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Central Bureau of Investigation vs. Srinivas D. Sridhar

Not available · 2024 INSC 783Decided 16 Oct 2024
Not available
Justice Abhay S. Oka · Justice Ujjal Bhuyan

Background

The respondent, Srinivas D. Sridhar, was the Chairman and Managing Director of Central Bank of India when the bank sanctioned large credit facilities (short-term loan, letter of credit, and export packing credit) worth hundreds of crores of rupees to a company, M/s Electrotherm (India) Ltd., for an alleged steel plant project in Tanzania. The CBI alleged the funds were diverted rather than used for the stated purpose, causing the bank a loss of over Rs. 436 crores, and charged Sridhar along with company officials and other bank officers under IPC cheating/forgery provisions and the Prevention of Corruption Act. A trial court refused to discharge him, but the High Court, in a revision petition, discharged him from the case. The CBI appealed to the Supreme Court against the discharge.

Decision Breakdown

The Supreme Court upheld the High Court's decision to discharge Sridhar and dismissed the CBI's appeal. Examining the chargesheet and witness statements, the Court found that Sridhar's role was limited to signing a loan Memorandum that had already been cleared and recommended by the bank's Loan Advisory Committee and other officers below him, and to participating in the Management Committee meeting that approved it. He had no role in a separate, more suspicious transaction (the Standby Letters of Credit) that caused the larger loss. The Court held that the speed with which the loan was processed created suspicion but was not, by itself, enough to frame criminal charges against him, since mere suspicion is insufficient. There must be at least a strong prima facie case connecting the specific accused to the alleged wrongdoing.

Lesson Learnt

In corruption and fraud cases, criminal liability must be tied to a person's actual specific role and conduct: merely holding a senior position and being part of an approval chain, or the fact that a process moved unusually fast, is not enough to justify putting someone on criminal trial without concrete evidence connecting them to wrongdoing.

Official source (sci.gov.in)View Judgment (PDF)

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