Case Note & Summary
The petitioner, Kishore Deshpande, was the General Manager of CKP Co-operative Bank Ltd. and was arraigned as accused No.5 in FIR No. RC 8/E/2010 registered by the CBI on the complaint of the Reserve Bank of India. The FIR alleged that the petitioner, along with other accused (including the bank's Assistant General Manager, a broker, a chartered accountant, and trustees of charitable trusts), conspired to violate RBI guidelines and circulars dated 19/04/2001 and 20/04/2002 by investing huge amounts of the bank's funds in Non-SLR (Statutory Liquidity Ratio) securities through a broker, accused No.3, which resulted in substantial loss to the bank. The offences alleged were under Sections 120-B (criminal conspiracy), 409 (criminal breach of trust by a public servant or banker), and 420 (cheating) of the Indian Penal Code, 1860. The petitioner filed an application for discharge under Section 239 of the Code of Criminal Procedure, 1973 before the learned Additional Chief Metropolitan Magistrate, 3rd Court, Esplanade, Mumbai, which was rejected on 01/09/2016. The petitioner then filed Criminal Revision Application No. 1212 of 2016 before the Special Judge for CBI/Additional Sessions Judge, Gr. Bombay, which was dismissed on 04/05/2017 along with similar revision applications by other accused. Aggrieved, the petitioner filed the present criminal writ petition under Article 227 of the Constitution of India. The petitioner argued that he was merely a salaried employee acting on the directions of the Board of Directors and that there was no material to show his involvement in the conspiracy or that he had any mens rea. He contended that the investments were made in accordance with the bank's policy and that the loss, if any, was due to market fluctuations. The respondents, the State of Maharashtra and the CBI, opposed the petition, submitting that the petitioner, as General Manager, was responsible for the day-to-day operations and had knowingly violated RBI guidelines by investing in non-SLR securities through a broker, which was prohibited. They argued that the material on record, including statements of witnesses and documents, prima facie showed the petitioner's active participation in the conspiracy. The court, after hearing both sides, held that at the stage of considering a discharge application under Section 239 CrPC, the court is not required to hold a roving enquiry or weigh the evidence meticulously. The test is whether the material on record, if unrebutted, would lead to a conviction. Applying this test, the court found that there was sufficient material to indicate that the petitioner, as General Manager, was aware of the RBI guidelines and yet participated in the decision to invest through the broker, thereby prima facie committing the offences alleged. The court noted that the petitioner's role was not merely ministerial but involved active decision-making. The court also observed that the revisional court had correctly appreciated the evidence and found no ground to interfere. Consequently, the court dismissed the writ petition, upholding the orders of the courts below and directing that the trial proceed. The court, however, clarified that the observations made were only for the purpose of deciding the discharge application and would not influence the trial court's final decision on merits.
Headnote
A) Criminal Procedure - Discharge under Section 239 CrPC - Prima Facie Case - The court must consider whether the material on record, if unrebutted, would lead to conviction; a roving enquiry is not permissible at the stage of framing of charge - Held that the trial court and revisional court correctly found a prima facie case against the petitioner, who as General Manager of the bank allegedly violated RBI guidelines and caused loss to the bank (Paras 1-22). B) Criminal Conspiracy - Section 120-B IPC - Ingredients - To establish conspiracy, it is sufficient if there is an agreement to commit an illegal act; direct evidence is not necessary and circumstantial evidence may suffice - Held that the allegations of conspiracy among the accused, including the petitioner, to invest in non-SLR securities through a broker in violation of RBI circulars, prima facie constitute criminal conspiracy (Paras 3-22). C) Criminal Breach of Trust - Section 409 IPC - Entrustment and Dishonest Misappropriation - The petitioner, being a public servant or banker, was entrusted with property and allegedly dishonestly misappropriated funds by making unauthorized investments - Held that the material on record shows prima facie entrustment and misappropriation, warranting trial (Paras 3-22). D) Cheating - Section 420 IPC - Deception and Dishonest Inducement - The prosecution alleged that the petitioner and other accused deceived the bank by investing in non-SLR securities in violation of RBI guidelines, causing wrongful loss - Held that the ingredients of cheating are prima facie made out (Paras 3-22).
Issue of Consideration
Whether the petitioner is entitled to discharge under Section 239 of the Code of Criminal Procedure, 1973 in a case involving offences under Sections 120-B, 409, and 420 of the Indian Penal Code, 1860.
Final Decision
The writ petition is dismissed. The impugned order dated 04/05/2017 passed by the Special Judge for CBI and the order dated 01/09/2016 passed by the Additional Chief Metropolitan Magistrate are confirmed. The trial shall proceed in accordance with law.
Law Points
- Discharge under Section 239 CrPC
- Prima facie case
- Standard of proof at framing of charge
- Criminal conspiracy
- Criminal breach of trust
- Cheating
