SC acquits man in 27-year-old bank fraud case, notes lacunae in CBI probe
The case stems from a complaint made in September 1997 by Vijaya Bank reporting about a fraud in an account operated by M/s Globe International.
More than 27 years after the Central Bureau of Investigation (CBI) initiated probe into a high-profile bank fraud case worth over ₹6 crore involving Vijaya Bank, the Supreme Court has observed that the entire investigation was based on suspicion rather than proof, acquitting the lone remaining accused in the crime – a jeweller – and directing the return of 205 gold blocks seized from him as ‘stolen property’.
A bench headed by justice Bhushan R Gavai reminded the CBI that suspicion, however strong, cannot replace proof as the agency failed to establish the case under Section 411 of the Indian Penal Code – the property in possession of the accused should be proven to be the one stolen and the person should have had knowledge that it was stolen.
Finding both these components missing in the CBI case, the court on Tuesday allowed the appeal of accused Nandkumar Babulal Soni and set aside the Bombay high court order of July 16, 2009, which held him guilty for criminal conspiracy (IPC section 120B), read with Section 411. This offence is punishable with a maximum sentence of three years.
The SC bench, also comprising justices Prashant Kumar Mishra and KV Viswanathan, said, “The prosecution has to prove its case beyond all reasonable doubts by positively completing the chain of circumstances against the appellant, which the prosecution has utterly failed in the present case.”
“It is surprising as to how the appellant (Soni) can be convicted for committing offence under sections 120B and 411 of the IPC. Once the courts below have found that the seized gold bars are not the same gold bars, conviction under sections 120B and 411 of the IPC cannot be sustained,” justice Mishra said.
The case stems from a complaint made in September 1997 by Vijaya Bank reporting about a fraud in an account operated by M/s Globe International. The bank’s Nashik branch received multiple remittances through fake Telegraphic Transfers (TT) from its Delhi branch. Several of these TTs were honoured, leading to subsequent withdrawals by Globe International to the tune of ₹6.70 crore.
When the Nashik branch manager noticed that these TTs were fraudulent as it did not translate into actual transfer of funds, the bank stopped processing further TTs worth ₹1.61 crore received in the same account, pursuant to which CBI took over the probe. On a detailed probe, the CBI found that the bank account was opened using forged documents and the person who opened the account was absconding.
The CBI named four persons as accused, including two bank officials accused of facilitating the opening of the account. Soni, the third accused, was in touch with the fourth accused Mukesh Shah associated with Globe International and had allegedly received the gold bars from him. Shad was never tried as he remained absconding.
The trial court held the three persons guilty but directed the 205 gold bars to be returned to Soni. On a subsequent appeal, the high court acquitted the bank officials but found Soni guilty under section 411 IPC. It even directed the gold bars to remain in the custody of the state. The appeals remained pending in the Supreme Court since 2012.
Along with Soni’s appeal, the court also decided Vijaya Bank’s appeal seeking return of the gold bars. This plea stood dismissed even as the court held that the decision will not affect the bank pursuing other remedies available in law.
Upon examining the evidence, the top court found that the gold bars were recovered by CBI in 2001, almost four years after the filing of complaint.
The bench said, “...even if it is proved that the appellant (Soni) was handed over the demand drafts by Mukesh Shah and gold bars were purchased by the appellant from M/s. Chenaji Narsinghji and M/s. V.P. Jewellers, still it was necessary for the prosecution to prove that the appellant either had knowledge or reason to believe that the demand drafts had been obtained through fraudulent process to make the gold bars as stolen property in the hands of the appellant or that the appellant was part of the conspiracy.”
Moreover, the court noted that Soni was charged with criminal conspiracy vis-a-vis receiving stolen property and not with regard to fraudulent TTs. The HC, while convicting Soni, found this fact irrelevant as, in its opinion, Soni failed to prove lawful acquisition of gold.
Not agreeing with such a reasoning, the top court said, “We fail to understand, when the prosecution has failed to prove the identity of seized gold as being the same gold which were sold by M/s. CN to M/s. Globe International, how the appellant is liable to prove lawful acquisition of gold visà-vis the stolen gold.”
The court held that to prove the offence under section 411 IPC, the prosecution must prove three things – the stolen property was in the possession of the accused, some persons other than the accused had possession of the property before it came into the possession of the accused, and the accused had knowledge that the property was stolen property.
