Mumbai: 5 fined and imprisoned for 20-year-old Canara bank fraud

Observing that offenses relating to banking activities are not only confined to banks but have a harmful effect on customers and society at large, a special court has sentenced two directors of private companies and a former branch head of Canara bank in a fraud to the institution to the tune of Rs. 1.64 lakhs in 2001-’02.

Loan sanctioned using fake documents

Pravin Bharathan and Mahesh Nagarajan claimed to be proprietors of firms that turned out to be fictitious companies purportedly dealing in computers and their spare parts. S. Mahalingam was branch head at Canara Bank’s Chunabhatti branch. He had sanctioned a loan of Rs. 40 lakhs to the companies of the two knowing that the documents submitted by them were fictitious. In Aug 2002, an internal inspection had found that stocks of computer spares that were shown as collateral were not available and that the account was not backed with any security. The two and others cheated the bank and diverted the amount for purposes other than for which it was disbursed. The deputy general manager of the bank had written a complaint to the superintendent of police, CBI, and Economic Offences Wing (EOW) and a complaint was registered on its basis. 

Directors and branch head of Canara bank sentenced

On Thursday, while Bharathan was sentenced to five years of rigorous imprisonment and a fine of Rs. 3 crores, Nagarajan was sentenced to three years jail, Rs. 24 lakhs fine and the bank official was sentenced to two years in jail and a fine of Rs. 15 lakhs. Others sentenced were one Hiten Avlani who claimed to be a car dealer and fraudulently got a loan of Rs. 10 lakhs. A tax consultant Mehul Ghataliya who furnished false documents about the existence of the firms and financial statements to support the loan proposal was sentenced to six months jail. One Sandeep Makhecha had stood as guarantor and was also made an accused. He died pending trial and the case against him closed.

Regarding Mahalingam, special judge SU Wadgaonkar said that he had knowledge of fictitious borrower entities and that documents forming part of the loan proposal were forged and as a public servant it was his duty to protect the interest of the bank but failed to do so. He gained Rs. 2 lakhs which was diverted out of the credit facilities, it said, adding that he facilitated the loan proposal violating guidelines and submitting false information for recommending sanction.