In a recent ruling, the Supreme Court of India ruled that mere suspicion of speedy loan sanction alone was insufficient proof of credit facility misuse and ordered the discharge of the Ex-Chairman of the Central Bank.
This criminal appeal involves Srinivas D. Sridhar (Respondent) and the Central Bureau of Investigation (CBI) (Appellant). The CBI filed a charge sheet based on an FIR registered with the Bank Securities and Fraud Cell in Mumbai against Srinivas D. Sridhar (Chairman and Managing Director of the Central Bank of India) and six other accused under sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act, 1988.
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The main allegations were wrongful sanction of loans to Electrotherm (India) Ltd. by the Central Bank of India, resulting in a loss of approximately Rs. 436.74 crores to the bank. The CBI alleged that the bank’s senior management, including Sridhar, sanctioned large credit facilities such as short-term loans, Letters of Credit, and Export Packing Credit to the company without proper due diligence.
The Additional Solicitor General (ASG) argued that a conspiracy existed among the accused to defraud the bank, particularly through sanctioning export credit facilities without proper appraisal or clearance. Further, ASG argued that even strong suspicion is enough to frame charges of conspiracy, and the speed with which the loans were sanctioned raises serious doubts about the accused’s role.
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The respondent’s counsel argued that Sridhar’s involvement was limited to signing off on the proposals presented to him by the bank’s officers and the credit proposals were vetted and recommended by various committees including the Loan Advisory Committee, which provided approvals before the respondent acted.
Further, the counsel pointed out that no direct evidence links Sridhar to the conspiracy, nor does the charge sheet show his involvement in fraudulent actions.
The bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan observed the charge sheet and statements of witnesses. It noted that merely because the process was fast did not imply a criminal conspiracy without further evidence.
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The court noted that the Loan Advisory Committee and other senior officials had already approved the credit facilities before the matter reached Respondent. It noted that there wasn’t sufficient evidence that the respondent personally conspired or benefited from the loans.
Therefore, the Supreme Court dismissed the appeal filed by the CBI, thereby upholding the discharge of Srinivas D. Sridhar by the High Court. The court highlighted that observations made in this judgment will not affect the trial against the other accused persons.
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