The Supreme Court upheld the discharge of the former Chairman and Managing Director (CMD) of Central Bank of India (Accused No. 7) in a case involving financial irregularities linked to Electrotherm (India) Ltd. and various sanctioned credit facilities. Despite allegations of procedural lapses, the Court found that no substantial evidence linked the ex-CMD to criminal conspiracy or misconduct. The Court emphasized that suspicion alone, especially when procedures were followed by multiple bank committees, was not sufficient to warrant framing charges.

1. Case Background: The appeal stems from a charge sheet filed in connection with FIR No. RC 7/E/2014 by CBI (Bank Securities and Fraud Cell, Mumbai). The FIR charged multiple accused, including the former CMD of Central Bank of India, under Sections 420, 468, 471, 120-B of IPC, and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988.

2. Accused and Allegations (Para 1–5):

   • A total of seven accused were charge-sheeted, including M/s Electrotherm (India) Ltd. (Accused No.1).
   • The bank had sanctioned Rs. 247.50 crores in Export Packing Credit (EPC) to the company for a steel plant in Tanzania, but the funds were misused.
   • The company allegedly transferred the funds to other accounts instead of using them for procurement of raw materials, causing a loss of Rs. 436.74 crores to the bank.

3. Submission of CBI's Arguments (Para 6):

   • The CBI, represented by the Additional Solicitor General (ASG), argued that the High Court erred in discharging the ex-CMD by conducting a "mini-trial" at the stage of framing charges.
   • The ASG emphasized that mere suspicion, based on the alleged haste in sanctioning credit facilities, was sufficient for charges and noted that the due process was bypassed.

4. Respondent's Defense (Para 7):

   • The respondent’s counsel argued that even if all materials from the charge sheet were taken at face value, no case was made out against the ex-CMD. The High Court was correct in discharging him, as there was no evidence of conspiracy or misconduct on his part.

5. Analysis of Evidence (Para 8–13):

   • The Court reviewed the charge sheet and witness statements. The main allegation against the ex-CMD was his role in approving the EPC facility without following the proper recommendation process.
   • The Loan Advisory Committee and Management Committee had recommended and approved the proposal before it reached the ex-CMD.
   • The Court found no evidence of the ex-CMD's involvement in the fraudulent transactions involving the Standby Letter of Credit (SBLC), nor any indication that he met with the company before sanctioning the facilities.

6. Findings and Conclusion (Para 14–17):

   • The Court noted that while there was suspicion regarding the speed with which the proposal was sanctioned, mere suspicion was insufficient to frame a charge.
   • The decision to approve the credit facilities had passed through the necessary committees, and the ex-CMD's role was limited to signing the memorandum.
   • The Court found no evidence of any criminal conspiracy or misconduct by the ex-CMD and upheld the High Court's decision to discharge him.

Acts and Sections Discussed:

• Indian Penal Code (IPC):
  • Section 420: Cheating and dishonestly inducing delivery of property.
  • Section 468: Forgery for the purpose of cheating.
  • Section 471: Using as genuine a forged document.
  • Section 120-B: Criminal conspiracy.
• Prevention of Corruption Act, 1988:
  • Section 13(1)(d): Criminal misconduct by a public servant.
  • Section 13(2): Punishment for criminal misconduct.

Ratio Decidendi:

• The Court held that mere suspicion or procedural lapses do not justify framing charges of conspiracy or misconduct unless substantive evidence links the accused to the fraudulent act.
• The role of the ex-CMD was confined to signing the memorandum after its approval by other bank officials, with no direct involvement in the fraudulent activities.

Subjects:

Criminal Conspiracy, Cheating, Bank Fraud, Prevention of Corruption Act.

Bank Fraud, Criminal Conspiracy, Central Bank of India, Electrotherm, Prevention of Corruption Act, Loan Misuse, CBI Investigation, Supreme Court Judgment, EPC Facility, Discharge of Accused.