspirators. Consequently, it discharged the petitioner, disallowing the continuation of the prosecution at the pre-trial stage. The court emphasized that observations in this order are strictly for disposal of the revision petition and not an adjudication on the merits.

Provisions of Law Cited

Section 120 B IPCSection 420 IPCSection 13(1)(d) read with Section 13(2) of Prevention of Corruption Act

Legal Doctrines & Maxims

Liability of professionals for negligence arises only when the professional actively participates in a plan to defraud; mere possession of skill or negligent act does not automatically render the professional liable (Central Bureau of Investigation v. Narayana Rao, 2012 (4) KLT 92 (SC)).
There must be materials connecting the professional with the conspirators; valuation reports by non-approved valuers require special circumstances to be acted upon (Narayana Rao, supra).
At the 239 Cr.P.C. stage, the court evaluates whether the materials on record disclose a prima facie case for proceeding; it is not required to weigh the probative value of all evidence at that stage.

Submissions & Arguments

Contentions of Appellants / Petitioners

Counsel for the revision petitioner argued that as a professional valuer, the petitioner cannot be prosecuted solely on the strength of his valuation report. Relying on the Supreme Court’s Narayana Rao decision, it was contended that liability arises only if the professional actively participates in a plan to defraud and that mere professional skill or negligence is insufficient for prosecution. It was pointed out that the loan sanction and disbursement occurred before the valuation report was submitted, that the petitioner was not an approved valuer of the bank, and that CW-15 and CW-16 reports did not reveal a reliable, legally acceptable method of valuation or a definite basis for the stated value. The defense asserted there was no direct, tangible link connecting the petitioner to the conspirators; hence there was no prima facie case to proceed. It urged discharge under Section 239 Cr.P.C. and set aside the impugned order.

Contentions of Respondents

The respondents contended that the valuation reports formed part of an alleged conspiratorial scheme to misappropriate funds. They maintained that CW-15 and CW-16 suggested exorbitant valuations relative to actual value and that the petitioner, as a professional, could be linked to the fraud through evidence of active participation or helpful involvement in the conspiracy. They argued that the loan was disbursed in reliance on the valuation and that there existed material, including documentary records, that connected the petitioner to the accused and conspirators, justifying continued proceedings at this stage. They urged that the court should not discharge the petitioner solely on the basis of questionable reports and lack of direct proof of involvement; trial would reveal the truth.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Central Bureau of Investigation v. Narayana Rao	2012 (4) KLT 92 (SC)	Positive	Cited to support the principle that a professional is liable only if actively engaged in defrauding or conspiring, and to emphasise the need for linking the professional with conspirators; aids the discharge at the initial stage absent tangible link.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE B.SUDHEENDRA KUMAR** **THURSDAY ,THE 11TH DAY OF OCTOBER 2018 / 19TH ASWINA, 1940** **Crl.Rev.Pet.No. 926 of 2018** **CRL.M.P 28/14 IN CC 40/11 IN RC 9(A)/2004/CBI/SPE/COCHIN of SPE/CBI COURT, THIRUVANANTHAPURAM** ## **REVISION PETITIONER/PETITIONER/ACCUSED NO.5:** **K.S. RAMAKRISHNA IYER S/O.LATE SUBRAMANIA IYER, AGED 69 YEARS, EARLIER RESIDENT OF KAITHARAM HOUSE, PALLIYIL LANE ,DIWANS ROAD, ERNAKULAM AND NOW RESIDING AT FLAT 4-B, ALDEBARAN, POONKUNNAM, THRISSUR680002.** **BY ADVS. SRI.C.S.MANU MRS.S.SREELAKSHMY SMT.V.SARITHA SRI.C.Y.VIJAY KUMAR SRI.S.K.PREMRAJ** ## **RESPONDENT/RESPONDENT/COMPLAINANT:** **CBI. TIRUVANANTHAPURAM UNIT, MALABAR HOUSE, KESTOM ROAD, T.C.11/304,VELLAYAMBALAM, THIRUVANANTHAPURAM695003, REPRESENTED BY ITS INSPECTOR.** **BY ADV. SRI. SASTHAMANGALAM S. AJITHKUMAR, SPL.P.P. FOR C.B.I.** ## **OTHER PRESENT:** **SRI. SASTHAMANGALAM S AJITHKUMAR- SPL. PP CBI** **THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 11.10.2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** Crl.Rev.Pet.No. 926 of 2018 -2- ## **ORDER** **The revision petitioner is the 5[th] accused in C.C.No.40 of 2011 on the files of the Court of the Special Judge (SPE/CBI), Thiruvananthapuram. The offences alleged are punishable under Sections 120 B and 420 IPC and Section 13(1)(d) read with Section 13 (2) of Prevention of Corruption Act ("the P.C. Act" for short)** **2. The prosecution allegation can be briefly stated as follows:- The revision petitioner entered into a criminal conspiracy with the other accused persons and pursuant to the said criminal conspiracy, the revision petitioner overvalued the mortgaged property having an extent of 54.67 acres of land in South Veeranallur and Pudukudi Villages of Ambasamudram in the name of George Dominic, Elima George and Thomas Martin George at Rs.1,91,34,500/- against** Crl.Rev.Pet.No. 926 of 2018 -3- **the real value of Rs.20,00,000/- (Rupees twenty lakhs only). Thus, the revision petitioner induced the bank to deliver the loan to the second accused and others and thereby the bank sustained a huge loss.** **3. The revision petitioner has filed CMP No.28 of 2014 before the court below praying for discharge under Section 239 of Cr.P.C. The court below as per the order impugned, dismissed the said petition, against which this criminal revision petition has been filed.** **4. Heard.** **5. The case of the prosecution is that the revision petitioner, who was the valuer, valued an extent of 54.67 acres of land at Rs.1,91,34,500/- even though the said property was having only a value of Rs.20,00,000/- and thereby, the revision petitioner induced the bank** Crl.Rev.Pet.No. 926 of 2018 -4- **to sanction loan to the second accused and others.** **6. The learned counsel for the revision petitioner has argued that since the revision petitioner was a person coming within the category of professionals, no prosecution against the revision petitioner on the strength of the report of valuation submitted by him can be sustained. The learned counsel relied on the decision of the Apex Court in Central Bureau of Investigation v. Narayana Rao [2012 (4) KLT 92 (SC)] to butter his argument.** **7. In Narayana Rao (supra), the Apex Court held in paragraph 22 thus:-** **“In the banking sector in particular, rendering of legal opinion for granting of loans has become an important component of an advocate's work. In the law of negligence, professionals such as lawyers, doctors, architects and others are included in the category of persons professing some** Crl.Rev.Pet.No. 926 of 2018 -5- ## **special skills.”** **8. The Apex Court further held that the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank. The Apex Court further held in paragraph 23 thus:-** **“The only assurance which such a professional can give or can be given by implication is that he is possessed of the requisite skill in that branch of profession which he is practising and while undertaking the performance of the task entrusted to him, he would be exercising his skill with reasonable competence. This is what the person approaching the professional can expect. Judged by this standard, a professional may be held liable for negligence on one of the two findings, viz., either he was not possessed of the requisite skill which he professed to have possessed, or, he did not exercise, with reasonable competence in the given case, the skill which he did possess.”** **9. The Apex Court further held that if there is a link or evidence to connect a** Crl.Rev.Pet.No. 926 of 2018 -6- **professional with the other conspirators for causing loss to the institution, undoubtedly, the prosecuting authorities are entitled to proceed under criminal prosecution.”** **10. In this case, admittedly, the loan was advanced prior to the submitting of the valuation report by the petitioner. The prosecution relies on the report submitted by CW15 Ramalingum, which is produced along with the final report as Document No.145, to show that the valuation made by the revision petitioner was exorbitant and such a valuation was made for the purpose of defrauding the bank pursuant to the conspiracy with the other conspirators. This is the stage where this Court cannot look into the probative value of a document. At the same time, the revision petitioner being a professional, before prosecuting the said professional on the strength** Crl.Rev.Pet.No. 926 of 2018 -7- **of an opinion report submitted by him, the court must ensure that there are materials to connect the revision petitioner with the other conspirators.** **11. It is stated in the counter filed by the Central Bureau of Investigation that there was no valuation report at the time of sanction and disbursement of the loan. The said aspect itself makes it clear that the loan was neither sanctioned not disbursed on the basis of the report or relying on the report submitted by the revision petitioner. It is also stated in the counter that the revision petitioner was not an approved valuer of State Bank of Travancore, Kottayam. Since the revision petitioner was not an approved valuer of the Bank concerned, the valuation report submitted by such a person will not be acted upon by the bank for any purpose** Crl.Rev.Pet.No. 926 of 2018 -8- **except under special circumstances. However, no such special circumstance is seen mentioned in the final report. I perused the report dated 20.3.2004 filed by CW15. The said report does not indicate the method by which he valued the property or the reason for reaching the conclusion with regard to the valuation of the property. It is not mentioned in the said report that CW15 fixed the value of the property after taking into consideration of the value of the adjacent properties on the basis of the records available with the Sub Registrar's Office. It is also not stated in the report that the value was fixed on the basis of the valuation fixed by the court in any acquisition proceedings in respect of the properties having similar nature situated in the locality. Document No.141 is the report submitted by the revision petitioner before the** Crl.Rev.Pet.No. 926 of 2018 -9- **bank. Document No.141 also would not show that he also had taken into consideration of the value of the adjacent properties from the documents available with the Sub Registrar's Office. CW16 also valued the properties and submitted a report dated 6.1.2004, which was produced by the investigation officer before the court as Document No.D142 along with the final report. The said report would also show that CW16 did not mention any reason or the yardstick to fix the value of the property. It is true that both CW15 and CW16 had stated that they had enquired about the market value of the property from the neighours. Therefore, the sole basis for filing the said reports by CW15 and CW16 was the enquiry conducted by them with the local people and not on the basis of any reliable material available with the office of the Sub Registrar or** Crl.Rev.Pet.No. 926 of 2018 -10- **the District Collector. There is absolutely no material before the court apart from the report submitted by CW15 and CW16 to connect the revision petitioner with the offences alleged. The reports were admittedly not prepared by CW15 and CW16 on the basis of any authenticated and acceptable method of valuation. Therefore, on the strength of those reports, it would not be just and proper to prosecute the revision petitioner, who is a professional, in the absence of any link connecting the revision petitioner with the conspirators, particularly when the loan was sanctioned and disbursed prior to the filing of the valuation report by the revision petitioner. At the stage under Section 239 Cr.P.C., the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face** Crl.Rev.Pet.No. 926 of 2018 -11- **value disclose the existence of all the ingredients constituting the offences alleged. For this limited purpose, the court will shift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth, even if it is opposed to common sense or the broad probabilities of the case. (See Central Bureau of Investigation v. Narayana Rao [2012 (4) KLT 92 (SC)].** **12. In this case, the reports submitted by CW15 and CW16 were not based on any legally acceptable method and hence it may not be justified to prosecute a professional on the basis of the said reports. So also, the revision petitioner was not the approved valuer of the bank. If at all the valuation conducted by the revision petitioner is found to be wrong, that** Crl.Rev.Pet.No. 926 of 2018 -12- **itself will not make the revision petitioner liable to be prosecuted for the offences alleged in the absence of any tangible material to connect the revision petitioner with the conspirators. Since there is no link or evidence to connect the revision petitioner with the other conspirators for causing loss to the bank, no purpose will be served even if the prosecution against the revision petitioner is permitted to be continued. Since tangible materials are lacking in this case to connect the revision petitioner with the offences alleged, it cannot be said that there is** _**prima facie**_ **case for proceeding against the revision petitioner and hence, this Court considers that the charge against the revision petitioner is groundless. Consequently, the order impugned cannot be sustained.** Crl.Rev.Pet.No. 926 of 2018 -13- **13. In the result, this revision petition stands allowed and the order impugned stands set aside and the revision petitioner stands discharged.** **The observations made by this Court in this order shall not be construed as expression on the merits of the case as the said observations are intended only for the purpose of disposing of this revision petition.** **Sd/-** **B.SUDHEENDRA KUMAR** **JUDGE** Scl.12/10