ASHOK KUMAR GUPTA v. CENTRAL BUREAU OF INVESTIGATION Advocates who appeared in this case

Judgment

1. The present petition under Section 482 of the Code of Criminal Procedure, 1973 (‘CrPC’) is filed seeking quashing of RC No. BD121016E0001 registered under Sections 120B/420/467/468/471 of Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019 the Indian Penal Code, 1860 (‘IPC’) read with Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988 (‘PC Act’), and the consequential proceedings arising therefrom, pending before the learned Additional Sessions Judge, Tis Hazari Courts, New Delhi. 2. The Petitioner, superannuated honorably as an Executive Director of Canara Bank on 31.10.2014. The prosecution stems from default on repayment of loan sanctioned to M/s Occasion Silver Pvt. Ltd. (OSPL) in the year 2013. It is stated that the petitioner was not named in the original RC and has been implicated based on his role in the ED-CAC (Executive Director-Credit Approval Committee) which sanctioned the proposal for loan to OSPL. Brief Facts

3. Succinctly stated, on 04.09.2013, OSPL, engaged in the wholesale and retail trading of silver jewellery and articles, gold, diamond and imitation jewellery, crockery, and gift items, submitted a proposal to Canara Bank, Kamla Nagar branch, for a working capital facility of ₹60 crores. Subsequently, on 14.09.2013, the branch forwarded the new business proposal to the Circle Office, Delhi, for appraisal. The Credit Committee at the Circle Office on evaluating the proposal on 18.09.2013, recommended it to the New Business Approval Committee (NBAC) at the Head Office, Bangalore. 4. On 26.09.2013, the NBAC accorded in-principle approval in the form of an ‘Expression of Interest’ for the proposed limit of ₹60 Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019 crores, with sub-limit for book debts of ₹30 crore, subject to standard sanction conditions. This approval was communicated back to the Circle Office on 30.09.2013, which then conveyed it to the Kamla Nagar Branch. Accordingly, the Branch submitted a regular proposal for sanction of the same working capital limit, including a sub-limit of ₹30 crores towards book debts. 5. On 19.10.2013, the General Manager–Credit Approval Committee (GM-CAC), Circle Office, recommended the revised proposal to the Corporate Credit Group (CCG) at the Head Office. The CCG, comprising senior General Managers, considered the same in a meeting held on 16.11.2013, and recommended it for final sanction by the Executive Director–Credit Approval Committee (ED-CAC). This proposal was one among 30 credit proposals across various regions, including Delhi, being considered. 6. On 21.11.2013, the ED-CAC, including the petitioner who was then serving as Executive Director, convened to deliberate on the proposal. The petitioner’s secretariat, after internal review, had noted that the proposal ought to be declined in view of the high volatility of the silver market and inadequate collateral cover. Nevertheless, following discussion and insistence on risk mitigation, the Committee sanctioned the proposal, but imposed stricter safeguards than earlier recommended, which are: (i) 100% additional collateral security coverage of sufficient value, (ii) mandatory physical verification and satisfaction of property value by the Circle Head, and (iii) deviation from guidance value to be reported to the Board. These conditions Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019 were formally communicated by Head Office to the Circle Office on

27.11.2013. 7. On 05.12.2013, the Kamla Nagar Branch issued a sanction letter to OSPL as approved by the Executive-Credit Approval Committee. Subsequently, on 13.12.2013, the Branch, through a written letter to the Circle Office, expressed urgency and communicated that the party was in dire need of funds for procurement of stock, and that the working capital limit was being released that day—without complying with the ED-CAC’s stipulated pre-conditions. 8. In due course, significant deviations from the sanctioned terms were noted. On 07.07.2014, the Long Form Audit Report (‘LFAR’) by statutory auditors flagged non-compliance of key conditions. Further, on 25.08.2014, the Corporate Credit Group at Head Office reiterated these compliance failures in a letter to the Circle Office, pointing out that the security verification and enhanced collateral conditions had not been adhered to. 9. Based on these findings, a formal written complaint was

submitted on 16.11.2015 by Shri A.K. Das, DGM (HRM Section), Circle Office, Delhi, alleging that OSPL had fraudulently availed ₹68 crores (including interest) by misrepresenting stock and book debts, and had diverted the funds. The complaint also made reference to failure of oversight by certain bank officials. On 27.01.2016, the CBI registered RC No. BD121016E0001 Sections 120B/420/467/468/471 of the IPC read with Sections 13(2) and 13(1)(d) of the PC Act. During the investigation, statements of key Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019 bank officials were recorded on 14.07.2016 and 15.07.2016, including that of the AGM (Vigilance), who categorically confirmed that the ED-CAC’s mandatory pre-disbursement conditions had not been implemented. 10. On 19.03.2018, the CBI filed its chargesheet against nine accused persons, including for the first time the petitioner (arrayed as Accused No. 5). It was alleged against the petitioner that he participated in the ED-CAC meeting of 21.11.2013 and approved the proposal, allegedly overlooking NBAC’s caution. 11. Cognizance of the chargesheet was taken by the learned Special Judge, Tis Hazari Courts, Delhi on 24.05.2018. The petitioner filed an application under Section 227 of the CrPC seeking discharge, which remains pending, and the present petition was filed. Submissions by the learned senior counsel for the Petitioner

12. The learned senior counsel for the petitioner, Mr. Vikas Pahwa, submitted that the entire criminal proceedings initiated against the petitioner in RC No. BD121016E0001 are a gross abuse of the process of law and liable to be quashed in exercise of the inherent powers of this Hon’ble Court under Section 482 of the CrPC. It was contended that even if the allegations made in the chargesheet were taken at face value and accepted in their entirety, they did not disclose the commission of any offence much less an offence under Section 13(1)(d) of the PC Act. Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019

13. At the outset, it was submitted that the petitioner was a highly respected banking professional who had retired as Executive Director from Canara Bank on 31.10.2014 after an unblemished service of over four decades. Post his superannuation, and following the mandatory cooling-off period under Ministry of Finance guidelines, he had served in an advisory capacity with an MNC. The petitioner, it was urged, had always discharged his duties in accordance with law and institutional interest. 14. He submitted that the genesis of the case lay in the credit facility sanctioned to OSPL, and the petitioner’s name had surfaced only because he had been one of the nine members of the Executive Director–Credit Approval Committee (ED-CAC) that met on

21.11.2013 to consider a proposal previously cleared by several layers of the bank’s internal committees, including the New Business Approval Committee (NBAC). It was argued that even in that meeting, the petitioner had, in fact, dissented initially and had recommended that the proposal be declined owing to high market volatility and insufficient collateral. However, upon detailed deliberation, the Committee had approved the proposal subject to stringent additional safeguards. These facts were fully documented in the minutes of the ED-CAC meeting as well as in the summary note prepared by the petitioner’s secretariat. 15. It was emphasized that the petitioner had no role to play in the subsequent disbursement of funds, which was done by the Kamla Nagar Branch on 13.12.2013 without complying with the mandatory Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019 pre-disbursement conditions imposed by the ED-CAC. The petitioner neither approved the disbursal nor had any knowledge of the same. In fact, the lapse in compliance was later confirmed by the statutory auditors in their Long Form Audit Report and by senior bank officials, including the Assistant General Manager, Vigilance, in statements recorded by the CBI during investigation. 16. The learned senior counsel argued that the chargesheet, which was filed on 19.03.2018, had not attributed any overt act of fraud, collusion, or corrupt intent to the petitioner. There was no allegation of quid pro quo, pecuniary gain, or gratification. The only allegation was that he participated in a committee meeting where the loan was approved albeit on conditions that were stricter than what had been recommended earlier by NBAC and GM-CAC. 17. It was contended that criminal misconduct under Section 13(1)(d) of the PC Act, particularly after its amendment in 2018, required a demonstrable element of mens rea and abuse of official position to obtain undue advantage for oneself or others. In the present case, the petitioner had, if anything, attempted to mitigate risk to the bank and enhance safeguards. The learned counsel relied on the judgment of the Hon’ble Apex Court in C.K. Jaffer Sharief v. State (CBI) : (2013) 1 SCC 205, where it was held that “dishonest intention is the gist of the offence under Section 13(1)(d) of the PC Act” and mere procedural lapses or errors of judgment could not form the basis of criminal prosecution under the PC Act. Signature Not Verified Signed By:HARMINDER KAUR Signing Date:20.08.2025 11:49:17 CRL.M.C. 194/2019

18. The learned counsel further submitted that with the enactment of the Prevention of Corruption (Amendment) Act, 2018, sub-clause (iii) of Section 13(1)(d)—under which the petitioner had been charged stood repealed. In the absence of any allegation of illegal gratification or quid pro quo, the provision was no longer attracted. It was urged that the benefit of a beneficial amendment decriminalizing a particular act must be extended to pending proceedings as well. 19. The learned senior counsel further placed reliance on the decision in Manoj Kumar v. CBI : 2023 SCC OnLine SC 139, wherein the Hon’ble Apex Court reiterated that unless there was a clear linkage between the accused’s actions and wrongful gain or loss, continuation of proceedings under the PC Act would amount to misuse of criminal law. The Hon’ble Apex Court had cautioned that criminal prosecution should not be permitted to become a tool for penalizing honest decision-making in high-level committees. 20. Lastly, the learned counsel inter alia referred to the well-settled principles laid down in State of Haryana v. Bhajan Lal : 1992 Supp (1) SCC 335, to argue that where the allegations did not disclose any offence or were manifestly attended with mala fide, interference under Section 482 CrPC was warranted to prevent miscarriage of justice. 21. The learned counsel for the petitioner has relied upon the following judgments to buttress his contentions: