Authorised banking transactions and lack of proved dishonest agreement defeated conspiracy, forgery and corruption charges in the securities fraud case.

Authorised short-term banking transactions routed through intermediary accounts did not, on the majority view, establish criminal conspiracy, criminal breach of trust, forgery, use of forged documents, dishonest misappropriation, or abuse of official position because the board and committee resolutions showed a legitimate investment purpose and the evidence did not prove a dishonest agreement or wrongful gain beyond reasonable doubt. The Special Court's jurisdiction under the securities offences statute was confined to transactions within its statutory window, so pre-1 April 1991 transactions could not be tried there absent a proved conspiracy extending them into that period. The majority set aside one conviction, upheld one acquittal, and maintained the remaining convictions with sentence reduction for two accused.

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Issues: Whether the prosecution proved a criminal conspiracy to divert Maruti Udyog Limited funds through intermediary bank transactions; whether the acts alleged against the public servants and bank officials constituted criminal breach of trust, forgery, use of forged documents, dishonest misappropriation, and abuse of official position; and whether the Special Court had jurisdiction over the pre-1 April 1991 transactions.

Issue (i): Whether the prosecution proved a criminal conspiracy to divert Maruti Udyog Limited funds through intermediary bank transactions.

Analysis: The evidence and the contemporaneous resolutions showed short-term investment or borrowing transactions conducted through banks under a practice of routing or switch transactions. The majority held that the prosecution failed to establish a conclusive agreement to commit an illegal act. The approver's version of an earlier conspiracy was found unreliable, the alleged meeting was not satisfactorily proved, and the surrounding banking practice did not by itself establish the requisite meeting of minds for conspiracy.

Conclusion: The charge of criminal conspiracy was not proved against the accused to the extent accepted by the majority.

Issue (ii): Whether the acts alleged against the public servants and bank officials constituted criminal breach of trust, forgery, use of forged documents, dishonest misappropriation, and abuse of official position.

Analysis: The majority held that the transactions were authorised by the company's board and committee resolutions, were intended to secure better returns on surplus funds, and did not show proved dishonest gain or loss. The evidence did not establish that the bank receipts were issued without backing security, nor that the bank official concerned credited the funds into the wrong account. On the majority view, the material disclosed at most irregular or administrative lapses, not the ingredients of the charged offences under the IPC or the Prevention of Corruption Act.

Conclusion: The convictions of the bank official and the broker were not sustained on the majority view, while the acquittal of one accused was upheld and the appeals were disposed of accordingly.

Issue (iii): Whether the Special Court had jurisdiction over the transactions that occurred before 1 April 1991.

Analysis: The Special Court's jurisdiction under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 was confined to transactions in securities after 1 April 1991 and on or before 6 June 1992. In the absence of a proved conspiracy extending the case to the earlier period, the majority held that the pre-1 April 1991 transactions did not fall within the Special Court's limited jurisdiction.

Conclusion: The Special Court could not proceed on the earlier transactions in the absence of a proved conspiracy bringing them within its statutory window.

Final Conclusion: The majority set aside the conviction of the bank official, upheld the acquittal of one accused, and maintained the convictions of the remaining convicted accused with reduction of sentence for two of them to the period already undergone.

Ratio Decidendi: Where short-term banking transactions are authorised by corporate resolutions and the evidence does not prove a dishonest agreement, dishonest misappropriation, or forgery beyond reasonable doubt, criminal liability under the IPC and the Prevention of Corruption Act cannot be sustained merely because the transactions were irregular or routed through banks.

Concurring Opinion: Arijit Pasayat, J. and B.N. Agrawal, J. disagreed with the acquittal of some accused and held that the convictions of the principal accused deserved to be maintained, subject to reduction of sentence for A-1 and A-3 to the period already undergone.

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