Half-Hearted Approach By CBI Towards Investigating Bank Officials: Special CBI Court Ghaziabad Orders Further Investigation

"It seems highly improbable that a bank official whose main duty is to get the documents verified would skip through the basic minimum requirements of verification, which is to say that he skipped his duty in entirety. It is difficult to believe that the accused would have been able to commit the alleged fraud without the active role of bank officials," Special Judicial Magistrate (CBI) Shivank Singh said while directing the central agency to further investigate the culpability of the bank officials.

Reliance was placed on Vinubhai Haribhai Malaviya & Ors. v. State of Gujrat, whereby the Apex Court had recognized the power of a Magistrate to order further investigation into an offence, even at a post cognizance stage, until the trial commences.

The Special CBI Court was hearing a criminal case filed against M/s Shri Balaji Hi-Tech Constructions Pvt. Ltd., its Directors, unknown officials of PNB and other unknown persons on the basis of written complaint of Chief Manager, PNB, Vasundhra Ghaziabad.

It was alleged that the above-said construction company constructed multi-storey residential flats at Crossing Republic, Ghaziabad under the name of Fosters Height. This project was approved by PNB for sanction of housing loans to allottees of the flats.

It was alleged that the builder connived with the allottees and cheated the bank by issuing more than one allotment letter for the same flat (without payment of consideration) and swindling huge amount of money in the name of house loan from the Bank on the basis of forged receipts.

The CBI had accordingly filed a charge sheet against the builder and an allottee (Neeraj Agarwal), accused of obtaining loan from PNB by filing forged receipts of booking amount, fabricated salary slips etc.

The charge sheet however mentioned that no criminality was found on the part of PNB's officials in the loan department, particularly the Loan Processing Officer and the Loan Sanctioning Officer. Hence the charge sheet was filed in offences of IPC only though the case was registered under Prevention of Corruption Act, 1988.

Taking an exception to this, the Special Judge remarked that it is highly improbable that a bank official, whose main duty is to get the documents verified, would not verify all the requisite documents before sanctioning a loan.

On a perusal of the material placed on record, the Court identified various pre-and-post sanction lapses in the process of giving loans, viz.: (i) ITR of borrower not obtained; (ii) Booking money paid in advance to the builder not verified by the branch officials; (iii) Allotment letters does not bear photo of allottee; (iv) In TPA Guarantee Flat No. is not mentioned; etc.

In view thereof, the Court observed,

"It is difficult to believe that the accused would have been able to commit the alleged fraud without the active role of bank officials. Prosecution has stated that accused in connivance with other accused has obtained loans on more than 60 flats in the Project Foster Heights. And all the loans were sanctioned by 4 branches of PNB, Ghaziabad only. Had the officials not turned a blind eye to the verification process, the loan would not have been sanctioned."

It added,

"Having regard to the Chargesheet and the material relied by the prosecution, it appears that there is a half-hearted approach by CBI in investigating the present case. Perusal of the Chargesheet and the material apparently shows that CBI has not conducted proper investigation with respect to particular roles of bank officials."

Hence, the Special Court has directed the CBI to conduct further investigation on the culpability of the bank officials in the present case, as per law laid down by the Supreme Court in Vinubhai Haribhai Malaviya (supra).

"The Magistrate's power under Section 156(3) of the CrPC is very wide, for it is this judicial authority that must be satisfied that a proper investigation by the police takes place. To ensure that a "proper investigation" takes place in the sense of a fair and just investigation by the police - which such Magistrate is to supervise - Article 21 of the Constitution of India mandates that all powers necessary, which may also be incidental or implied, are available to the Magistrate to ensure a proper investigation which, without doubt, would include the ordering of further investigation after a report is received by him under Section 173(2); and which power would continue to enure in such Magistrate at all stages of the criminal proceedings until the trial itself commences," it had held.

Case Title: CBI v. Neeraj Agarwal

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