Kerala High Court Upholds Order Directing Further Investigation In Corruption Case Involving Bank Officials

The first accused had approached the High Court by filing an original petition (Criminal) under Article 227 of the Constitution, seeking quashing of an order passed by the Court of Special Judge (CBI/SPE), Thiruvananthapuram. The Petitioner claimed that due to the passing of the impugned order, the Petitioner was dragged into these proceedings without having finality to the allegations against him.

The Single Bench of Justice A.Badharudeen noted, “Thus, the learned Special Judge opined that the investigating officer could not simply state that all the lapses from the side of the bank Officials were either negligent act or dereliction of duty, without criminal intend. On these circumstances, the learned Special Judge returned the final report dated 13.07.2020 filed pursuant to Ext.P2 order, with direction to the Investigating Officer to conduct proper and effective investigation and complete the same not later than three months from 26.06.2023 (the date of the order).”

“If the petitioner would not have filed this petition and stayed the further investigation as per Ext.P5, the further investigation ought to be completed much earlier. Therefore, the apprehension of delay in finalizing the proceedings, projected as the reason for challenge, could not sustain, as the pendency of this petition and stay thereof obtained by the petitioner delayed the investigation for more than two years”, it added.

Senior Advocate S. Sreekumar represented the Petitioner, while Spl. Public Prosecutor (CBI) Sreelal N. Warrier represented the Respondent.

Factual Background

The case was registered based on a complaint lodged by a Regional Manager of the State Bank of India. It was alleged that the accused persons with dishonest intentions to cheat the bank and diversion of funds/sale proceeds of the collateral, M/s.Heera Constructions Company Pvt.Ltd. (HCCPL) availed loans to the tune of Rs 15 Crore, but there was no proper remittance, and the amount due was accumulated to Rs 12.08 crore. As per the complaint, the accused persons committed offences punishable under Section 120B read with Section 420 and Section 405 read with Section 406 of the Indian Penal Code (IPC) as well as under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (PC Act) by the accused.

After filing the final report, CBI filed a petition seeking exclusion of the Bank Officials from the array of accused and to transfer the case against the other accused persons to a competent Magistrate court. The Special Judge was not inclined to accept the final report. The CBI investigated the matter and filed a report, in tune with the earlier report. Thereafter, CBI filed Petitions to remove Section 13(2) read with Section 13(1)(d) of the PC Act, from the final report and delete the unknown public servants listed as fourth and fifth accused in the FIR.

Reasoning

The Bench found that the loan was to be repaid on or before December 23, 2016; however, the Heera Lake Front project was not completed as scheduled, and the time limit was extended by the bank as requested by HCCPL at a reduced limit of Rs.9.90 Crore. However, the lonee did not pay the money. Thereafter, the project loan account was classified as Non-Performing Asset (NPA). Almost all the flats in the primary security 'Heera Lake Front', apartments were sold by HCCPL to various buyers without the consent of the Bank.

Referring to the imugned order, the Bench noted that the involvement of the bank officials in the crime could be gathered, and the report of the investigating officer gave them a clean chit in the matter of criminal culpability, by merely alleging lapses alone on the part of the bank officials within the orbit of negligence or dereliction of duty. According to the Bench, the same could not be justified.

It was further noticed that the Special Court ordered further investigation against the fourth and fifth accused persons per the impugned order, but no petition was filed by these two accused challenging the said order. However, the petitioner who was arrayed as the first accused was aggrieved by the order on the submission that he was ready to face trial on the strength of the charge filed against him.

“Once the cause of accused Nos.4 and 5 being taken by the first accused to get the further investigation ordered against accused Nos.4 and 5 to be annulled, the intention of the first accused to be a saviour of accused Nos.4 and 5 protrudes, after lifting the curtain in front of him. This would show an unholy nexus between the first accused and accused Nos.4 and 5, where the specific allegation orbited is that the bank officials allowed the first accused to deal with the property offered as security, in ignorance of their legal obligation to secure the same to realise the liability of the Bank. This aspect also throw light on the fact that the bank officials have involvement in this crime”, it noted.

Thus, finding the impugned order to be justifiable, the Bench dismissed the Petition. “Interim order of stay granted by this Court stands vacated. The investigating officer is specifically directed to conduct effective further investigation in terms of Ext.P5 order and file report thereof to the Special Court within two months from the date of receipt of this judgment”, it concluded.

Cause Title: Abdul Rasheed @ Dr.A.R. Babu v. Central Bureau of Investigation (CBI) (Neutral Citation: 2025:KER:77124)

Appearance

Petitioner: Senior Advocate S. Sreekumar, Advocates C.S.Manu, C.Y.Vijay Kumar, Manju E.R., Anandhu Satheesh, Alint Joseph, C.A.Anupaman, Dilu Joseph, T.B.Sivaprasad

Respondent: Spl. Public Prosecutor (CBI) Sreelal N. Warrier, Advocates Akhil Suresh, Kalliyani Krishna B., Gilbert George Correya

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