Kerala High Court
A.P.Varghese vs The Inspector Of Police on 16 February, 2026
2026:KER:13752
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A. BADHARUDEEN
MONDAY, THE 16TH DAY OF FEBRUARY 2026 / 27TH MAGHA, 1947
CRL.A NO. 924 OF 2016
AGAINST THE JUDGMENT DATED 31.08.2016 IN CC NO.39 OF 2014 OF
SPE/CBI - III, ERNAKULAM
APPELLANT/ACCUSED NO.2:
JAMES MATHEW
AGED 34 YEARS,S/O.K.M.MATHEW,KANNAMUNDAYIL
HOUSE,VALLAKADAVU, KADAMAKUZHI P.O., KATTAPPANA, IDUKKI
DISTRICT
BY ADVS.
SRI.S.RAJEEV
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/STATE/COMPLAINANT:
STATE OF KERALA
REP. BY STANDING COUNSEL SPE/CBI,HIGH COURT OF KERALA,
ERNAKULAM, PIN-682031 (CRIME NO.RC 09(A) 2006 OF
VIGILANCE POLICE STATION, IDUKKI DISTRICT
BY ADV.SHRI.SREELAL N.WARRIER, SPL.PUBLIC PROSECUTOR,
CENTRAL BUREAU OF INVESTIGATION (CBI)
THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 05.02.2026,
ALONG WITH CRL.A.977/2016, THE COURT ON 16.02.2026 DELIVERED THE
FOLLOWING:
CRL.A.NOS.924 & 977 OF 2016 2 2026:KER:13752
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A. BADHARUDEEN
MONDAY, THE 16TH DAY OF FEBRUARY 2026 / 27TH MAGHA, 1947
CRL.A NO. 977 OF 2016
AGAINST THE JUDGMENT DATED 31.08.2016 IN CC NO.39 OF
2014 OF SPE/CBI - III, ERNAKULAM
APPELLANT/ACCUSED NO.1:
A.P.VARGHESE
S/O.PYLO PYLO, AGED 57 YEARS,SENIOR MANAGER UNION
BANK OF INDIA, KATTAPPANA BRANCH, IDUKKI DISTRICT
BY ADVS.
SHRI.VARGHESE C.KURIAKOSE
SRI.P.J.JOSE
SMT.SEENU SADIQUE
RESPONDENTS/COMPLAINANT:
1 THE INSPECTOR OF POLICE
CENTRAL BUREAU OF INVESTIGATION,CBI, TRIVANDRUM
UNIT-645001
2 STATE OF KERALA
REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,
ERNAKULAM, PIN-682031
BY ADV.SHRI.SREELAL N.WARRIER, SPL.PUBLIC
PROSECUTOR, CENTRAL BUREAU OF INVESTIGATION (CBI)
THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON
05.02.2026 ALONG WITH CRL.A.924/2016, THE COURT ON
16.02.2026 DELIVERED THE FOLLOWING:
CRL.A.NOS.924 & 977 OF 2016 3 2026:KER:13752
CR
COMMON JUDGMENT
Dated this the 16th day of February, 2026
Accused Nos.1 and 2 in C.C.No.39/2014 on the files of the
Special Judge-III, CBI/SPE, Ernakulam, have filed these appeals
challenging the verdict in the above case, dated 31.08.2016,
whereby accused Nos.1 and 2 were found guilty for the offences
punishable under Sections 120B r/w 420 of the Indian Penal
Code (for short, ‘the IPC‘ hereinafter) as well as under Section
13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988 (for
short, ‘the PC Act, 1988‘ hereinafter).
2. Heard the learned counsel for the appellants/accused
Nos.1 and 2 and the learned Special Public Prosecutor appearing
for CBI.
3. The case of the prosecution is that the 1st accused,
while officiating as Senior Manager, Union Bank of India,
CRL.A.NOS.924 & 977 OF 2016 4 2026:KER:13752
Kattappana Branch, Idukki District, during the period from
17.05.2004 to 07.05.2005, conspired with accused Nos.2 to 6
with the intention of cheating Union Bank of India, Kattappana
Branch, by sanctioning and disbursing housing loans while
abusing his official position. In pursuance of the conspiracy, the
1st accused, in violation of banking norms, sanctioned five housing
loans amounting to ₹50 lakh, viz., ₹10 lakh in the name of the 2 nd
accused on 29.12.2004; ₹10 lakh in the name of the 3 rd accused
on 02.09.2004; ₹10 lakh in the name of the 4 th accused on
14.07.2004; ₹10 lakh in the name of the 5th accused on
03.09.2004; and ₹10 lakh in the name of the 6 th accused (who is
the wife of the 2nd accused) on 26.02.2005, on the basis of false
and bogus documents. The 1st accused disbursed the amounts
without conducting any pre or post sanction inspection, fully
knowing that the amounts would not be used for construction of
any house and would be applied to purposes other than those for
which they were sanctioned. The 1st accused allowed the 2nd
accused to utilise the amount for purchasing a cardamom estate
CRL.A.NOS.924 & 977 OF 2016 5 2026:KER:13752
in the name of the 2nd accused. Accused Nos.2 to 6 dishonestly
induced the Bank to sanction the loans on the basis of false and
bogus documents and got the amounts released, knowing well
that they were not required for construction and would be used
for other purposes. On this premise, the prosecution alleges
commission of the above offences by the accused.
4. The Special Court recorded evidence after framing
charge as against accused Nos.1 to 6. PW1 to PW14 were
examined and Exts.P1 to P65 were marked on the side of the
prosecution. DW1 to DW3 were examined and Exts.D1 to D10
were marked on the side of the defence.
5. On appreciation of the evidence, the learned Special
Judge found commission of offences punishable under Sections
120B r/w 420 of the IPC as well as under Section 13(1)(d) r/w
13(2) of the PC Act, 1988, by accused Nos.1 and 2, while
acquitting accused Nos.3 to 6. Accordingly, accused Nos.1 and 2
were sentenced as under:
i. A1 is sentenced to undergo Rigorous
CRL.A.NOS.924 & 977 OF 2016 6 2026:KER:13752Imprisonment for one year and to pay fine of
Rs.10,000/- in default to undergo Simple
Imprisonment for three months u/s. 13(2) of the
PC Act and Rigorous Imprisonment for one year
and to pay fine of Rs.10,000/- in default to
undergo Simple Imprisonment for three months
u/s.420 IPC. Regarding the conspiracy, A1 is
sentenced to undergo Rigorous Imprisonment
for one year each u/s.120 B r/w 420 IPC and
120 B r/w. S.13(2) of PC Act.
ii. Accused No.2 is sentenced to undergo
Rigorous Imprisonment for one year and to pay
fine of Rs.10,000/- in default to undergo Simple
Imprisonment for three months each u/s. 420
IPC. Further, he is sentenced to undergo
Rigorous Imprisonment for one year each for
the offences u/s. 120B r/w. S.420 IPC and 120B
r/w 13(2) of PC Act.
iii. The substantive sentence of imprisonment
shall run concurrently.
iv. The accused are entitled to set off of the
period of detention already undergone by them
during the investigation, enquiry and trial of this
CRL.A.NOS.924 & 977 OF 2016 7 2026:KER:13752
case.
6. The learned counsel for accused Nos.1 and 2
vehemently canvassed that as per Ext.P20(a), an application put
in by the 2nd accused, pursuant to which, the 1st accused granted
housing loan to the tune of Rs.10 lakh and out of which, the 2 nd
accused was given first instalment Rs.6 Lakh on 30.12.2004.
Again on 04.02.2005, the second instalment Rs.4 Lakh also was
sanctioned and disbursed, and received by the 2 nd accused. The
prime point argued by both the counsel is that, subsequently, as
per Ext.P20(e), the nature of the loan was changed from home
loan to ordinary loan carrying interest at the rate of 12.75%.
Apart from that, the evidence of DW3, the Manager of the Bank,
and Ext.D6, the statement of account of the 2 nd accused, have
been relied upon to substantiate that, even though a housing loan
with lesser interest was initially granted and received by the 2 nd
accused, thereafter, as per Ext.P20(a), the application submitted
by the 2nd accused, the nature of the loan was changed and the
CRL.A.NOS.924 & 977 OF 2016 8 2026:KER:13752
rate of interest was also altered. According to the learned counsel
for accused Nos.1 and 2, it is in this context, DW3, the Manager,
who produced Ext.D6 statement of account, deposed before the
court that no loss was sustained by the Bank.
7. Opposing the contentions raised by the learned
counsel for appellants/accused Nos.1 and 2, the learned Special
Public Prosecutor for CBI vehemently argued that in this case,
PW2 formed an audit team and they found several defects in the
loan sanctioned by the 1st accused. It is argued that PW1 accorded
sanction as Ext.P1 for the grant of the loan, and thereafter the 1 st
accused sanctioned the loan without complying with the requisite
formalities. According to the learned Special Public Prosecutor,
as per Ext.P20 file, two pre-sanction reports could be found. The
first report, dated 14.07.2004, states that 40% of the work had
been completed. The second report, which is undated, shows
further progress of the work. But in fact, no work was carried out.
Thus, granting loan without verifying the documents and which
should not have been granted, would attract offence under
CRL.A.NOS.924 & 977 OF 2016 9 2026:KER:13752
Section 420 of the IPC as there was an intention on the part of the
1st accused to cheat and defraud the Bank as part of conspiracy
hatched between accused Nos.1 and 2.
8. Adverting to the rival arguments, the points arise for
consideration are;
(i) Whether the Special Court was right in
holding that accused Nos.1 and 2 committed
offence punishable under Section 120B r/w Section
420 of the IPC?
(ii) Whether the Special Court was right in
holding that accused Nos.1 and 2 committed
offence punishable under Section 13(1)(d) r/w
Section 13(2) of the PC Act, 1988?
(iii) Whether the verdict would require interference?
(iv) The order to be passed?
Point Nos.(i) to (iv)
9. On appreciating the evidence tendered altogether, the
CRL.A.NOS.924 & 977 OF 2016 10 2026:KER:13752
learned Special Judge concluded his finding in paragraph No.90
as under:
“90. On consideration of the facts and circumstances
surrounding the sanctioning and disbursal of Ext.P20
loan, the following circumstances have come out from the
evidence adduced before this court.
i. A2 applied for a home loan for making a new
construction before A1.
ii. It was A2 who himself processed, sanctioned and
disbursed the loan.
iii. In the pre-sanction inspection reported to have been
conducted on 14-7-2004 by A1 in Ext.P.20 file, it is
mentioned that 40% of the work has done which is false.
iv. In another pre-sanction inspection report which is
undated, in Ext.P20 file, it has been mentioned that work
is in progress, which is also false.
v. The second accused received the first installment of the
loan amount on 30-12-2004 without conducting any
work.
vi. The second accused received the second installment of
the loan amount on 4-2-2005 without conducting any
work.
vii. The second accused himself admitted in Ext.P20(a)
CRL.A.NOS.924 & 977 OF 2016 11 2026:KER:13752that no construction was made.
viii. The second accused produced bills and receipts
before A1 without conducting any work.
ix. Out of the bills produced, Ext. P20(c) and P20(d) were
proved to have been unauthorized and falsely altered.
X. False and unauthorized alterations in Ext.P20(c) and
Ext.P20(d) are for supporting the claim of A2, in order to
make it appear that the construction work was going on.
xi. The conduct of the second accused in admitting that no
construction has been made as per Ext.P20(a) does not
seem to be bonafide since the same was made only after
the detection of the foul play.
xii. The conduct of the first accused in certifying that
work is in progress was not at all bonafide.
xiii. There was clear violation of Ext.P13 norms in the
case of disbursal of the loan to A2 as per Ext.P20.
xiv. The contention of A1 regarding the ignorance of
Ext.P13 norms is not bonafide.
xv. There is no explanation from the side of A1 as to how
the second installment of the loan was disbursed to A2.
xvi. There is no explanation from the side of A1 regarding
the manipulation in Ext.P20(c) and P20(d).
xvii. It has been proved that Ext.P20(c) and P20(d) were
handed over to A2 by PW7.
CRL.A.NOS.924 & 977 OF 2016 12 2026:KER:13752
xviii. It has been proved that when Ext.P20(c) and
Ext.P20(d) were handed over by PW7 to A2, the
alterations were not there.
xix. It has been proved that the carbon copies of
Ext.P20(c) and P20(d) which were kept by PW7 do not
contain any such alterations.
xx. There is no explanation from the side of the second
accused regarding the alterations in Ext.P20(c) and
P20(d).
xxi. Ext.P20(a) letter was given by the second accused to
the bank only after the tenure of the first accused as
Manager of the Union Bank of India, Kattappana.
xxii. Apart from A2, A1 sanctioned 4 other housing loans
to the wife and brothers of A2.
xxiii. There is every reason to believe that the violation of
the norms by A1 was malafide.
xxiv. Ext.P20 file reveals that the interest of the housing
loan sanctioned to A2 was only 9%.
xxv. The evidence of PW2 reveals that the interest rate of
other loans during that time was 14 to 15%.
xxvi. The violation of the norms in the disbursal of the
loan to A2 by A1 amounts abuse of authority.
xxvii. A1 obtained pecuniary advantage to A2.
CRL.A.NOS.924 & 977 OF 2016 13 2026:KER:13752xxviii. There is meeting of minds between A1 and A2 as
regards the sanctioning and disbursal of loan by abusing
the official position of A1.
xxix. A1 and A2 with the intent to cheat the Union Bank of
India induced Union Bank of India to disburse the entire
loan amount to A2, without starting any construction.
xxx. The evidence indicates that A1 and A2 are fully
aware of the fact that the amount was not required for
any construction.
xxxi. The evidence indicates that A1 and A2 were fully
aware of the fact that the amount of loan will be utilized
for purpose, other than for which it was sanctioned.”
10. When considering the ingredients of the offence under
Section 13(1)(d) r/w 13(2) of the PC Act, 1988, what is to be
examined is whether by corrupt or illegal means, a public servant
obtained for himself or for any other person, any valuable thing
or pecuniary advantage by abusing his position as a public
servant, in any manner. On perusal of Ext.P20 pertaining to the
loan, housing loan was granted and first instalment of the same to
the tune of Rs.6 Lakh was released on 30.12.2004 on the premise
CRL.A.NOS.924 & 977 OF 2016 14 2026:KER:13752
of making part construction of the proposed building. Anyhow,
no such building was constructed, as admitted by the 2 nd accused
in Ext.P20(a), application submitted by him. But, before
registration of this crime, as per Ext.P20(e), the nature of the loan
was changed as one which would carry higher rate of interest,
i.e.,12.75%. If so, it could not be safe to conclude that in the
instant case, any undue pecuniary advantage obtained to the 2 nd
accused, at the instance of the 1st accused or any corresponding
loss sustained to the Bank, in any manner. It is true that when an
application is put up on the premise of obtaining a housing loan
with an undertaking to effect construction in part by utilising the
first instalment, failure to do so may indicate a mala fide
intention.
11. In the instant case, even though, as admitted by the 2 nd
accused in terms of as Ext.P20(a) application, he did not make
any construction. No deceitful intention could be attributed to
the 2nd accused, as the nature of the loan was changed only
because he was unable to do the house construction.
CRL.A.NOS.924 & 977 OF 2016 15 2026:KER:13752
12. Since the law is settled, as pointed out by the learned
counsel for the 2nd accused to attract offence u/s.420 of the IPC,
there should be an intention to cheat at the beginning of the
transaction, i.e., at the very inception. A perusal of the facts and
evidence discussed above would show that there is no such
intention from the side of the accused/appellants. Decisions
pointed out by the learned counsel for the 2 nd accused, viz.,
Mitesh Kumar J. Sha v. State of Karnataka, 2021 (6) KLT
OnLine 1107 (SC); Rekha Jain v. State of Karnataka, 2022
(3) KLT OnLine 1110 (SC): 2022 SCC OnLine SC 585;
Satishchandra Ratanlal Shah v. State of Gujarat, 2019 (1)
KLT OnLine 3087 (SC), are on this point. Similarly, as argued
by the learned counsel for the 2 nd accused, dishonest intention is
the gist of the offence under Section 13(1)(d) and the same could
be seen from the words used i.e. obtaining illegal pecuniary
advantage by corrupt or illegal means and abuse of position as a
public servant. In this case, after changing the category of the
loan with high rate of interest, the same was repaid by the 2 nd
CRL.A.NOS.924 & 977 OF 2016 16 2026:KER:13752
accused. Be it so, there is nothing on record to show that the
accused has obtained for himself or for any other person, any
valuable thing or pecuniary advantage. In such circumstances,
the appellants are entitled for an acquittal. (See decisions in
C.K.Jaffer Sharief v. State (2013) 1 SCC 205 :AIR 2013 SC
48; Sabu K S v CBI, 2025 ICO 1703; Raju v. State of
Kerala, 2022 (1) KLT 585; Surendranath v. State of
Kerala, 2024 (1) KLT 728). When the full repayment is made,
and there is no falsification of records, the conviction against the
appellant is liable to be set aside. (Jayson Joy v. CBI, 2025
KLT OnLine 2938; N.S.Gnaneshwaran Etc v. Inspector of
Police and Anr, (2025) SCC OnLine SC 1257; K.Bharthi Devi
and Ors. v. State of Telangana and Ors. (2024) 10 SCC 384)).
13. Therefore, the element of deceitful intention also could not
be gathered from the available materials. Thus, even though the
learned Special Judge has concluded the findings in paragraph No.90,
as extracted above, the factual aspects and the evidence discussed
above would lead to the conclusion that, in the
CRL.A.NOS.924 & 977 OF 2016 17 2026:KER:13752
instant case, no pecuniary gain to accused Nos.1 and 2 and no
corresponding loss to the Bank, have been established beyond
reasonable doubt. In such view of the matter, the verdict under
challenge would require interference.
In the result, these appeals succeed. The conviction and
sentence imposed against the appellants/accused Nos.1 and 2 are
set aside, and they are acquitted of the offences punishable under
Sections 120B r/w 420 of the IPC as well as under Section 13(1)
(d) r/w 13(2) of the PC Act, 1988. They are set at liberty forthwith,
and the bail bonds executed by the appellants/accused Nos.1 and
2 shall stand cancelled.
Registry is directed to forward a copy of this judgment to the
Special Court, forthwith.
Sd/-
A. BADHARUDEEN
JUDGE
Bb
CRL.A.NOS.924 & 977 OF 2016 18 2026:KER:13752
APPENDIX OF CRL.A NO. 977 OF 2016
PETITIONER’S ANNEXURES
Annexure A1 TRUE PHOTOSTAT COPY OF THE JUDGMENT
DATED 07.04.2025 IN CRIMINAL CASE
NO.37880/2007 ON THE FILES OF 11TH ADDL.
SENIOR CIVIL JUDGE AND ADDL. CHIEF
JUDICIAL MAGISTRATE AT VADODARA
RESPONDENTS’ ANNEXURES : NIL