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Ashoo Surendranath Tewari

Aged: 43 years, residing at 404, SIDBI Officer's
Apartment, 25, Veer Desai Road,
Andheri (W), Mumbai 400 053.
vs.
The Deputy Superintendent of Police
Economic Offences Wing, Central
Bureau of Investigation, 3rd floor,
Kitab Mahal, 192,Dr. D.N. Road, Fort,
Mumbai 400 001.

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The State of Maharashtra

)Respondents

2.

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).. Petitioner

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO. 3024 OF 2012

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ALONG WITH
CRIMINAL WRIT PETITION NO. 3137
Shasheel Vasantrao Karade
37 years, Permanently residing at Flat No.206,
Mahadeo Apartment, Pipeline Road,
Ahmednagar 414 111.
vs.
2.
The Deputy Superintendent of Police
Economic Offences Wing, Central
Bureau of Investigation, 3rd floor,
Kitab Mahal, 192,Dr. D.N. Road, Fort,
Mumbai 400 001.

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)
).. Petitioner

2.

)Respondents

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OF 2012

The State of Maharashtra

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Mr. Subhash Jha a/w Ms. Rushita Jain i/.b. M/s. Law Global for the petitioner.
Ms. Rebecca Gonsalves for CBI.
Mr. S.S.Pednekar, APP, for the respondent-State.

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CORAM: SMT.SADHANA S.JADHAV,J.

JUDGMENT RESERVED ON:26.03.2014
JUDGMENT PRONOUNCED ON: 11.07.2014.

JUDGMENT:.
1.

By these petitions, the petitioners are seeking the relief of quashing

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the proceedings pending before the Special Court in Special Case No.19 of 2011,
wherein the petitioners are being prosecuted for the offence punishable under

Sections 406, 420 read with Section 120B of Indian Penal Code pursuant to
Crime No.13/E/2009/CBI/EOW/MUMBAI.
2

The petitioners are public servants. They are the officers of Small

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Industries Development Bank of India (hereinafter referred to as `SIDBI'), which

is a Corporation established by the Central Government of India by an Act of
Parliament. SIDBI is the financial institution established by the

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1989 of

Government for promotion and development of micro, small and medium

enterprises. It is an Authority empowered to frame different rules for achieving

the objects of the institution.

3.

The petitioner in Writ Petition No.3024 of 2012 is working as the

Deputy General Manager in SIDBI, whereas the petitioner in Writ Petition No.

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3173 of 2012 was, at the relevant time, working as Manager at Pune Branch

2012 was assigned the work related to MSME Receivable

Finance/Bills Scheme sanctioned to

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No.3173 of

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office and was assigned direct business and accounts. The petitioner in W.P.

Tata Motors Ltd. (TML) after Shri

Muthukumar (original accused No.5) submitted his resignation to the Bank.

The work in respect of Tata Motors Ltd. was voluminous and

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therefore one special officer was assigned the work to handle the transactions

relating to Tata Motors Ltd. and the other officer was entrusted with the work in
relation to other corporates other than TML.

The work regarding payments related to TML was handled by Shri S.

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5.

Muthukumar and the work in respect of other corporates

was handled by

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Maganbhai Jadhav, who was officiating as Assistant Manager.

6.

The facts are that one MOU was signed between SIDBI and Tata

Motors Ltd. mutually agreeing with the details of transactions and the amount due
would be furnished by TML and the payment would be sent directly by SIDBI as
per the MOU. The payment was to be sent by cheque to the vendors. No other
mode of remittance was agreed between TML and SIDBI. One of the vendors

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introduced by TML was Ranflex India Pvt.Ltd. situated at Banglore. Tata Motors

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Ltd. had not furnished the bank account details of Ranflex India with Federal

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Bank to SIDBI. TML had never advised SIDBI for remittance of the amount to
RIPL through RTGS. However, the money was transferred through RTGS.

7.

On 11.8.2009, a complaint was received by the Superintendent of

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Police, Central Bureau of Investigation, Economic Offences Wing, Mumbai from

the General Manager, R.M.Yadav, who was in charge of SIDBI Branch at Pune,

and was authorised to file the report. It was informed to the police that SIDBI
operates a Scheme know as MSME Receivable Finance Scheme. Large
corporates furnish a list of such MSME vendors who make supplies to it to whom

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the payment is due from them along with the name and address of such vendor,
code numbers and invoice details etc. are furnished. Payment is made by SICBI

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to such vendor directly and such corporate pays the amount due to SIDBI. By
the said scheme, MSME vendors get advantage of timely payment. Tata Motors

Ltd. has been sanctioned a limit under the above Scheme covering its purchasers
from MSME. Tata Motors Ltd. had introduced Ranflex India as one of the
MSME vendor under the arrangement. SIDBI based on intimation received from
TML had made payment to RIPL of Rs.1,51,97,111/- only through various
cheques from 31.3.2009 to 29.4.2009. On 25.5.2009, SIDBI received an e-mail

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message purportedly from Ranflex India giving RTGS details and requesting

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SIDBI for making future payments through RTGS instead of cheque payments.

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Pursuant to the said e-mail, 12 payments to the tune of Rs.1,64,17,551/- were

made through RTGS by SIDBI in the account mentioned in e-mail with Federal
Bank. The payments were made during the period 27.5.2009 to 4.8.2009.
8.

On 5.8.2009, RIPL telephonically informed SIDBI about non-receipt of its

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payments. RIPL was informed that payment had been made to the account of
RIPL with Federal Bank Ltd. Thiruppurur. The details were received through an

e-mail dated 25.5.2009. SIDBI had contacted Federal Bank telephonically and by
e-mail and informed them about the non-receipt of payments by RIPL. The
Federal Bank informed SIDBI that out of the total amount of Rs.1,64,17,000/-,

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an amount of Rs.34,73,193/- was the balance, whereas amounts of Rs.70 lakhs

and Rs.22 lakhs have been transferred to Axis Bank, Chennai and ICICI Bank

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Ltd. Selaiyur, Chennai through RTGS and an amount of Rs. 37,50,000/- has been
withdrawn in cash between 29.5.2009 and 16.7.2009 from Federal Bank. Federal

Bank therefore requested to freeze the account and not allow further withdrawals.
The officials of SIDBI visited the Regional and Branch office of Federal Bank
Ltd. at Chennai and Thirupporur. The officials of Federal Bank informed that
the said Current Account No. 16110200000734 in the name of Ranflex India
Pvt.Ltd. was opened on 24.5.2009 by one S.Babu who was purportedly

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authorized by the Board Resolution. A copy of the Board Resolution was signed

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by M. Anand. The last operation in the said Account took place on 17.7.2009

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and the credit balance available in the said account was Rs. 10,64,000/-. As on
5.8.2009, the balance in the said account was Rs.34,73,193/-. An enquiry was also
made with Axis Bank, Chennai and ICICI Bank, Chennai and it was realized that
huge amounts were being transferred from the account of RIPL with Federal

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Bank to the accounts maintained in the name of Sneha Services and J. Raja
respectively. The officials of Axis Bank informed SIDBI that a current account

was opened on 11.5.2009 by S. Babu, a proprietary concern. The last date of

operation in the account was on 29.7.2009. The police was informed that some
unknown persons had opened fictitious account with Federal Bank in the name of

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Ranflex India Pvt.Ltd. causing

a loss

of equal amount

to SIDBI.

The

investigation was set in motion.

That Disciplinary proceedings were initiated against the applicant in

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9.

W.P.No.3024 of 2012 on 25.1.2010. A statement of Imputation of Lapses was

issued to him as he was working as Deputy General Manager at the Bank, Pune
Branch Office.
10.

The Executive Director and the Competent Authority by an order

dated 21.5.2010, had exonerated the petitioner of the charges and advised him
that he must be more pro-active and vigilant in discharging his official duty as a

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senior officer so that the Bank's interest are safeguarded at all times irrespective

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of the portfolio assigned to him.

The learned Counsel appearing for the petitioner submits that the Executive

Director had upon detailed enquiry, exonerated the petitioner. It is pertinent to

note that the transaction in respect of TML and Ranflex India doe not find place

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in the said order. There is a reference to the account of Vaishnair Engineers dated
16.4.2008. It is in respect of the visits to the units under implementation as

regard the post disbursement visits. It further pertains to no pre-disbursement

visits carried out. Hence, it cannot be said that the transaction in respect of
which the crime was registered was enquired into.
In the course of investigation, the CBI has recorded the statements of

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several witnesses, including the statement of the Chief General Manager, S.V.G.

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Nandagopal. He had stated before the police that the payment made through
RTGS to M/s. Ranflex is totally wrong. The reason being SIDBI had to approach

Tata Motors Ltd. for verifying the details of the customs i.e. Ranflex India
Pvt.Ltd. There is clause No.5 in the proposed mechanism for MSME facility in
the agreement. He had further disclosed that the General Manager or any senior
officer had not authorized the petitoner to look after the business affairs of the
branch as the then General manager was transferred to Chennai. He had further

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disclosed that upon receiving the name from Ranflex on 26.5.2009, without

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obtaining the Bank mandate form, Ashoo Tiwari had gone ahead for making

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payment to Ranflex through RTGS. He had further stated that Ashoo Tiwari,
Muthukumar had violated all the norms. The reason is best known to them. The

other responsible officers had also reiterated the statement of the General

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Manager.

13.

The petitioners are the public servants and hence the CBI had

requested the Competent Authority to accord sanction for prosecution of the

petitioners. By an order dated 27th/28th December 2011, the Executive Director

and the Competent Authority had refused sanction to prosecute. It was opined

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that there was no adequate evidence in the CBI report to suggest any malafide
intention, involvement, connivance/conspiracy, meeting of the minds or any

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criminal misconduct having been committed by the two officials of SIDBI and
hence sanction was refused. The CBI then challenged the said order refusing

sanction before the Central

Vigilance Commission.

The Central Vigilance

Commission had taken into consideration the conduct of the petitioner in freezing
the accounts of RIPL with Federal Bank and thus prevented and saved withdrawal
of Rs.34 lakhs lying in their account and hence CVC had concluded that it
supports the case of its non-involvement. The CVC had thus passed an order that

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prima facie charges do not seem to be established against Ashoo Tiwari and

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Shasheel Karade and, therefore, no interference was warranted in the order

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refusing sanction to prosecute Ashoo Tiwari and Shasheel Karade. Hence, charge
sheet was filed before the Sessions Judge by CBI against the petitioner for the

offence punishable under Section 120B of IPC read with Sections 420, 406, 467,
468 and 471 of IPC and under Section 13(2) read with Section 13(1)(d) of

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Prevention of Corruption Act, 1988.

The petitioners then filed an application for discharge under Section

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227 of Cr.P.C. The main contention of the petitioners was that the Competent
Authority had refused to sanction prosecution after a full-fledged enquiry and,

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therefore, there was no question of prosecuting them for the offence punishable
under the Indian Penal Code. According to the petitioners, there was no iota of

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evidence to warrant framing of charge against them as they had acted in the
bonafide manner.

It was further contended that it was not the duty of the

petitioners to verify the credentials of the e-mails raised from RIPL and,
therefore, they prayed for discharge.

15.

It was demonstrated before the Special Court that after completion of

investigation, a proposal was sent to accord sanction to prosecute the petitioner.

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However, before receipt of the reply, charge-sheet was filed in the Court on

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27.9.2011. In any case, the sanction was refused. The learned Special Court had

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considered the papers of investigation and the submissions advanced by the

counsel representing the petitioners and has discharged the petitioners under the
provisions of Section 13(2) read with Section 13(1)(d) of P.C. Act and had
proceeded to frame charge against the petitioners for the offence punishable under

Petitions seeking discharge.

The learned Special Judge has observed that the statements of the

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Section 120B read with Sections 420 and 406 of IPC. Hence, by these Writ

officers of TML clearly indicated that no intimation was given to the officers of
SIDBI, Pune Branch to remit the amount to the vendor by RTGS on the Federal

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Bank, Thiruppurur. The Special Judge has further observed that in the course of
investigation it had transpired that the account was opened by accused No.2

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S.Babu. That the prosecution deserves to be given a fair opportunity to adduce

evidence at the time of trial as there cannot be direct evidence in respect of the

offence punishable under Section 120B of Indian Penal Code. The petitioners had
claimed benefit of the provisions of Section 45 of SIDBI Act, 1949. However, the
learned Special Judge had rightly observed that regarding criminal conspiracy to
cheat the Bank and to defraud it cannot be treated as an act done in good faith
and, therefore, it refused to grant protection under Sec.45 of the said Act.

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The learned Counsel appearing for the petitioner submits that the

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petitioner was not directly handing the portfolio related to the scheme/bill section

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and that he had forwarded the e-mail to Shri S. Muthukuamr, the then Manager

handling Bill Section for verifying the correctness of the supplier and correctness
of RTGS details. He had marked the printed copy of the said e-mail to A-5 with
the remark Please check and verify the update. The learned Counsel further

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submits that all the e-mails received from the vendors were marked to S.
Muthukumar. He has narrated the instances to demonstrate the diligence of the

petitioners in discharging their official duty. It is further submitted that the

learned Special Judge has not considered the order refusing sanction in its proper
perspective and that the petitioners although innocent would have to go through

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the ordeal of trial. In the alternative, it is submitted that in the eventuality this
Court comes to a conclusion that the charges restrict the culpability of the

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petitioners though they should be tried by the Court of Magistrate as Sections

406 and 420 of IPC are triable by the Magistrate and hence, according to the

learned Counsel for the petitioners, the Special Court cannot try the case in
absence of the inability to frame charge under the provisions of Prevention of
Corruption Act. It is specifically submitted that the petitioner has not denied
approving transactions but on the other hand, he had done so in good faith and
without there being any malice. It is urged that the petitioner has not received

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any wrongful gain from the entire alleged fraudulent transactions.

The learned Counsel for the petitioner further submits that at the time

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when the said payments were made in the RTGS, the concept of RTGS was at an
evolutionary stage and there was no formal guideline issued by the Bank on the
provisions of accepting intimation for RTGS transactions and therefore, the

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petitioner had worked in good faith by following the precedents and prevailing
practices in the Bank. According to the learned counsel, the compilation of

charge sheet does not establish any nexus between the petitioners and any other
accused person and therefore, there is no cause to frame charge under Sec. 120B

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of the Indian Evidence Act.

As against this, the learned Counsel appearing for the respondents

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has drawn attention of this Court to the statements of the witnesses/officials of the
Bank recorded under Section 161 of the Cr.P.C. She has pointed out Mathew

Harris who was working with Mathew Ibrahim. It was his duty to perform the
daily routine work in TML such as keeping of track for the material, shortage of
related items, collection room, hundies collection, cheque collection and keeping
a track of payment of Ranflex India. Mathew Ibrahim runs the office from his
residence. The wife of Mathew Abraham is handling the work of Ranflex India

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Pvt. Ltd. He had been relegated to Ashoo Tiwari i.e. the present petitioner by ..

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Senior manager (Accounts) TML and he had contacted the petitioner in regard to

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payment of Rs.22 lakhs. According to him, in his presence, the petitioner had
enquired with Muthukumar regarding payment of Rs.22 lakhs to Ranflex and the

payment was confirmed by Muthukumar. According to him, in the month of

June, 2009, Mathew Abraham had informed him that Ranflex had received the

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payment. The disputed e-mail was received on 25.5.2009 and the payments were
made during 27.5.2009 to 4.8.2009. On 5.8.2009, Ranflex had informed SIDBI

about on-receipt of these payments and hence there is a link evidence between the
activities of the present petitioners, Mathew Abraham and others. The chargesheet indicates that there was a conspiracy/connivance between Muthukumar,

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Ashoo Tiwari, Susheel Karade.

Muthukumar is still absconding.

He had

resigned from the job soon after the fraud had come to light. The statement of

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Mathew Abraham would go to show that he had evaded to answer several

questions.

He had feigned ignorance about having met any person i.e.

Muthukumar or any other person of SIDBI.

The learned Counsel for the

respondents further submits that during the same period, SIDBI had followed the
established procedure in respect of M/s. Paracoat vendors of TML. According to
her, there is sufficient material for proving that the petitioners were members of
conspiracy along with co-accused. That they had committed offences such as

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cheating, criminal breach of trust and that they had not acted in good faith. That

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they do not deserve to be discharged and the mens rea has to be proved by

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substantial evidence. According to the learned Counsel, a prima facie case is

made out against the petitioners for proceeding with the trial.

20.

The learned counsel for petitioner has placed reliance upon the

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judgment of the Hon'ble Apex Court in the case of Vasanti Dubey vs. State of
Madhya Pradesh (2012) SCC 731. The learned counsel has drawn the attention

of this Court to the observations of the Hon'ble Apex Court wherein the Hon'ble
Apex Court had held that the Special Judge could not have directed that sanction
be obtained or order re-investigation and thereafter refused to accept closure

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report. Therefore, the Hon'ble Apex Court had held that the said procedure
adopted by the Special Court was an abuse of process of law. In the present case,

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the Special Judge has neither directed re-investigation nor has caused any doubt

on the act of the competent authority not according sanction to prosecute.

21.

Reliance is placed upon the Judgment of the Hon'ble Apex Court in

the case of Hardeep Singh vs. State of Madhya Pradesh (2012) 1 SCC 748,
wherein the Apex Court had upheld the judgment of the Division Bench of
Madhya Pradesh High Court thereby upholding the refusal of sanction or to

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enforce that the decision of the said refusal to accord sanction and awarded a

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compensation of Rs. 2 lakhs to the accused persons.

The learned Counsel has also relied upon the following Judgments

of the Apex Court :-

Mansukhlal V.Chauhan vs. State of Gujarat (1997) 7 SCC 622.

(2)

Jaysingh vs. K.K.Velayutham & Anr. (2006) 9 SCC 414

(3)

Uttam Chand & Ors. vs. Income Tax Officer,Central Circle, Amritsar,
(1982) 2 SCC 543.

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(1)

Goondla Venkateswarlu vs. State of A.P. & Anr. (2008) 9 SCC 613.

(5)

State of Punjab & Anr. vs. Mohammed Iqbal Bhatti (2009) 17 SCC 92.

(6)

Hardeep Singh vs. State of M.P. (2012) 1 SCC 748

Chittaranjan Das vs. State of Orissa (2011 7 SCC 167.

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(7)

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(4)

(8)

G.L.Didwania & Anr. vs. Income Tax Officer & Anr. (1995) Supp.(2) SCC

724.

(9)

K.C.Builders vs. Asst. Commissioner of Income Tax (2004) 2 SCC 731.

(10) Asiya vs. State of Maharashtra AIR 12 Bom. 785.

(11) Jeewan Kumar Raut vs. CBI (2009) 7 SCC 526.
(12) Matajog Dobey vs. HC Bhari AIR 1956 SC 44

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(14) Ttchut Mucund Alornekar vs. CBI 2012 BCR (Cri.) 477

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(15) Abdul Wahab Ansari vs. State of Bihar (2008) 8 SCC 500.

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(13) TSK Reddy vs. State of Mah. & Ors. CDJ 2013 BHC 1254.

(16) Lokesh Kr. Jain vs. State of Rajasthan CDJ 2013 SC 583.

Upon perusal of the citations relied upon by the learned Counsel for the

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petitioners, this Court has observed that on facts, the material before the Court in
the said cases was different from the material brought about by the prosecuting

agency in the present case. The decisions in the said cases have no relevance to
the case in hand and therefore are not being considered.

The learned counsel for the respondent has placed reliance upon the

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23.

Judgment of the Hon'ble Apex Court in the case of Prakash Singh Badal and

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another vs. State of Punjab & Ors. (2007) 1 SCC. However, in the said case,
the Hon'ble Apex Court had held that since the accused had ceased to be a public

servant

and had ceased to hold the office where the alleged offence was

committed, question as to non-application of mind in granting sanction had

become academic. The Hon'ble Apex Court had held that the offence of cheating
under Section 420 or for that matter offence under Section 467, 468, 471 and
120B of Indian Penal Code by no stretch of imagination by the very nature be

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regarded as having been committed by any public servant while acting or

The same proposition is reiterated by the Hon'ble Apex Court in the

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purporting to act in discharge of official duty.

case of In Bholu Ram vs. State of Punjab & Another reported in (2008) 9
SCC 140.

Hence, it is clear that refusal to accord sanction for prosecution

23.

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under the provisions of the Prevention of Corruption Act cannot be held to be

relevant to try an accused for the offence punishable under the Indian Penal
In the present case, upon perusal of the documents and hearing the

Code.

submissions of the learned Counsel, this Court is of the opinion that the act of the
petitioners in transferring the amount by RTGS without there being proper

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verification would indicate culpability on the part of the petitioner' contention

that they had so acted in good faith cannot be made a touchstone for discharging

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them from the alleged offence punishable under Sections 406 and 420 of IPC.
The amount that is involved is Rs.1,64,17,551/-. The prosecution need to be

given an opportunity to lead evidence to establish the guilt of the accused. In the
eventuality that the prosecution fails to meet the charges, the accused would be
acquitted. However, the prosecution of the petitioners cannot be said to be an
abuse of process of law. The reason assigned by the learned Special Judge for
proceeding to frame charge under Sections 406, 420 and 120B do not call for any

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interference.

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The Investigating agency had arrived at a conclusion that the

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accused had committed offence punishable under Sections 406 and 420 of IPC.

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The details of the payment transactions approved in the bills finance system
software owned by RIPL indicate that it was Ashoo Tiwari who forwarded the e-

mail to IDBI Bank Ltd. and the name of the maker of payment is shown as
Sasheel Karade in the transactors dated 7.7.2009, 21.7.2009, 29.7.2009 and
Hence connivance

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4.8.2009 based on e-mails forwarded by Ashoo Tiwari.

between the officers/accused who made the said payments is writ large on the

24.

face of the record.

The learned Counsel for the petitioners submits that since the Central

Vigilance Commission had exonerated the petitioners of all the charges, there is

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no reason why they should be proceeded for the offence punishable under the
Indian Penal Code. The CVC Report has observed as follows :it is transpired that the fraud has been perpetrated by Shri

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Muthukumar who was the officer of SIDBI at that time and entered
into conspiracy with various other people including his relatives.

Shri Tiwari and Shri Karade seem to have fallen for this
machinations by their acts of relying upon the verification report
submitted by Shri Muthukumar. They seem to be victims of his
fraud. Moreover, having friendly relations between employees of the
same Branch and having minor financial relationship like lending
and borrowing money in case of urgent needs, which in this case is

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cited by the CBI, is normal practice amongst colleagues in any work

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environment and it does not prove criminal conspiracy. It is true

that the money has come out of the amount cheated by Shri

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Muthukumar but there is nothing to indicate that Shri Karade would

be aware of his account from where money was deposited by Shri
Muthukumar in his account. (sic)
25.

The Central Vigilance Commission could not have come to the

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aforementioned conclusion unless there was evidence to do so. This submission

of the learned counsel is unfounded. The CVC had specifically observed that

Shri Karade has benefited from Shri Muthukumar. The CVC ought not to have
observed that they are the victims of conspiracy specially when the CVC has

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observed that Muthukumar had entered into conspiracy with various other
people. The petitioners would fall into the category of various other people and
therefore they ought to be tried for the offence punishable under the Indian Penal

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Code specially for the offence punishable under Section 420 of IPC.
26.

The alternative submission of the learned counsel for the petitioners

is that the petitioners ought not to be tried by the Special Court since the offences
alleged against the present petitioners are the offences triable by the Court of
Magistrate. It is pertinent to note that the petitioners cannot be tried in isolation.
They are being tried with other co-accused/conspirators, who are not exonerated
under the Prevention of Corruption Act. The charge-sheet filed by the Deputy

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Superintendent of Police, CBI, EOW, specifically reads as follows :-

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There is evidence and statement of witnesses against Tiwari, Karade

which proves that both are part and parcel of the conspiracy being

hatched by Muthukumar who is absconding and others in cheating

and defrauding the SIDBI to the tune of Rs.1,64,17,551/-.

The

sanction of prosecution is not required against Shri Muthukumar as

he has retired voluntarily from SIDBI on 31.7.1991. The charge sheet

LearnedCounselforthePetitionersubmitsthattheveryfact

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has been filed against total 13 accused persons by CBI.

that the appointing authority has exonerated the petitioners of all the

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offences and have only held that it could be negligence as far as the
Petitioner had believed Muthukumar. It is sufficient to infer that the
present Petitioner cannot be held liable for offence punishable under

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Section420,406etc.ofI.P.C.Itisfurthersubmittedthatthereisnothing
onrecordtoindicatethatthePetitionerAshukumarhadpersonallygained

from the erroneous transaction. The submission is unfounded. It is

enough to establish the existence of one out of wrongful loss and the
wrongfulgain.Thelawdoesnotrequirethatforthepurposeofcheating
to be established both the ingredients of Section 420 need to be
established.

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To hold a person guilty of the offence of cheating, it has to be shown

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that his intention was dishonest at the time of making the promise. Such a

subsequently demonstrated bonafide acts.

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dishonest intention cannot be inferred from the mere fact that the accused had

In the present case, after the

transaction had come to light, the petitioner is said to have taken abundant
caution to prevent further loss to SIDBI. This subsequent act by itself cannot be

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considered to infer that he had no dishonst intention at the time when the
fraudulent transaction had taken place or that he had wrongful gain which could

not be detected. It cannot be ignored that even if there is nothing to indicate that
there was no wrongful gain to the petitioner Ashokkumar, there was definitely

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wrongful loss to SIDBI.

In the present case, the petitioners need to necessarily face the trial as

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the prosecution deserves an opportunity to adduce evidence to establish that there

was mens rea at the time of contravention of the established practice in SIDBI or

the terms of agreement had not been followed.

30.

In the case of Director of Enforcement vs. M/s. MCPTM

Corporation Pvt.Ltd. & Ors. reported in AIR 1996 SC 1100, the Hon'ble
Apex Court has held that mens rea is a state of mind. Under the criminal law,

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mens rea is considered as a guilty intention and unless it is found that the

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accused had the guilty intention to commit the crime. He cannot be held guilty

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of committing the crime.

In view of this, the onus to prove that the accused had a guilty

intention at the time when the fraudulent transaction had taken place, lies

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principally on the prosecution and only because the Department has

exonerated them on unwarranted grounds, the prosecution cannot be denied an

opportunity to lead evidence to approve that the accused had the guilty mind
and therefore there was wrongful loss to SIDBI.

The Hon'ble Apex Court in the case of

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32.

Madchl Chemicals and

Pharma Pvt.Ltd. vs. Bioligical E Ltd. & Ors. AIR 2000 SC 1869 has held

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that mens rea is one of the essential ingredients of the offence of cheating. At
present, the CBI has adequate material against the present petitioners which

would enable the Court to frame charge against the petitioners for the offences
punishable under Sections 420 and 406 of IPC.

33.

The possibility that the CBI would be able to establish

nexus/conspiracy between the present petitioners and the principal accused at

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the time of trial cannot be ruled out. Under Section 14 of the Evidence Act,

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facts showing existence of state of mind are relevant. It is true that there

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cannot be direct evidence in respect of conspiracy. Section 14 of the Evidence

Act reads thus :Facts showing

the existence of any state of mind, such

as intention, knowledge, good faith, negligence, rashness, ill-will

or goodwill towards any particular person . is in issue or

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relevant.

A fact relevant as showing the existence of a relevant state

of mind must show that the state of mind exists, not generally, but

in reference to the particular matter in question.

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The mental condition of which a person is conscious is a fact. The expression

of which a person is conscious signifies that simple mental phenomena which

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could be inferred from acts are made relevant.

34.

The learned counsel submits that although there was no specific

agreement with TML, the money could be sent through RTGS to Ramflex, the
absence of which is also not mandatory and that there is no question of
deliberately violating the rules.

Section 16 of the Indian Evidence Act

contemplates when there is a question whether a particular act was done, the
existence of any course of business, according to which it naturally would have

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been done, is a relevant fact. In a trial for forgery or cheating, evidence of

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though not as a proof of forgery.

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similar transaction not included in the charge is relevant as proof of intention

In view of the above observations, on the merits of the matter, this Court

is not inclined to quash the proceedings against the present petitioners for the
offences punishable under Section 120-B read with Sections 420, 406, 467,

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468 and 471 of IPC. The present petitioners have been discharged under the
Prevention of Corruption Act for want of sanction.

Moreover, besides the

present petitioners, rest of the ten accused are all private persons and are not
public servants. S.Muthukumar is a public servant. He is absconding. His trial
be separated from the present petitioners and the other accused. Hence, the

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present petitioners can be tried by the Court of Judicial Magistrate, First Class
since all the rest of the offences for which they are charge-sheeted are triable

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by a Judicial Magistrate, First Class. Hence, the following order :-

(i)

ORDER
The prayer for quashing the proceedings concerning Special Case
No.19/2011 from the Court of the Learned Special Judge, CBI
(ACB), Pune, is hereby rejected.

(ii)

The proceedings pursuant to registration of

C.R.No./RC.13/E/2009/Mumbai CBI/EOW/Mumbai, be tried by

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a Judicial Magistrate, First Class having jurisdiction in accordance

The case be transferred from the Court of Special Judge, Mumbai

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(iii)

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with law.

to the Court of Judicial Magistrate, First Class, having

jurisdiction within four weeks from the date of receipt of this

order.

The trial of S.Muthukumar be separated from the present

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(iv)

petitioners and the other accused.

(SMT.SADHANA S. JADHAV, J.)

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Both the Petitions stand disposed of.

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