A special CBI court in Mohali has convicted two directors of a cement manufacturing company in a Punjab National Bank loan diversion case involving about Rs 87 lakh, but released them on probation after noting that the full amount had later been repaid and that the criminal proceedings had continued for nearly 15 years.
Court Convicts Two Company Directors
The case arose from an alleged misuse of a Rs 2 crore loan and cash credit facility sanctioned in 2009 by Punjab National Bank’s Faridkot Cantonment branch for setting up a cement manufacturing unit. According to the prosecution, a portion of the sanctioned amount was later diverted through fictitious firms and forged invoices for personal use.
The special CBI court convicted Balwinder Singh and his relative Sukhwinder Singh, both associated with M/s Maha Sagar Cement Co Pvt Ltd, under provisions relating to cheating, forgery, use of forged documents and criminal conspiracy under the Indian Penal Code. The case had originally been registered by the CBI’s Chandigarh branch in 2011 after irregularities surfaced during scrutiny of the loan account.
Investigators told the court that Balwinder Singh and his late son Satinder Pal Singh had availed the loan and cash credit limit for establishing a cement plant, but nearly Rs 87.29 lakh was later routed through non existent firms and fake billing arrangements instead of being used for the approved business purpose.
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Fake Firms and Forged Invoices Alleged
According to the prosecution, Sukhwinder Singh created paper entities identified as M/s Guru Nanak Building Material and M/s Guru Nanak Engineering Works. Through these firms, investigators alleged, amounts of about Rs 25.04 lakh and Rs 45 lakh were transferred using forged invoices despite there being no genuine business activity connected to the entities.
The funds were allegedly withdrawn and diverted for private use. Investigators also informed the court that the accused had attempted to manipulate transactions involving legitimate suppliers in order to siphon money through undisclosed accounts.
Another alleged effort involved diversion of Rs 50.52 lakh through a purported shell entity named M/s Sharma Dealer. That transaction, however, reportedly failed after a bank official raised concerns regarding the authenticity and credibility of the beneficiary account. The court was thus presented with what the prosecution described as a pattern of post sanction diversion using fictitious entities and forged documentation.
Bank Officials Acquitted, Probation Granted
The case also included allegations against the then branch manager and deputy manager of Punjab National Bank. However, the court acquitted both officials, observing that while procedural lapses and lack of due diligence were evident, the prosecution failed to prove criminal conspiracy or personal financial gain. The court said there was insufficient evidence to establish deliberate collusion or any meeting of minds between the bank officials and the private accused.
While deciding the sentence, the court recorded several mitigating factors. It observed that when the loan was sanctioned, the accused had furnished collateral and primary securities proportionate to the amount, indicating that there was no dishonest intention at the time of availing the facility. The wrongdoing, the court said, arose later at the post sanction stage when funds were diverted to fictitious firms.
The judge also noted that the entire outstanding amount had eventually been repaid, resulting in no ultimate financial loss to the bank. The long duration of the trial, which continued for more than a decade, was also treated as a relevant consideration. Another factor noted by the court was the personal hardship faced by the family during the proceedings, including the death by suicide of Balwinder Singh’s son. Referring to the Probation of Offenders Act and earlier rulings of the Punjab and Haryana High Court, the court held that no useful purpose would be served by sending the convicts to jail at this stage and released both on probation upon furnishing bonds and depositing litigation costs.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
