Court’s Decision
The Kerala High Court, through Justice A. Badharudeen, upheld the conviction of two accused persons — a borrower and his accomplice — involved in a ₹1 lakh loan fraud committed against the Idukki District Co-operative Bank. The Court observed that the prosecution had proved the case beyond reasonable doubt and that criminal conspiracy could be inferred from the sequence of events and the conduct of the accused.
While confirming their guilt, the Court slightly modified the sentence for the primary accused, reducing the imprisonment from two years to one year under Sections 420 and 120B IPC read with Section 13(2) of the Prevention of Corruption Act, 1988, considering mitigating circumstances.
“Criminal conspiracy can rarely be established by direct evidence. It must be inferred from the facts and conduct of the accused. The unlawful agreement, not its accomplishment, constitutes the essence of the crime,” the Court held.
Facts
The prosecution alleged that the Manager of the Idukki District Co-operative Bank, along with other accused persons, entered into a conspiracy to forge documents relating to 1 acre and 15 cents of property belonging to a person named Joseph Mathew. Using these forged documents, a loan of ₹1,00,000 was obtained in his name on January 9, 2001, without his knowledge.
The third accused impersonated the real owner, while the fourth accused abetted and assisted in the forgery and impersonation. The manager, who was the first accused, allegedly used his official position to facilitate the fraudulent transaction. The loan amount was eventually disbursed and encashed, with the proceeds allegedly shared among the conspirators.
Following investigation, the Vigilance and Anti-Corruption Bureau (VACB) filed a charge sheet against four accused. The first and second accused died during trial, and proceedings continued against the third and fourth accused, who were convicted by the Special Judge, Kottayam, under Sections 419, 420, 468, 471, and 120B IPC, along with Section 13(2) of the Prevention of Corruption Act.
Issues
- Whether the trial court erred in convicting the appellants without sufficient identification evidence.
- Whether the confession of the fourth accused (Ext.P42) was admissible and properly proved.
- Whether the conviction for criminal conspiracy under Section 120B IPC and related offences under the Prevention of Corruption Act was justified.
- Whether the sentence imposed was disproportionate.
Petitioner’s Arguments
The counsel for the appellants argued that no proper identification of the accused was conducted. PW5, the bank’s accountant, initially failed to identify the accused during deposition but later claimed to recognize him through a photograph. The defence contended that photograph-based identification was impermissible without following proper procedures and cited the Supreme Court judgment in D. Gopalakrishnan v. Sadanand Naik [(2005) 1 SCC 85], which warned against unreliable photo identification without corroborating evidence.
It was further submitted that the alleged confession (Ext.P42) by the fourth accused was neither voluntary nor scientifically verified. The defence argued that the handwriting and signatures on the disputed documents were never sent to the Forensic Science Laboratory (FSL) for comparison, and thus, the evidence was incomplete. Reliance was placed on Vinod Jaswantray Vyas v. State of Gujarat [2024 INSC 490], which held that marking a document as an exhibit does not automatically prove its contents — execution must be proved by persons who can vouch for its authenticity
.
The appellants also urged that the alleged conspiracy was unsupported by direct evidence and that the trial court had misapplied Section 120B IPC.
Respondent’s Arguments
The Public Prosecutor countered that PW11, the real owner Joseph Mathew, had categorically stated that he had never applied for any loan, and the matter came to light only when a recovery notice was sent to him. Upon inquiry, PW11 identified the impersonator as the third accused. Similarly, PW5, the bank accountant, testified that the person who signed the loan documents in his presence was indeed the third accused, whom he knew personally.
The prosecution further submitted that PW17, the bank manager of the Nedumkandam branch, confirmed that the fourth accused voluntarily wrote and signed Ext.P42, admitting his role in the forgery and the conspiracy to obtain the loan fraudulently. The confession was proved under Section 47 of the Evidence Act, as PW17 had seen the accused write it in his presence.
The State argued that even in the absence of direct evidence, criminal conspiracy can be inferred from surrounding circumstances, as the accused acted in concert and benefited from the fraudulent loan.
Analysis of the Law
The Court meticulously examined the elements of criminal conspiracy under Sections 120A and 120B IPC. Citing the landmark judgment in State through Superintendent of Police, CBI v. Nalini [(1999) 5 SCC 253], the Court reiterated that conspiracy may be established through circumstantial evidence and inferred from the conduct of the parties:
“Conspiracy is hatched in secrecy; it is rarely proved by direct evidence. What is necessary is cogent evidence showing unity of purpose and concerted action towards an unlawful object”.
The Court also cited Vinod Jaswantray Vyas (supra) and Narbada Devi Gupta v. Birendra Kumar Jaiswal [(2003) 8 SCC 745] to emphasize that proof of document execution must be based on credible testimony of those who witnessed the act. In this case, PW17’s direct testimony that the confession was written in his presence satisfied this requirement.
Further, the Court found that the evidence of PW5 and PW11 regarding the identity of the impersonator, corroborated by Ext.P42, conclusively proved the appellants’ participation in the offence.
Precedent Analysis
The Court relied on multiple decisions:
- D. Gopalakrishnan v. Sadanand Naik (2005) 1 SCC 85 – Held that photographic identification must comply with legal safeguards to ensure reliability. The Court distinguished this case, noting that identification here was corroborated by witnesses’ direct recognition, not merely by photos.
- Vinod Jaswantray Vyas v. State of Gujarat (2024 INSC 490) – Clarified that documents must be proved by those present at execution; applied here to accept PW17’s testimony.
- Narbada Devi Gupta v. Birendra Kumar Jaiswal (2003) 8 SCC 745) – Reinforced the need for proper proof of document execution.
- State v. Nalini (1999) 5 SCC 253) – Explained the scope of conspiracy and collective liability of conspirators.
- Santhosh Madhavan v. State (2014 KHC 31) – Reiterated principles of evidentiary reliability in identification and confession cases.
The combined application of these precedents strengthened the Court’s conclusion that both the third and fourth accused acted together to commit forgery and fraud.
Court’s Reasoning
The Court held that the prosecution successfully demonstrated:
- The third accused impersonated the genuine property owner, affixed his own photograph, and signed loan documents to obtain ₹1 lakh.
- The fourth accused aided and abetted this act, introduced the impersonator to the bank, and signed as a witness in the loan agreement.
- The confession (Ext.P42) was voluntary and admissible, corroborating the prosecution’s case.
The Court rejected the defence claim that identification was doubtful, noting that PW5’s in-court identification and PW11’s testimony provided credible confirmation.
“The agreement between the accused to defraud the bank constitutes criminal conspiracy. Their acts — from preparing forged documents to encashing the loan — form one continuous chain proving guilt beyond reasonable doubt,” the Court observed.
Conclusion
The Kerala High Court upheld the conviction under Sections 419, 420, 468, 471, and 120B IPC, read with Section 13(2) of the Prevention of Corruption Act, 1988. However, considering the long passage of time and mitigating factors, the sentence for the third accused was reduced from two years to one year of rigorous imprisonment, while the conviction and sentence for the fourth accused remained unchanged.
The Court directed both accused to surrender before the Special Court to undergo their respective sentences and instructed the trial court to execute the order without delay.
Implications
This judgment reaffirms key legal principles:
- Criminal conspiracy can be proved through circumstantial evidence and inferred from collective conduct.
- Photographic identification is valid when supported by direct witness testimony.
- Documentary evidence requires proof of execution through persons who witnessed its creation.
- Courts may exercise leniency in sentencing based on proportionality and passage of time.
The decision underscores judicial commitment to protecting institutional integrity in cooperative banks while ensuring procedural fairness to the accused.
FAQs
1. Can criminal conspiracy be proved without direct evidence?
Yes. The Court clarified that conspiracy is often proved by circumstantial evidence and inference from coordinated acts of the accused.
2. Was the confession letter admissible?
Yes. It was written voluntarily in the presence of PW17, satisfying Section 47 of the Evidence Act.
3. Why was the sentence reduced for one accused?
The Court reduced the sentence considering the time elapsed since the offence (over two decades) and mitigating factors, while maintaining the conviction.