* THE HON’BLE SRI JUSTICE U. DURGA PRASAD RAO
+ Criminal Revision Case No.558 of 2011
%11.09.2014
Between:
The State (CBI / SPE, Hyderabad). .... Appellant AND K. Jaipal Reddy. ….
Respondent ! Counsel for Appellant : Sri P. Kesava Rao, Special Standing Counsel for CBI ^ Counsel for Respondent : Sri I. Gopala Reddy.
< Gist:
> Head Note:
? Cases referred:
1) 2012 (1) ALD (Crl.) 325 AP
2) 2012 Law Suit (SC) 620 HONOURABLE SRI JUSTICE U.DURGA PRASAD RAO
Criminal Revision Case No.558 of 2011
ORDER:
Aggrieved by the order dated 08.11.2010 in Crl.M.P.No.754 of 2009 in C.C.No.1 of 2008 passed by the learned Special Judge for CBI cases, Hyderabad discharging the Accused No.8 under Section 239 Cr.P.C for the offences under Sections 120-B, 419, 420, 468, 471 of I.P.C and 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 (for short “P.C. Act”), the complainant i.e, the State, (CBI/SPE, Hyderabad) preferred the instant Crl.R.C.
2) The factual matrix of the case is thus:
a) The Investigating Officer filed charge-sheet in R.C.No.24(A) of 2005 against eight accused including Accused No.8 who is the panel advocate of UCO Bank, Medak District at Sangareddy. The allegation is that in the matter of sanction and disbursement of 28 loans under UCO Cash schemes, two loans under UCO Mega Cash and one loan under UCO Shelter Scheme, AO1, AO2 and AO4 being officers of the bank colluded with other accused who are private persons, issued loans based on fake salary certificates and identity cards allegedly issued by Ordinance Factory, Eddumailaram, Medak District and caused loss to the bank to an extent of Rs.53 Lakhs. The imputation against AO8 is that he gave positive legal opinion on the sale deed bearing document No.13556/2003 registered in favour of the borrower B. Pramila W/o. Hanumanth Reddy with the District Registrar office, Ranga Reddy District which was found after investigation as false and fake document. Hence, he was charged for criminal conspiracy and other allied offences with the co-accused.
b) Aggrieved by his inclusion as one of the accused in the charge-sheet, AO8 filed Crl.M.P.No.754 of 2009 in C.C.No.1 of 2008 under Section 239 Cr.P.C before the trial Court praying to discharge him for the offences leveled against him. Apart from denying the material allegations leveled against him in the charge-sheet, his main submission is that in usual course of practice, as a legal adviser to the bank, it was his duty to give opinions basing on the documents (Xerox) supplied by the bank and it was not possible for him to detect from the Xerox copies, the genuinity or otherwise of the documents and as a legal adviser it was not his duty to detect whether the documents sent to him were fake documents or not. It was his further submission that it was not his duty to identify the borrowers to collect information by making roving enquiries and searches in the various offices as expected by the bank. On the other hand, the only duty cast on him was that he should diligently examine the documents and material placed before him by a party and offer his opinion or defend a case to the best of his abilities and inconsonance with the provisions of the law and in the instant case he performed his duty and offered his opinion based on the documents submitted by the bank and there no negligence or any mala fides and motives can be attributed against him.
c) The complainant—CBI opposed the petition.
d) The trial Court held that the investigating agency has misconceived the role of legal adviser in respect of loan sanctioned to the borrowers. It held that unless there is prima facie material that the legal adviser has conspired with the remaining accused for committing various offences alleged by the prosecution, he cannot be arrayed as accused on the simple fact that he offered legal opinion on the basis of the documents submitted by the bank for legal opinion. The trial Court observed that to make out a case that the opinion given by the Standing Counsel/ legal adviser is influenced by the criminal intentions, it is the duty of I.O to collect prima facie material that the legal adviser had hand-in-glove with the other accused who had conspired for cheating the bank. Basing on the precedential law, the trial Court further observed that the legal adviser is under no duty to investigate whether the transactions covered by the documents placed by him are clandestine or bona fide. His duty is to evaluate the documents with the prima facie impression that they are true and submitted for his opinion and to give his opinion as to whether the alleged owner of the property has absolute marketable title to the subject matter of the documents or not. The trial Court concluded that there was absolutely no allegation that AO8 was directly or indirectly responsible for submission of fake documents by the borrowers before the bank and for misrepresentation that they are true and genuine documents. Accordingly, the trial Court allowed the petition and discharged AO8.
Hence the Crl.R.C. by the State.
3) Heard arguments of Sri P. Kesava Rao, learned Special Standing Counsel for CBI (Spl.S.C.) and Sri I. Gopala Reddy, learned counsel for respondent/A8.
4) Impugning the trial Court’s order learned Spl.S.C. mainly argued that before rendering legal opinion it will be sublime responsibility of a bank panel advocate to cause personal enquiries with the concerned Sub-Registrar Office/District Registrar Office/MRO Office/Municipal Office etc. to confirm genuinity and authenticity of the documents furnished to him for tendering legal opinion. As such in the instant case also, he would emphasize, the duty was cast on AO8 being the panel advocate of UCO bank to cause such personal searches in the concerned offices with reference to the documents furnished to him and confirm their genuinity before embarking upon giving legal opinion. Since he did not follow this procedure and simply tendered his legal opinion which was accepted by the bank and granted loan, the UCO bank ultimately suffered loss.
He vehemently argued that had the learned panel advocate verified with the concerned Registrar office, the veracity of the documents, the truth would have been known at the inception and fraud would have been detected at the earliest. The sale deed covered by document No.13556/2003 purported to be registered in the District Registrar Office, Ranga Reddy is a fake document which fact could be detected only subsequently. He argued that in fact as per revised Operational Guidelines on UCO Shelter Scheme issued by the Head Office of UCO bank, the bank panel advocate shall submit his report on title of the property in bank’s prescribed format provided in Annexure-V. As per Annexure—V, the bank panel advocate shall certify at the end of his report to the effect that he has caused necessary searches in the Sub-Registrar office and inspected the settlement records and all other relevant documents in support of the subject property(emphasis supplied). He argued that AO8 failed to discharge his duty and conspired with borrowers and bank officials and caused loss to the bank and therefore, IO rightly charge sheeted him but, however, the trial Court on an erroneous view that there was no prima facie material to show that the AO8 conspired with the remaining accused discharged him. He thus prayed to allow the Crl.R.C. and set aside the impugned order and direct the trial Court to frame charges against all the accused including AO8.
5 a) Per contra, while supporting the order learned counsel for respondent/AO8 argued that the prime responsibility of bank panel advocate is to only conduct a legal scrutiny of the documents furnished to him and tender his opinion with regard to absolute, clear and marketable title of the proposed borrower and by no stretch of imagination it can be said that it is imperative on his part to make personal, roving enquiries in concerned offices with regard to genuinity of documents. In the instant case also, except providing legal opinion, which the AO8 has done with meticulous care as can be seen from legal opinion, no duty was cast upon him to conduct personal searches in the concerned offices, which was the duty of the Field Officers and Law Officers of the concerned bank. Since no responsibility was attached to AO8 to verify the genuinity of the documents tendered to him, he cannot be found fault with if one or some of the documents, which were tendered to him for opinion were subsequently proved to be sham or fake documents. Precisely he is responsible for forming opinion on the contents of the documents but not their origin.
b) He alternatively submitted that even assuming that bank guidelines enjoin him with the duty of conducting personal searches in different offices to know the genuinity or authenticity of the documents supplied to him and the panel advocate failed in that regard, that by itself no culpability can be attributed to his defaults, since bank circular orders are only internal guidelines but not penally enforceable laws as laid down in a similar case reported in P.Venkateswara Rao vs.
[1]
State . He further submitted that to prosecute a bank panel advocate for guilty of criminal conspiracy with other accused, there must be some tangible material to show his criminal nexus with other accused apart from just giving legal opinion. In this regard, he relied upon a decision reported in Central
[2]
Bureau of Investigation, Hyderabad vs. K. Narayana Rao .
He submitted that the prosecution utterly failed to project any material in this case to show even the prima facie criminal connection between AO8 and other accused. He thus submitted that trial Court rightly discharged AO8 and prayed to dismiss the Crl.R.C.
6) In the light of above arguments, the point for determination is:
“Whether the impugned order of the trial Court is legally and factually sustainable?”
7) POINT: In the light of above rival arguments, I perused the charge-sheet. The specific allegations against AO8 as per the charge-sheet can be extracted thus:
Para 8: That Sri K. Jaipal Reddy (A-8) r/o 4-9-124,
Prasanth Nagar Colony, Sangareddy, Medak District is an advocate by profession and has given a legal opinion based on fake and false documents in the loan account No.T6 1303.
Para 26: That Sri K. Jaipal Reddy, advocate, has given positive legal opinion on the document No.13556/2003 of the District Registrar Office, Ranga Reddy District, submitted by the borrower in case of Uco Mega Cash loan Account No. T6 1303, which was sanctioned in the name of Smt.B.Prameela and B. Hanumanth Reddy, investigation revealed that the document submitted to the Bank is a false and fake document. The signatures of Sri K. Jaipal Reddy on the legal opinion have been confirmed by GEQD opinion vide opinion No.CH 363/2006 dated 30.03.2007.
Para 28: xxxx
…..Sri K. Jaipal Reddy (A-8) has given positive legal opinion in case of Uco Mega Cash Loan account No.T6 1303 based on false and fake document.
Para 29: Therefore, A-1, A-2 and A-4 criminally conspired with A-3, A-5, A-6, A-7 and A-8 to cheat UCO Bank, Sanga Reddy Branch in the matter of sanction of 31 loans under UCO Cash, UCO Mega Cash and UCO Shelter Scheme on the basis of false and fabricated documents and caused a financial loss of Rs.53,00,000/- to the bank on all the 31 accounts became non-performing assets due to non- payment.
Para 30: The above acts of L.S.R Murthy (A-1), K.R.Manga(A-2), J.Aruna(A-3), P.S.N. Murthy (A-4), A.
Venugopal Reddy (A-5), B.Savitha @ B. Priya (A-6) , P. Sucharitha (A-7) and Sri K. Jaipal Reddy (A-8) are punishable u/s.120-B, 419, 420, 468, 471 of I.P.C and 13(2) r/w 13(1)(d) of PC Act, 1988, and substantive offences there of.
a) Thus from the charge-sheet, the discernible ascription against AO8 is that as a bank panel advocate, he issued legal opinion in favour of Smt. B. Pramila W/o.S.Hanumanth Reddy basing on the sale deed bearing document No.13556/2003 and other supporting documents and on the strength of the same, the bank sanctioned UCO Mega Cash loan of Rs.3,50,000/- under loan account No.T6 1303 to the borrowers and later it was found that the sale deed was a fake document and the persons with those names never borrowed loan and that the borrowers are fake persons. Hence, he was charged for criminal conspiracy and other offences as narrated supra. Now the main argument of learned Spl.S.C is that a duty was cast on AO8 being bank panel advocate to cause personal searches in the concerned public offices like District Registrar’s office/MRO Office/Municipal Office, etc., and confirm the genuinity of the documents and then give his legal opinion on the title of the applicant but he grossly abdicated his duty in collusion with bank officials and applicants and caused wrongful loss to the bank. Whereas, AO8 opposed this line of argument and submitted that his duty was only to give legal opinion on the documents submitted to him but nothing more, much-less verifying the genuinity of the documents with concerned offices.
b) So it is apposite to scrutinize the legal opinion issued by AO8 to appreciate the respective arguments. The Registry, on the direction of this Court, secured and furnished the photocopies of the legal opinion issued by AO8 and the documents perused by him. A perusal of those documents would show that the legal opinion which is styled as “Legal scrutiny report” was issued by AO8 in the proforma prescribed by the UCO Bank, Branch Sangareddy. This proforma contains 30 columns under different heads, a format (scrutiny report) and a certificate to be issued by the Advocate. The legal scrutiny report shows that following documents were furnished to AO8 for tendering legal opinion:
i) Document No.1 i.e, Sale Deed dated 04.12.2003 purported to be executed by one Smt. N. Dhana Laxmi W/o. Sri N.V. Bhaskara Rao in favour of Smt. Beemidi Pramila W/o. S. Hanumanth Reddy i.e, borrower in respect of a house bearing No.1-13, in Plot No.14 in Survey No.356, admeasuring 160 Sq.yards or 133.76 Sq. Metres, situated at Chandanagar village and Gram Panchayat, under Seri Lingampally Municipality, Ranga Reddy District for Rs.7,45,000/-. The stamps on the rear side of the documents would show that it was registered with District Registrar, Ranga Reddy District. The particulars along with photos of vender and vendee and a site plan are also enclosed to the sale deed.
ii) Document No.2 is the House Tax receipt dated 01.11.2003 issued in the name of Smt. B. Pramila.
iii) Document No.3 is the proceedings dated 08.12.2003 of Municipal Commissioner, Seri Lingampally ordering mutation of the name of Smt. B. Pramila in the place of N. Dhana Laxmi in municipal records.
iv) Document No.4 is the Encumbrance Certificate No.22508/20646/03 from 01.01.1983 to 07.12.2003 issued by Joint Sub-Registrar, R.R.District.
Then the legal scrutiny report would show that basing on the above documents, AO8 at the end of Column No.8 has certified thus:
“I have gone through the above all documents (emphasis supplied) pertaining to H.No.1-13 in Plot No.14 in Sy.No.356 an extent of 160 Sq.yards situated at Gangaram Village under municipal limits Seri Lingampally, R.R.District. I certify that Smt. B. Pramila W/o. S. Hanumanth Reddy, R/o. Quarter No.22165 Ordinance Factory Estate Eddumailaram village, Sangareddy Mandal, District Medak is having title over the above property and she has got valid and marketable title over the above property and she is in possession by way of conveying the title in her favour. I further certify that there are no prior mortgage or charges, whatsoever as could be seen from the E.C. Hence bank may accept the above all documents for creation of equitable mortgage in favour of the bank by depositing the above original documents.”
A close perusal of legal scrutiny report, particularly the certificate appended thereto would disclose that AO8 has studied and analysed the documents supplied to him with reference to the title and possession of the applicant and accordingly, issued his legal opinion. The words employed in the proforma certificate to the effect that “I have gone through the above all documents” would show that it was the duty of the panel advocate only to scrutinise the documents furnished to him and give the legal opinion but it was not his duty to cause personal searches in the concerned offices to know the genuinity and authenticity of those documents. Nowhere in the proforma of the Legal scrutiny report, such a recital is mentioned. So it must be said that AO8 has discharged his part of the responsibility. Hence going by the proforma legal scrutiny report, it is not apt to blame AO8 for not causing personal enquiries in concerned offices regarding the genuinity of the documents. Thus, I find force in the argument of AO8 that it was not his duty to cause personal enquiries regarding the origin of the documents. If the sale deed bearing document No.13556/2003 was ultimately found to be a fake document, the bank or prosecution cannot lay responsibility on AO8.
8) Then with reference to the argument of learned Spl.S.C, I perused the revised Operational Guidelines of UCO Shelter Scheme. Those guidelines were purported to be issued by the Head Office on 21.05.2004 in respect of the loans issued under UCO Shelter Scheme. Annexure-V of the guidelines relates to Non-encumbrance certificate and detailed report of title along with the certificate to be issued by the bank panel advocate. This certificate no doubt reads as if a duty is cast on the panel advocate to cause necessary searches in the Sub-Registrar office with regard to the title and encumbrance over the subject property and also to verify settlement records etc., to issue his legal opinion. It is by referring these guidelines that the Spl.S.C argued that duty was cast on AO8 to cause personal searches which he failed to do. I am afraid, this argument is not correct.
It must be noted that the AO8 issued legal opinion in respect of a different type of loan i.e, “T6 1303 UCO Mega Cash Scheme” but not in respect of the UCO Shelter Scheme, for which the cited guidelines were issued. Therefore, the cited guidelines issued in respect of UCO Shelter Scheme cannot have any bearing on the UCO Mega Cash Scheme. As already referred supra, the proforma of legal scrutiny report under which AO8 issued his legal opinion did not contain any guideline or condition to the effect that panel advocate has to cause personal searches in the concerned offices regarding the genuinity of the documents referred to him. Therefore, the argument of learned Spl.S.C is untenable.
9) Coming to the alternative argument of learned counsel for AO8, I find much force in it. Even assuming that bank guidelines contain a clause resting responsibility on the bank panel advocate to conduct personal searches in different offices to know the genuinity and authenticity of the documents supplied to him and he failed to discharge the said duty, by that count alone he cannot be prosecuted. In P.Venkateswara Rao’s case (1 supra) under similar circumstances, this High Court held thus:
“It is not case of the respondent/Central Bureau of Investigation (C.B.I) that the bank circular No.97/66, dated 12.08.2003 is an enforceable law by itself. It is not the prosecution case that A-2 violated any norms prescribed by any law for the time being in force. Any circular issued by Bank of India prescribing guidelines to the panel advocates, would be nothing more than internal instructions between the bank management and its panel advocates. It is nobody's case that the said circular was issued by the bank in exercise of any statutory powers vested in the bank by virtue of any provisions in any enactment passed by the State Legislature or the Parliament. In the absence of any enforceability of the circular in any Court of law against any person including a panel advocate, any violation of guidelines issued in that circular would not attract legal liability on A-2 under any criminal law. Circular No. 97/66, dated 12.08.2003 is only a routine circular issued by Head Office of Bank of India to all the branches of the Bank.”
I agree with the above observation. Mere violation of internal guidelines which have no force of a statute, not attract penal provisions. It must be noted that there is a marked difference between simple negligence and criminal negligence. Inspite of the guidelines, if a bank panel advocate failed to cause personal searches in the concerned offices and issued legal opinion only on the basis of documents referred to him, he may be attributed with the negligence for which lapse bank may dispense with his services or complain to the Bar Council. However, to attribute criminal negligence, there must be an element of mens rea, without establishing which, no penal prosecution can be initiated. Hon’ble Apex Court held in similar lines in K.Narayana Rao’s case (2 supra) as follows:
“Therefore, the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank. In the given case, there is no evidence to prove that A-6 was abetting or aiding the original conspirators.”
10) In the instant case, the prosecution failed on two counts.
Firstly to establish that a duty was cast on AO8 to cause personal search in the concerned offices to confirm the genuinity and authenticity of the documents referred to him and secondly, assuming that such a duty was vested in him, he neglected it due to his criminal conspiracy with the other accused, as no material even remotely showing his criminal nexus, is produced. The trial Court rightly discharged him having come to the conclusion that there were no grounds to frame charges against him. I hold that prosecuting AO8 will result in abuse of process of law. I find no merits in the Criminal Revision Case.
11) In the result, this Criminal Revision Case is dismissed by confirming the order passed by the trial Court in Crl.M.P.No.754 of 2009 in C.C.No.1 of 2008.
As a sequel, miscellaneous petitions if any pending in this appeal shall stand closed.
U.DURGA PRASAD RAO, J Date: 11.09.2014
Note: L.R. copy to be marked: Yes/No
murthy / scs
[1] 2012 (1) ALD (Crl.) 325 AP
[2] 2012 Law Suit (SC) 620