T.Peter Dhas, v. The Inspector Of Police,

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT Reserved on :

15.07.2024 Pronounced on :

04.03.2025

CORAM

THE HONOURABLE MR.JUSTICE K.K.RAMAKRISHNAN CRL.A(MD).No.69 of 2018 T.Peter Dhas ... Appellant Vs.

The State Represented by The Inspector of Police, SPE:CBI:ACB:Chennai, RC 40(A) /2009 ... Respondent PRAYER: This Criminal Appeal is filed under Section 374 of Cr.P.C. to call for the entire records pertaining to the judgment and conviction delivered by the II Additional District Court for CBI Cases, Madurai in C.C.No.3 of 2011 vide his judgment dated 31.01.2018 and set aside the same and consequently acquit the appellant honourably from all the charges framed against him in the said case.

For Appellant : Mr.V.Kathirvelu, Senior Counsel for Mr.R.J.Karthick For Respondent : Mr.C.Muthusaravanan, Special Public Prosecutor for CBI 1/37

JUDGMENT

The appellant is the 2nd accused in C.C.No. 3 of 2011 on the file of the II Additional District Court for CBI Cases, Madurai and he has filed this appeal challenging the following conviction and sentence imposed against him by virtue of the impugned judgment dated 31.01.2018. Crl.A.

(MD).No.

Rank of the Accused and Name Charges proved under sections Punishment (imprisonment and fine) u/s. 120 - B r/w. 420 of I.P.C.

Rigorous imprisonment for 7 years and to pay a fine of Rs.50,000/- in default to undergo simple imprisonment for six months A-2 T.Peter Dhas u/s. 120 - B r/w. 409 of I.P.C.

Rigorous imprisonment for 10 years and to pay a fine of Rs.50,000/- in default to undergo simple imprisonment for six months 69/2018 C.C.No. 3/2011 u/s. 420 of I.P.C. Rigorous imprisonment for 7 years and to pay a fine of Rs.50,000/- in default to undergo simple imprisonment for six months u/s. 409 of I.P.C. Rigorous imprisonment for 10 years and to pay a fine of Rs.50,000/- in default to undergo simple imprisonment for six months The sentence of imprisonment shall run concurrently 2/37

2.Brief facts of the case:

2.1. The appellant herein and other three accused conspired together to cheat Pandyan Grama Bank and defrauded the bank fund of Rs. 6,19,93,533/-, therefore the CBI registered the case in RC 40(A)/2009 under section 120 (b), 468, r/w. 471, 420, 409, 477 (A), 201 of I.P.C r/w. 13 (2) r/w. 13 (1) (d) Prevention of Corruption Act 1988. After the completion of the investigation, the CBI filed the final report against the four accused under the above said sections before the Special Court for CBI, II Additional District Court, Madurai. A1 was the branch manager of the Pandyan Grama Bank of both Sri Venkteswarapuram Branch and Marthandam Branch. A2/ appellant was the president of the N.G.O., A3 and A4 were working in the said bank as officers. The Special Court took the said final report on file in C.C.No. 3 of 2011.

After taking on file, summons were issued to the accused and copies under section 207 of Cr.P.C. were served upon them and charges were framed and questioned. They pleaded not guilty and they stood for trial. 2.2.

following the various norms and failed to remit the loan amount collected from the various self help groups in their respective accounts and swindled the amount in the guise of taking insurance policy on the said loan and thereby loss of Rs.6,19,93,533/- had been caused. During the pendency of trial A1 died. The prosecution in order to prove the case examined PW1 to PW16 and marked Ex.P1 to P693. The court below questioned the accused under section 313 of Cr.P.C. by putting the incriminating material available against them. The accused denied them as false and they stated that false case was foisted against them. On the side of the defence no oral evidence led in rather only one document was marked as Ex.D1. The learned trial judge considering the evidence on record and the arguments advanced on both sides convicted the appellant under the above said offence by the impugned judgment dated 31.01.2018. The learned trial judge acquitted the appellant under section 120 (b), r/w. 468, 468 r/w. 471 and 477 (A) and 13

(2) r/w. 13 (2) of the prevention of the corruption Act and 468, 468 r/w. 471, 477 (A), 201 of I.P.C. The learned trial judge also acquitted A3 and A4 from the entire charges. Aggrieved over the same, the appellant filed this appeal challenging the conviction and sentence imposed against him. 4/37

3. Thiru. V.Kathirvelu the learned senior counsel appearing for the appellant made the following submission : - 3.1. The appellant was the president of NGO and he only facilitated the deserving women belonging to fisherman community to get the benefit under the special scheme and most of the self help groups had repaid the amount. Some of the groups have not repaid the amount and for the said purpose the bank has got independent procedure to recover the said amount against the appellant on the basis of the undertaking given by them. Without initiating the recovery proceedings for the due amount, registration of the FIR and continuation of the trial and conviction passed vide the impugned judgment amounts to abuse of process of law.

More particularly, the learned trial judge has acquitted the appellant of the charge under Sections 120 (b), r/w. 468, 468 r/w. 471 and 477 (A) and 13 (2) r/w. 13 (1)(d) of the Prevention of Corruption Act, and 468, 468 r/w. 471, 477 (A), 201 of I.P.C. finding that there was no manipulation of the record, falsification of the documents. Therefore, the conviction under Section 120 (b) r/w. 420 of I.P.C, 120 (b) r/w. 409 of I.P.C., 420 of I.P.C., 409 of I.P.C is not legally maintainable.

3.2. The learned trial judge has committed error in convicting the appellant under Section 120 (b) r/w. 420 of I.P.C, 120 (b) r/w. 409 of I.P.C., 5/37

after the death of the A1 during the pendency of the trial. 3.3. The learned trial judge failed to consider that every beneficiary has accepted the receipt of the loan amount and hence the question of the cheating would not arise, for which he relied on the judgment of this court reported in AIR 1940 Madras 329 and Crl.A.No. 463 of 2022 Vijay Kumar Ghai and others Vs The State of West Bengal and others. According to the learned senior counsel, there was no evidence available an record to convict the appellant under section 420 of I.P.C. i.e., according to the senior counsel no material is available to presume intention of deception to cheat or defraud the complainant bank right from the inception. Therefore, he seeks acquittal.

3.4. There was no complaint either by the self help group or public. Hence, the complaint by the bank officials, without resorting to recovery proceedings on the basis of the undertaking given by him and the responsible group member of the corresponding default self help group, is not legally maintainable.

3.5. The learned senior counsel reading through the voluminous records (around 38 volumes of typed set of papers) made a submission that no incriminating material is available to constitute the criminal offence. 6/37

None of the witness have deposed about the conversion of the loan amount for the benefit of the appellant and that he wrongfully retained the amount of the self help group, and therefore conviction either under section 409 of I.P.C or 420 of I.P.C. is not made out.

3.6. A1 Bank Manager had violated the procedure and sanctioned the loan to the self help group through the account of A2 and A2 retransferred the said amount to the individual group. There is some violation of procedure on the part of A1. The said violation of procedure does not create offence either under section 420 or 409 of I.P.C. Therefore, the conviction under section 120 (b) r/w. 420 of I.P.C., 120 (b) r/w. 409 of I.P.C. is not legally correct.

3.7. The learned trial judge failed to consider that the evidence of PW1 would not show any abnormalities or irregularities at the time of the grant of loan to 805 self help groups and the learned Judge erroneously convicted the appellant.

3.8. According to the prosecution PW3 has conducted inspection and submitted the report. The said report does not contain the pre-inspection 7/37

report. Further, number of transfer vouchers clearly proved that loan amounts credited in his account were transferred to the individual self help groups account and there is no dispute in this aspect. Therefore, no offence either under section 420 or 409 of I.P.C., is made out. 3.9. The prosecution examined some of the beneficiaries namely PW13, PW14 and PW15. Their specific evidence is that they received the amount and repaid the same in the office of A2 and to prove such claim they have not produced any document. Therefore their case of repayment in the office of A2 has not been supported by any document and hence he seeks for the acquittal.

3.10. The learned senior Counsel further reiterated his submission that the appellant was the facilitator of the NGO and he intended to serve the needy people by giving undertaking letter to the bank for the amount received by the individual self help groups. Except the said fact no evidence is available to prove that the appellant either misappropriated the amount or diverted the fund. Therefore the learned trial judge is not correct in convicting the appellant. Hence he seeks to acquit the appellant. 8/37

4. Thiru.Muthusaravanan, the learned Special Public Prosecutor for CBI made the following submissions:

- 4.1. As per the scheme, A1 Bank manager is duty bound to disburse the loan to each individual self help group under the direct linkage scheme, after verifying the functioning of self help groups, upon verification of the resolution copy for the formation of the self help groups by interviewing each group. In the said process the bankers can find out whether the NGO is genuine or not. A1 is also duty bound to ensure regular repayment by the members of loan account. In this case, there was no such follow up action. Hence prosecution clearly proved the conspiracy between A1 and A2. 4.2. From the documents collected by the CBI i.e., more than 693 documents, there is no material to show that A1 and A2 assessed the saving mobilization capacity of each individual groups before granting loan.

As per the terms, the quantum of loan advanced to the SHGs by the branch of the bank should be proportionate to the savings mobilised by the group. Without following this practice, huge amount was credited in the account of A2. Before allowing A2 to act as facilitator, article of agreements should be verified and obtained. In this case, A2 had not complied the said requirement and therefore the conspiracy is clearly proved.

4.3. A1 had not followed both pre-sanction and post sanction procedure and credited the loan amount to the tune of more than Rs.6 Crores in the account of A2 which is a strong circumstance to presume their intention to cheat and defraud the bank amount. 4.4. As per the scheme, once loan was sanctioned in the name of the individual self help group and if they committed default, further loan can not be sanctioned for the said group. But in this case A1 granted loan to more than 40 self help groups in Sri Venkteswarapuram Branch and without repayment of said amount, further loan was granted to the said 40 groups through the branch at Marthandam after the transfer of A1 to the Marthandam Branch from the Sri Venkteswarapuram Branch.

The said amount was also credited in A2's account and the same was utilized towards the repayment of the loan of the self help groups accounts in the Sri Venkteswarapuram Branch. Therefore, there was a illegal conversion of the amount and hence offence under section 420, 409 are clearly made out. 4.5. The learned special public prosecutor also submitted that A2 has admitted the receipt of the loan amount in his account and all the transaction made in the account.

prosecution to examine all members of the self help groups. Prosecution examined four witnesses and all the four witnesses in a universal voice chorus deposed that they had repaid the entire amount in the office of A2 and the same was correctly believed and relied by the learned trial judge. He had also read the copious records and evidence and showed the incriminating materials available against A2 to sustain the conviction and sentence of imprisonment imposed against him. Therefore he seeks to confirm the conviction and sentence imposed against A2. 4.6. This court considered the rival submission and perused the records and the precedents relied upon by them. 5.

Discussion :

Only question that arises in the appeal is whether the conviction and sentence imposed against the appellant as stated above is in accordance with law or not?

6. The government to enhance the economic condition of people announced the scheme. As per the scheme, a group of poor people not exceeding 20 members would join together and form a self help group 11/37

(herein after referred as "SHG") and mobilize own savings and rotate the amount to meet the credit needs of the members. They open the savings bank account in the name of the "SHG" and deposit the mobilized savings and grant loan to the members from the own savings and collect the due amount. In that process, they are free to use the service of the NGO who would offer helps in conducting meetings and maintenance of accounts. Each group opens the bank account jointly operated by president, secretary and treasurer or by the secretary and treasurer as decided by the group members. Each group shall maintain cash register, pass book for deposits/ loans, cash receipts and vouchers.

For that purpose, a resolution copy for the permission of the group, authorization letter from the group members to operate the bank account by the above said persons have been made by the "SHG". With the said resolution copy they shall open the account in the unique name of "SHG". The bank as a promoter and financier shall create linkage with each "SHG". The banker could attend the meeting and interact with members and also the NGO. The NGO helps in group formation and conducting the meeting of the "SHG" in order to make easy access of "SHG" with the bank. The banker should have good relationship with a genuine NGO.

each member of the "SHG" through allotment of the fund under "NABARD". The "NABARD" shall choose the bank and deposit the amount for disbursing the loan to the eligible "SHG". The bank considering the savings of the "SHG" and progress report of the "SHG" shall disburse the loan by acting as a promoter and financier. It is open to the bank to finance the "SHG" either through direct linkage or indirect linkage. In the case of the direct linkage the bankers could directly grant loan to the "SHG". In the case of the indirect linkage, the bank could finance through the sponsoring NGO by following the procedure stated in annexure 5 and 6.

7. As per the above "NABARD" scheme, the Pandyan Grama Bank, Virudhunagar Circle was authorized to disburse the loan to the eligible "SHG" through their branch situated in various places of Tamil Nadu. The circle head office at Virudhunagar also issued circular dated 23.01.2002 to all the branches to comply the requirement stated in the scheme to provide the loan to "SHG" through the NGO. In the said circular also, head office reiterated the requirement of the compliance of the procedure stated in the above said annexure and reiterated number of mandatory requirements in the case of the indirect linkage. They also prescribed specific form and fulfilment of the required mandatory conditions. 13/37

8. A1 was the manager of the Srivenkatesapuram Branch Pandya Grama Bank during the period of 2004 to 2008. A3 and A4 were the Subordinate officers of the said branch. A2/ appellant herein is the managing director of the NGO Kanyakumari District Women's collective. They conspired together to cheat the Pandyan Grama bank, Srivenkatespuram Branch and defraud the said scheme amount by obtaining loan in the name of various "SHG" and failed to disburse the entire loan amount to each individual of "SHG", collected the repayment amount from the various "SHG" and failed to remit the same in the name of corresponding "SHG" in the Srivenkatespuram Branch and as a squeal, there was total non payment of loan amount of Rs.

6,19,93,533/-( Six crore nineteen lakhs nighty three thousand five hundred and thirty three) in the account of 754 Self Help Groups. A1 was transferred to "Marthandam Branch". A2 had obtained 51 loans in the said "Marthandam Branch" with the active connivance of A1 and credited the said amount in his savings bank account and diverted part of the said loan amount to make the repayment of the loan amount of the various Self Help Groups in Srivenkatespuram Branch. Srivenkatespuram Branch is situated at 150 kms away from Marthandam Branch. Among the 51 loans granted in the name of the 51 SHG's.

loan. A1 and A2 obtained fresh loan in the name of the said 42 defaulted SHGs' which was not permissible as per the scheme. Therefore, there was astronomical non recovery of loan amount both in the Srivenkatespuram Branch and Marthandam Branch. Hence, PW3, Senior Manager of the Marthandam Branch was appointed as an enquiry officer to find out the cause for the non payment of the said loan amount. He collected numerous documents and found that there was material violations during the grant of the loan. He submitted the report under Ex.P.8 along with the particulars of violations in granting loan under Ex.P.9. The said report disclosed cognizable offence and hence complaint was made to the CBI.

CBI registered the case and collected volumes of records and completed the investigation and filed the final report under section 120 (b), 468, r/w. 471, 420, 409, 477 (A), 201 of I.P.C r/w. 13 (2) r/w. 13 (1) (d) Prevention of Corruption Act 1988 against A1 to A4. The learned special judge, II Additional District Judge for CBI cases, Madurai has taken final report on file in C.C.No. 3 of 2011 and conducted the trial and acquitted A3 and A4 and convicted A2 for the above stated offence. A1 died during the pendency of the trial after framing of the charges and prior to commencement of examination of witnesses.

15/37

9. A2 as observed above was running NGOs' in the name of "Kanyakumari Women's Collective" and also "Neithal foundation". He had not maintained any records to run the said organizations. He obtained various loans in Srivenkataspuram Branch for the welfare of the fishermen in Kanyakumari District by forming SHG with many members and obtained loan on various dates without proper documents and loan documentation. A1 granted the loan in violation of the procedure under the said scheme. A2 disbursed the loan to the individual SHG's after deducting the portion of the amount under the guise of the loan processing charges and payment for the LIC premium. As per the scheme there was no such requirement to pay the loan process charges. But he deducted the said amount.

Even though he received the amount under the caption of insurence premium, he never paid any amount. The various Self Help Groups had repaid the entire loan amount to A2. A2 did not make payment of the said loan amount in the corresponding SHG account and made them as defaulters in Srivenkatespuram Branch. The default account comes to around 754. In the meantime A1 was transferred to Marthandam Branch from Srivenkatespuram Branch. A2 had obtained the loan in the name of the 51 Self Help Groups in the Marthandam Branch. Among the 51 Self Help Groups, 42 SHGs are defaulters in the Srivenkatespuram Branch.

per the scheme, A1 had no authority to grant loan to the said 42 defaulters. But, both conspired and swindled Rs. 74,04,370/-.(Seventy four lakhs four thousand three hundred seventy only). According to the prosecution, only a portion of the loan amount sanctioned to the said 51 SHGs' is said to have been credited in various SHG's loan account. Therefore, the learned trial judge has correctly looked into the material documents and evidence and arrived at a finding that A2 has committed offence under section 120 (b) r/w. 420 of I.P.C, 120 (b) r/w. 409 of I.P.C., 420 of I.P.C., 409 of I.P.C. This court finds no infirmity in the said finding. The prosecution has clearly proved the above said charges through exhibits P1 to P692. 10.1.

It is sufficient to cull out the substance of the voluminous documents to arrive at a finding about the guilt of A2. A2 was the managing director of the NGO namely the "Kanyakumari Women's Collective" and "Neithal foundation". He had not produced any document to show that it is either registered under the co-operative societies Act, or under society registration Act or under any trust act. He has not produced any document to show that the said NGO is a genuine one. He had not submitted loan documents with proper documentation, sponsorship letter of the NGO, resolution of SHG's financial particulars.

with the said material defects and credited the amount in his savings account (A/c.No. 7080 Srivenkatespuram Branch) of A2 on various dates. Out of the said amount Rs.18,40,000/- was credited for the payment of the insurance premium of each loan. A2 neither made the payments towards LIC premium nor transferred the said amount to the credit of each SHG. P.W.3 in his detailed deposition on 18.09.2017 while marking Ex.P.201 to Ex.P.692 narrated the sequence of events which clearly proved the grant of loan by A1 in favour of A2 in utter disregard to the procedures and conditions. P.W.3 further deposed about the credit of the loan amount in the account of A2 and the said evidence was put under Section 313 of Cr.P.C., A2 also admitted the said transaction. There was no material, cross examination on the side of A2 to disbelieve his version.

He further specifically deposed that there was a transfer of the amount of Rs.18,40,000/- for making the payment of LIC premium and no record was found to show that A2 had indeed paid the premium. Further, P.W.13,P.W. 14 and P.W.15 deposed that more than Rs.10,000/- was collected from each group, apart from the amount towards insurance premium. The following evidence would prove this fact: - P.W.13:- 'xU FOtpw;F &.

18/37

xU cWg;gpdUf;F &.10>000 tPjk; tz;br; nryT Nghf kPjj;ij ghf;fp gzk; KOtijAk; fldhf ngw;Nwd;.

mjw;F ehq;fs; Peterdhas (A2) ,lk; flid nfhLj;Jtpl;Nlhk; vd;Wk; vq;fSf;Fk; tq;fpf;Fk; rk;ke;jkpy;iy vd;Wk; Mjyhy; ehq;fs; fl;l Ntz;ba mtrpak; ,y;iy vd;Wk; $wpNdhk;.

P.W.14:- Peter Dhas A2 nrhd;d eghplk; jhd; ehq;fs; fld; njhifia fl;bNdhk; mrYk; tl;bAk; Nru;e;J ehq;fs; fld;fis;f fl;btpl;Nlhk;.

mjd;gpwF Peter Dhas A2 I njhlh;G nfhz;Nlhk;

mjw;F Peter Dhas A2 flid ePq;fs; fl;baJ cz;ik jhd; vd;Wk; xU rpy FOf;fs; fld;

fl;lhjjhy; ehq;fs; me;j njhifia gphpj;J fl;btpl;Nlhk; vd;W vq;fsplk; $wpdhh; NkYk; Peter Dhas A2 MW khj fhyj;jpw;Fs; gpur;rid epth;j;jp nra;ag;gLk; vd;Wk; vq;fSf;F ve;j gpur;ridAk; tuhJ vd;W $wpdhh;.

fld; njhif Ra cjtp FOf;fSf;F toq;fg;gl;l rkaj;jpNyNa mj;njhiff;F cz;lhd Insurance Policy njhif kw;Wk; Processions Fee Mfpait vLj;Jf;nfhs;sg;gl;lJ.

19/37

10.1. There was no cross examination in this aspect. This would show that the prosecution clearly proved the receipt of more than Rs. 10,000 in the loan account of each SHG by A2 without authority and the failure to remit the insurance premium amount. 10.2. In the absence of cross examination on a particular fact either by denial or suggestion, it would amount to admission of the said fact and the same is fortified by the three Judge Bench of the Hon'ble Supreme Court in Arvind Singh Vs State of Maharashtr reported in 2021 11 SCC 1 following portion of the judgment of the Hon'ble Supreme Court : "The system of adminsitration of justice allows of cross-examination of opposite party's witnesses for the purpose of testing their evidence, and it must be assumed that when the witnesses were not tested in that way, their evidence is to be ordinarily accepted."

10.3. The unchallenged evidence of the above said P.W.13, P.W14 and P.W.15 would clearly prove the failure to repay the collected amount from the SHG into their account.

20/37

11. PW3 also specifically deposed about the various material defects in granting the loan in the name of A2 without proper documentation and the non-compliance of the procedure stated in annexure 5 and 6 of the scheme and there was no cross examination in this aspect also. His report under Ex.P8 and defects mentioned in the Ex.P9, had never been controverted by the appellant either through the cross examination or by adducing evidence.

12.The conduct of A2 in approaching A1 in his transferred place Marthandam situated far away from Srivenkatespuram Branch and obtaining loan in the name of 42 defaulted Self Help Groups and remitting portion of the said loan amount towards the repayment of the some other SHG's loan account, clearly prove the conspiracy between A1 and A2 to defraud the bank amount and also clear conversion of the loan amount. PW13, 14 and 15 cogently deposed about the deduction of Rs.15,000/- in their individual SHG's account and the repayment of the entire loan amount in the office of A2 and his failure to repay the said amount in the loan account. The said evidence are cogent and also trustworthy. Even though they were subjected to incisive cross examination, nothing was elicited to disbelieve the version.

21/37

13. One other circumstance is also seen to have emanated from the different answers given by A2 during his examination under section 313 of Cr.P.C. He has specifically admitted that various loan amount of SHG was transferred in the account number 7080 in Srivenkatespuram Branch, Account No. 1 of Marthandam Branch and the fictitious account No. 1111 of Marthandam Branch. His case is that the SHGS had not repaid the amount. He gave the undertaking letter to repay the said amount along with loan application. Therefore, he is not liable to be prosecuted. This court declines to accept the same. Here the case is not one of mere non payment. He swindled the huge loan amount under the guise of the NGO.

He and A1 from the inception with intention to cheat the bank, made the application with material defects and obtained the loan amount and transferred the amount with deduction of more than 10,000/- in each SHG's account for the loan amount of Rs.1,50,0000/- and received the repayment from each SHG and failed to credit it in the corresponding SHG's account. Therefore, the circumstances and oral evidence and documentary evidence clearly proved the offence under section both 120 (b) r/w. 420 and 420 of I.P.C. A2 collected LIC premium amount and never paid the said amount. A1 is duty bound to verify the end user of the loan amount i.e.

account.

13.1. Apart from that A1 granted loan in the Marthandam Branch in the name of 41 SHG's groups and amount was credited into the account of A2 and a portion of the amount was also transferred towards the payment of loan account of some other SHGS, without crediting in the corresponding account of the correct SHGs. Therefore there is a clear case of conversion of the loan amount and hence this court finds that the prosecution clearly proved the charge under section 120 (b) r/w. 409 of I.P.C. and 409 of I.P.C. Hence, this court holds that the learned trial judge correctly convicted the appellant under section 120 (b) r/w. 420 of I.P.C, 120 (b) r/w. 409 of I.P.C., 420 of I.P.C., 409 of I.P.C.

14. PW3 conducted a detailed enquiry and found that a number of material irregularities were committed by A1 Manager in connivance with A2 in sanctioning the loan to various SHG's and thereby caused loss to the bank to the tune of Rs.6,19,93,533 and in his report he has clearly stated that 18.40 lakhs collected from the SHGS as insurance premium was neither remitted to the insurance company nor in the account of the individual SHG's. In this report the following material irregularities have been observed:- 23/37

24/37

25/37

26/37

15. To substantiate the said report, the prosecution had produced volumes of documents. There was no letter of authority for each loan. All the letter of authorities are in blanks. For better appreciation, this court has extracted one of the form submitted along with each loan: 27/37

16. A2 had not annexed his NGO resolutions along with all loan forms and there was also no pre inspection report of the functioning of the individual SHG, to ascertain their repaying capacity. Even the agreement is blank. For better appreciation this court has extracted one of the forms submitted along with the loan application:

28/37

29/37

30/37

17. The prosecution also produced account details of A2 in the account No. 7080 Srivenkatespuram Branch, Account No. 1 of Marthandam Branch and the fictitious account No. 1111 of Marthandam Branch. From the transaction in the said accounts, it is clear that there was a clear diversion of the loan amount. Ex.P673 to Ex.P89 are pay in slips in the account No. 1 of Marthandam operated by A2. The prosecution proved all the transactions under the various exhibits including Ex.P652, P654, P660, P665, P666 etc., This court perused all the records along with the 31/37

evidence of the bank officials namely PW3, PW4, PW5, PW6, PW7, PW8, PW9, PW10, PW11, PW12 and finds that the prosecution clearly proved the charges i.e., A1 and A2 conspired together to cheat the bank and defrauded the funds of the bank by granting loan in the name of various SHG without proper pre sanction loan verification and other material formalities as required under the scheme and sanctioned the loan in the name of the various SHGs'. Illegally collected Rs.

10,000/- from the SHGs' as insurance premium and failed to remit the repayment made by the individual SHG's towards the loan account in Srivenkatespuram Branch and subsequently obtained loan in the Marthandam Branch after the transfer of A1 to that place, without disclosing the default committed by the 42 SHGs' and diverted the said fund for the other purpose of settling the earlier defaults. In view of the above discussion, the judgment relied by the learned Senior counsel in the case of Sathischandra Ratanlal Shah vs. State of Gujarat and another in Crl.A.No.9 of 2019 is not applicable to the present case. Even in the said judgment, in paragraph No.

15 it is stated about those breaches which are accompanied by fraudulent, dishonest or deceptive inducements, which resulted in involuntary and in-efficient transfers, under Section 415 of IPC.

Srivenkadeswaram Branch, A1 was transferred to the Marthandam Branch. In the Marthandam Branch, A1 granted loan in the name of the same SHG groups, which committed default in making the repayment in the Srivenkatesapuram Branch and transferred the loan amount of Rs. 95,17,000/- in the new account of A2. Therefore, both fraudulent and dishonest intention at the inception is clearly made out from the entire circumstances of the case. The Hon'ble Supreme Court in the case of Bashirbhai Mohamedbhai vs. State of Bombay reported in AIR 1960 SC 979 has held that making of false representation is one of the ingredients for an offence of cheating and also the Hon'ble Three Judges Bench of the Supreme Court in the case of Shivanarayan Kabra vs.

The State of Madras reported in AIR 1967 SC 986 has held as follows: The appellant knew fully well that he had no right to do forward business and that he was not a member of any recognised association and that he could not lawfully advertise to P.W.2 for investment in forward contracts. It is not necessary that a false pretence should be made in express words by the appellant. It may be inferred from all the circumstances including the conduct of the appellant in obtaining the property and in Ex.

concealed from P.W.2 the fact that he was not a member of any recognised association and that he was not entitled to carry on the forward contract business, it is clear that P.W.2 could not have parted with the sum of Rs.12,000/- but for the inducement contained in Ex.P34 and the representation of the appellant that he could lawfully carry on forward contract business.

17.1. In the present case, false pretence can be legally inferred from the conduct of the appellant in diverting loan amount of various SHG and obtaining fresh loan from Marthandam Branch in the name of SHGS' that had already committed default of earlier loan in the S.V. Puram Branch and siphoning off the said amount also. A2 NGO has no authority to utilise the various loan amount of SHGs. Even he has not taken any steps to deposit the collected amount from each SHG groups. The offence is completed, when misappropriation of amount has been made dishonestly. Therefore prosecution proved the case beyond reasonable doubt and this appeal lacks merit and hence liable to be dismissed.

17.2. In view of the above discussion, this Court concurs with the finding of the learned trial judge that the appellant has committed offence 34/37

under section 120 (b) r/w. 420 of I.P.C, 120 (b) r/w. 409 of I.P.C., 420 of I.P.C., 409 of I.P.C. and considering the huge loss and also the fact that no payment was made either during the pendency of the trial or appeal, this Court has no reason to interfere with the punishment imposed by the learned trial Judge.

18. Accordingly, this Criminal Appeal is dismissed by confirming the conviction and sentence imposed in C.C.No. 3 of 2011 on the file of the II Additional District Court for CBI Cases, Madurai. The bail bond executed by the appellant is hereby cancelled and the learned trial judge is directed to secure the accused to undergo the remaining part of sentence of imprisonment.

04.03.2025 NCC : Yes/No Index : Yes / No Internet :Yes / No sbn 35/37

To

1. The II Additional District Judge for CBI Cases, Madurai District.

2. The Inspector of Police, SPE:CBI:ACB:Chennai.

3. The Special Public Prosecutor for CBI Cases, Madurai Bench of Madras High Court, Madurai.

4. The Section Officer, Criminal Section(Records), Madurai Bench of Madras High Court, Madurai.

36/37

K.K.RAMAKRISHNAN,J.

sbn Pre-delivery judgment made in CRL.A(MD).No.69 of 2018 04.03.2025 37/37