Madras High Court
K.R.Sudersan vs The Inspector Of Police, Cbi on 7 August, 2026
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.O.P.No.6048 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 06.07.2026
PRONOUNCED ON : 07.08.2026
CORAM:
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.O.P.No.6048 of 2024
and Crl.M.P.Nos.4409 & 4421 of 2024
K.R.Sudersan
S/o. K.S.Ramanujam,
Flat No. G-2, Srinivas Flats,
52/72, 53rd Street, Ashok Nagar,
Chennai – 600 083. ... Petitioner
Vs.
1. The Inspector of Police,
CBI, No.36, Bellary Road,
Ganganagar, Bangalore – 32.
2. Sankar, AGM,
Union Bank of India,
Industrial Finance Branch,
Chennai. ... Respondents
Prayer: Criminal Original Petition filed under Section 482 of Code of
Criminal Procedure, to call for records to C.C.No.9274 of 2021 on the
file of the Additional Chief Metropolitan Magistrate Court, Egmore,
Chennai and quash the same by allowing this Criminal Original Petition
insofar as the petitioner concerned.
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For Petitioner(s) : Mr.L.Infant Dinesh
For Respondent(s): Mr.K.Srinivasan,
Special Public Prosecutor for CBI for R1
For Mr.M.Thiyageswaran for R2
ORDER
This petition has been filed to quash proceedings in
C.C.No.927 of 2021 on the file of the learned Additional Chief
Metropolitan Magistrate, Egmore, Chennai, thereby taken cognizance for
the offences punishable under Sections 120(b) r/w 420, 468 & 471 of
IPC, as against the petitioners.
2. The case of the prosecution is that on the complaint lodged
by the defacto complainant viz., Assistant General Manager, Union Bank
of India, the first respondent registered a case in Crime No.14(E)/2016-
CBI/ B&FC/BLR as against the first and second accused, who are the
Chief Managing Director cum Chief Executive Officer and the Managing
Director cum Chief Operating Officer of M/s. Zylog Systems Limited
(hereinafter referred to as “the Company”) and also others for the
offences punishable under Sections 120-B r/w. 420 of IPC, alleging that
the Company availed various credit facilities such as packing credit, term
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loan and corporate loan, working capital credit facilities from Union
Bank of India under consortium with Syndicate Bank and majority of the
proceeds of those facilities were diverted and transferred to the branch
office of the Company thereby caused loss to the defacto complainant
bank to the tune of Rs.466.38 crores as on 30.06.2016.
3. Thereafter, another complaint was lodged by the Syndicate
Bank dated 16.12.2016 for the fraud committed by the Company for the
loans/credit facilities availed out of consortium. The said credit facilities
were availed outside the consortium and the Company availed corporate
loan from the Syndicate Bank, Corporate Finance Branch, for the purpose
of expansion related developments and marketing in foreign countries,
thereby caused loss to the bank to the tune of Rs.296.01 crores as on
30.09.2016. After completion of investigation, the first respondent filed
final report sheet and the same has been taken cognizance by the Trial
Court in C.C.No.927 of 2021. The petitioner is arrayed as A12, who is a
Chartered Accountant, charged for the offences punishable under Section
420 r/w. 120B of IPC. Challenging the above said proceedings, the
petitioner filed the present petition.
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4. The learned counsel appearing for the petitioner submits that
the petitioner is a Chartered Accountant, duly qualified and provided with
professional certificate. He issued certificate only upon proper
verification of the books of accounts and other bank statements of the
Company. In fact, the Disciplinary Directorate of the Institute of
Chartered Accountants of India held that the petitioner is not guilty of any
professional misconduct. Further, a forensic audit was conducted by the
Syndicate Bank itself, wherein the forensic auditors had concluded that
there was no specific details with regard to mis-utilisation of corporate
loan given by the bank. Therefore, the findings of a disciplinary authority
are based on a standard of proof that is higher than that applicable in
ordinary civil proceedings, but lower than the standard required for a
criminal conviction. In disciplinary proceedings, the applicable standard
is the preponderance of probabilities, whereas, in criminal prosecutions,
the charge must be proved beyond reasonable doubt. Consequently,
where the petitioner has been exonerated in the disciplinary proceedings,
the pending criminal prosecution, which is subject to the more stringent
standard of proof, would ordinarily be unable to establish the same charge
beyond reasonable doubt.
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4.1. He further submits that the petitioner’s role was confined to
signing the statement of facts prepared on the basis of the records
produced by the Company. Merely because the records are alleged to
have been fabricated, the petitioner cannot be implicated in a criminal
conspiracy in the absence of any independent material establishing his
involvement or meeting of minds with the other accused. The mere act of
signing the statement of facts, without anything more, does not constitute
the offence of conspiracy. It is further submitted that there is no material
whatsoever to attract the offence punishable under Section 420 of the
Indian Penal Code as against the petitioner. There is no evidence to
demonstrate that the petitioner had any personal gain or pecuniary benefit
from the transactions of the Company. In the absence of the essential
ingredients of the alleged offences and any incriminating material
connecting the petitioner with the commission thereof, the continuation
of the criminal proceedings against the petitioner would amount to an
abuse of the process of law. Therefore, the entire proceedings against the
petitioner cannot be sustained and liable to be quashed.
5. Heard the learned counsel appearing on either side and
perused the materials placed before this Court.
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6. On perusal of the counter affidavit filed by the first
respondent and on the submissions made by the learned counsel
appearing on either side, it is revealed that the petitioner is arrayed as
A12 and his role is that he issued CA Certificate regarding utilization of
Rs.50 crores sanctioned to the Company as corporate loan for the purpose
of meeting expenses related to expansion related developments and
marketing at foreign countries by the Company, in pursuance of criminal
conspiracy with other accused persons co-operated in availing the
corporate loan fraudulently, thereby causing wrongful loss to the bank to
the tune of Rs.79.39 crores.
7. Further in respect of the credit facilities availed by the
Company in consortium from Union Bank of India and Syndicate Bank,
LR was sent to USA for pointers for execution. It was partly executed
based on which, further investigation is being conducted. On perusal of
the certificate dated 05.01.2012, reveals that there are materials to show
that the petitioner had certified that the Company had availed the
corporate loan of Rs.50 crores for the purpose of meeting expenses
relating to expansion related development and marketing in foreign
countries. However, after receipt of corporate loan of Rs.50 crores, it was
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transferred to the Company’s current account and thereafter diverted to
various other current accounts for the purpose other than it was
sanctioned. The petitioner issued certificate in conspiracy with other
accused persons.
8. Further the petitioner also issued utilization certificate,
which is a vital document required to be submitted to the bank for
certifying the utilization of the credit facilities availed by the Company.
The said certificate constituted as foundational document on the basis of
which the bank assessed the financial credentials of its customer and
considered the grant of further credit facilities. According to the
prosecution, the issuance of the false utilization certificate clearly
demonstrates the petitioner’s involvement in the conspiracy to cheat the
bank. Further the enhancement of the credit facilities from ₹80 crores to
₹100 crores evidences the pivotal role played by the petitioner in the
alleged conspiracy. Had the false utilization certificate not been issued,
the enhancement of the credit facilities would not have been sanctioned
by the bank. Therefore, there are specific and substantive allegations
against the petitioner, supported by prima facie material, and that the
grounds urged by the petitioner do not warrant the quashing of the
criminal proceedings at the threshold.
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9. The learned counsel appearing for the petitioner relied upon
the judgment of the Hon’ble Delhi High Court reported in 2007 SCC
Online Del 1248 in the case of Swaminathan Vs. State of Delhi, wherein
it was held that where a chartered accountant merely certifies a statement
of fact based on the records produced by a Company on the allegation
that the record is fabricated, charge of a conspiracy cannot be framed
against the chartered accountant unless there is some more material
against the chartered accountant. In the case on hand, there are materials
available apart from the issuance of certificate as against the petitioner.
Therefore, the above judgment is not applicable to the case on hand.
10. The learned counsel appearing for the petitioner also relied
upon the judgment reported in 2022 SCC Online Ori 3938 in the case of
Kulamani Parida Vs. State of Odisha, wherein the Hon’ble High Court
of Orissa at Cuttack held that the allegation of forgery and fabricated is
not attributed to the case in absence of a material showing that he had a
personal interest in the gain or loss of the parties conducting the business,
other than his professional interest. Therefore, no charge is made out as
against the accused. The above judgment is not applicable to the case on
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hand since there are sufficient materials available to attract the charge
under Section 120-B r/w. 420 of IPC as against the petitioner.
11. He also relied upon the judgment of the Hon’ble Supreme
Court in Ashoo Surendranath Tewari v. Deputy Superintendent of
Police &Anr., reported in (2020) 9 SCC 636, wherein it was held that
where a person has been exonerated on merits in departmental
proceedings, with a categorical finding that the allegations are wholly
unsustainable and that the person is innocent, a criminal prosecution
arising out of the same set of facts and circumstances cannot ordinarily be
permitted to continue, having regard to the higher standard of proof
required in criminal cases.
12. However, the said judgment is not applicable to the facts of
the present case. The findings recorded in departmental or adjudicatory
proceedings are not binding on a criminal court conducting a prosecution
arising out of the same transaction. Although the charges in the
departmental proceedings and the criminal prosecution arise out of the
same set of facts, the prosecution has collected independent oral and
documentary evidence to substantiate the allegations against the
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petitioner. Therefore, the exoneration of the petitioner in the departmental
proceedings, by itself, does not constitute a valid ground for quashing the
criminal proceedings.
13. In this regard, the learned Special Public Prosecutor
appearing for the first respondent relied upon the judgment of the
Hon’ble Supreme Court of India, reported in (2012) 9 SCC 685 in the
case of State (NCT of Delhi) Vs. Ajay Kumar Tyagi, which held as
follows :-
“21. It is worth mentioning that decision in P.S. Rajya
(supra) came up for consideration before a two-Judge Bench
of this Court earlier, in the case of State v. M. Krishna
Mohan, (2007) 14 SCC 667. While answering an identical
question i.e. whether a person exonerated in the
departmental enquiry would be entitled to acquittal in the
criminal proceeding on that ground alone, this Court came
to the conclusion that exoneration in departmental
proceeding ipso fact would not lead to the acquittal of the
accused in the criminal trial. This Court observed
emphatically that decision in P.S. Rajya (supra) was
rendered on peculiar facts obtaining therein. It is apt to
reproduce paragraphs 32 and 33 of the said judgment in this
connection:
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“32. Mr Nageswara Rao relied upon a decision of this Court
in P.S. Rajya v. State of Bihar [1996 (9) SCC 1]. The fact
situation obtaining therein was absolutely different. In that
case, in the vigilance report, the delinquent officer was
shown to be innocent. It was at that juncture, an application
for quashing of the proceedings was filed before the High
Court under Section 482 of the Code of Criminal Procedure
which was allowed relying on State of Haryana v. Bhajan
Lal [1992 Supp. (1) SCC 335] holding: (P.S. Rajya case
[1996 (9) SCC 1, SCC p.9, para 23)]“23. Even though all these facts including the report of the
Central Vigilance Commission were brought to the notice of
the High Court, unfortunately, the High Court took a view
that the issues raised had to be gone into in the final
proceedings and the report of the Central Vigilance
Commission, exonerating the appellant of the same charge
in departmental proceedings would not conclude the
criminal case against the appellant. We have already held
that for the reasons given, on the peculiar facts of this case,
the criminal proceedings initiated against the appellant
cannot be pursued.” Ultimately this Court concluded as
follows:
“33. The said decision was, therefore, rendered on the facts
obtaining therein and cannot be said to be an authority for
the proposition that exoneration in departmental proceeding
ipso facto would lead to a judgment of acquittal in a
criminal trial.”
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22. This point also fell for consideration before this
Court in the case of Supdt. of Police (C.B.I.) v. Deepak
Chowdhary, (1995) 6 SCC 225, where quashing was sought
for on two grounds and one of the grounds urged was that
the accused having been exonerated of the charge in the
departmental proceeding, the prosecution is fit to be
quashed. Said submission did not find favour with this Court
and it rejected the same in the following words:
“6. The second ground of departmental exoneration by the
disciplinary authority is also not relevant. What is necessary
and material is whether the facts collected during
investigation would constitute the offence for which the
sanction has been sought for.”
23. The decision of this Court in the case of Central
Bureau of Investigation v. V.K. Bhutiani, (2009) 10 SCC 674,
also throws light on the question involved. In the said case,
the accused against whom the criminal proceeding and the
departmental proceeding were going on, was exonerated in
the departmental proceeding by the Central Vigilance
Commission. The accused challenged his prosecution before
the High Court relying on the decision of this Court in the
case of P.S. Rajya (supra) and the High Court quashed the
prosecution. On a challenge by the Central Bureau of
Investigation, the decision was reversed and after relying on
the decision in the case of M. Krishna Mohan (supra), this
Court came to the conclusion that the quashing of the
prosecution was illegal and while doing so observed as
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follows:
“6………In our opinion, the reliance of the High Court on
the ruling of P.S. Rajya was totally uncalled for as the
factual situation in that case was entirely different than the
one prevalent here in this case.”
24. Therefore, in our opinion, the High court quashed
the prosecution on total misreading of the judgment in the
case of P.S. Rajya case (Supra). In fact, there are precedents,
to which we have referred to above speak eloquently a
contrary view i.e. exoneration in departmental proceeding
ipso facto would not lead to exoneration or acquittal in a
criminal case. On principle also, this view commends us. It
is well settled that the standard of proof in department
proceeding is lower than that of criminal prosecution. It is
equally well settled that the departmental proceeding or for
that matter criminal cases have to be decided only on the
basis of evidence adduced therein. Truthfulness of the
evidence in the criminal case can be judged only after the
evidence is adduced therein and the criminal case can not be
rejected on the basis of the evidence in the departmental
proceeding or the report of the Inquiry Officer based on
those evidence.
25. We are, therefore, of the opinion that the
exoneration in the departmental proceeding ipso facto
would not result into the quashing of the criminal
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prosecution against an accused is solely based on a finding
in a proceeding and that finding is set aside by the superior
authority in the hierarchy, the very foundation goes and the
prosecution may be quashed. But that principle will not
apply in the case of the departmental proceeding as the
criminal trial and the departmental proceeding are held by
two different entities. Further they are not in the same
hierarchy.”
14. Therefore, the exoneration of the petitioner in the
departmental proceedings would not, ipso facto, warrant the quashing of
the criminal prosecution. It is well settled that the standard of proof
applicable in departmental proceedings is distinct from, and lower than,
the standard required in a criminal trial. Equally, it is a settled principle of
law that both departmental proceedings and criminal prosecutions must
be decided independently on the basis of the evidence adduced in the
respective proceedings. Consequently, a criminal prosecution cannot be
terminated solely on the basis of the findings recorded in the
departmental proceedings or the report of the Inquiry Officer, as such
findings are based only on the evidence led before the disciplinary
authority and are not determinative of the issues arising in the criminal
trial.
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15. Further, the Hon’ble Supreme Court of India in the judgment
reported in 2019 (4) SCC 351 in the case of Devendra Prasad Singh Vs.
State of Bihar &Anr., (Crl.A.No.579 of 2019 dated 02.04.2019) while
dealing with the petition to quash the entire criminal proceedings held
that the High Courts have no jurisdiction to appreciate the statement of
the witnesses and record a finding that there were inconsistencies in their
statements and therefore, there was no prima facie case made out as
against the accused. It could be done only by the trial Court while
deciding the issues on the merits or/and by the Appellate Court while
deciding the appeal arising out of the final order that the charge sheet has
been laid on the basis of the inconsistency statement under Section 161 of
Cr.P.C.
16. The Hon’ble Supreme Court of India in the judgment
reported in 2019 (10) SCC 686 in the case of Central Bureau of
Investigation Vs. Arvind Khanna, (Crl.A.No.1572 of 2019 dated
17.10.2019) held that while exercising its jurisdiction under Section 482
of the Code of Criminal Procedure, the High Court cannot embark upon
an appreciation of disputed questions of fact or record findings thereon.
The defence sought to be raised by an accused is a matter to be tested on
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the basis of the evidence adduced during the course of trial and cannot be
adjudicated at the stage of considering a petition for quashing.Therefore,
this Court, while exercising its inherent jurisdiction under Section 482 of
the Code of Criminal Procedure, cannot record the findings on the
disputed facts. The defence of the accused is to be tested after
appreciation of evidence by the trial Court during the trial. Therfore, this
Court has no power to consider the disputed facts under Section 482 of
Cr.P.C.
17. The Hon’ble Supreme Court of India in another judgment
dated 02.12.2019 passed in Crl.A.No.1817 of 2019 in the case of
M.Jayanthi Vs. K.R.Meenakshi&anr, held that while considering the
petition for quashment of complaint or charge sheet, the Court should not
embark upon an enquiry into the validity of the evidence available. All
that the Court should see is as to whether there are allegations in the
complaint which form the basis for the ingredients that constitute certain
offences complained of. Further, the Court can also see whether the
preconditions requisite for taking cognizance have been complied with or
not and whether the allegations contained in the complaint, even if
accepted in entirety, would not constitute the offence alleged. Whether
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the accused will be able to prove the allegations in a manner known to
law would arise only at a later stage i.e., during trial.
18. Further this Court cannot observe at this stage as to whether
the initiation of criminal proceeding itself is malicious or not. The same is
required to be considered at the conclusion of the trial. Therefore, the
grounds raised by the petitioner to quash the final report/charge sheet
cannot be entertained.
19. In view of the above discussions, this Court is not inclined to
quash the proceedings in C.C.No.927 of 2021 on the file of the learned
Additional Chief Metropolitan Magistrate, Egmore, Chennai, and the
Criminal Original Petition stands dismissed. Consequently, connected
miscellaneous petitions are also closed.
07.08.2026
(1/3)
Index : Yes/No
Neutral citation : Yes/No
Speaking/non-speaking order
rts
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Crl.O.P.No.6048 of 2024
G.K.ILANTHIRAIYAN. J,
rts
To
1. The Additional Chief Metropolitan Magistrate,
Egmore, Chennai.
2. The Inspector of Police,
CBI, No.36, Bellary Road,
Ganganagar, Bangalore – 32.
2. The Assistant General Manager,
Union Bank of India,
Industrial Finance Branch,
Chennai.
3. The Public Prosecutor,
Madras High Court,
Chennai.
Order in
Crl.O.P.No.6048 of 2024
and Crl.M.P.Nos.4409 & 4421 of 2024
07.08.2026
(1/3)
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