Research › Search › Judgment

Kerala High Court · body

2025 DIGILAW 2132 (KER)

Leelamma v. State Of Kerala

2025-08-04

A.BADHARUDEEN

body2025
ORDER : A. BADHARUDEEN, J. Crl.R.P.No.729/2022 has been filed by accused No.15 in C.C.No.6/2014 on the files of the Enquiry Commissioner and Special Judge, Thrissur, challenging dismissal of her petition seeking discharge by the Special Court. Crl.R.P.No.893/2022 is at the instance of accused No.12 in the above case, who also challenges order refusing discharge. Crl.R.P.No.32/2023 has been filed by accused No.11 in the same case, aggrieved by dismissal of his discharge plea. Similarly, accused No.13 has filed Crl.R.P.No.793/2022, challenging dismissal of her discharge petition by the Special Court. 2. Heard respective counsel for the revision petitioners as well as the learned Public Prosecutor appearing for the Vigilance and Anti-Corruption Bureau. 3. In this matter, the prosecution alleges commission of offences punishable under Section 13 (1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988 (for short, ‘the PC Act, 1988’ hereinafter) as well as Sections 419 , 420, 465, 468, 471 and 120B of the INDIAN PENAL CODE , by the accused. 4. The case of the prosecution in brief is that, accused Nos.1 to 4 and 10 to 17 along with accused Nos.5 to 9, hatched a conspiracy during the period March, 2001 - August, 2001, with an intention to commit criminal misconduct, misappropriation and cheating, sanctioned loans of Rs.50 lakh each (total Rs.1 Crore) from Kerala Financial Corporation (for short, ‘KFC’ hereinafter) to accused Nos.5 to 9 by using and sticking on fake and forged documents in the names of two fake industrial units, named M/s.Geetha Suppliers and M/s.G & J Suppliers, Karoor, Thrissur, which were submitted by accused Nos.5 to 9, causing substantial wrongful loss to KFC and abusing their official position as the officers of KFC, Thrissur and disbursed the loan without properly vetting the documents, conducting site inspections, relying on false documents and false valuation certificates and showing that the property belonged to CW6 and CW7, was conveyed to accused Nos.5, 8 and 9. Accused Nos.5 to 9 forged the signatures and photographs of CW6 and CW7 in the documents submitted before KFC to avail loan and so far, they have not discharged the loan amount accruing the liability of Rs.1 crore and odds besides interest thereon. 5. The learned counsel for the revision petitioner/accused No.12 vehemently canvassed interference of the order refusing discharge of accused No.12 by the Special Court. 5. The learned counsel for the revision petitioner/accused No.12 vehemently canvassed interference of the order refusing discharge of accused No.12 by the Special Court. According to him, as per Annexure A6 in Crl.R.P.No.893/2022, it is emphatically clear that accused No.12, being the Deputy Manager, who is also a member of the District Level Screening Committee (for short, ‘the DLSC’ hereinafter) and as per decision, dated 31.03.2001 where Sri.K.S.V.Nayakan - Regional Manager (A10), Sri.V.M.Vijayan - Deputy Manager (A1), Smt.Elizabeth John - Deputy Manager (A13) and Sri.P.P.Joy - Deputy Manager (A11), were participated in the meeting of DLSC and the Committee decided to accept the proposal and resolved to sanction a T/L of Rs.50 Lakh each subject to conditions a to c mentioned therein. According to the learned counsel for accused No.12, the role of accused No.12 is merely to recommend the loan on verification of the documents produced by the other accused and accused No.12 has no role to interact with the loanees and to verify their title documents etc. According to the learned counsel, Annexure A5 in Crl.R.P.No.893/2022 is the appraisal memorandum for sanction of loan pertaining to the present case to the tune of Rs.50 Lakh and as per which, it was directed that before drawing any portion of the amount, the party should satisfy the following conditions: “a) Satisfactory confidential report from State Bank of Travancore Vazhappally. b) Industrial land should be purchased and mortgaged to the Corporation. c) Collateral security property worth not less than Rs.49.00 lakhs should be offered. d) Approved building plan/NOC from Panchayath for construction of industrial building. e) Payment for machinery will be effected only after physical verification/valuation at the industrial site. f) Advance to machinery supplier should be given by DD. g) The capital should be brought up and raised at least to the minimum level of Rs 30.25 Lakhs as shown in the financing pattern. h) Conditions of working capital term loan under Single Window Scheme will also be applied for.” The learned counsel further pointed out that the Special Court addressed the discharge petition filed by accused No.12 on wrong impression that he held the post of Branch Manager, in fact, he is the Deputy Manager. According to the learned counsel for accused No.12, the Special Court failed to consider the arguments tendered and therefore, the order impugned would require interference. According to the learned counsel for accused No.12, the Special Court failed to consider the arguments tendered and therefore, the order impugned would require interference. In fact, the revision petitioner in Crl.RP.No.32/2023 is accused No.11 and revision petitioner in Crl.R.P.No.793/2022 is accused No.13. They also shared the argument advanced by the learned counsel for accused No.12 to contend that the Special Court did not consider the contentions raised by accused Nos.11 and 13, while seeking interference in the order impugned. It is argued further that, initially, in the FIR, accused No.12 was not an accused and he got in the array of accused in the final report. It is pointed out further that accused No.10 - Regional Manager, who is also a member of the DLSC, was discharged by the Special Court, as per Annexure A8 order in Crl.R.P.No.893/2022 and therefore, accused No.12 also deserves discharge on the same ground. 6. The learned counsel for accused No.15 would submit that in this matter, accused No.14 was discharged by the Special Court, as per Annexure 1 order in Crl.R.P.No.729/2022 and the status of the petitioner herein is that of accused No.14 and therefore, the Special Court went wrong in disallowing the application filed by accused No.15, taking the case of accused No.15 on a different footing. 7. Strongly opposing interference of the orders impugned, it is submitted by the learned Public Prosecutor that the prosecution materials are abundant to proceed with the trial against accused Nos.11, 12, 13 and 15. It is pointed out that the statements given by CW3 and CW4 along with the entry in Annexure A5 in Crl.R.P.No.893/2022 would clearly show that accused Nos.11, 12, and 13, who are members of the DLSC, approved the loan without examining the records placed before them, though the records did not contain anything regarding the details of the property offered as security for the loan. According to the learned Public Prosecutor, it is the duty of the DLSC to screen both the loan applications as well as the collateral security submitted along with the applications for sanctioning the loan. Smt.Sally Joseph, who is the wife of Sri.John Joseph, whose signature was put in the application, given statements to the Vigilance that she did not sign application and she even denied her photo and signature as shown in the agreement of loan. Smt.Sally Joseph, who is the wife of Sri.John Joseph, whose signature was put in the application, given statements to the Vigilance that she did not sign application and she even denied her photo and signature as shown in the agreement of loan. Therefore, the Screening Committee miserably failed to do their job in the matter of scrutiny, involving sanction of loan to the tune of Rs.50 Lakh and thereby, Rs.50 Lakh was granted to M/s.Geetha Suppliers on getting collateral security of a property, in fact, owned by Smt.Sally Joseph without her knowledge and consent as the outcome of conspiracy hatched among the accused. Thereafter, when the signatures in the agreement alleged to be signed by Smt.Sally Joseph and Sri.John Joseph were compared with the original signatures and it was found that they were not matching. According to the learned Public Prosecutor, accused Nos.11, 12 and 13, being the members of the DLSC, failed to scrutinize the application and also to verify collateral security offered as that of the applicant/s and even failed to identify the genuine identity of the applicant/s and thereby, KFC lost Rs.1 Crore along with subsequent interest because the property offered for the loan could not be proceeded, as the property was not offered as security by its original owners as Smt.Sally Joseph and Sri.John Joseph. 8. Even though much have been argued by the learned counsel for the revision petitioners, it is relevant to note that while addressing the discharge plea, at the instance of accused No.12, the Special Court observed that the collateral security in the form of mortgage was given to KFC after creating forged documents by accused Nos.5 to 9 and impersonating the names of two industrial units, named M/s.Geetha Suppliers and M/s.G & J Suppliers, Karoor, Thrissur. But, no clarification report was sought for by the authority to ascertain the sanctity of the forged documents, which is ought to have been done by the DLSC. In paragraph Nos.11 and 12 of the discharge plea, at the instance of accused No.12, the learned Special Judge observed as under: “11. The accused, having dominion over the property of the KFC, disposed the same without discharging his legal obligation as the branch manager, and DLSC member of the KFC. Thereby, he did not discharge the obligation of trust on his part. Thus he committed criminal breach of trust as well. The accused, having dominion over the property of the KFC, disposed the same without discharging his legal obligation as the branch manager, and DLSC member of the KFC. Thereby, he did not discharge the obligation of trust on his part. Thus he committed criminal breach of trust as well. Without making any attempt to go behind the forged document, simply allowed the loan amount. Therefore, he directly involved in the commission of offence, forgery and forgery for the purpose of cheating. His involvement was from the beginning till the end of the criminal episodes. Therefore, he is liable u/s. 120-B of I.P.C. as well. 12. On going through the facts and materials in this case, the petitioner is not entitled to get any discharge. On the other hand, these materials would attribute the involvement in the commission of offence. Sometimes, he may be innocent. But it may be established through adjudication during trial. Therefore, this petition is premature at this stage. Therefore, the accused is not entitled to get discharge. Hence, point No. 1 is against the petitioner.” 9. In fact, accused Nos.11 and 13 were members of the Screening Committee. While dismissing the application, seeking discharge at the instance of revision petitioner/accused No.11 in Crl.R.P.No.32/2023, the learned Special Judge observed in paragraph Nos.9 to 13 of the impugned order as under: “9. In this case, the petitioner was a member of District Level Screening Committee which accorded sanction to disburse loan amount to A5 for his industrial units M/s.Geetha Suppliers and M/s.G & J Suppliers, Karoor. They are with the authority to reject the recommendation of their subordinates, approve or alter their recommendation in the matter of disbursement of loan. So they have a vide power to supercede the recommendation of their subordinates. It shall not be expected to have been acted as mechanically. 10. All the higher ups of the KFC should apply their wisdom and mind to protect the interest of KFC from any loss. Their negligence would attribute offence u/s.406 of I.P.C. Since they have dominion over the funds of KFC and all with the trust of to ensure its recovery without causing any loss to KFC. The petitioner as well as the higher ups of the KFC have dominion over the affairs of the KFC. Their negligence would attribute offence u/s.406 of I.P.C. Since they have dominion over the funds of KFC and all with the trust of to ensure its recovery without causing any loss to KFC. The petitioner as well as the higher ups of the KFC have dominion over the affairs of the KFC. They should use or dispose the loan amount with the obligation to discharge their trust towards KFC to ensure recovery as the officers of the same . In case, any latches from their side would attribute breach of trust. 11. In this case, they parted the loan on the basis of fake documents and fake identity persons or fictitious person. They relied on false valuation certificate as well. The amount involved in this case is more than Rs.1 crore. Therefore, circumstances would spell out that they had dishonest intention in disbursing the loan amount. This would reflect on acting upon incomplete application form without affixing photo. It caused wrongful loss to KFC. Normally, it would pave way for wrongful gain to the A5 to A7. Their negligence of not properly exercising duty as District Level Screening Committee attributed the same. 12. Loan amount Rs.1 crore was disbursed to A5 to A7 relying forged documents. It could have been ferreted, if proper mind was applied by KFC officials. This making the probability of their unlawful enrichment in the plot. Production of two fake documents reveal the dishonest intention of accused not pay any loan amount from the inception. They deceitfully offered the property of others to KFC as security to get loan amount. The loan amount should not be delivered by KFC because the original owner did not execute any deed. But the forged document used as genuine for securing loan, knowing it to be false. Still no amount has been paid till this time. It could have been averted, if it is property sanctioned by KFC office vetting the documents, identity of the loanees and site inspection. Thus all the accused hatched conspiracy and committed offence u/s 420, 468, 471, 120 B and 34 of I.P.C. besides 13(2) of the Prevention of Corruption Act. 13. Apart from this, A5 to A9 directly committed the offence of cheating, misappropriation, breach of trust, forgery and forgery for the purpose of cheating contemplated under INDIAN PENAL CODE and misconduct under Prevention of Corruption Act. 13. Apart from this, A5 to A9 directly committed the offence of cheating, misappropriation, breach of trust, forgery and forgery for the purpose of cheating contemplated under INDIAN PENAL CODE and misconduct under Prevention of Corruption Act. Negligence on the part of this petitioner as well as other higher ups of KFC would prove prima-facie case that they hatched conspiracy in granting and disbursing the loan amount. Therefore, they form part of the conspiracy as well. Therefore, there is prima-facie case of Sec. 120-B of I.P.C. also there. Whereas offence u/s.13(2) of the Prevention of Corruption Act, breach of trust, cheating, forgery and forgery for the purpose of cheating attribute misconduct. Thus all are liable for the commission of offence u/s.13(2) of the Prevention of Corruption Act r/w 120 B of I.P.C. as also.” 10. Similarly, while dealing with the discharge plea, at the instance of revision petitioner/accused No.13 in Crl.R.P.No.793/2022, the learned Special Judge observed in paragraph Nos.7 and 8 of the impugned order as under: “7. In fact, she did not moot any plausible reasons in this matter. She being an American citizen do not exonerate her from the liability. The offences was committed inside India and she is liable for the offence committed within this country. That contention need not be looked into. She was a member of DLSC committee which sanctioned loan. 8. Thereafter, disbursement was also granted to A5. In fact, the loan was sanctioned without proper scrutiny and identification of loanees. False documents were received to part the loan. A legal officer shall not take the shield of ignorance and no involvement in the offence, when willful negligence and deliberate laches caused for her part. She did not discharge the trust, which would be discharged as the officials of KFC. She had dominion over the funds of the KFC, when granting loan. Therefore, her omission in discharge of her duty or property would attribute criminal breach of trust and cheating.” 11. Insofar as the revision petitioner/accused No.15 in Crl.R.P.No.729/2022 is concerned, his plea of discharge was dismissed by the Special Court mainly relying on the observations in paragraph Nos.8 and 9 of the impugned order, which reads as under: “8. Loan amount of Rs.1 crore was disbursed to A5 to A9 relying forged documents and inconsequence of the foul play. Insofar as the revision petitioner/accused No.15 in Crl.R.P.No.729/2022 is concerned, his plea of discharge was dismissed by the Special Court mainly relying on the observations in paragraph Nos.8 and 9 of the impugned order, which reads as under: “8. Loan amount of Rs.1 crore was disbursed to A5 to A9 relying forged documents and inconsequence of the foul play. It could have been ferreted, if proper mind application shall be resorted by KFC officials. This might attribute their move of unlawful enrichment in the plot. Production of two fake documents reveal the dishonest intention of accused not pay any loan amount from its beginning. It was from inception of the transaction. They offered the property of others to KFC as their own security to get loan amount. The property should not have been delivered to KFC because the original owner did not execute any deed. But the forged document for availing loan and used as genuine, knowing it to be at fake. Still no amount has been paid till this time. It could have avoided if it is proper, if it properly sanctioned by KFC office conducting site inspection and insisting for completing filled up application form with photo and other documents. Thus all the accused hatched conspiracy and committed offence u/s.420, 468, 471, 120 B and 34 of I.P.C. besides 13(2) of the Prevention of Corruption Act. 9. Apart from this, A5 to A9 directly committed the offence of cheating, misappropriation, breach of trust, forgery, for the purpose of cheating contemplated under INDIAN PENAL CODE and misconduct under Prevention of Corruption Act. Negligence on the part of this petitioner as well as other higher ups would be revealed as keeping much from inception and it would prove prima-facie case that they hatched conspiracy in granting and disbursing the loan amount. Therefore, they form part of the conspiracy as well. Therefore, there is prima-facie case of Sec.120-B of I.P.C. also there. Whereas offence u/s 13(2) of the Prevention of Corruption Act, breach of trust, cheating, forgery, forgery for the purpose of cheating attributes misconduct. There is enough materials to expose the offence alleged against A15. Thus she is liable for the commission of offence u/s.13(2) of the Prevention of Corruption Act as also.” 12. Whereas offence u/s 13(2) of the Prevention of Corruption Act, breach of trust, cheating, forgery, forgery for the purpose of cheating attributes misconduct. There is enough materials to expose the offence alleged against A15. Thus she is liable for the commission of offence u/s.13(2) of the Prevention of Corruption Act as also.” 12. Coming to Annexure A8 order in Crl.R.P.No.893/2022, whereby accused No.10, who is the Regional Manager, KFC, Thrissur, who also participated in the DLSC meeting, was discharged, the reasons found by the Special Court for discharging the accused, as could be read out from Annexure A8 order are: there was no mention in the final report regarding the role of accused No.10, and no single witness had been examined since 2010 to find his involvement. The witnesses’ statements otherwise did not contain any material against accused No.10. Most importantly, there were no materials to show any conspiracy hatched by accused No.10 with other accused persons with the element of meeting of minds. Accordingly, the Special Court found that merely for the reason that the petitioner presided over the DLSC meeting itself would not suffice to establish criminal misappropriation. In fact, this Court is not inclined to look into the correctness of findings in Annexure A8 order and the said findings could be addressed only when the same is challenged before this Court. Thus, this Court cannot say that Annexure A8 order is correct. Therefore, Annexure A8 order would not save accused Nos.11, 12 and 13 getting discharge for the reasons stated in Annexure A8 order, where the same Judge, in fact, dismissed the application of accused No.10. Coming to Annexure A9 order in Crl.R.P.No.893/2022, whereby the Special Court discharged accused No.16 also. The reasons could not be looked into by this Court for the reasons already referred hereinabove. 13. Coming back, Kerala Financial Corporation is a public sector undertaking aimed at giving financial assistance to various persons to run business. When the amount of loan applied for a higher sum, e.g. Rs.50 Lakh and above, a double check system has been introduced and therefore, the DLSC (District Level Screening Committee), a separate body consisting of senior officers, was formed. Coming back, Kerala Financial Corporation is a public sector undertaking aimed at giving financial assistance to various persons to run business. When the amount of loan applied for a higher sum, e.g. Rs.50 Lakh and above, a double check system has been introduced and therefore, the DLSC (District Level Screening Committee), a separate body consisting of senior officers, was formed. Even though the contention raised by accused Nos.11 to 13 are accepted to find that DLSC has no option to verify the documents and to deal with customers when materials are forwarded for the DLSC to consider grant of loan amounting to Rs.50 Lakh each, they could not mechanically grant the same and they should have the preliminary responsibility of verifying as to whether the report would contain atleast the property offered as security for availing the loan with title deed thereof, and the property is capable of providing security for the loans so granted. 14. In the instant case, as pointed out by the learned Public Prosecutor, it is emphatically clear that in Annexure A5 in Crl.R.P.No.893/2022, no property offered as security. In such situation, the DLSC is expected to return the report for producing along with the property details and title deeds of the documents without sanctioning the loan by imposing conditions a to h. If a mere formal approval of the loan applied alone in the domain of DLSC, there is no necessity to establish such a committee in the second tier in cases where the loan amount exceeds Rs.50 Lakh or above and such committee is meaningless. In such a case, the contention raised by accused Nos.11, 12 and 13, relying on Annexures A5 and A6 and other documents are sufficient to give them clean chit in the form of discharge would not yield. In this matter, it is evident from the documents that accused Nos.5 to 9 availed loan of Rs.1 Crore on producing forged documents alleged to be signed by CW6 and CW7 and after availing the loan, they did not repay the amount. Now, KFC is not in a position to realise the loan and the interest accrued thereof because of failure in getting sufficient security due to laches of officials including the revision petitioners. Therefore, dismissal of discharge plea, at the instance of accused Nos.11, 12 and 13 by the Special Court is only to be justified. 15. Now, KFC is not in a position to realise the loan and the interest accrued thereof because of failure in getting sufficient security due to laches of officials including the revision petitioners. Therefore, dismissal of discharge plea, at the instance of accused Nos.11, 12 and 13 by the Special Court is only to be justified. 15. Addressing the case advanced by accused No.15, the main point urged by the learned counsel is that, as per Annexure 1 order in Crl.R.P.No.729/2022, the trial court discharged accused No.14 and therefore, accused No.15, who was working as Assistant Manager (Legal), KFC, Thrissur, during the period March, 2001 - August, 2001 is also entitled to get discharge on the same grounds, for which the Special Court discharged accused No.14. 16. As already pointed out, as far as discharge of accused No.14 is concerned, the same is not a subject matter to be addressed by this Court. Even though for clarity, Annexure 1 order is produced, it could be gathered that, regarding accused No.14, the Special Court observed that going by the statement of CW5, accused No.14 inspected the property even before passing of title to the loan applicants and therefore, the act of accused No.14 of preparing feasibility report before the property was assigned to the promoters could be held only as an official lapse and not a crime. This Court is not inclined to decide the correctness of that order as the same is not challenged before this Court. Therefore, this Court could not say that the said order is correct. However, the substantial difference could be seen in between accused Nos.14 and 15 is that, accused No.15, being Assistant Manager (Legal), KFC, as observed by the Special Court, accused No.15 as well as the other higher officials hatched conspiracy in granting and disbursing the loan amount without obtaining sufficient security to see commission of offences alleged against accused No.15, prima facie or with the element of strong suspicion. 17. 17. Having appraised the matter in detail, it is difficult to hold that the reasons stated by the learned Special Judge to dismiss the discharge pleas, at the instance of accused Nos.11, 12, 13 and 15 are erroneous to re-visit the same, in any manner, since the prosecution records would reveal that accused Nos.11, 12, 13 and 15 have involvement in this crime, prima facie, as the outcome of conspiracy hatched among the accused in a case involves Rs.1 Crore along with subsequent interest thereof to KFC, would require trial. Therefore, all these petitions must fail and are accordingly dismissed. The interim order of stay granted by this Court in these matters, stand vacated. It is specifically made clear that the observations made in this order are confined to the determination of the plea for discharge and shall have no binding effect on the Special Court, while considering the case on its merits, after adducing evidence.