NEW DELHI: A special court has rejected a closure report of CBI giving clean chit to several bank officials in a case involving Paramount Airways Pvt Ltd and a former CMD of Oriental Insurance Company Ltd for allegedly causing loss of about Rs 442 crore to five public sector banks.
The court said the chain of conspiracy and money trail was incomplete in the absence of the bankers and held that prima facie, there was sufficient material to make 32 officials of five public sector banks as accused.
According to the CBI charge sheet filed in 2012, Paramount Airways Pvt Ltd (PAPL), its managing director M Thiagarajan, then CMD of Oriental Insurance Company Ltd (OICL) M Ramadoss and three other officers were accused of causing wrongful loss to the five banks and the insurance company, against which claims of Rs 442 crore were raised due to payment defaults by the airline.
Special CBI Judge Kamini Lau said, "The chain relating to conspiracy is not complete in the absence of the bankers and hence prima facie, there is sufficient material on record for arraying the persons/officials of the Andhra Bank, IDBI Bank, State Bank of India, Indian Bank and Bank of India, as accused in the present case and the closure, as recommended by the CBI against the bank officials, is not accepted," the court said, adding that the allegations against bankers and other accused were identical.
Initially, the CBI had said that the probe against the bankers was incomplete and sought time to complete the investigation.
In July 2014, the investigating officer (IO) filed a report stating that there was no prosecutable evidence against the bankers and its 2012 charge sheet against other accused be treated as final.
The court recently rejected the closure report against the bankers and asked the CBI to take steps for obtaining sanction to prosecute the public servants under the provisions of the Prevention of Corruption Act.
It granted three months to the IO for placing the entire material before the competent sanctioning authority to take a decision.
Regarding the bankers' role in the conspiracy, the CBI prosecutor had argued that there was no need to summon them as the investigating agency could not find sufficient material to proceed against them despite their specific roles.
He also said that the agency has recommended departmental enquiry against the bank officials.
The counsel for the other accused had contended that the chain of conspiracy would not be completed in the absence of the bankers, who had allegedly failed to exercise due care and necessary verification at the time of sanctioning the loan of Rs 441.30 crore.
After perusing the documents, the judge noted that the allegations against the bankers were later departmentally ratified by the banks to help themselves.
"On the basis of identical material the officers of the insurance company have been summoned as accused in this case and keeping in view the fact that the predecessor court had taken cognisance for the offence of conspiracy, the ratification shall have little effect and without the bankers who were involved in sanctioning of loan without proper verifications, the chain relating to offence of conspiracy is not complete," the court said.
The CBI, which had registered a complaint in July 2011, had alleged that the accused had conspired to cheat and cause loss to the five banks and OICL, which had to bear claims of Rs 442 crore on default of payment by Paramount Airways to the banks.
It had alleged that Chennai-based PAPL had taken credit insurance from OICL for its multiple bank guarantees to cover its transactions with state-owned oil companies.
As the airline allegedly defaulted in paying the oil companies under the contract guarantee, the oil firms invoked bank guarantees and the banks in turn raised the claims of Rs 442 crore on OICL, the CBI had claimed.
Besides PAPL, Ramadoss and Thiagrajan, the other accused are former deputy general manager of OICL V Harshvardhan, OICL general manager Niraj Kumar and DGM of OICL Chandra Shekhar Tandon.
The probe agency has alleged that Ramadoss of OICL entered into a criminal conspiracy with Thiagrajan, abused his official position and favoured the airline in issuance of 220 credit insurance policies during 2005-10.
The credit insurance policies were used in securing multiple bank guarantees from SBI, BOI, Indian Bank, Andhra Bank and IDBI to cover its transactions with PSU oil firms and to meet expenses relating to fuel, aircraft, lease, rent airport charges and others, it has claimed.
All the accused have been booked for criminal conspiracy, cheating under the IPC and also under the Prevention of Corruption Act.