The Supreme Court on Monday acquitted a former Indian Bank branch manager in a 35-year-old corruption case, holding that the Central Bureau of Investigation (CBI) had "failed miserably" in proving the case against him [V Balakrishnan v. State].

A Bench of Justices JB Pardiwala and K Vinod Chandran found that several key allegations were based on assumptions and unsupported evidence. It described the prosecution case as "fully fabricated" and criticised the CBI for failing to establish the allegations as well as for the manner in which the case had been framed.

The case related to loans sanctioned in 1991-92, when the accused, one Balakrishnan, was the manager of Indian Bank’s Anna Nagar branch in Chennai. The CBI alleged that he had colluded with one Kumaradevan, a retired Indian Overseas Bank officer, to sanction loans to two borrowers who were Kumaradevan’s domestic helps.

One borrower was allegedly a washerman working at Kumaradevan’s house. Balakrishnan had recommended a ₹13.50 lakh loan for him by describing him as a real estate businessman. Another ₹3.30 lakh was allegedly disbursed even before the loan was formally sanctioned.

A ₹10 lakh loan was also sanctioned to the other borrower for purchasing 21.39 acres of land. The prosecution alleged that the property had been overvalued by another accused, an Indian Bank appraiser.

The CBI’s case was that the loans were actually used by Kumaradevan. It relied, among other things, on cheques bearing signatures on their reverse, allegedly showing that Kumaradevan had received the money.

The trial court convicted Balakrishnan, finding that the prosecution had established the allegations against him. The High Court later upheld his conviction and sentence, prompting him to approach the Supreme Court.

The Supreme Court found several gaps in the evidence relied upon by the lower courts. It noted that no contemporaneous specimen of Kumaradevan’s signature had been produced to establish that he had signed the cheques. The two former Indian Overseas Bank officers who had worked with him were also never asked to identify the signatures. The Bench also noted that the loans had been sanctioned by Indian Bank’s Regional Office, rather than Balakrishnan alone.

The prosecution had further relied on Kumaradevan’s real estate dealings to connect him to the loans. But the Court found that evidence of his property transactions did not establish Balakrishnan’s involvement.

The Bench also rejected the alleged overvaluation of the mortgaged properties. The trial court and High Court had relied on their value when they were auctioned nearly two decades later, in 2010. But the prosecution had not produced contemporaneous sale deeds or government-fixed market values to show what the properties were worth when the loans were sanctioned. The properties were eventually auctioned and the bank recovered its dues in full. The auctions also generated substantial amounts over and above the loan dues.

The Court took note of this excess money and questioned why it was still lying with the bank instead of being returned to the legal heirs.

“We are surprised that no attempt was made to find out the legal heirs and pass on the money,” the Court said.

The Bench then granted Balakrishnan a “clean acquittal” and directed the Indian Bank to submit a report on excess money left after the mortgaged properties were auctioned.

The matter will be listed on October 5 to consider that report.

Balakrishnan was represented by Senior Advocate S Nagamuthu and Advocate MP Parthiban.

The State was represented by Additional Solicitor General Davinder Pal Singh, along with Advocates Shreekant Neelappa Terdal, Khushal Kolwar, Shubham Prakash Mishra, Abhinav Singh and Jagdish Chandra.

[Read Judgment]