Money Deposited in Bank not held by it as Trustee but it becomes part of Banker’s Fund payable on-demand with agreed Interest Rate: Supreme Court [Read Judgment]

The Supreme Court has held that the Money deposited in a bank not held by it as Trustee but it becomes part of banker’s fund payable on-demand with agreed interest rate.

The Appellant, N. Raghavender is aggrieved by the judgment dated 18th June, 2009 passed by Andhra Pradesh High Court, dismissing his criminal appeal against the judgment and order dated 28th March, 2002 of the Special Judge, CBI Cases, Hyderabad whereby he was held guilty of the offences under Sections 409, 420, and 477A of the Indian Penal Code and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 and sentenced to a total of five years of rigorous imprisonment with various fines for each offence. Accused who were also tried along with the appellant, were, however, acquitted of all the charges.

The alleged modus operandi of the accused persons was that the Appellant, in his capacity as a Branch Manager, issued loose-leaf cheques on 23.04.1994 and thereafter, for a sum of Rs. 2,50,000/-, and despite withdrawal of the said amount, the debit was deliberately not entered into the ledger book. After that, another such transaction took place on 30.06.1994 for a sum of Rs. 4,00,000/-, and once again, the debit was not entered into the ledger sheet of the Bank. This was followed by the Appellant issuing another cheque on 30.07.1994, of a closed account for withdrawal of Rs. 3,50,000/-.

The three judge bench of Justice N.V.Ramana, Justice Surya Kant and Justice Hima Kohli held that the Appellant acted brazenly contrary to the norms and internal instructions of the Bank. Although he was clever enough to not trespass into the prohibited area(s) of Sections 409, 420 and 477-A IPC, he ran the risk of causing financial loss to the Bank. Despite his subsequent act of depositing the interest accrued upon the FDRs of B. Satyajit Reddy, from his personal account, and thereby absolving the Bank from such liability, the actions of the Appellant constitute gross departmental misconduct and are unbecoming of a senior Bank Officer.

“In this case the CBI has either adopted a casual and callous approach or there was some hidden pressure to derail a fair investigation. The resultant effect is that though there is a strong suspicion of criminal breach of trust, cheating and/or fabrication of the Bank records against the Appellant, but such suspicion falls short of a conclusive proof to hold him guilty of the criminal charges. The best evidence having been withheld by the prosecution, the benefit of doubt must be extended to the Appellant, for no conviction can be sustained on the basis of conjectures and surmises. Non-production of the records of the Bank also adversely comments on the fairness and independence of the investigation conducted in the instant case,” the Apex court observed.

The court concluded that the prosecution has failed to prove the charges under Sections 409, 420 and 477A IPC against the Appellant beyond reasonable doubt. As a necessary corollary thereto, his conviction under Section 13(2) read with Section 13(1)(d) of the PC Act can also not be sustained. However, the benefit of doubt being extended to him on account of a thin margin between ‘strong suspicion’ and ‘conclusive proof’, shall not entitle him to initiate a second round of lis to seek his reinstatement or to claim other service benefits from the Bank. The Appellant is deemed to be guilty of gross departmental misconduct, for which the punishment of dismissal from service has been adequately awarded. It requires no repetition that standard of proof to establish a misconduct in a domestic enquiry i.e. even preponderance of evidence, is drastically different to those of proving a ‘criminal charge’ beyond any reasonable doubt. The Appeal is accordingly disposed of in the above terms. Bail bonds, if any, furnished by the Appellant stand discharged.

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