Isabella Mariam

The High Court of Kerala Single Bench of Justice A. Badharudeen held that a civil court’s decree allowing recovery of loan dues does not erase criminal responsibility for conspiracy and misappropriation under the Prevention of Corruption Act, 1988, clarifying that criminal culpability must be determined independently of civil remedies. Delivering judgment in a criminal appeal arising from the conviction of a contractor accused of conspiring with a public servant in diverting a housing loan sanctioned in another person’s name, the Court upheld the finding of guilt while reducing the sentence to one year’s rigorous imprisonment and fine. The Court directed the appellant to surrender before the Special Court to serve the modified term.

The case arose from allegations of criminal conspiracy and misappropriation of bank funds relating to a housing loan sanctioned by a nationalised bank. The prosecution alleged that a public servant working as Branch Manager of the bank, along with a private contractor and a Village Officer, conspired to fraudulently sanction and disburse a housing loan in the name of a college student. It was alleged that the loan application was signed in blank, false income certificates were produced, and multiple blank cheques were obtained from the borrower.

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According to the prosecution, the sanctioned loan amount was withdrawn using those cheques, with a substantial portion credited directly to the account of the Branch Manager and the remainder encashed through the contractor’s staff. The borrower allegedly received no benefit from the loan, and the house was not constructed as agreed.

The trial court convicted the Branch Manager and the contractor for offences under Section 120B of the Indian Penal Code read with Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988, and imposed sentences of rigorous imprisonment and fine. The contractor, as the second accused, challenged the conviction and sentence before the High Court, contending inter alia that the loan amount was credited to the borrower’s account, that partial construction had taken place, and that civil recovery proceedings were already initiated by the bank.

The High Court examined the entire evidence on record and recorded that “a housing loan was sanctioned in the name of Miss. Sini A.T. on the strength of Ext.P33 agreement executed between PW9 and the 2nd accused to construct a house in the property in the name of PW10.” The Court noted that an account was opened in the borrower’s name and a cheque book was issued, following which the loan amount was credited to that account.

The Court observed that “Ext.P48 cheque for Rs.5,000/-, Ext.P49 cheque for Rs.58,000/-, Ext.P50 cheque for Rs.34,000/-, Ext.P51 cheque for Rs.50,000/- and Ext.P52 cheque for Rs.25,000/- were encashed by PW18 and handed over to the 2nd accused.” It further recorded that “Rs.1,25,000/- in the name of the 1st accused as per Ext.P47 cheque was directly credited in the account of the 1st accused.”

With regard to the defence contention that no misappropriation occurred since the loan amount was credited to the borrower’s account, the Court stated that “no house construction was effected, though accused Nos.1 and 2 misappropriated the said sum.” The Court further recorded that “the crucial evidence as regards to availing of loan and non construction of the building as agreed could be gathered from the evidence of PW9.”

Addressing the argument based on the civil court decree obtained by the bank, the High Court observed that “the contention raised by the learned counsel for the appellant/2nd accused that, no misappropriation in this case, in view of Civil Court decree also would not yield.” It was further stated that “PW10 is ultimately the loser in this misappropriation and the accused persons are the persons gained out of the same.”

On the question of conviction, the Court recorded, “on re-appreciation of the entire evidence, I am of the considered view that the Special Court is right in holding that the accused committed offence punishable under Section 120B of IPC read with Section 13(2) read with 13(1)(d) of the P.C. Act, 1988.” However, on the issue of sentence, the Court observed, “I am of the view that some leniency in the matter of sentence can be considered.”

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The Court ordered that “this appeal stands allowed in part. The conviction imposed by the learned Special Judge stands confirmed.  The 2nd accused/appellant is sentenced to undergo rigorous imprisonment for a period of one year and to pay a fine of Rs.50,000/-.” The Court further directed that “in default of payment of fine, the 2nd accused/appellant shall undergo rigorous imprisonment for a period of two months,” for the offence under Section 120B of the Indian Penal Code read with Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988.

“The order suspending sentence and granting bail to the 2nd accused stands vacated. The 2nd accused shall appear before the Special Court, forthwith, to undergo the modified sentence.” And “failing such appearance, the Special Court is directed to execute the modified sentence, without fail.”

Advocates Representing the Parties

For the Appellant: Shri. Sasthamangalam S. Ajithkumar, Standing Counsel, Central Bureau of Investigation

For the Respondent: Shri. Sreelal N. Warrier, Special Public Prosecutor, Central Bureau of Investigation

Case Title: P.V. Ravi v. SPE/CBI Kochi
Neutral Citation: 2026: KER:1008
Case Number: Criminal Appeal No. 178 of 2010
Bench: Justice A. Badharudeen