BENCH AT AURANGABAD v. The State of Maharashtra & Anr.

Mr.Satish M. Godsay, advocate for the applicant. Mr.D.R.Kale, A.P.P. for Respondents. WITH CRIMINAL APPLICATION NO. 391 OF 2012 Hanmant s/o Vishwambar Bhusare Applicant Versus The State of Maharashtra & another Respondents {2} cria38912.odt Mr.V.J.Dixit, Senior Counsel holding for Mr.D.J.Choudhari, advocate for the applicant. Mr.D.R.Kale, A.P.P. for Respondents. CORAM : R.M.BORDE, J. DATE : 25th January, 2012. PER COURT: 1 These are applications presented by the applicants for their release on bail in the event of their arrest in connection with Crime No. 10/2011, registered with City Police Station, Osmanabad on 29.12.2011 for offences punishable under Sections 406,409, 420, 466, 467, 468, 471, 120-B of the Indian Penal Code. 2 The applicants in Criminal Application No.389/2012 are the Directors and office bearers of Osmanabad District Central Co-operative Bank Ltd., whereas, applicant in Criminal Application No.391/2012 is the Deputy Chief General Manager of the said Bank. The applicant in Criminal Application No.390/2012 is the Chairman of Terna Sahakari Sakhar Karkhana Ltd. 3 One Nanasaheb Baliram Jadhavar, lodged a complaint in the Court of Chief Judicial Magistrate, Osmanabad against 7 accused alleging therein commission of offence of misappropriation, criminal breach of trust and falsification of record. It is alleged that the office bearers and the Directors of the Bank who are impleaded as accused nos. 1 to 4 have committed illegalities in advancing short term loan to the {3} cria38912.odt extent of Rs.9 crores in favour of Terna Sahakari Sakhar Karkhana Ltd. Accused no.5 is the Chairman of Terna Sahakari Sakhar Karkhana, Dhoki. The short term loan amount has been sanctioned in favour of Terna Sahakari Sakhar Karkhana Ltd. in spite of said Karkhana suffering loss to the extent of 265.42 crores. The loss for the year 2010-2011 is to the extent of 39.49 crores. It is alleged that the regular Managing Director proceeded on leave during Diwali vacation and in his place, one H.P.Bhusare – accused no.7 was authorised to act as the in- charge General Manager and record in respect of sanctioning of loan was got prepared through him. The accused are alleged to have conspired to misappropriate the funds to the extent of Rs.4.5 crores belonging to Osmanabad District Central Co-operative Bank. 4 On receipt of the complaint, the Chief Judicial Magistrate, in exercise of the powers conferred under Section 156(3) of the Code of Criminal Procedure, directed the police to inquire into the matter and submit report. On receipt of the order, the police have registered crime and the accused-applicants apprehend their arrest in connection with the crime registered at City Police Station, Osmanabad. 5 It is contended by the Counsel appearing for the accused- applicants that the advancement of short term loan in favour of Terna Sahakari Sakhar Karkhana is an act done during conduct of regular banking transactions and after completing all necessary formalities and after scrutinising the proposal, short term loan to the extent of Rs.9 crores has been sanctioned in favour of the Karkhana. It is further contended by the learned Counsel appearing for the accused-applicants that even if the allegation made in the complaint in respect of financial {4} cria38912.odt impropriety or indiscipline is taken to be true, it does not constitute an offence and further does not attract the provisions of Sections 406 and 409 of the Indian Penal Code. There is nothing on record to indicate that the Directors of the Bank have appropriated any gain out of the regular banking transaction. 6 Apart from this aspect, it has been pointed out that consideration of loan proposal and sanctioning of the amount is a matter of regular banking business of the bank and no guilt can be attributed to the Directors. It is pointed out that a Resolution was adopted by the Terna Sahakari Sakhar Karkhana for securing short term advance to the tune of Rs.10 crores from Osmanabad District Central Co-operative Bank in a meeting dated 15.07.2011 and a proposal was forwarded along with the Resolution for securing short term advance on 09.09.2011. It is noted in the proposal that the agriculturists have registered sugar cane in the area of operation of the Karkhana to the extent of 19,889.77 hectares and approximately 11,93,380 Metric tonnes sugar cane would be available for crushing. In addition thereto, cane to the extent of 19000 metric tonnes would be available from outside the area of operation of the Karkhana. Considering the recovery of sugar at 11%, the Karkhana is expected to manufacture sugar to the extent of 11,00,000 quintals. The Karkhana, in order to commission the crushing season, needs funds to the extent of Rs.10 crores and as such, a proposal was forwarded for securing short term advance. The proposal tendered by the Bank was initially considered by the officers of the Bank and it was reported that the Karkhana was in arrears and the financial condition of the Karkhana is not sound and as such, proposal may not be considered. The official noting was placed before the CMA committee {5} cria38912.odt of the Bank which deals with the loan proposals. The Committee opined that after securing proper security from the Karkhana, loan proposal may be considered. It was suggested that mortgage of the landed property belonging to the Karkhana be secured and after observing certain additional conditions, the loan proposal may be considered. The report of the CMA committee along with the loan proposal was placed in the meeting of the Managing Committee of the Karkhana on 24.10.2011 and the Managing Committee passed a Resolution sanctioning advance of Rs.10 crores on certain conditions. A condition was prescribed that the term loan should be repaid up to 28.02.2012. The bank should secure mortgage deed of the landed property belonging to the Karkhana towards security and also observe certain other conditions mentioned in the Resolution. Accordingly, decision in respect of approval of proposal was communicated to the Karkhana. The Karkhana thereafter executed two mortgage deeds for securing sum of Rs.9 crores in respect of agricultural property admeasuring 37 hectares and 53 ares. The value of the property, as per ready reckoner, is Rs.18.52 crores. Apart from securing mortgage of the property, the Directors of the Co-operative Sugar Factory were also required to sign an undertaking taking the personal responsibility in respect of repayment of loan and after securing personal undertaking from each of the Director of the Sugar Factory, loan amount to the extent of Rs.4.5 crores was disbursed in favour of the Karkhana. 7 So far as the allegation that regular Chief General Manager was kept away and in his absence, in order to facilitate sanction of loan, accused no.7 was authorised, it is contended that the regular Chief General Manager – one Mr.P.M.Bhuktar was sent on deputation by the {6} cria38912.odt Maharashtra State Co-operative Bank and his deputation period has come to an end. The regular Chief General Manager expressed his inability to accord consent for his continuation as Chief General Manager and failed to report to the Bank since 28.10.2011. It is because of this reason, the seniormost officer i.e. accused no.7 was given charge of the post of Chief General Manager, temporarily. There does not appear to be any mala fide in accused no.7 acting in his capacity as in-charge Chief General Manager. 8 Considering the fact that the short term loan amount appears to have been sanctioned in favour of Terna Sahakari Sakhar Karkhana after observing proper procedure, there does not appear to be presence of an element of criminality, even assuming that the allegation of the complainant to the effect that it was a financial impropriety in lending advance to the Terna Sahakari Sakhar Karkhana or that there was a financial indiscipline in sanctioning the loan, still that in itself do not attract the provisions of Sections 406 and 409 of the Indian Penal Code. There is nothing in the complaint or nothing has been brought forward to draw an inference that the Directors or office bearers of the bank have gained any advantage while sanctioning the loan in favour of the Karkhana or that they have appropriated the funds belonging to the bank for their personal gain. Considering these circumstances, I am of the opinion that the applicants need to be granted protection from arrest on prescribing certain conditions. 9 Criminal Applications No.389, 390, 391/2012 are, thus, allowed. In the event of their arrest in connection with Crime No. 10/2011, registered at City Police Station, Osmanabad, applicants be {7} cria38912.odt released on bail on their furnishing P.R. Bond of Rs.1,00,000/- (Rs. One lac) each with one surety each for the like amount. The applicants shall report to the City Police Station, Osmanabad, on every Sunday between

10.30 a.m. to 4.30 p.m. till conclusion of investigation and submission of report. Applicants shall co-operate with the police for further investigation of the crime. adb/cria38911 R.M.BORDE JUDGE