SRI. YALAMURI NAGENDRA PRASAD v. STATE BY INSPECTOR OF POLICE, C.B.I, A.C.B., BANGALORE

CORAM: HON'BLE MR JUSTICE V SRISHANANDA - 3 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 ORAL JUDGMENT Heard Sri. H.Mujtaba and Sri M.S.Mohan, learned counsels for the appellants and Sri P.Prasanna Kumar, learned counsel for the respondent / CBI.

#2. These two appeals are filed by accused No.3 and accused No.1 respectively, challenging the order of conviction passed Spl.C.C.No.225/2009

19.04.2011 by the XXXII Additional City Civil and Sessions Judge and Special Judge for CBI Cases, (CCH-34), Bangalore, whereby the appellants have been convicted and sentenced as under: "i) The accused Nos.1 to 3 are convicted and sentenced to undergo simple imprisonment for one year for the offence punishable U/s 120-B of IPC. ii) the accused Nos.1 to 3 are convicted and sentenced to undergo simple imprisonment for one year for the offence punishable U/s 420 IPC and shall pay fine of Rs.5,000/- each and in default of fine, they shall undergo simple imprisonment for 6 months. iii) The accused Nos.1 to 3 are convicted and sentenced to undergo simple imprisonment for one year for the offence punishable under Section 468 of IPC and shall pay - 4 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 fine of Rs.5,000/- each and in default of fine, they shall undergo simple imprisonment for 6 months. iv) The accused Nos.1 to 3 are convicted and sentenced to undergo simple imprisonment for one year for the offence punishable under Section 471 IPC and shall pay fine of Rs.5,000/- each and in default of fine, they shall undergo simple imprisonment for 6 months. v) The accused No.1 is convicted and sentenced to undergo simple imprisonment for one year for the offence punishable under Section 409 of IPC and shall pay fine of Rs.5,000/- each and in default of fine, shall undergo simple imprisonment for 6 months. vi) The accused No.1 is convicted and sentenced to undergo simple imprisonment for one year for the offence punishable under Section 13(1)(d) r/w 13(2) of P.C.Act and shall pay fine of Rs.5,000/- each and in default of fine, shall undergo simple imprisonment for 6 months. It is further ordered that the substantive sentences shall run concurrently. The bail bonds of the accused Nos.1 to 3 are stand cancelled."

#3. Brief facts of the case which are utmost necessary for disposal of the appeal are as under:

3.1 Appellants including other accused persons were charge sheeted for the offences punishable under Sections - 5 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 120-B, 420, 468, 471, 419, 409 of Indian Penal Code (for short, 'IPC') and Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act (for short, 'P.C.Act').

3.2 The material facts as per the charge sheet, would reveal that all the accused persons have conspired together in the illegal acts like forging the documents, make use of forged documents as genuine with an intention to cheat the Life Insurance Corporation of India (for short, 'the LIC') in fraudulently encashing nine cheques which were actually issued in favour of the policy holders as against surrender value. For the sake of convenience, 18 policies under which the fraud has taken place is tabulated hereunder: Sl. No Policy No. & date of application Surren (in Rs..) Cheque No. / Date Beneficiary A/c & Name of the Bank / Financial Institution Name of the A/c holder Name of the introducer 2 3 4 5 6 7 1 612121700 11,575 20514 9.10.06 SB A/c No. M/s LIC of India, Madugiri Branch Shankarappa --- 2 361018675 11,571 081465 24.7.06 SB A/c No.1531, M/s Pragathi Credit Co- Operative Ltd., Madugiri GC Lakshminarayan a A2 H. Hanumanthara 4 5 6 7 8 9 - 6 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 3 361161865 5,582 81496 17.8.06 SB A/c No.2770, M/s Madhu Credit Co- Operative Society, Madugiri Branch, Dist., Tumkur. Shri. G.C. Lakshminarayan a S/o Shri Chandregowda, R/o V.V. Halli Madhugiri colony, Shri P.Ranganath, LIC, Madhugiri. 361038366 1,231 361071814 1,050 361079562 1,296 20509 6.10.06 SB A/c No. M/s Madhu Credit Co-Operative Society, Madugiri Branch, Dist, Tumkur. Shri. G. Lakshminarayan a PLD Bank Madhugiri. Shri P. Ranganath, LIC, Madhugiri. 361037507 1,599 361161946 2,262 20081 11.9.06 SB A/c No.2960, M/s Madhu Credit Co-Op. Society, Madugiri, Dist, Branch Tumkur. 610978821 2,567 10 610978947 4,763 11 361071681 9,161 12 361162005 5,491 81485 7.8.06 13 360587535 6,732 14 361037508 4,375 15 361111847 4,284 16 361162523 4,711 17 614151728 46,910 SB A/c No.1531, M/s Pragathi Credit Co- Operative Society, Madugiri Branch, Dist, Tumkur 81491 14.8.06 81431 29.6.06. SB A/c No.1497, M/s Pragathi Credit Co-Op. Society Ltd., Madugiri Branch, Dist, Tumkur 18 612443860 10,098 81462 24.7.06 SB A/c No.1516, M/s Pragathi Credit Co-Op. Society Ltd., Madugiri Branch, Dist, Tumkur Shri H. Hanumanthara ya, LIC, Retd., Madhugiri Shri. G. C. Lakshminarayan a S/o Shri Lakshminarayan a, R/o Gudibande Taluk, Gouribidanur Shri. Shri. Shri. Madanappa S/o Shri Veeramarappa, R/o Mallanayakanah alli, Taluk Madugiri. Smt. Sarojamma, R/o Mallanayakanah alli, Taluk Madhugiri A.2 Sri. H. Hanumanthara A.2 Sri. H. Hanumanthara

3.3. Pursuant to the criminal conspiracy entered into by all the accused persons, the policy holders who were the actual beneficiaries under the above referred policies, - 7 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 did not get the proceeds of the policies, but those policies were surrendered by forging the documents and whereby all the accused persons said to have shared the proceeds of the surrender value of the policies.

#4. Necessary documentary evidences were secured by the investigating agency after registering the case and after consulting the real policy holders and confirming that they did not receive any benefits of the surrendered policies, CBI filed the charge sheet against the accused persons.

#5. After securing presence of the accused persons, learned Trial Judge framed the charges against the accused persons after due compliance of Section 207 of Cr.PC.

#6. All the accused persons pleaded not guilty and therefore, trial was held.

#7. In order to bring home the guilt of the accused persons, prosecution chosen to examine as many as 26 - 8 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 witnesses, comprising of complainant, policy holders, investigating agency and sanctioning authority as P.W.1 to

#8. Prosecution placed on reliance 155 documentary evidence which were exhibited and marked as Exs.P.1 to P.155, comprising of original policies which were surrendered and supporting documents thereof and office notes have been put up for processing the surrendering of the policies and preparing of the cheques for the surrender value of the policies.

#9. On behalf of accused, copy of letter and account opening form in Pragathi Pattina Sahakara Sangha were exhibited and marked as Exs.D1 and D2.

#10. On conclusion of recording of evidence on behalf of prosecution, learned Trial Judge recorded statements of accused as is contemplated under Section 313 of Cr.PC. wherein accused persons have denied all the incriminatory circumstances, but did not chose to place - 9 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 any written submission on their behalf in order to place their version as is contemplated under Section 313(4) Cr.PC, nor any defense evidence is placed.

#11. Thereafter, learned Trial Judge heard the parties in detail and on cumulative consideration of the oral and documentary evidence placed on record, convicted the appellants and another accused Sri.H.Hanumantharaya, who died during the pendency of the appeal and sentenced as referred to supra.

#12. Being aggrieved by the same, accused No.3 and accused No.1 are before this Court, in these appeals.

#13. Sri H.Mujtaba and Sri M.S.Mohan, learned counsels for the appellants, reiterating the grounds urged in the appeal memorandum vehemently contend that the material evidence placed on record is hardly sufficient enough to establish the alleged forgery as well as the mis- appropriation of the proceeds of the surrendered LIC policies, which has been ignored by the learned Trial Judge - 10 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 while passing the impugned judgment resulting miscarriage of justice and sought for allowing the appeals.

#14. They would further submit that the oral evidence placed on record by the prosecution in the form of 126 witnesses, did not conclusively establish the dishonest and fraudulent act that has been attributable to the appellants herein which has been not properly appreciated by the learned Trial Judge in the impugned judgment and mere re-stating the deposition of witnesses for the prosecution would not take seat of proof. Therefore, conviction of the appellants for the aforesaid offences has resulted in miscarriage of justice and sought for allowing the appeals.

#15. Alternatively, learned counsels for the appellants submit that since accused No.3 is only a beneficiary, he has not been convicted, and he is a first-time offender and the distance of time accused No.3 spent in prison is considered, it would harsh on him and therefore, in the event this Court upholding the order of conviction, may set - 11 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 aside the period of imprisonment by enhancing the fine amount reasonably.

#16. Insofar as accused No.1 is concerned, Sri.M.S.Mohan, also pleaded leniency to the accused by setting aside the conviction under the provision of Section 13(1)(d) read with Section 13(2) of the P.C.Act and accused No.1 is prepared to forego the benefits derivable from LIC if the jail sentence is set aside by enhancing the amount reasonably.

#17. In this regard, he has filed an affidavit, the contents of which are extracted hereunder: "Herein, I, P.Ranganath, aged about 67 years, S/o. Late Puttaiah, Ex-HGA of LIC of India, Madhugiri Branch, Tumakuru District, residing at Kunigal Street, near Bus stop, Gulur, Tumakuru Taluk, Tumakuru District 572118, today camping at Bengaluru, do hereby solemnly and sincerely affirm and state on oath as follows: i) I submit that, the respondent Police of CBI, ACB Bengaluru had registered a Criminal case against me and two others before the XXXII Additional City Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru (CCH-34). - 12 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 ii) I submit that, I was convicted and sentence was awarded in Special C.C.No.225/2009 on the file of the learned XXXII Addl. City Civil and Sessions Judge for CBI Cases, Bengaluru (CCH-34) on 19.04.2011 by invoking under Section 120-B read with Sections 468, 471, 419, 409 of IPC and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act. The Hon'ble Court was pleased to held that, I am guilty of the above offences and awarded punishment to me. iii) Being aggrieved by the conviction and sentence awarded, I preferred Criminal Appeal against the conviction and sentence awarded to me in the Criminal Court on 19.04.2011. Hence, this Criminal Appeal was filed on 14.06.2011. iv) I submit that, now, I have decided to assure before this Appellate Hon'ble High Court that, I will not claim anything from my employer under any circumstances, I also humbly pray that, I have no objection if, this Hon'ble Court imposes a reasonable penalty amount to discharge me from the above owing to my advanced age. Wherefore, I humbly pray that, this Hon'ble Court may be pleased to accept my prayer and grant an order of discharge by accepting the penalty amount imposed by this Hon'ble Court on mercy grounds, in the interest of justice."

#18. Per contra, Sri P.Prasanna Kumar, learned counsel for respondent/CBI supports impugned judgment.

#19. He would further contend that, admittedly, none of the policy holders have received the proceeds of - 13 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 the surrendered policies and moreover, they had not given any instruction for surrendering the policies and their signatures have been forged and fraudulently the policies were placed before the LIC for processing the value of the surrendered policies and the cheques that were drawn in favour of the policy holders have been encashed by forging the signatures of the policy holders resulting in commission of offences alleged against all the accused persons including appellants herein. Thus, sought for dismissal of the appeals.

#20. Insofar as alternate submission on behalf of the appellants is concerned, Sri P.Prasanna Kumar would contend that, perpetrators of the crime like the appellants would get encouraged if any leniency is shown. Therefore, appeals have to be dismissed in toto.

#21. Having heard the parties in detail, this Court perused the material on record meticulously. On such perusal of the material on record, following points would arise for consideration: - 14 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011

#1. Whether the material evidence placed on record by the prosecution would be sufficient enough to maintain the conviction of the appellants for the offence under Sections 120-B, 420, 468, 471, 419, 409 of IPC and Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act, 1988?

#2. Whether the appellants would make out a case that the impugned judgment is suffering from legal infirmity or perversity and thus calls for interference?

#3. Whether the sentence is excessive and needs a modification?

#4. What order? REG. POINTS No.1 AND 2:

#22. In the case on hand, accused No.1 being the employee of the LIC is not in dispute and thus, he is a public servant. When the fraud come to light, there is an internal enquiry and later on action was also initiated against accused No.1. Further, while issuing the sanction order, the officials of LIC have taken into consideration all the relevant material factors including surrender of the 18 policies as referred to supra wherein, the signatures of the policy holders were forged and surrender has taken place. - 15 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011

#23. Further, the original policy holders were contacted by investigation agency during investigation and their statements were recorded by the Investigating Officer. None of them were aware of the policies in their names being surrendered to LIC and the proceeds thereof has been paid to the some other persons in the names of policy holders. None of the policy holders received any proceeds of the surrendered policies as well.

#24. These aspects of the matter is borne out on record not only in the form of oral testimony, but also on the collection of the necessary documents by the Investigating Officer, including the forged surrender notice on the policies.

#25. Material on record prima facie would indicate that the signatures of the policy holders were forged while surrendering the same to LIC. Accused No.1 is the person who was required to verify the same and thereafter allow the surrendering and processing the proceeds thereof. Since there was criminal conspiracy among the appellants, - 16 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 accused No.1, without verification has surrendered all the 18 policies and proceeds thereof have been paid to the some other persons other than the policy holders. On further verification from the material on record, it is crystal clear that other accused persons derived the proceeds of the surrendered policies through co-operative bank.

#26. Therefore, it is crystal clear that policy holders were kept in dark and their policies have been surrendered and proceeds thereof have been shared by other accused persons.

#27. To prove the existence of the criminal conspiracy, the prosecution would seldom get the direct evidence. In such circumstances, the courts are not precluded to find out the material evidence on record and thereafter all may infer in reduction of existence of the criminal conspiracy as is held in the case of Mohd. Khalid vs. State of West Bengal reported in (2002) 7 SCC 334, wherein the Hon'ble Apex Court reiterated the principles of governing - 17 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 the appreciation of existence of criminal conspiracy by following the judgment of Constitutional Bench of the Hon'ble Apex Court in the case of Kehar Singh vs. State (Delhi Admn.) reported in (1988) 3 SCC 609.

#28. Applying the legal principles enunciated in the aforesaid decisions to the facts of the case, it is crystal clear that accused No.1, who is required to exercise due clearance of the policies and surrender of the policies, without verification, has surrendered all the policies and proceeds thereof have been paid to some other persons other than policy holders.

#29. Since the policies were not surrendered by the actual policy holders; instead surrender of the policies have taken place by forging which has been ignored by accused No.1, Trial Court was justified in inferring existence of criminal conspiracy among all the accused persons. Therefore, finding recorded by the learned Trial Judge that accused persons are responsible for the offence is justified. - 18 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011

#30. However, with regard to offence under Section 13(1)(d) read with Section 13(2) of the P.C.Act insofar as accused No.1 is concerned, in the absence of any material on record to establish that there was actually misuse committed by the officials for some consideration or pecuniary benefits of accused No.1, this Court is of the considered opinion that the offence under Section 13(1)(d) read with Section 13(2) of P.C.Act, needs a re-look.

#31. While re-appreciating the material evidence on record, this court does find sufficient force in the argument put forth on behalf of Sri M.S.Mohan appearing on behalf of accused No.1 that the material on record would not want the conviction to be maintained for the offence punishable under Section 13(1)(d) read with Section 13(2) of P.C.Act.

#32. Further, if two views are permissible in a given case, the view which favours the accused persons is to be given effect to. Under such circumstances, this court being the Court of appeal, on re-appreciation of material - 19 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 on record both on facts and law, is of the considered opinion that accused No.1 is entitled for order of acquittal for the offence punishable under Section 13(1)(d) read with Section 13(2) of P.C.Act.

#33. The apprehension expressed by the CBI in this regard that, if the acquittal takes place for the offence under Section 13(1)(d) read with Section 13(2) of P.C.Act, then there would be no disqualification which would entitle accused No.1 to claim the future benefits including back wages is of considerable force.

#34. To quell such an apprehension of prosecution, Sri M.S.Mohan, learned counsel has filed an affidavit of accused No.1 as referred to supra.

#35. Therefore, this Court is of the considered opinion that points No.1 and 2 are to be answered partly in the affirmative. - 20 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 REG.POINT No.3:

#36. In view of the finding of this Court on points No.1 and 2 as above, the Sentence needs a modification as compulsion for the Court to order for minimum punishment for the offence punishable under Section 13(1)(d) read with Section 13(2) of P.C.Act has been now taken off in view of the acquittal of accused No.1 for the aforesaid offence under the provision of P.C.Act.

#37. Since the appellants are the first-time offenders and accused No.1 having lost his job and now is eking out his livelihood by doing some other labour work, this Court is of the considered opinion that the imprisonment period needs to be set aside as it would act harsh on the appellants by enhancing the fine amount to a sum of Rs.75,000/- payable by each of the appellants. The same would meet the ends of justice in the attendant facts and circumstances of the case. Accordingly, point No.3 is also answered partly in the affirmative. - 21 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 REG. POINT No.4:

#38. In view of the findings of this Court on points No.1 to 3 as above, following: ORDER i. Criminal Appeals are allowed in part. ii. While maintaining the conviction on both the appellants for the offence punishable under Sections 120-B, 420, 468, 471, 419 and 409 of IPC, accused No.1 in Crl.A.No.600/2011 is acquitted for the offence punishable under Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act, 1988. iii. Consequently, the sentence is modified as under: Appellants are directed to pay enhanced fine amount of Rs.75,000/- each for the aforesaid offences and on payment of such amount, sentence of imprisonment, as ordered by the - 22 - NC: 2025:KHC:5862 CRL.A No. 507 of 2011 C/W CRL.A No. 600 of 2011 learned Trial Judge impugned judgment, stands set aside. Enhanced fine amount is ordered to be paid on or before 10.03.2025 failing which, imprisonment ordered by the learned Special Judge stands restored automatically. Office is directed to return the Trial Court Records with copy of this order forthwith by issuing modification conviction warrant. Sd/- (V SRISHANANDA) JUDGE MKM List No.: 1 Sl No.: 38