VINAYAK NARAYAN DEOSTHALI Vs. C.B.I. - Synopsis
Team SoOLEGAL 16 May 2017

As per Supreme Court case is registered against the appellant. The appellant while he was working as Assistant Manager in the Securities Department of UCO Bank, Hamam Street Branch, Mumbai in connivance with a colleague of the Bank hatched a criminal conspiracy with the infamous share & stock broker of Bombay of those times, Harshad S. Mehta Mehta with the object of cheating the UCO Bank by causing wrongful loss to the Bank and effecting illegal gain to the Harshad Mehta. It is alleged that for achieving the object of conspiracy, the appellant despite being a public servant,committed criminal breach of trust and misappropriated the funds of Bank by manipulating the accounts to facilitate unlawful gains to Harshad S. Mehta. UCO Bank had two Subsidiary General Ledger (SGL) accounts with the RBI. The SGL is a type of Securities Account floated by the Central Government. For making transactions in these Securities, Banks and financial institutions have to open the SGL account with the Public Debt Office of the Reserve Bank of India. UCO Bank has two such SGL accounts with the Reserve Bank of India. Out of the two SGL accounts owned by the UCO Bank, one account with the number 032 was meant for the Bank’s Head Office’s own transactions and the other SGL account No. 065 was maintained  for the transactions done by constituents/brokers. When the Bank itself purchased/sold a Government Security, the respective entry  was to be made in account No. 032 and if the Security was  purchased/sold by a broker client of the UCO Bank, the entry was to be made in SGL account No. 065. As far as the entry in the books of RBI was concerned, it was made in a particular account according to the instructions given by UCO Bank for every transaction, as both the accounts stood in the name of UCO Bank.  On 22nd March, 1991 UCO Bank sold Securities namely, Government of India 11.5% 2009, worth Rs.20 crores to Indian Bank (Ext. 250) from its SGL account No. 032 i.e. UCO Bank’s own account. On the same day, UCO Bank purchased Securities namely, Government of India 11.5% 2006, worth Rs.20 crores from Indian Bank (Ext. 425). 5th April, 1991 UCO Bank re-purchased the earlier sold GOI  11.5% 2009 Securities from Indian Bank and sold GOI 11.5% 2006 Securities purchased earlier to Indian Bank. In other words, UCO Bank reversed the earlier transactions. With the effect of repurchase of Securities by the UCO Bank, RBI should have made the entry crediting the worth of those securities in SGL Account No. 032 of the UCO Bank.  It was claimed by the accused that he has transferred an amount of Rs.2.00 crores from account No.065 to account No.032, without there being any transaction which 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 and exhibits the conduct of the accused. All the documents relating to switch transaction between the UCO Bank and Indian Bank were signed by the accused, being the responsible officer knowing pretty well that these securities are purchased by the Head Office of UCO Bank, these securities are purchased by the Head Office of UCO Bank, oversight, and above all, the debit and credit vouchers for transaction. The material on record unequivocally establishes that the wrong entry in the account of UCO Bank SGL Account No. 065 effected to the advantage of Harshad Mehta (Accused No. 3) was not occurred as a result of an inadvertent error, but a planned misdeed done with mala fide intention. Considering the whole scenario, the accused, who is well acquainted with the banking activities and SGL transactions, created false documents and acted contrary to the provisions and committed illegal acts which are writ large on the face of record.  As a result, appeal gets dismissed and appellant found guilty.

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