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by sayum
06 August 2026 1:57 PM
“When Forged Documents Are Used Knowingly To Obtain A Loan, The User Is As Guilty As The Maker,” Madras High Court partly allowing the criminal revisions while affirming the conviction of both petitioners under Sections 120-B, 420, 406, 466, 474 and 471 of the Indian Penal Code, 1860. The Court modified the sentence of imprisonment from three years to one year in consideration of the petitioners’ age and health, while maintaining the fine and concurrent operation of sentences.
The petitioners were convicted for conspiring with absconding co-accused Sethuraman to fraudulently obtain a ₹25.95 lakh loan from the Central Bank of India, Siddhapudur Branch, Coimbatore, by submitting forged mortgage deeds, fake valuation certificates, and fabricated title documents. Rejecting the defence of false implication and lack of evidence of partnership or conspiracy, the Court held that the prosecution had “proved beyond reasonable doubt that the petitioners participated in the fabrication and use of false documents to secure the loan.”
“Conspiracy Can Be Inferred From Conduct And Chain Of Circumstances — Direct Proof Is Rare”
Justice Nirmal Kumar began by recalling the well-established principle under Section 120-B IPC that criminal conspiracy can seldom be proved by direct evidence. “An agreement to commit an unlawful act is often inferable from conduct, correspondence, and joint participation in acts furthering the common design,” the Court observed.
In this case, the Court noted that A1 Rajeswari, along with the absconding accused Sethuraman, had approached the Central Bank of India as partners of a firm named Royal Print Packs seeking a business loan for purchase of machinery and raw materials. The loan was sanctioned on 19 July 1999, with A2 Damodarasamy and A3 Venkatraman (husband of A1) standing as guarantors. The accused executed pro-notes, loan and hypothecation deeds, and deposited title deeds purportedly belonging to A2 as collateral security.
The investigation, based on the testimony of the Bank Manager (PW1), Advocate who gave legal opinion (PW4), Sub-Registrar (PW5), and Village Administrative Officer (PW6), established that the documents submitted were forgeries. “The signatures, stamp denominations, and vendor details differed from the original records,” the Court recorded. “Such consistent anomalies and the joint acts of submission of forged papers, mortgage, and execution of hypothecation deeds leave no doubt of a common intention and conspiracy.”
“Forgery Is Not Limited To The Hand That Writes — Using A Forged Document With Knowledge Is A Crime In Itself”
Dismissing the argument that the petitioners were not the “makers” of the forged documents and hence could not be convicted for forgery, the Court emphasized that the law punishes not only the maker but also the conscious user of forged instruments.
Quoting from the judgment, Justice Nirmal Kumar observed: “A person who knowingly uses a forged document for unlawful gain cannot escape liability by pleading that he was not the scribe. The essence of the offence lies in the intent and knowledge with which the forged instrument is employed.”
The Sub-Registrar (PW5) deposed that the document submitted as title deed (Doc. No. 4126/1991) differed from the genuine record in the office. While the genuine deed was executed on five non-judicial stamp papers of ₹750 and ₹100 denominations totaling ₹1800, the fake document used to obtain the loan was on lesser-value papers totaling ₹750, bearing a different vendor’s name and lacking the Sub-Registrar’s seal on the reverse. “These inconsistencies prove the falsity of the document beyond doubt,” the Court said.
The Village Administrative Officer (PW6) confirmed that the valuation certificate allegedly issued by him was forged. “The prosecution, through unimpeached testimonies, has demonstrated that forged property documents and fabricated valuation certificates were deliberately used to secure a bank loan,” the Court noted.
“Entrustment, Cheating, And Forgery Stand Proved Through Documentary And Oral Evidence”
The Court found that the evidence of PW1, PW3, and PW4 clearly established the loan transaction, the hypothecation, and the forged mortgage. “The bank’s inspection revealed that no manufacturing activity was ever carried out at the supposed business premises of Royal Print Packs, and the machineries had been dismantled and were ready to be removed,” Justice Nirmal Kumar observed. “This conduct confirms dishonest intention from inception.”
Rejecting the petitioners’ defence that they were victims of the absconding partner Sethuraman’s fraud, the Court held that “A1, A2, and A3 acted in concert with Sethuraman to mislead the bank, execute false documents, and obtain unlawful financial benefit.” The Court drew attention to the consistent chain of evidence that showed A1’s participation in executing the loan papers and A2’s role in producing the forged title deeds used for mortgage.
“Conviction Upheld, Sentence Reduced In View Of Age, Gender And Health”
While affirming the conviction on all charges, Justice Nirmal Kumar showed leniency in sentencing, observing: “Considering the gender of A1, and the age and health condition of both petitioners, this Court deems it appropriate to modify the sentence of imprisonment from three years to one year for each offence. However, the fine imposed for each count shall remain, and the sentences shall run concurrently.”
The Court thus partly allowed the criminal revisions, upholding the conviction but reducing the term of imprisonment. The ruling reinforces the principle that the courts will not permit misuse of financial institutions through forged documents and conspiracies masked as business transactions.
As the Court succinctly summed up: “Those who use forged instruments to cheat a bank commit not merely an economic offence but an act that undermines the integrity of financial systems. Such acts must meet the consequence of law, though tempered by compassion when circumstances warrant.”
Date of Decision: 07 October 2025
