At the hearing, being held at the 19th court at the Esplanade, the court said it has become a habit with the investigating agency to shield influential persons. In his interim order on January 21, 1999, the magistrate observed that of all the CBI matters pending before him, ``the CBI has failed to prosecute any of the officers, telephone authorities and other public servants who are directly involved in the cases.''

He has therefore issued a notice to CBI Superintendent (Economic Offences Wing) Virendra Singh as well as Investigating Officer N S Yadav under Section 217 of the Indian Penal Code (IPC), asking why prosecution proceedings had not been initiated against thebank's officials.

The First Information Report (FIR), registered on a complaint lodged on June 26, 1997, states that serious irregularities have been observed in loans and advances disbursed by its Wadala and Malad branches in Mumbai and its M J Library Road branch in Ahmedabad against fake/invalid shares to one Rajendra Bhatt and his family.

The complaint, by the bank's Deputy General Manager (Mumbai region) N N Pal, states that in September 1995, the Bhatts approached the Wadala branch for credit facilities against security of shares which were later found to be fake. Similar instances were repeated at Malad and the M J Road branch at around the same time. In this manner, various parties siphoned off Rs 50.28 lakh from the bank.

The chargesheet, prepared by Investigating Officer (IO) N S Yadav, was filed on December 21, 1998, naming the Bhatts and their associates as the accused. However, no bank officers were named. Instead, Yadav only recommended ``measure penalty'' against the bank officers in theabsence of substantial proof'', which is tantamount to a departmental inquiry.

The court therefore sought to know why Malad Branch Manager N Ramamurthy and Wadala Branch Manager Michael Machado, who were involved in the conspiracy, were not chargesheeted.

The magistrate said that though the CBI ``is aware that these bankers had disbursed loans contrary to the law and prevailing guidelines of the banking authority and helped the accused persons in commission of offence, the IO has not prosecuted the bank officers to save them from likely legal punishment.''

Stating that this lapse amounted to an offence, the magistrate initiated proceedings for offence against Yadav under Section 217 of the IPC which states that any public servant who knowingly protects an offender with intention to spare him from legal punishment, if found guilty is liable to be punished with imprisonment for a term which may extend to two years, or with a fine, or both.

Special Public Prosecutor for the CBI, Gopal Sharan, howeversaid that the IO is not the officer who decides on whom to name as accused in a chargesheet. When the court asked Yadav who the deciding authority was, the IO replied that the decision is taken by the superintendent as the IO is not so empowered.

A notice was then issued to Superintendent (Economic Offences Wing) Virendra Singh, who has sought time to reply.