Authority: High Court of Judicature at Madras

Order Date: 07.08.2026

Case Overview

  • Petitioner: K.R. Sudersan, Chartered Accountant (referred to as A12 in the charge sheet).
  • Respondents: 1) Inspector of Police, CBI, Bangalore; 2) Sankar, AGM, Union Bank of India, Chennai.
  • Underlying Criminal Proceedings: C.C.No.927 of 2021 before the Additional Chief Metropolitan Magistrate, Egmore, Chennai, concerning offences under Sections 120(b) r/w 420, 468 & 471 IPC.
  • Allegations: The prosecution alleges that Zylog Systems Ltd, through its senior executives, obtained credit facilities (packing credit, term loan, corporate loan, working‑capital loan) from Union Bank of India (in consortium with Syndicate Bank). The banks claim that the majority of the loan proceeds were diverted to the Company’s branch office and subsequently to other accounts, causing losses of Rs 466.38 crore (Union Bank) as of 30‑06‑2016 and Rs 296.01 crore (Syndicate Bank) as of 30‑09‑2016, totalling approximately Rs 762 crore.
  • Petitioner’s Role: The petitioner issued a Chartered Accountant (CA) certificate confirming utilization of a Rs 50 crore corporate loan for expansion and marketing abroad. The prosecution contends that the certificate was false and facilitated the enhancement of credit facilities from ₹80 crore to ₹100 crore.
  • Defence Arguments: The petitioner argued that he merely signed a statement of facts based on company‑provided records, was exonerated by the Institute of Chartered Accountants of India, and that a forensic audit by Syndicate Bank found no specific misuse. He cited case law (Swaminathan Vs State of Delhi, Kulamani Parida Vs State of Odisha, Ashoo Surendranath Tewari Vs D.S.P.) asserting that a CA’s certification alone should not attract conspiracy charges.
  • Prosecution Counter‑arguments: The court noted additional material beyond the CA certificate, including the alleged diversion of the Rs 50 crore loan to other accounts, and the issuance of a utilization certificate that was pivotal for the banks’ credit assessment.
  • Judicial Precedents Discussed: The judgment referenced multiple Supreme Court decisions (P.S. Rajya v State of Bihar, State (NCT of Delhi) Vs Ajay Kumar Tyagi, State Vs M. Krishna Mohan, CBI v V.K. Bhutiani, Devendra Prasad Singh Vs State of Bihar, CBI Vs Arvind Khanna, M. Jayanthi Vs K.R. Meenakshi) establishing that exoneration in departmental or disciplinary proceedings does not automatically quash a criminal trial, and that a High Court cannot adjudicate disputed facts under Section 482.

Final Outcome

  • The Madras High Court dismissed the Criminal Original Petition (Crl.O.P.No.6048 of 2024) seeking quash of the criminal proceedings.
  • The court held that the petitioner’s exoneration in disciplinary proceedings is not sufficient to terminate the criminal case.
  • Consequently, the criminal proceedings in C.C.No.927 of 2021 remain pending, and all connected miscellaneous petitions were also closed.

Topics: Court Order, Banking Fraud, Chartered Accountant Liability