BOGHA CHINI MILLS Vs. STATE

JUDGEMENT

(1.) On a First Information Report ('FIR' for short) lodged by an Inspector of Police attached to the Central Bureau of Investigation ('CBI' for short), Special Police Establishment, Calcutta Branch on May 23, 1990, a case under sections 120B and 420 of the Indian Penal Code and section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988 ('Act' for short) has been registered against Sri K. L. Ramanathan, General Manager (Administration), Indian Bank Head Office, Madras (hereinafter referred to as 'A-1'), Sri T. Jothipandian, Deputy General Manager, Indian Bank Zonal Office, Calcutta ('A-2' for short), the petitioner ('A-3' for short), M/s. Hemraj Mahavir Prosad ('A-4' for short) and others and investigation taken up. Aggrieved thereby the petitioner filed an application under sections 401 and 482 of the Code of Criminal Procedure praying for quashing of the 'investigation and obtained the present Rule.

(2.) To appreciate the points raised by Mr. Bhola Nath Sen, the learned Advocate appearing in support of the Rule, the contents of the FIR are required to be stated. It has been alleged therein that during 1989, A-1 and A-2 entered into a criminal conspiracy with A-3, A-4 and others to cheat the Indian Bank and in furtherance of their such criminal intent, A-1 and A-2 by wilful abuse of their official position arranged to issue at Calcutta to A-3 a demand draft for Rs. 4 crores towards Term Loan deliberately violating the mandatory guidelines issued by Reserve Bank of India ('RBI' for short) and that A-3 dishonestly siphoned off the money by transferring Rs. 2 crores and odd in favour of A.C.C. and withdrawing Rs. 1.90 crores in cash in November, 1989 instead of utilising the money for the purpose for which the said Term Loan was granted and thus pecuniary advantage was obtained for the said A-3 against public interest. The detail of the above accusation, as disclosed in the FIR, are as under.

(3.) On September 1, 1989, A-3 which belongs to the holding Company A-4, applied to the Indian Bank, Strand Road Branch, Calcutta for a Term Loan/DPG (Deferred Payment Guarantee) Package of Rs. 680 Lakhs towards modernisation and expansion programme of their Chini Mills. As per the guidelines issued by RBI, vise its Circular dated June 29, 1988 to all scheduled Commercial Banks, projects exceeding Rs. 3 crores were required to be appraised and financed by Term Lending Institutions and funding by Banks in projects exceeding Rs. 3 crores without participation of Term Loan Lending Institutions was not permssible. The request of A-3 for the above Loan was forwarded by the Branch to its Head Office and it was mentioned by the Branch that A-3's repayment to IRBI (Industrial Reconstruction Bank of India) was irregular and overdue. It has next been stated in the FIR that despite bad track record and unsatisfactory/irregular operations in the accounts of A-3 and its allied! companies (on the basis of which IRBI had already rejected the loan proposal of A-3 and which fact was known to A-l and A-2), the Indian Bank sanctioned in September, 1989 Term Loan of Rs. 4 crores and DPG of Rs. 2.8 crores in favour of A-3. When the matter was referred to RBI, its Industrial and Export Credit Department advised Indian Bank not to go in for the said funding of A-3 without proper appraisal and without participation of Term Loan Lending Institution. The above advice of the RBI against the said funding of A-3 was received in the Office of A-2 on 7.11.89 and it was also known to A-l. Despite such refusal of RBI for grant. of loan facilities to A-3 by Indian Bank and withholding by IRBI of issuance of No Objection Certificate for such funding of A-3, which was received by the Strand Road Branch of Indian Bank, Calcutta on 11.11.89, the Branch issued a demand draft in favour of A-3 on the same day for Rs. 4 crores on Indian Bank, Service Branch, Bombay towards, Term Loan. It has lastly been stated in the FIR, that though as per terms and conditions of the Term Loan the facilities sanctioned were to be utilised only for the purpose for which they were sanctioned, all payments were to be made direct to the suppliers of the machineries/materials and disbursement of Term Loan was to be made only in stages after obtaining satisfactory report of completion of the earlier stages and/or against Industrial Development Officer's report, a sum of Rs. 2 crores and odd was transferred in favour of Associated Cement Company by A-3 and another sum of Rs. 1.90 crores was withdrawn by it, in cash in November, 1989 and thus the loan amount was misutilised.