PNB Scam: Ex-ED KV Brahmaji Rao discharged By CBI Court

Mumbai: The special CBI court has discharged K.V. Brahmaji Rao, former executive director of PNB bank booked in connection with the case registered against Nirav Modi for allegedly cheating the bank by allegedly obtaining LoUs worth Rs 23000 crores fraudulently.

The special judge, Ajay Vitthal Gujarathi while discharging Rao said, "no conspiracy is established against the applicant (Rao) as no criminality or mens rea could be attributed to him."

Observation Made By The Court

"There is no allegation on record of any dishonest intention, participation in conspiracy, or of the applicant having derived any pecuniary benefit or quid pro quo. In the absence of specific incriminating material, the role of applicant (Rao) cannot be construed as constituting criminal misconduct. At worst, the allegations, if assumed to be correct, may indicate a lapse or dereliction of duty, which by itself does not attract criminal liability," the court further said.

The court said that Rao was at a top level and would not look intonthe day to day affairs of the branch but would indulge in policy making. The court hence questioned CBI for not adding the branch level senior officials as accused. 

"the circle/zonal/treasury officials, (Deputy General Manager, Chief General Manager and General Manager) who serve as the statutory supervisory link between the branches and the head office, have not been made accused in the proceedings. If misconduct is to be attributed, it should first be examined at the supervisory level (zonal/circle) before escalating accountability to senior management, especially in the case of a localized fraud committed by branch-level officers. But there is no satisfactory explanation from the prosecution in this regard," the court said adding that the prosecution had proceeded against the officials in a pick-and-choose manner. 

Rao was booked by CBI alleging that RBI had issued a Caution Advice on 10th August, 2016, alerting banks about the fraud involving fraudulent Letters of Comfort (LOCs) issued via SWIFT messages in another Public Sector Bank. CBI claimed that despite receiving this caution notice, senior PNB officers, including Rao, allegedly failed to act upon its directions.

The prosecution further contented that the Rao, as Executive Director, dealt with the RBI circulars, caution notices, and urgent questionnaires relating to SWIFT fraud and reconciliation, but failed to protect the Bank's interests by not taking timely corrective steps and follow-up action.

Defence countered the prosecution contended that after, receiving the RBI, a special meeting was promptly convened by Rao with top officials from various divisions to discuss the recommendations. However, It was contended that, It was the job of the Information Technology Division, which was headed by a different Executive Director, to implement the recommendations. It was claimed that IT Department was to be blamed for delay. 

The court after hearing both the side observed that, "applicant had discharged the functions assigned to him and he had no remote concern with the criminal acts committed by the bank officials Gokulnath Shetty and Manoj Kharat at the Brady House branch of PNB, where the fraud stood committed." To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/

"The alleged fraud occurred at the Branch levels and neither the circle/regional office noticed, nor the internal and external auditors reported it to the PNB top management at any point of time. Further, no material has been produced to show that the applicant either overruled internal guidelines or pressurized any subordinate to deviate from the procedure. None of the statement recorded of the several witnesses from the PNB top management indicate that any existing rule or directive of the bank was violated by the applicant while fraud was being committed," The court said. 

The court further noted that, "The applicant was working in supervisiory capacity. More than 7000 branches were under his control. Under these circumstances, it is humanly impossible to keep eye on the transactions taking place in each and every branch. 

"Admittedly, there is no material on record to show that fradulent activities of the co-accused, particularly, bank employees were brought to the notice of the applicant. Admittedly, the present applicant has not obtained any illegal consideration/gratification out of the said fradulant transactions. Therefore, in the absence of mensrea, it cannot be said that criminal liablity can be fastened on the applicant," the court said discharging Rao.

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