VINAYAK NARAYAN DEOSTHALI versus CENTRAL BUREAU OF INVESTIGATION

Citation: [2015] 1 S.C.R. 84 · Decided: 12-01-2015 · Supreme Court of India · Bench: S. J. MUKHOPADHAYA · Disposal: Dismissed

Judgment (excerpt)

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[2015] 1 S.C.R. 84 
VINAYAK NARAYAN DEOSTHALI 
v. 
CENTRAL BUREAU OF INVESTIGATION 
(Criminal Appeal No. 335 of 2005) 
JANUARY 12, 2015 
[SUDHANSU JYOTI MUKHOPADHAYA AND 
N.V. RAMANA, JJ.] 
Penal Code, 1860 - ss.4091120-B, 403, 477-A/109 -
c Prevention of Corruption Act, 1988 - s.13(2) rlw s.13(1)(d) -
Security scam - Prosecution of the appellant-accused (a 
Bank employee) for hatching criminal conspiracy with the 
infamous share-broker (Accused No. 3-Harshad Mehta) with 
the object of cheating the Bank and effecting illegal gain to 
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accused No. 3 - Conviction by Special Court - On appeal, 
held: The appellant-accused was part of the conspiracy in 
facilitating trading of SGL (Subsidiary General1-edger) 
securities to the benefit of accused No. 3 by abusing his 
official position and by violating provisions· of banking laws -
E The prosecution successfully proved the offences, beyond 
reasonable doubt through voluminous documentary 
evidence. 
Dismissing the appeal, the Court 
HELD: 
1. 
The 
procedure of .-Oa€11ing 
with 
F SGL(Subsidiary General Ledger) accounts as explained 
by PW1 and PW2 has not been followed in the case of 
securities in question. The material on record 
unequivocally establishes that the wrong entry in the 
account of UCO Bank SGL Account No. 065 effected to 
G the advantage of Harshad Mehta (Accused No. 3) had not 
occurred as a result of an inadvertent error, but a planned 
misdeed done with mala fide intention. The appellant-
accused, who is well acquainted with the banking 
activities and SGL transactions, created false documents 
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84 
VINAYAK NARAYAN DEOSTHALI v. CENTRAL 
85 
BUREAU OF INVESTIGATION 
and acted contrary to the provisions and committed 
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illegal acts which are writ large on the face of record. 
Thus, the appellant was part of the conspiracy in 
facilitating trading of SGL securities to the benefit of 
accused No. 3 and in the process, abused his official 
position and violated provisions of banking laws. The 
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facts and circumstances of the case clearly show the 
participation of the appellant in the criminal acts and 
misuse of his official position. The prosecution has 
successfully proved the nexus between the accused. The 
ingredients of the offences for which the accused is 
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charged has also been established beyond all reasonable 
doubt by the prosecution by adducing voluminous 
documentary evidence as well as oral evidence. [para 29 
and 30] [98-E-H; 99-B-D] 
2. The Telex messages dated 23.3.1991 (Ext. 287) and 
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6.4.1991 (Ext. 466) reveal that UCO Bank Head Office 
explicitly instructed for its own Account (032). The 
communication dated 13th April, 1991 (Ext. 300) sent by 
the accused Nos. 1 & 2 cannot be treated as a simple 
mistake considering the consequential events. The 
preparation of the said communication and also the entry 
relating to the Securities in question has been written by 
the accused No.1-appellant himself. The entry indicates 
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to transfer the securities into the UCO Bank's Account 
No. 065 (Brokers' Account) together with two other 
entries relating to other securities which were actually 
meant for transfer into the UCO Bank's Account No. 065. 
Therefore, it cannot be said that it was merely a clerical 
mistake that the Account No. 032 was struck off and 
Account No. 065 was retained by accused No.2. The 
inclusion of securities in question in the said 
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communication by the appellant in his own handwriting, 
establishes the fact that the appellant had willfully and 
with ulterior motive prepared the communication. [para 
27] [97 -C-G] 
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SUPREME COURT REPORTS 
[2015] 1 S.C.R. 
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3. The transfer of an amount of Rs.2.00 crores from 
account No.065 to account No.032, without there being 
any transaction clearly shows that to get away with 
enquiries of the Head Office, the accused has chosen to 
transfer the money without there being any transaction 
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and exhibits the conduct of the accused. Almost all the 
documents pertaining to switch transaction are signed by 
him. [para 28] [97-G-H; 98-A-B] 
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CRIMINAL APP ELLA TE JURISDICTION : Criminal Appeal 
No. 335 of 2005. 
From the Judgment and Order dated 03.12.2004 of the 
Special Court (Trial of offences relating to transaction in 
securities) at Bombay in Special Case No. 3 of 1995. 
Dhiraj Mirajkar, Kamini Jaiswal for the Appellant. 
Vibha Datta Makhija, T. A. Khan, Chetan Chawla, Disha 
Vaish, B. V. Balramdas, Arvind Kumar Sharma for the 
Respondent. 
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