'Prima Facie' Committed The Offence: Kerala High Court Refuses To Discharge Public Servant Accused In Alleged ₹7 Crore Loan Fraud Case

While reiterating the legal threshold for discharge under CrPC, the Kerala High Court dismissed the plea of a public servant accused of conspiracy and cheating in respect of Rs 7 crore loan fraud case seeking discharge from offences alleged against him, observing that there a "prima facie" case was made out. Justice A Badharudeen, in his judgement affirmed the trial court's decision to proceed with the charges against the petitioner, the then regional manager at SBI, accused of offences punishable under Section 120 B(criminal conspiracy), 409(criminal breach of trust) and 420 (cheating) of IPC and provisions of the Prevention of Corruption Act.The high court referred to its own decision in Sandeep G. v. State of Kerala (2024 KHC OnLine 586) which lists the essential ingredients while considering a plea of discharge and framing charge. The high court while laying down the parameters in Sandeep G had said:"Matters to be considered at the time of considering discharge and while framing charge are not aimless etiquette. Concomitantly the same are not scrupulous exertion. Keeping an equilibrium in between aimless etiquette and scrupulous exertion, the trial judge need to merely examine the materials placed by the prosecution in order to determine whether or not the grounds are sufficient to proceed against the accused on the basis of police charge/final report. The trial Judge shall look into the materials collected by the investigating agency produced before the Court, to see, prima facie, whether those materials would induce suspicious circumstances against the accused, so as to frame a charge and such material would be taken into account for the purposes of framing the charge. If there is no sufficient ground for proceeding against the accused necessarily, the accused would be discharged. But if the court is of the opinion, after such consideration of the materials there are grounds for presuming that accused has committed the offence/s which is/are triable, then necessarily charge shall be framed". The high court thereafter said that in the present case it was "emphatically clear" that the, petitioner was involved in the alleged crime as part of conspiracy hatched in between the various accused persons, granting a Rs.7 Crore loan to the co-accused who mortgaged a property which was too less in value, thereby granting the co-accused an "illegal pecuniary advantage". "Thus the revision petitioner is liable to be tried after framing charge as the prosecution materials would prima facie show the offences alleged to be committed by him. Thus, his plea of discharge would not succeed as found by the trial court," the court added. The case arose from a 2016 complaint by the Regional Manager of SBI Shornur branch, leading to a CBI investigation. It was alleged that the first accused M. M. Shoukkathali, the proprietor of M/s.M.M. Traders, approached SBI Kunnamkulam branch on 20.01.2015, for an Asset Based Loan (ABL) facility of Rs.7 Crores for the purpose of business of dealing in 'areca-nut and pepper' on the security of a property with a residential building in Thrissur District. The loan was processed by the Medium Enterprises Hub of SBI, Thrissur, since the applied loan amount limit falls under its purview. It was alleged that the Hub obtained an inflated valuation report from their two valuers, Sanoj. P. Vincent (2nd accused) and A. M. Shereef (3 rd accused) for Rs.15.11 Crores and 16.00 Crores respectively.On the basis of this inflated valuation report, the bank sanctioned a loan amount to Shoukkathali and loan documents were executed.The loan amount was disbursed by the bank and was withdrawn by the borrower on the same day. It was alleged that at the time of sanctioning the loan, all property documents like mutation certificate, title deed, etc., were not obtained by the bank. The collateral security property was purchased by the borrower on 20.03.2015. The loan agreement and documents were executed by M/s.M.M.Traders on 21.03.2015. Loan amount was sanctioned and disbursed on the same day. But the borrower created an equitable mortgage of the property offered as a security only on 28.03.2015. These facts revealed that the public servants showed undue haste in the sanctioning and disbursement of loan, that too, even before creation of equitable mortgage. The property was purchased by the borrower for Rs.1.00 Crore, but the very next day, the Bank sanctioned loan for Rs.7.00 Crores by accepting the said property as collateral security. Subsequently, on the request of the borrower, the bank sanctioned two more ad-hoc loans; the loan became NPA on 27.09.2015 and even then, another ad-hoc loan of Rs.22 lakhs were sanctioned on 30.09.2015. The above acts of these persons caused a huge wrongful loss to the bank and corresponding gain to the accused persons. It was also alleged that the petitioner, Radhakrishnan Nair. P the then Regional Manager, and Appu Mathew Jose the fifth accused, being...

'Prima Facie' Committed The Offence: Kerala High Court Refuses To Discharge Public Servant Accused In Alleged ₹7 Crore Loan Fraud Case

Anamika MJ

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