1. WHAT IS EXPERT TESTIMONY FRAUD?

Under Bharatiya Sakshya Adhiniyam (BSA) Sec 39-45 [Old Sec 45 IEA], expert opinion is admissible when court needs help on foreign law, science, art, handwriting, fingerprint.

Fraud occurs when:

A. False Expertise: Person not qualified pretends to be expert (e.g., B.Sc. claiming to be handwriting expert).

B. False Opinion: Qualified expert deliberately gives false opinion for money:

• Valuer inflates property value from Rs. 50 lakh to Rs. 5 crores to enable excess loan (HDIL-PMC, DHFL cases)
• Handwriting expert says forged signature is genuine to save borrower
• Cyber expert says CBS logs tampered when actually genuine, to help accused
• Forensic auditor hides diversion of funds

C. Suppression of Basis: Expert hides that his opinion is based on photocopy, not original, or hides that he was paid by one party.

2. LEGAL FRAMEWORK - 5 OFFENCES TRIGGERED

1. BNS Sec 229-236 [Old IPC Sec 191-204] - Giving False Evidence & Fabricating False Evidence:

• Sec 229 BNS (Old 191): Giving false evidence - Whoever being legally bound by oath gives false statement.
• Sec 230 BNS (Old 192): Fabricating false evidence - Making false document with intent it will be used in judicial proceeding.
• Sec 233 BNS (Old 193): Punishment for false evidence - Up to 7 years + fine. If false evidence given in capital case, up to life.
• Sec 236 BNS (Old 201): Causing disappearance of evidence.
• Sec 241 BNS (Old 204): Destruction of document to prevent production.

2. BSA Sec 39: Expert must give reasons. Bare ipse dixit not admissible. If reasons false, opinion rejected and expert liable for perjury.

3. CrPC Sec 340 / BNSS Sec 379: Procedure for prosecuting perjury. Court can order preliminary inquiry and file complaint.

4. Prevention of Corruption Act: If expert is public servant (government valuer) taking bribe to give false report = Sec 7 PC Act.

3. TYPES OF EXPERT FRAUD IN BANKING LITIGATION

4. DETAILED CASE LAWS

CATEGORY A: HANDWRITING EXPERT FRAUD

Case 1: Ram Gopal v. CBI, Dehradun - 2019 INSC 706 - Supreme Court

Facts: Fictitious bank account opened in SBI, fraudulent withdrawals Rs. 3.5 lakhs. Accused bank employee Ram Gopal. Defence: Handwriting expert was false, investigation gaps.

Held: Supreme Court upheld conviction based on handwriting expert + circumstantial evidence. Ratio: Bank employee can be convicted for fraud if handwriting evidence proves he wrote fictitious account opening form, even if other evidence has gaps. But court warned: Handwriting expert opinion must be corroborated.

Fraud Angle: In many cases, borrower brings private handwriting expert who says signature on loan agreement not his, to avoid liability. Supreme Court in this case said court must test expert under Sec 45 - Is expert qualified? Did he see original? Did he give reasons?

Case 2: State of HP v. Jai Lal (1999) 7 SCC 280 - Test for Expert Fraud

Facts: Forensic expert gave opinion without reasons.

Held: Expert must give reasons. Bare opinion "signature matches" without showing points of similarity/dissimilarity is not evidence. If expert gives false reasons, it amounts to fabricating false evidence under Sec 192 IPC.

Application to Banking: If valuer says "Property worth 10 cr" without giving 3 comparable sales, method (market, income, cost), it is not expert evidence but fraud.

Case 3: Murari Lal v. State of MP (1980) 1 SCC 704 - Court Can Be Expert

Held: Under Sec 73 BSA (Old 73 IEA), court itself can compare handwriting. Expert opinion not conclusive.

Banking Use: In cheque bounce (Sec 138 NI Act) + loan fraud, courts often reject private handwriting expert brought by borrower saying "signature forged" when court comparison shows similarity. If expert deliberately lies, court can initiate perjury.

CATEGORY B: VALUATION FRAUD - PMC, DHFL, HDIL

Case 4: PMC Bank - HDIL Fraud - EOW Case - 2019 - Valuation Fraud

Facts: HDIL mortgaged 3 properties to PMC Bank. Government approved valuers valued at Rs. 3,000 cr. Actual market value Rs. 800 cr. Valuers used fake development agreements showing FSI 4 when actual FSI 1.33.

Charges: EOW filed case under Sec 420, 467, 468, 471 IPC + Sec 13 PC Act against valuers + bank officials.

Status: Valuers arrested, confessed they were paid 1% of inflated value as fee (instead of fixed fee).

Legal Doctrine: Valuation fraud = Fabrication of false evidence under Sec 192 IPC + Cheating under Sec 318 BNS. If bank relies on it and suffers loss, valuer liable for conspiracy.

Case 5: Indian Bank Fabricated Due Diligence Case - 2017 (12) TMI 1854 - Chennai

Facts: Petitioner along with builder connived to cheat Indian Bank by producing due diligence certificate based on fabricated documents, induced bank to sanction housing loan Rs. 20 lakhs. Trial under Sec 120-B r/w 420, 468, 471 IPC.

Held: Due diligence certificate (legal search report) by advocate is expert opinion. If advocate gives false report saying title clear when title encumbered, it is fabrication of false evidence + cheating. Advocate can be prosecuted as co-conspirator.

CATEGORY C: CYBER EXPERT FRAUD - CBS LOGS

Case 6: Anvar P.V. v. P.K. Basheer (2014) + Arjun Panditrao Khotkar (2020) - Electronic Evidence & Expert Fraud

Facts: Banks produced CBS logs printouts without Sec 65B certificate.

Supreme Court Held: Computer outputs susceptible to tampering, alteration. If expert (IT Head) gives certificate under Sec 65B(4) falsely that logs are genuine when actually tampered, it is fabricating false evidence.

Banking Litigation Impact: In Yes Bank fraud, DHFL fraud, CBI found IT Heads had deleted logs or given false certificates. CBI booked them under Sec 201 + Sec 65 IT Act + Sec 192 IPC.

CATEGORY D: PERJURY BY EXPERT - PROCEDURE TO PUNISH

Case 7: Ashok Kumar Aggarwal v. Union of India AIR 2014 SC 1020 - When to Prosecute Expert for Perjury

Held: In order to initiate prosecution for perjury under Sec 340 CrPC (now Sec 379 BNSS), court must prima facie hold preliminary inquiry that there has been deliberate and conscious effort to misguide court and interfere in administration of justice. Prosecution must be necessary in interest of justice.

Applied to Expert: Mere inconsistency in expert statements not perjury. Need intentional falsehood.

Case 8: N.S. Nandiesha Reddy v. Kavitha Mahesh - CA 4821/2012 - Supreme Court - 2021

Held: Witness cannot be prosecuted for perjury under Sec 193 IPC merely because he made inconsistent statements before court. Prosecution requires intentional falsehood, proved by comparing with unimpeachable evidence.

Doctrine for Banking: If two handwriting experts give opposite opinions (one says signature genuine, other says forged), neither can be prosecuted for perjury merely because of difference. Need proof one took bribe and deliberately lied.

Case 9: National Justice Compania Naviera SA v. Prudential Assurance Co. Ltd. (The Ikarian Reefer) - 1993 - UK Case Cited by Indian Supreme Court on Expert Fraud

Held: Duties of expert: (1) Independent, not advocate for party (2) Must state facts/basis (3) Must not omit material facts (4) Must inform if opinion changes.

Indian Adoption: Supreme Court in Malay Kumar Ganguly v. Sukumar Mukherjee (2009) 9 SCC 221 cited this. If expert hides that he was paid by bank/borrower, or hides that his opinion based on photocopy, it is fraud.

5. HOW COURTS DETECT EXPERT FRAUD IN BANKING CASES

Checklist Used by CBI Special Courts:

1. Qualification Check: Is expert registered with IBBI (for valuers), Forensic lab recognized under Sec 79A IT Act?
2. Original vs Copy: Did expert examine original loan file, original cheque, or only photocopy? If only photocopy, opinion weak and may be fraudulent.
3. Reasoning: Does report give points of similarity/dissimilarity (handwriting), comparable sales (valuation), hash value (cyber)?
4. Fee Structure: Was fee contingent on outcome? (e.g., "Fee = 2% of valuation" = incentivizes inflation = fraud)
5. Contradiction with Unimpeachable Evidence: If expert says property worth 10 cr, but sub-registrar shows same property sold for 2 cr 1 month earlier, expert lying.

6. PUNISHMENT AND REMEDY

• If expert gives false evidence: Prosecution under Sec 233 BNS (up to 7 years), Sec 340 BNSS complaint by court itself.
• If bank relies on false expert: Bank can sue expert for damages under Law of Contract + Negligence. ICAI, IBBI can cancel license.
• Civil: Under Sec 93 BSA, adverse inference - If party relies on fraudulent expert, court presumes its case false.
• Recent Trend: In Suresh Chandra Singh Negi v. Bank (Allahabad HC 2023), court held burden to prove customer's liability in unauthorized electronic banking lies upon bank, and if bank's cyber expert gives false report, bank loses.

Bottom Line: Under BSA 2023, expert is not hired gun. Expert who commits fraud in banking litigation faces same jail as main fraudster under conspiracy (Sec 61 BNS).