SC acquits man in 27-year-old bank fraud case, punches holes in CBI probe

More than 27 years after a ₹6.7 crore fraud case involving Vijaya Bank was investigated by the Central Bureau of Investigation (CBI), the Supreme Court held the entire probe to be based on suspicion rather than proof. The court acquitted the lone remaining accused in the crime, jeweller Nandkumar Babulal Soni, and directed the return of 205 gold bars seized from him.

CBI alleged that the gold bars were received from the company that had opened the fraudulent bank account.

According to data from the World Gold Council, the annual average price of gold in India has increased by 16.6 times between 1997 and 2024. It was ₹12,006.1 per troy ounce (31.1 gram) in 1996 and ₹1,99,686.3 in 2024. 

A bench, headed by justice Bhushan R Gavai, reminded the CBI that suspicion, however strong, cannot replace proof. The agency, the court said, failed to establish the two fundamental ingredients required to punish a person under Section 411 of the Indian Penal Code (receiving stolen property) -- the property in possession of the accused should be proved to be the one stolen, and the person should have knowledge that it was stolen.

Finding both these components missing in the CBI case, the decision pronounced on Tuesday allowed the accused Soni’s appeal and set aside the Bombay high court order of July 16, 2009 holding him guilty for criminal conspiracy (IPC Section 120B) to commit the offence under Section 411. This offence is punishable with a maximum sentence of three years.

The 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.”

Justice Mishra, writing the judgment for the bench, said, “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.”

The case emanates from a complaint made in September 1997 by Vijaya Bank 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 that led to subsequent withdrawals by Globe International to the tune of ₹6.7 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 of further TTs worth ₹1.61 crore received in the same account pursuant to which CBI took over the probe.

It later emerged that the bank account was opened based on forged documents, and the person who came forward to open the account remained absconding.

The CBI named four persons as accused, including two bank officials accused of facilitating the opening of the account. The third accused was Soni, who was in touch with the fourth accused Mukesh Shah associated with Globe International, and had allegedly received the gold bars from him. Shah was never tried as he remained absconding.

The trial court held the three persons guilty but directed the 205 gold bars be returned to Soni. On appeal, the high court acquitted the bank officials but fastened guilt on Soni under Section 411. It even directed the gold bars to remain in custody of the state. The appeals remained pending in the Supreme Court since 2012.

Along with Soni’s appeal, the court also dismissed Vijaya Bank’s appeal seeking the return of the gold bars.