A Mumbai magistrate's court has convicted Anushool Metals Pvt Ltd and its 65-year-old director, Bharathi Hegde, in a long-running fraud case involving Canara Bank. The trial, which took 18 years to conclude, found the accused guilty of cheating the bank of approximately Rs 3.33 crore through forged financial statements and the concealment of prior encumbrances on collateral property.
Court Verdict and Sentencing
Additional Chief Judicial Magistrate Supriya V Nikam sentenced Bharathi Hegde to imprisonment and imposed a fine of Rs 4.5 lakh. The company was fined Rs 3 lakh. The magistrate emphasized the seriousness of the economic offence, noting that it involved criminal conspiracy, cheating, and forgery, resulting in substantial wrongful loss to a public sector bank.
“It is needless to mention that banks survive only on the hard-earned investments and deposits made by people at large, and any loss caused to the bank ultimately affects the public at large. Having regard to the totality of facts and circumstances, the gravity of the offence, the quantum of loss caused to the bank and the role played by the accused, a sentence of incarceration coupled with a fine would meet the ends of justice,” the magistrate said.
Prosecution's Case
The Central Bureau of Investigation's Economic Offences Branch investigated the case following a complaint lodged on August 18, 2008, by a Canara Bank official. According to the prosecution, the company, run by directors Jayram Hegde and Bharathi Hegde, first obtained a cash credit facility from Canara Bank's Mangalore branch by submitting two different sets of audited reports for the same financial years 2002-03 and 2003-04. One set contained correct figures, while the other carried inflated and false figures, making the firm appear financially stronger. This led the bank to disburse an initial loan of Rs 50 lakh, which was later enhanced to Rs 2 crore.
After the account was shifted to Canara Bank's Parel branch in Mumbai, the company sought an additional facility of Rs 58 lakh and offered land in Panvel as collateral. It was later discovered that the land was not free of encumbrance, as represented, and had already been attached in recovery proceedings by Janata Sahakari Bank Ltd, Pune, by an order dated January 31, 2005. The prosecution alleged that this was suppressed while the property was presented to Canara Bank as fresh security.
Evidence and Court Findings
The prosecution examined bank officials and other witnesses to establish the loan processing trail, the reliance placed on the borrower's financial statements, and the later discovery of defects in the collateral. The court cited evidence that Canara Bank relied on the borrower's documents and professional reports while sanctioning limits. Later, the bank found that the property carried a prior charge and that hypothecated stock valued by the bank's valuer at about Rs 1.83 crore was missing during subsequent verification.
The court held that the prosecution “unfolded a classic tale of corporate fraud, inflated numbers on paper, a property that was already pledged elsewhere, and documents that looked perfect on the surface but crumbled under scrutiny. The bank parted with crores, only to discover later that the security it relied upon was illusory and the financial health projected was, in large measure, make-believe.”
Defense and Leniency Plea
Bharathi Hegde sought leniency on grounds of her age, financial difficulties, and the fact that she was still grieving the sudden death of her husband. She also claimed to be unaware of the company's affairs. However, the magistrate rejected these arguments, emphasizing the gravity of the offence and the role played by the accused.
Other Accused
Two other accused, Jayram Hegde and chartered accountant Iqbal Gour, died during the pending proceedings, and the case against them was abated. Advocate Satish Bejal was discharged earlier.
