The Kerala High Court (Ernakulam Bench) refused to quash the Special CBI Court’s order directing further investigation in a Rs. 15 crores bank loan diversion case, while upholding the Special Judge’s finding that the callous attitude of bank officials in issuing no liability certificate could not be brushed aside as mere negligence.
The Court upheld the CBI’s Court order, observing that the act of bank officials had resulted in the non-detection of a fraud committed by a customer of the bank, and the negligence of those officials further resulted in the issuance of a no liability certificate for the illegally sold property, thereby exposing the bank to the risk of losing one of its collateral securities.
At the same time, the Court discarded the contention regarding the absence of evidence to establish the dishonest intention, or mens rea, to justify the negligence and dereliction of duty on the part of the public servants, and explained that the officials, as the public servants, had committed an offence, which needed investigation.
Finding the involvement of the bank officials in the crime, a Single Judge Bench of Justice A. Badharudeen observed that the report of the investigating officer giving them a clean chit in the matter of criminal culpability by merely alleging lapses alone on their part within the orbit of negligence or dereliction of duty, is simply not justified.
The Bench explained the scope of judicial interference under Article 227 and reiterated that the supervisory jurisdiction should not be invoked to stifle legitimate investigations, especially where the Special Court has found prima facie material warranting deeper scrutiny.
Essentially, the Single Judge asserted that mere ‘negligence cannot always absolve public officials from criminal responsibility if surrounding circumstances indicate conscious facilitation of wrongdoing.
Briefly, in this case, a complaint was filed by the Regional Manager of the State Bank of India, alleging that one Heera Constructions Company and its directors had availed a Rs. 15 crore loan for their project in Thiruvananthapuram but failed to repay it. The loan account was later classified as a Non-Performing Asset (NPA) when the company diverted sale proceeds and sold secured properties, without the bank’s consent. The CBI initially registered an FIR, and after investigation, excluded the bank officials from the array of accused, stating there was no evidence of dishonest intention. However, the Special CBI Court rejected this finding and ordered further investigation.
Appearances:
Advocates C.S. Manu, C.Y. Vijay Kumar, Manju E.R., Anandhu Satheesh, Alint Joseph, C.A. Anupamam, Dilu Joseph and T.B. Sivaprasad, for the Petitioner
Senior Advocate S. Sreekumar, along with Advocates Sreelal N. Warrier, Akhil Suresh, Kalliyani Krishna B., and Gilbert George Correya, for the Respondents
