V S MURTHY Vs. STATE

JUDGEMENT

(1.) These are three revision petitions arising out of the same impugned orders dated 7.5.1999 and 11.8.1999 whereby the three petitioners were charged under various sections of Indian Penal Code (in short 'IPC') and the Prevention of Corruption Act. The story of the prosecution is as under: The accused No. 4, V.S. Murthy (petitioner in Crl. Rev. No. 432/99) at the relevant time was the Director (Finance), Bharat Dynamics Limited (in short 'BDL') and was the Chairman of the Investment Committee of the BDL. During February and March, 1994, the BDL, Hyderabad had surplus funds to the extent of Rs. 100 crores which could be invested. This was disclosed by A-4 to Dr. R.S.A. Dhani (A-5), petitioner in Crl. Revision Petition No. 434/99), who in turn conveyed the same to accused Mohan Gupta (A-6), petitioner in Crl. Revision Petition No. 52/2000, who was a finance broker. Around that time, John Daniel (A-3), a NRI from Kuwait was in New Delhi and was contemplating to start an air taxi service in the name and style of Wens Airways Corporation. Y.K. Sharma, Accused No. 2, came in contact with John Daniel (A-3), who wanted the help of A-2 for opening a bank account in some South Delhi Bank. A-2 used his acquaintance with Ranbir Sharma (A-l), who was the Deputy Manager of State Bank of India (in short 'SBI'), Green Park, New Delhi. A-l introduced A-3 to the Chief Manager, SBI, Green Park and a current account No. 965 was opened in the SBI, Green park on 11.2.1994 in the name and style of M/s. Jaydees International with the introduction of A-2. A-2 at the instance of A-3 contacted A-6 for arranging funds for the project of Air Taxi service. On 3.3.1994, A-6 informed A-2 that BDL, Hyderabad had surplus funds amounting to Rs. 100 crores and that they were interested in investing the same with some nationalized bank on interest ranging from 14% to 15%. From the residence of A-6, A-2 talked with A-5 and thereafter A-6 and A-2 discussed plan with A-3 at Hotel Taj. Pradeep Goel, a close associate of A-2, was sent to the residence of A-6 by A-3 and A-2 to explain the mode by which interest of 14.5% on deposits could be provided to BDL besides a service charge of 2%. Pradeep Goel met Mohan Gupta and explained the proposal. Mohan Gupta, A-6, in turn passed on the information to A-5 and a couple of days later A-6 with Pradeep Goel called on A-5 in his office at Maya Puri and explained the proposal and the whole plan was passed on to A-4, V.S. Murthy on telephone. Pradeep Goel thereafter visited Hyderabed for seeking the deposit of surplus funds and inter alia explained to V.S. Murthy, A-4, that bank would pay interest @ 14.5% by issuing two FDRs for one year period and that one of the FDR would be for the amount deposited @ 10% for the period of one year and another FDR of the maturity value to the extent of 4.5% interest on the actual deposit to be provided by BDL, Hyderabad. However, although A-4 was satisfied at the proposal the General Manager (Finance) and Deputy General Manager (Finance) of BDL were not satisfied with the proposition and inter alia expressed the view that such transaction would be against the RBI guidelines and could be questioned by the audit and would be bad in accounting. Nonetheless, A- 4 told Pradeep Goel that after taking approval of the competent authority he (A-4) would inform A-5, Dr. RSA Dhani. In pursuance to the criminal conspiracy to provide the surplus funds of BDL, Hyderabad to A-3, A-4 put the matter of investment of surplus funds before the Investment Committee of BDL and sought the advice from V.K. Bhandarkar, Additional Financial Advisor and Joint Secretary, Ministry of Defence vide letter dated 6.4.1994. Till then A-4 had not even approached the SBI, Green Park, New Delhi nor did the bank offer to give any undertaking. A-4 informed in his letter that BDL approached SBI, Green Park to deposit a sum of Rs. 100 crores and bank agreed to give 14.5% by issuing two FDRs as well as an undertaking assuring that the funds would not be deployed under the Port-folio Management Scheme (PMS) and payment of interest @ 14.5% would not contravene RBI guidelines. In order to convince Shri V.K. Bhandarkar, Additional Financial Advisor of BDL, on phone he falsely informed that the SBI had a number of schemes whereby the bank could pay higher interest than what was stipulated by the RBI, although there was no such scheme in existence. Mr. Bhandarkar in his letter dated 12.4.1999 expressed his concern and doubt about the proposed arrangement and wanted a more clear statement in order to ensure that the funds were not deployed under the PMS and payment of interest would not contravene RBI guidelines.

(2.) It is further alleged that on 15.4.1994, V.S. Murthy visited New Delhi and called on P.M. Nair, Joint Secretary, Department of Defence Production and Supplies, who was Chairman of Staff and Finance Sub-Committee of the Board of Directors of BDL and requested for passing a resolution for immediate deployment of surplus funds with SBI, Green Park, New Delhi on the pretext that otherwise BDL would lose heavy interest. P.M. Nair called on the Additional Advisor, Somi Tandon, Co-Chairman of the Committee, and the matter was taken up for discussion without any agenda note prepared by A-4. A-4 deliberately refrained from apprising both these persons about the procedure followed by BDL in respect of deployment of surplus funds. Nor did he tell them about the delegation of powers to Investment Committee which has been formed for deposit of surplus funds of BDL with nationalized banks, etc. By concealing such facts he obtained a resolution dated 15.4.1994 from the Committee for deployment of surplus funds with the SBI emphasizing the same conditions as stipulated by Shri V.K. Bhandarkar in his letter dated 12.4.1994.

(3.) V.S. Murthy instead of taking steps to ensure the implementation of instructions of the Staff and Finance Sub-Committee informed A-5 about the approval taken from the Government and directed him to depute bank officials for collection of cheques. A-5 informed A-3 as well as A-l and A-2 so that the funds could be collected from Hyderbad. At the instance of A-l, A-2 prepared a proforma undertaking to be given by SBI and faxed the same to V.S. Murthy, A-4, on 20.4.1994 stating therein that the funds would not be deployed under the PMS and that the payment of interest @ 14.5% would be within the RBI guidelines. A-3 sent A-l and A-2 to Hyderabad on 3.5.1994 for collection of cheques in question and both of them called on V.S. Murthy. The proforma undertaking to be given by the Bank was finalized by A-4 in consultation with A-l and A-2. The amount to be deposited was reduced to Rs. 60 crores as on 3.5.1994 on 1 y that much amount was available for investment. A-4 also prepared a letter to be given by the BDL to the bank for converting the funds into fixed deposits receipts @ 14.% for one year. The General Manager (Finance) and Deputy General Manager (Finance) advised A-4 about the absence of any authority letter with A-l or any identification. A-4, however, went ahead with the investment and after obtaining the undertaking he handed over a post dated cheque No. 586092 dated 6.5.1994 for Rs. 60 crores drawn on Andhra Bank Connaught Place, New Delhi to accused No. 1, Y.K. Sharma along with covering letter addressed to Manager, Green Park, New Delhi and obtained the signatures of Y.K. Sharma on office copy of cheque as well as on cheque issue voucher in token of his having received the cheque. At the instance of A-l, the revised undertaking was prepared to add the words 'CA-965' and the words 'as per the RBI rules as on date'. Accused No. 2, Y.K. Sharma, also added the words 'Both STDRs' on the revised undertakings. Similarly the draft letter addressed to Manager, SBI, Green Park was corrected by A-l by adding the words 'to the credit of CA-965' and issue of STDRs for a period of one year with maturity value of Rs._____as per the existing RBI rules as on date. However, these words were subsequently scored out by A-4 before preparing the fair copy. On their return A-l and A-2 came to A-3 and the covering letter given by BDL was replaced with a letter written by A-3 on behalf of M/s. Jaydees International for crediting the proceeds of the cheque to CA-965 of his firm. However, R.K. Arora, Chief Manager of SBI, Green Park refused to deposit the cheque in the account of M/s. Jaydees International in the absence of clear title in favour of that firm. Thereafter A-3 and A-2 again visited Hyderabad on 5.5.1994 and obtained the words 'FDR A/c 965' on the aforesaid cheque despite the fact that on earlier occasion at the time of drafting the undertaking of the bank he had scored out the words CA-965. V.S. Murthy also signed FDR account opening form as well as term deposit pay-in-slip against the suggestion of Deputy General Manager (Finance). The cheque was returned to Y.K. Sharma with the aforesaid amendment. On receipt of the cheque, R.B. Sharma, A-l, prepared a clearing schedule for presenting the cheque in high value clearing and dishonestly and fraudulently mentioned CA-965 in the column Account No. although he was aware that the cheque was in favour of SBI, Green Park and that no FDR Account No. 965 had been opened in favour of BDL, Hyderabad. The cheque was eventually passed and the amount was credited to the account of M/s. Jaydees International. On the basis of the letter given by John Danial, A-3. R.B. Sharma, A-1, got the funds converted into three short term deposit receipts of Rs. 20 crores each in favour of M/s. Jaydees International. At the same time, against the debit to the account of M/s. Jaydees International STDR No. 492506 for Rs. 2,67,80,000/- was prepared in the name of BDL. This created a doubt in the mind of Mr. Rakesh Rastogi, an employee of SBI, and he informed the Regional Manager of the deposit and sanction of the demand loan for a sum of Rs. 15 crores in favour of M/s. Jaydees International. Mr. Rakesh Rastogi also advised not to allow any cash withdrawal without proper sanction of the competent authority. A-l and A-3 approached the bank on 7.5.1994 for withdrawal of 1.25 crores and when the withdrawal was not allowed by Rakesh Rastogi, they approached the Regional Manager. However, the fraud was detected when John Daniel could not explain the source as well as the purpose for which the BDL, Hyderabad had made the funds available to him.