Bank Loan Fraud | Civil Decree For Recovery Doesn't Erase Liability For Criminal Misappropriation Under PC Act: Kerala High Court

Justice A Badharudeen was delivering a judgment in a criminal appeal challenging the conviction and sentence imposed for misappropriation and conspiracy.

The appellant who is the second accused in the case, is a private contractor convicted alongside a bank official for fraudulently siphoning housing loan funds.

According to the prosecution, the first accused who is a public servant employed as Branch Manager at Canara Bank, Sultan Battery, Wayanad hatched criminal conspiracy during August - September, 1998 at Sultan Battery and other places with the second accused and third accused to misappropriate the funds of the bank which was entrusted with him and controlled by him to obtain undue pecuniary advantage by corrupt or illegal means for himself and the 2nd accused, by abusing the official position of the 1st accused as Branch Manager.

Accused Nos.1 and 2, in pursuance of the conspiracy obtained the signatures of Miss.Sini A.T.(PW10), a college student, on a blank Housing Loan Application, dishonestly representing to her and her mother that the Housing loan would be given to her, for the construction of her house and also falsely representing that the home would be constructed by the 2nd accused for her.

The Special Court has convicted the appellant of guilty for the offenses punishable under Section 120 B of IPC read with Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988.

The prosecution argued that the loan amount in favour of PW 10 was encashed by a staff of the appellant and was transferred in the name of the first accused.

The appellant argued that the Special Court was not inclined to believe in the evidence of PW 10 as she was declared as an accomplice witness and the loan amount due to the bank could be realised through civil proceedings. They further argued that misappropriation of loan amount and hatching conspiracy could not be proved.

The Court observed that the civil Court decree is upon the PW10 and on her property for the recovery of loan and not on the appellants. The Court further observed that the accused persons gained out of the misappropriation while PW 10 is the loser in the situation.

“In view of Civil Court decree, the liability is upon PW10 and on her property. Thus, the contention raised by the learned counsel for the appellant/2nd accused that, no misappropriation in this case, in view of Civil Court decree also would not yield, since PW10 is ultimately the loser in this misappropriation and the accused persons are the persons gained out of the same.”

The Court thus upheld the conviction while modifying the sentence from three years to one year rigorous imprisonment.

Case Title: P V Ravi v SPE/CBI Kochi

Case No: Crl. A 178/ 2010

Citation: 2026 LiveLaw (Ker) 16

Counsel for Respondent: Sasthamangalam S Ajithkumar (SC- CBI), Sreelal N Warrier (Spl. PP, CBI)