Sec.482 of Cr.P.C. - Non-Compoundable Economic Offences against public funds/Banks - not to be quashed on comprise -Fraud on Bank of Baroda - siphon crores of amounts in the name of fictitious companies for their personal use - pending trial one of accused paid amount and obtained no due certificate - High court quashed the case against him - Apex court held that It is not such a case where one can pay the amount and obtain a “no due certificate” and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Article 226 of the
Constitution or under Section 482 of the Code and quash the proceeding. It is not legally permissible. It is the experience of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinize the entire conspectus of facts in proper perspective and quashed the criminal proceeding. Ex consequenti, the appeal is allowed, and the order passed by the High Court is set aside and it is directed that the trial shall proceed in accordance with law. =
During the pendency of the case before the trial court on 30th March
2009 the informant, Bank of Baroda, had transferred its debts to a
trust IARC – BOB-01-07 under the control of Kotak Mahindra Bank.
The
accused, Vikram Doshi, settled the disputes and paid Rs.42 lacs for
settling the dispute.
On that basis, Kotak Mahindra Bank issued a “no
due certificate” to M/s Atcom Technology Limited stating that on
receipt of Rs.42 lacs, there was no amount outstanding and payable by
them in respect of facility advanced by Bank of Baroda.
The said bank
also confirmed that the guarantees issued by Vikram Doshi stood
discharged.
9. After the receipt of such “No dues certificate” the respondent
preferred a petition under Section 482 of the Cr.P.C. bearing Criminal
Application No. 2239 of 2009 before the High Court of Judicature at
Bombay and the learned Single Judge vide order dated 24.2.2010 quashed
the criminal proceedings pending before the learned Addl. Metropolitan
Magistrate.
The learned Single Judge referred to one of its earlier
orders and came to hold as follows:-
“Both the offices under Sections 406 and 420 are compoundable
with the permission of the court. As already discussed
hereinabove, the Bank has already given its No Due Certificate to
the borrower i.e. ATCOM. It can clearly be seen that even if
the matter is permitted to go for trial, no fruitful purpose
would be served, except burdening the criminal Courts which are
already over-burdened.”=
whether a proceeding could be quashed in
exercise of inherent jurisdiction in respect of the non-compoundable
offences and principle of law in that regard was not in a state of
certainty. The said position has been made clear by this Court that
High Court has the jurisdiction to quash a criminal proceeding under
Section 482 of the Code in respect of non-compoundable offences
barring certain nature of crimes.=
In Rumi Dhar
v. State of W.B.[2] while dealing with an order declining to discharge
the accused under Section 239 of the Code by the learned Special Judge
which has been affirmed by the High Court, a two-Judge Bench referred
to the decision in Central Bureau of Investigation v. Duncans Agro
Industries Ltd.[3] and Nikhil Merchant v. C.B.I.[4] came to hold as
follows:-
“14. It is now a well-settled principle of law that in a
given case, a civil proceeding and a criminal proceeding can
proceed simultaneously. Bank is entitled to recover the
amount of loan given to the debtor. If in connection with
obtaining the said loan, criminal offences have been
committed by the persons accused thereof including the
officers of the Bank, criminal proceedings would also
indisputably be maintainable.”
In the said case, the Court took note of the fact the compromise
entered into between the Oriental Bank of Commerce and the accused
pertaining to repayment of loan could not form the foundation of
discharge of the accused. The two-Judge Bench appreciated the stand
of the C.B.I. before the High Court that the criminal case against the
accused had started not only for obtaining loan but also on the ground
of criminal conspiracy with the Bank officers and accordingly upheld
the order passed by the High Court.=
The modus operandi as
narrated in the chargesheet cannot be put in the compartment of an
individual or personal wrong. It is a social wrong and it has immense
societal impact. It is an accepted principle of handling of finance
that whenever there is manipulation and cleverly conceived
contrivance to avail of these kind of benefits it cannot be regarded
as a case having overwhelmingly and predominantingly of civil
character. The ultimate victim is the collective. It creates a
hazard in the financial interest of the society. The gravity of the
offence creates a dent in the economic spine of the nation.
The
cleverness which has been skillfully contrived, if the allegations are
true, has a serious consequence. A crime of this nature, in our view,
would definitely fall in the category of offences which travel far
ahead of personal or private wrong. It has the potentiality to usher
in economic crisis. Its implications have its own seriousness, for it
creates a concavity in the solemnity that is expected in financial
transactions.
It is not such a case where one can pay the amount and
obtain a “no due certificate” and enjoy the benefit of quashing of the
criminal proceeding on the hypostasis that nothing more remains to be
done.
The collective interest of which the Court is the guardian
cannot be a silent or a mute spectator to allow the proceedings to be
withdrawn, or for that matter yield to the ingenuous dexterity of the
accused persons to invoke the jurisdiction under Article 226 of the
Constitution or under Section 482 of the Code and quash the
proceeding. It is not legally permissible.
The Court is expected to
be on guard to these kinds of adroit moves. The High Court, we humbly
remind, should have dealt with the matter keeping in mind that in
these kind of litigations the accused when perceives a tiny gleam of
success, readily invokes the inherent jurisdiction for quashing of the
criminal proceeding.
The court’s principal duty, at that juncture,
should be to scan the entire facts to find out the thrust of
allegations and the crux of the settlement.
It is the experience of
the Judge comes to his aid and the said experience should be used with
care, caution, circumspection and courageous prudence. As we find in
the case at hand the learned Single Judge has not taken pains to
scrutinize the entire conspectus of facts in proper perspective and
quashed the criminal proceeding.
The said quashment neither helps to
secure the ends of justice nor does it prevent the abuse of the
process of the Court nor can it be also said that as there is a
settlement no evidence will come on record and there will be remote
chance of conviction. Such a finding in our view would be difficult
to record. Be that as it may, the fact remains that the social
interest would be on peril and the prosecuting agency, in these
circumstances, cannot be treated as an alien to the whole case. Ergo,
we have no other option but to hold that the order of the High Court
is wholly indefensible.
24. Ex consequenti, the appeal is allowed, and the order passed by the
High Court is set aside and it is directed that the trial shall
proceed in accordance with law. We may hasten to add that our
observations in the present appeal are solely in the context of
adjudicating the justifiability of order of quashing of the criminal
proceeding and it would not have any bearing at the time of trial.
And we so clarify.
2014- Sept. Month - http://judis.nic.in/supremecourt/imgst.aspx?filename=41939
THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 2048 OF 2014
(Arising out of S.L.P. (Crl.) No. 6461 of 2011)
State of Maharashtra Through CBI … Appellant
Versus
Vikram Anantrai Doshi and Others …Respondents
J U D G M E N T
Dipak Misra, J.
The centripodal issue that strikingly emerges, commanding the
judicial conscience to ponder and cogitate with reasonable yard-stick
of precision, for consideration how far a superior court should
proceed to analyse the factual score in exercise of its inherent
jurisdiction bestowed upon it under Section 482 of the Code of
Criminal Procedure or under Article 226 of the Constitution of India,
to quash the criminal proceeding solely on the ground that the parties
have entered into a settlement and, therefore, the continuance of the
criminal proceeding would be an exercise in futility, or the
substantial cause of justice warrants such quashment to make the
parties free from unnecessary litigation with the assumed motto of not
loading the system with unfruitful prosecution, of course with certain
riders, one of which, as regards the cases pertaining to commercial
litigations, appreciation of predominant nature of civil propensity
involved in the lis or social impact in the backdrop of the facts of
the case. The primary question that we have posed has a substantial
supplementary issue; i.e. should the courts totally remain oblivious
to the prism of fiscal purity and wholly brush aside the modus
operandi maladroitly adopted, as alleged by the prosecution, on the
part of industrial entrepreneurs or the borrowers on the foundation
that money has been paid back to the public financial institutions.
We think not, especially regard being had to the obtaining factual
matrix in the case at hand.
2. Presently to the factual exposition. On the basis of a written
complaint of chief vigilance officer, Bank of Baroda a case was
registered against the respondents on 6.1.2006 and after completion of
investigation a report was filed before the Special Court, CBI cases,
Mumbai with a prayer to forward the chargesheet to the learned
Magistrate who was competent to take cognizance of the offences as
the involvement of R.C. Sharma, the concerned Bank Officer, a public
servant, in the crime in question, could not be prima facie found
during the investigation. As the facts would undrape, on 3.2.2006
upon perusal of the chargesheet the learned Special Judge, CBI cases
directed to place the chargesheet before the appropriate court and
accordingly a fresh chargesheet was filed before the ACMM, 19th Court,
Esplanade, Mumbai vide criminal case no. 82/CPW/2006 for commission of
offences punishable under Section 120-B, Section 406, 20, 467, 468 and
471 IPC against the accused persons.
3. On a perusal of the charge sheet, it is evincible that there are
allegations to the effect that Vikram Doshi, A 1, Vineet Doshi, A 2,
and Sanjay J. Shah, A 3, made number of applications to the Bank of
Baroda for sanction of various credit facilities, stating that they
wanted to induct the said bank as a new consortium member to replace
the existing members, namely, the UTI Bank and the Federal Bank. They
requested the said Bank to sanction 15% of the total Working Capital
facility sanctioned by the consortium of Banks, so that, that much
amount could be transferred to the UTI bank and Federal Bank to take
over the existing liabilities with the said two banks. It was revealed
during investigation that the account of the company, with the
consortium of banks as well as the finance institutions, was highly
irregular and in the said condition the accused persons approached the
Bank for sanction of loan. In the application to the Bank, the accused
persons concealed the fact relating to the dues outstanding against
them. Thereafter, when asked for the outstanding position with the
existing consortium members, the accused persons willfully and with
the criminal intent to mislead the Bank of Baroda, furnished wrong
statements about the outstanding position by giving considerably
lesser amount as outstanding than the actual.
4. As further alleged, the amount of loan sought was sanctioned on
24.01.2003 by one Mr. K.K. Aggarwal, General Manager and communicated
to the branch. As per the terms and conditions of the said Term Loan,
the primary security for the same was the first charge to be created
on the fixed assets of the company ranking pari passu with the
existing Term Lending Institutions. The primary charge for the cash
credit and working capital demand loan was the hypothecation of
current assets such as stocks, stocks in trade, raw materials and book
debts, and, that apart, one of the important terms and conditions was
that the CC, WCDL and Term Loan amounts were to be directly paid to
the company’s account with the UTI Bank and Federal Bank so as to take
over the liabilities as well as the securities mortgaged with the two
banks. Despite the said situation, the Bank on 29.01.2003 intimated
the sanction to ATCOM, the company in question. It is further
demonstrable from the chargesheet that A-1 and A-2, with the intention
to escape personal liabilities, made A-3 and one Mr. Chirag Gandhi
directors in ATCOM and got all the loan documents including the Demand
Promissory Note (DPN) signed by the said persons. The terms and
conditions of the sanction was that the entire Working Capital of
Rs.570.00 lakhs (Rs.114.00 lakhs + Rs.456.00 lakhs) and the Term Loan
of Rs.360.00 lakhs were to be directly paid to the UTI Bank and
Federal Bank. Consequently, the Term Loan was released and paid as per
the sanction terms and conditions. As alleged, A-1 induced the Bank to
release the sanctioned Working Capital Funds to the Current Account
and from the said account money was dishonestly diverted to his own
accounts with SBI and Dena Bank, to bring down the outstanding
liabilities in those accounts. As per the Chargesheet, Rs.114.00 lakhs
of Cash Credit (the Fund Based portion of Working Capital) and
Rs.456.00 lakhs (the Demand Based portion of Working Capital) were
released into the Current Account on 27.03.2003. Thus, the total funds
released into the Current Account was Rs.560.00 lakhs out of which A-1
dishonestly transferred Rs.352.00 lakhs to SBI and about Rs.200.00
lakhs to Dena Bank, which amounted to diversion of concerned Bank’s
funds dishonestly and caused wrongful loss to the said Bank.
5. As is evident from the chargesheet the transfer of funds of CC and DL
to the current account was with a dishonest intention to further
divert the funds from the current account, and for transfer of the
said funds of CC and WCDL. A-1 used the cheque leaf available with
him for the Current Account and substituted out the words “Current
Account” and substituted them with “Cash Credit”. It has come out in
the investigation that in order to further divert the funds from the
Current Account, A-3 used to issue “Pay Yourself cheques” by obtaining
Banker’s Cheque favouring their account with SBI and Dena Bank. It is
also perceivable from the chargesheet that though the accused A-1 and
A-3 knew that the said Working Capital was sanctioned only for the
purpose of taking over the liabilities of UTI Bank and Federal Bank
yet they dishonestly diverted the funds to SBI and Dena Bank. The
sanctioned money, as alleged, was not used for the purpose it was
availed of and the sanction terms and conditions were violated as a
consequence of which the Bank could not get the charge in pari passu
with the other consortium Banks. The said diversion of funds by A-1
and A-3 deprived the Bank of its security and the entire loan became
unsecured.
6. The investigation further revealed that A-1 got letter of credits
(hereinafter referred as “LCs”) issued from SBI and Dena Bank in
favour of fictitious companies propped by the accused and used the
said LCs to siphon the funds from these Banks. The LCs beneficiary
firms, favoring whom the A-2 and A-3 had requested the LCs to be
issued, were companies existing only on paper without any commercial
activity. The said fictitious companies got the LCs discounted by
attaching their bogus bills and portion of these discount proceeds
were used for personal benefits of A-1 and a certain portion was
routed back to ATCOM. On the due dates, ATCOM did not discharge its
liabilities with SBI and Dena Bank. In the chargesheet, the
particulars of the names of fictitious companies have been given. The
said list covers 10 companies. It has been further mentioned in the
chargesheet that the Proprietors/Directors of these fictitious
companies had issued false bills under their signatures and discounted
these false bills backed by the LCs, with the discounting Banks, at
the instance of one Kanakranjan Jain. Some of these
Proprietors/Directors are the employees and domestic servants of said
Kanakrajan Jain.
7. After so stating the chargesheet proceeds as follows:
“That, in two of these fictitious companies, viz., M/s Anew
Electronics & M/s Covet Securities, Sh. Vikram Doshi (A-1)
and Sh. Vineet Joshi, (A-2) were Directors for some period
of time. These two companies were maintaining their
accounts at United Western Bank. Sh. Vikaram Doshi (A-1)
was also having his personal account in the same bank. From
these two Accounts Sh. Vikram Doshi had received a sum of
Rs. 1, 48,50,000/-. This amount was utilized by him towards
purchase of residential flat. Thus it is clear that the
accused persons under the garb of business requirements had
obtained credit facilities from the bank but had utilized
the funds for acquiring immovable property for personal
use. In order to clear the liability generated because of
such illegal acts, they had induced the Bank of Baroda to
sanction the credit facilities, which facility was
dishonestly used by them. The entire amount sanctioned and
released by the Bank of Baroda is outstanding and nothing
has been repaid. Because of the acts of the accused, the
facilities sanctioned by the Bank of Baroda are rendered
without any securities and the bank has thus suffered
wrongful loss.”
8. During the pendency of the case before the trial court on 30th March
2009 the informant, Bank of Baroda, had transferred its debts to a
trust IARC – BOB-01-07 under the control of Kotak Mahindra Bank. The
accused, Vikram Doshi, settled the disputes and paid Rs.42 lacs for
settling the dispute. On that basis, Kotak Mahindra Bank issued a “no
due certificate” to M/s Atcom Technology Limited stating that on
receipt of Rs.42 lacs, there was no amount outstanding and payable by
them in respect of facility advanced by Bank of Baroda. The said bank
also confirmed that the guarantees issued by Vikram Doshi stood
discharged.
9. After the receipt of such “No dues certificate” the respondent
preferred a petition under Section 482 of the Cr.P.C. bearing Criminal
Application No. 2239 of 2009 before the High Court of Judicature at
Bombay and the learned Single Judge vide order dated 24.2.2010 quashed
the criminal proceedings pending before the learned Addl. Metropolitan
Magistrate. The learned Single Judge referred to one of its earlier
orders and came to hold as follows:-
“Both the offices under Sections 406 and 420 are compoundable
with the permission of the court. As already discussed
hereinabove, the Bank has already given its No Due Certificate to
the borrower i.e. ATCOM. It can clearly be seen that even if
the matter is permitted to go for trial, no fruitful purpose
would be served, except burdening the criminal Courts which are
already over-burdened.”
10. To arrive at the same conclusion the High Court relied on the decision
in Madan Mohan Abbot v. State of Punjab[1] and distinguished the
pronouncement in A. Ravishanker Prasad (supra).
11. We have heard Ms. Pinky Anand, learned ASG and Mr. P.K. Dey, learned
counsel for the Central Bureau of Investigation and Arunabh Chowdhury
and Mr. Anupam Lal Das for the respondents.
12. In the backdrop of aforesaid facts the seminal question that arises is
whether in the obtaining factual matrix the High Court is justified in
quashing the criminal proceeding. Learned counsel for the appellants
submits that the High Court has erroneously opined that the remaining
offences are 406 and 420 of IPC whereas the chargesheet, also included
other offences against the accused persons. It is further contended
that the chargesheet was not filed against the public officer as the
allegation against public officer could not be substantiated during
the investigation and the High Court without appreciating the gravity
of the other offences has quashed the proceeding which makes the order
absolutely vulnerable in law. Learned counsel for the respondent
would contend that when “No due certificate” was obtained from the
bank and the matter had been settled the High Court has correctly
quashed the proceeding and hence, it does not warrant any
interference.
13. At this juncture, we are obligated to state that when the High Court
decided, the issue was whether a proceeding could be quashed in
exercise of inherent jurisdiction in respect of the non-compoundable
offences and principle of law in that regard was not in a state of
certainty. The said position has been made clear by this Court that
High Court has the jurisdiction to quash a criminal proceeding under
Section 482 of the Code in respect of non-compoundable offences
barring certain nature of crimes.
14. To appreciate the complete picture in proper perspective we think it
seemly to refer to the relevant decisions in the field. In Rumi Dhar
v. State of W.B.[2] while dealing with an order declining to discharge
the accused under Section 239 of the Code by the learned Special Judge
which has been affirmed by the High Court, a two-Judge Bench referred
to the decision in Central Bureau of Investigation v. Duncans Agro
Industries Ltd.[3] and Nikhil Merchant v. C.B.I.[4] came to hold as
follows:-
“14. It is now a well-settled principle of law that in a
given case, a civil proceeding and a criminal proceeding can
proceed simultaneously. Bank is entitled to recover the
amount of loan given to the debtor. If in connection with
obtaining the said loan, criminal offences have been
committed by the persons accused thereof including the
officers of the Bank, criminal proceedings would also
indisputably be maintainable.”
In the said case, the Court took note of the fact the compromise
entered into between the Oriental Bank of Commerce and the accused
pertaining to repayment of loan could not form the foundation of
discharge of the accused. The two-Judge Bench appreciated the stand
of the C.B.I. before the High Court that the criminal case against the
accused had started not only for obtaining loan but also on the ground
of criminal conspiracy with the Bank officers and accordingly upheld
the order passed by the High Court.
15. In Central Bureau of Investigation v. A. Ravishanker Prasad and
Others[5], the Court was dealing with the fact situation wherein the
accused persons had committed offences such as forgery, fabrication of
documents and used the said documents as genuine. There was
allegation that they had entered into conspiracy with the Bank
officers for availing huge credit facilities. In course of the
pendency of the criminal proceedings, the accused persons had settled
the outstanding dues by paying a sum of rupees 157 crores and on that
basis preferred an application under Section 482 of the Code for
quashing of the criminal proceeding and the High Court quashed the
proceedings on the basis of the settlement. Be it stated, the trial
had progressed in the said case and 92 witnesses had already been
examined. The question that arose before this Court was whether such
a proceeding should have been quashed. The Court distinguished the
decision in Duncans Agro Industries Ltd.‘s case and opined that the
tenor of the language implied therein indicates that quashing of the
complaint depends on the facts of each case. The Court also
distinguished the decision in Nikhil Merchant’s case.
16. A three-Judge Bench in the case of Gian Singh v. State of Punjab and
Another[6] while answering the reference whether the High Court has
the jurisdiction under Section 482 of the Code to quash a proceeding
in respect of non-compoundable offences, after referring to number of
authorities, ruled that Section 482 of the Code, as its very language
suggests, saves the inherent power of the High Court which it has by
virtue of it being a superior court to prevent abuse of the process of
court or otherwise to secure the ends of justice. The words, “nothing
in this Code” which means that the provision is an overriding
provision and the said words leave no manner of doubt that none of the
provisions of the Code limits or restricts the inherent power. The
Bench proceeded to state that the guideline for exercise of such power
is provided in Section 482 itself i.e. to prevent abuse of the process
of any court or otherwise to secure the ends of justice and in
different situations, the inherent power may be exercised in different
ways to achieve its ultimate objective. Formation of opinion by the
High Court before it exercises inherent power under Section 482 on
either of the twin objectives, (i) to prevent abuse of the process of
any court, or (ii) to secure the ends of justice, is a sine qua non.
The Court further added that it is the judicial obligation of the High
Court to undo a wrong in course of administration of justice or to
[pic]prevent continuation of unnecessary judicial process and the
maxim ex debito justitiae is inbuilt in such exercise for the whole
idea is to do real, complete and substantial justice for which it
exists.
After so stating, the three-Judge Bench addressed to the issue
pertaining to the quashing of a criminal proceeding on the ground of
settlement between an offender and the victim and in this context, it
ruled thus:-
“61. Inherent power is of wide plenitude with no statutory
limitation but it has to be exercised in accord with the
guideline engrafted in such power viz.: (i) to secure the ends of
justice, or (ii) to prevent abuse of the process of any court. In
what cases power to quash the criminal proceeding or complaint or
FIR may be exercised where the offender and the victim have
settled their dispute would [pic]depend on the facts and
circumstances of each case and no category can be prescribed.
However, before exercise of such power, the High Court must have
due regard to the nature and gravity of the crime. Heinous and
serious offences of mental depravity or offences like murder,
rape, dacoity, etc. cannot be fittingly quashed even though the
victim or victim’s family and the offender have settled the
dispute. Such offences are not private in nature and have a
serious impact on society. Similarly, any compromise between the
victim and the offender in relation to the offences under special
statutes like the Prevention of Corruption Act or the offences
committed by public servants while working in that capacity,
etc.; cannot provide for any basis for quashing criminal
proceedings involving such offences. But the criminal cases
having overwhelmingly and predominatingly civil flavour stand on
a different footing for the purposes of quashing, particularly
the offences arising from commercial, financial, mercantile,
civil, partnership or such like transactions or the offences
arising out of matrimony relating to dowry, etc. or the family
disputes where the wrong is basically private or personal in
nature and the parties have resolved their entire dispute. In
this category of cases, the High Court may quash the criminal
proceedings if in its view, because of the compromise between the
offender and the victim, the possibility of conviction is remote
and bleak and continuation of the criminal case would put the
accused to great oppression and prejudice and extreme injustice
would be caused to him by not quashing the criminal case despite
full and complete settlement and compromise with the victim.”
17. Recently, in Narinder Singh & Ors. v. State of Punjab & Anr.[7], a two-
Judge Bench placed reliance on Gian Singh’s case (supra) and Dimpy
Gujral v. Union Territory through Administrator[8] and distinguished
the decision in State of Rajasthan v. Sambhu Kevat[9], and came to
hold that in the facts of the said case the proceedings under Section
307 deserved to be quashed. The two-Judge Bench laid down certain
guidelines by which the High Courts would be guided in giving adequate
treatment to the settlement between the parties and exercising its
power under Section 482 of the Code while accepting the settlement and
quashing the proceedings or refusing to accept the settlement. Some
of the guidelines which are relevant for the present purpose are
reproduced below :-
“(II) When the parties have reached the settlement and on that
basis petition for quashing the criminal proceedings is filed, the
guiding factor in such cases would be to secure:
(i) ends of justice, or
(ii) to prevent abuse of the process of any Court.
While exercising the power the High Court is to form an opinion
on either of the aforesaid two objectives.
(III) Such a power is not be exercised in those prosecutions
which involve heinous and serious offences of mental depravity or
offences like murder, rape, dacoity, etc. Such offences are not
private in nature and have a serious impact on society.
Similarly, for offences alleged to have been committed under
special statute like the Prevention of Corruption Act or the
offences committed by Public Servants while working in that
capacity are not to be quashed merely on the basis of compromise
between the victim and the offender.
(IV) On the other, those criminal cases having overwhelmingly and
pre-dominantly civil character, particularly those arising out of
commercial transactions or arising out of matrimonial relationship
or family disputes should be quashed when the parties have
resolved their entire disputes among themselves.
(V) While exercising its powers, the High Court is to examine as
to whether the possibility of conviction is remote and bleak and
continuation of criminal cases would put the accused to great
oppression and prejudice and extreme injustice would be caused to
him by not quashing the criminal cases.”
18. At this stage it is apt to notice a three-Judge Bench decision in CBI,
ACB, Mumbai v. Narendra Lal Jain & Ors.[10] In the said case during
the investigation pertaining to the culpability of the accused in the
crime, the concerned bank had instituted suits for recovery of the
amount claimed to be due from the respondents and said suits were
disposed in terms of the consent decrees. On the basis of the said
consent decrees an application for discharge was filed which was
rejected by the trial court but eventually was allowed by the High
Court. Be it stated, charges were framed under Section 120-B/420 IPC
by the learned trial Judge against the private parties. As far as
bank officials are concerned, charges were framed under different
provisions of the Prevention of Corruption of Act, 1988. Being
dissatisfied with the said order, the CBI had preferred an appeal by
obtaining special leave and in that context the court observed that
the accused respondent had been charged under Section 120-B/420 IPC
and the civil liability of the respondent to pay the amount had
already been settled and further there was no grievance on the part of
the bank. Taking note of the fact that offence under Section 420 of
IPC is compoundable and Section 120-B is not compoundable, the Court
eventually opined thus:-
“11. In the present case, having regard to the fact that the
liability to make good the monetary loss suffered by the bank had
been mutually settled between the parties and the accused had
accepted the liability in this regard, the High Court had thought
it fit to invoke its power under Section 482 Cr.P.C. We do not
see how such exercise of power can be faulted or held to be
erroneous. Section 482 of the Code inheres in the High Court the
power to make such order as may be considered necessary to, inter
alia, prevent the abuse of the process of law or to serve the
ends of justice. While it will be wholly unnecessary to revert
or refer to the settled position in law with regard to the
contours of the power available under Section 482 CR.P.C. it must
be remembered that continuance of a criminal proceeding which is
likely to become oppressive or may partake the character of a
lame prosecution would be good ground to invoke the extraordinary
power under Section 482 Cr.P.C.”
19. Slightly more recently in Gopakumar B. Nair v. CBI and Anr.[11] the
Court referred to the paragraph 61 of Gian Singh’s Case, distinguished
the decision in Narendra Lal Jain (supra) regard being had to the fact
that the accused persons were facing charges under Section 120-B r/w
Section 13(2) r/w 13 (1) (d) of the 1988 Act and Section 420/471 of
IPC and came to hold that substratum of the charges against the
accused-appellant were not similar to those in Narendra Lal Jain
(supra) wherein the accused was charged under Section 120-B read with
Section 420 IPC only. After so stating the Court observed as follows:-
“The offences are certainly more serious; they are not private
in nature. The charge of conspiracy is to commit offences
under the Prevention of Corruption Act. The accused has also
been charged for commission of the substantive offence under
Section 471 IPC. Though the amount due have been paid the
same is under a private settlement between the parties unlike
in Nikhil Merchant (supra) and Narendra Lal Jain (supra)
where the compromise was a part of the decree of the Court.
There is no acknowledgement on the part of the bank of the
exoneration of the criminal liability of the accused-appellant
unlike the terms of compromise decree in the aforesaid two
cases. In the totality of the facts stated above, if the High
Court has taken the view that the exclusion spelt out in Gian
Singh (supra) (para61) applies to the present case and on
that basis had come to the conclusion that the power under
Section 482 CrPC should not be exercised to quash the criminal
case against the accused, we cannot find any justification to
interfere with the said decision.”
20. The present obtaining factual score has to be appreciated on the
anvil of aforesaid authorities. On a studied scrutiny of the
principles stated in Gain Singh (supra) it is limpid that the three-
Judge Bench has ruled that proceeding in respect of heinous and
serious offences and the offences under prevention of corruption Act
and all other offences committed by public servants while working in
that capacity are not to be quashed. That apart, the court has also
emphasized on offences having a serious impact on society. It has
been further laid down that criminal cases having overwhelmingly and
predominantingly civil flavour stand on a different footing for the
purposes of quashing, particularly the offences arising from
commercial, financial, mercantile, civil partnership or such like
transactions or the offences arising out of matrimony relating to
dowry, etc. or the family disputes where the wrong is basically
private or personal in nature. In Narendra Lal Jain (supra) the three-
Judge Bench quashed the proceeding as the charges were famed under
Section 120/420 IPC in respect of the private respondents. In
Gopakumar B. Nair’s case the court distinguished the decision in
Narendra Lal Jain (supra) and opined that the accused had also been
charged for the commission of offence under Section 471 of IPC and on
that basis declined to interfere with the order passed by the High
Court which had refused to quash the criminal proceeding.
21. In the case at hand, as per the chargesheet the respondents had got
LCs issued from the bank in favour of fictitious companies propped up
by them and the fictitious beneficiary companies had got letters of
credits discounted by attaching their bogus bills. The names of 10
fictitious companies have been mentioned in the chargesheet. Thus,
allegation of forgery is very much there. As is manifest from the
impugned order, the learned Single Judge has not adverted to the same.
It is not a simple case where an accused has borrowed money from the
bank and diverted it somewhere else and, thereafter, paid the amount.
It does not fresco a situation where there is dealing between a
private financial institution and an accused, and after initiation of
the criminal proceedings he pays the sum and gets the controversy
settled. The expose’ of facts tells a different story. As submitted
by the learned Counsel for CBI the manner in which the letters of
credits were issued and the funds were siphoned has a foundation in
criminal law. Learned counsel would submit that it does not depict a
case which has overwhelmingly and predominatingly civil flavour. The
intrinsic character is different. Emphasis is laid on the creation of
fictitious companies.
22. In this context, we may usefully refer to a two-Judge Bench
decision in Central Bureau of Investigation v. Jagjit Singh[12]
wherein the court being moved by the CBI had overturned the order of
the High Court quashing the criminal proceeding and in that backdrop
had taken note of the fact that accused persons had dishonestly
induced delivery of the property of the bank and had used forged
documents as genuine. Proceeding further the Court opined as follows:-
“The offences when committed in relation with banking activities
including offences under Sections 420/471 IPC have harmful effect
on the public and threaten the well-being of the society. These
offences fall under the category of offences involving moral
turpitude committed by public servants while working in that
capacity. Prima facie, one may state that the bank is the victim
in such cases but, in fact, the society in general, including
customers of the bank is the sufferer. In the present case,
there was neither an allegation regarding any abuse of process of
any court not anything on record to suggest that the offenders
were entitled to secure the order in the ends of justice.”
23. We are in respectful agreement with the aforesaid view. Be it
stated, that availing of money from a nationalized bank in the manner,
as alleged by the investigating agency, vividly exposits fiscal
impurity and, in a way, financial fraud. The modus operandi as
narrated in the chargesheet cannot be put in the compartment of an
individual or personal wrong. It is a social wrong and it has immense
societal impact. It is an accepted principle of handling of finance
that whenever there is manipulation and cleverly conceived
contrivance to avail of these kind of benefits it cannot be regarded
as a case having overwhelmingly and predominantingly of civil
character. The ultimate victim is the collective. It creates a
hazard in the financial interest of the society. The gravity of the
offence creates a dent in the economic spine of the nation. The
cleverness which has been skillfully contrived, if the allegations are
true, has a serious consequence. A crime of this nature, in our view,
would definitely fall in the category of offences which travel far
ahead of personal or private wrong. It has the potentiality to usher
in economic crisis. Its implications have its own seriousness, for it
creates a concavity in the solemnity that is expected in financial
transactions. It is not such a case where one can pay the amount and
obtain a “no due certificate” and enjoy the benefit of quashing of the
criminal proceeding on the hypostasis that nothing more remains to be
done. The collective interest of which the Court is the guardian
cannot be a silent or a mute spectator to allow the proceedings to be
withdrawn, or for that matter yield to the ingenuous dexterity of the
accused persons to invoke the jurisdiction under Article 226 of the
Constitution or under Section 482 of the Code and quash the
proceeding. It is not legally permissible. The Court is expected to
be on guard to these kinds of adroit moves. The High Court, we humbly
remind, should have dealt with the matter keeping in mind that in
these kind of litigations the accused when perceives a tiny gleam of
success, readily invokes the inherent jurisdiction for quashing of the
criminal proceeding. The court’s principal duty, at that juncture,
should be to scan the entire facts to find out the thrust of
allegations and the crux of the settlement. It is the experience of
the Judge comes to his aid and the said experience should be used with
care, caution, circumspection and courageous prudence. As we find in
the case at hand the learned Single Judge has not taken pains to
scrutinize the entire conspectus of facts in proper perspective and
quashed the criminal proceeding. The said quashment neither helps to
secure the ends of justice nor does it prevent the abuse of the
process of the Court nor can it be also said that as there is a
settlement no evidence will come on record and there will be remote
chance of conviction. Such a finding in our view would be difficult
to record. Be that as it may, the fact remains that the social
interest would be on peril and the prosecuting agency, in these
circumstances, cannot be treated as an alien to the whole case. Ergo,
we have no other option but to hold that the order of the High Court
is wholly indefensible.
24. Ex consequenti, the appeal is allowed, and the order passed by the
High Court is set aside and it is directed that the trial shall
proceed in accordance with law. We may hasten to add that our
observations in the present appeal are solely in the context of
adjudicating the justifiability of order of quashing of the criminal
proceeding and it would not have any bearing at the time of trial.
And we so clarify.
………………………………J.
[Dipak Misra]
………………………………J.
[Vikramajit
Sen]
New Delhi;
September 19, 2014.
-----------------------
[1] (2008) 4 SCC 582
[2] (2009) 6 SCC 364
[3] (1996) 5 SCC 591
[4] (2008) 9 SCC 677
[5] (2009) 6 SCC 351
[6] (2012) 10 SCC 303
[7] 2014(4) SCALE 195
[8] AIR 2012 SCW 5333
[9] 2013(14) SCALE 235
[10] 2014 3 SCALE 137
[11] 2014 4 SCALE 659
[12] (2013) 10 SCC 686
Constitution or under Section 482 of the Code and quash the proceeding. It is not legally permissible. It is the experience of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinize the entire conspectus of facts in proper perspective and quashed the criminal proceeding. Ex consequenti, the appeal is allowed, and the order passed by the High Court is set aside and it is directed that the trial shall proceed in accordance with law. =
During the pendency of the case before the trial court on 30th March
2009 the informant, Bank of Baroda, had transferred its debts to a
trust IARC – BOB-01-07 under the control of Kotak Mahindra Bank.
The
accused, Vikram Doshi, settled the disputes and paid Rs.42 lacs for
settling the dispute.
On that basis, Kotak Mahindra Bank issued a “no
due certificate” to M/s Atcom Technology Limited stating that on
receipt of Rs.42 lacs, there was no amount outstanding and payable by
them in respect of facility advanced by Bank of Baroda.
The said bank
also confirmed that the guarantees issued by Vikram Doshi stood
discharged.
9. After the receipt of such “No dues certificate” the respondent
preferred a petition under Section 482 of the Cr.P.C. bearing Criminal
Application No. 2239 of 2009 before the High Court of Judicature at
Bombay and the learned Single Judge vide order dated 24.2.2010 quashed
the criminal proceedings pending before the learned Addl. Metropolitan
Magistrate.
The learned Single Judge referred to one of its earlier
orders and came to hold as follows:-
“Both the offices under Sections 406 and 420 are compoundable
with the permission of the court. As already discussed
hereinabove, the Bank has already given its No Due Certificate to
the borrower i.e. ATCOM. It can clearly be seen that even if
the matter is permitted to go for trial, no fruitful purpose
would be served, except burdening the criminal Courts which are
already over-burdened.”=
whether a proceeding could be quashed in
exercise of inherent jurisdiction in respect of the non-compoundable
offences and principle of law in that regard was not in a state of
certainty. The said position has been made clear by this Court that
High Court has the jurisdiction to quash a criminal proceeding under
Section 482 of the Code in respect of non-compoundable offences
barring certain nature of crimes.=
In Rumi Dhar
v. State of W.B.[2] while dealing with an order declining to discharge
the accused under Section 239 of the Code by the learned Special Judge
which has been affirmed by the High Court, a two-Judge Bench referred
to the decision in Central Bureau of Investigation v. Duncans Agro
Industries Ltd.[3] and Nikhil Merchant v. C.B.I.[4] came to hold as
follows:-
“14. It is now a well-settled principle of law that in a
given case, a civil proceeding and a criminal proceeding can
proceed simultaneously. Bank is entitled to recover the
amount of loan given to the debtor. If in connection with
obtaining the said loan, criminal offences have been
committed by the persons accused thereof including the
officers of the Bank, criminal proceedings would also
indisputably be maintainable.”
In the said case, the Court took note of the fact the compromise
entered into between the Oriental Bank of Commerce and the accused
pertaining to repayment of loan could not form the foundation of
discharge of the accused. The two-Judge Bench appreciated the stand
of the C.B.I. before the High Court that the criminal case against the
accused had started not only for obtaining loan but also on the ground
of criminal conspiracy with the Bank officers and accordingly upheld
the order passed by the High Court.=
The modus operandi as
narrated in the chargesheet cannot be put in the compartment of an
individual or personal wrong. It is a social wrong and it has immense
societal impact. It is an accepted principle of handling of finance
that whenever there is manipulation and cleverly conceived
contrivance to avail of these kind of benefits it cannot be regarded
as a case having overwhelmingly and predominantingly of civil
character. The ultimate victim is the collective. It creates a
hazard in the financial interest of the society. The gravity of the
offence creates a dent in the economic spine of the nation.
The
cleverness which has been skillfully contrived, if the allegations are
true, has a serious consequence. A crime of this nature, in our view,
would definitely fall in the category of offences which travel far
ahead of personal or private wrong. It has the potentiality to usher
in economic crisis. Its implications have its own seriousness, for it
creates a concavity in the solemnity that is expected in financial
transactions.
It is not such a case where one can pay the amount and
obtain a “no due certificate” and enjoy the benefit of quashing of the
criminal proceeding on the hypostasis that nothing more remains to be
done.
The collective interest of which the Court is the guardian
cannot be a silent or a mute spectator to allow the proceedings to be
withdrawn, or for that matter yield to the ingenuous dexterity of the
accused persons to invoke the jurisdiction under Article 226 of the
Constitution or under Section 482 of the Code and quash the
proceeding. It is not legally permissible.
The Court is expected to
be on guard to these kinds of adroit moves. The High Court, we humbly
remind, should have dealt with the matter keeping in mind that in
these kind of litigations the accused when perceives a tiny gleam of
success, readily invokes the inherent jurisdiction for quashing of the
criminal proceeding.
The court’s principal duty, at that juncture,
should be to scan the entire facts to find out the thrust of
allegations and the crux of the settlement.
It is the experience of
the Judge comes to his aid and the said experience should be used with
care, caution, circumspection and courageous prudence. As we find in
the case at hand the learned Single Judge has not taken pains to
scrutinize the entire conspectus of facts in proper perspective and
quashed the criminal proceeding.
The said quashment neither helps to
secure the ends of justice nor does it prevent the abuse of the
process of the Court nor can it be also said that as there is a
settlement no evidence will come on record and there will be remote
chance of conviction. Such a finding in our view would be difficult
to record. Be that as it may, the fact remains that the social
interest would be on peril and the prosecuting agency, in these
circumstances, cannot be treated as an alien to the whole case. Ergo,
we have no other option but to hold that the order of the High Court
is wholly indefensible.
24. Ex consequenti, the appeal is allowed, and the order passed by the
High Court is set aside and it is directed that the trial shall
proceed in accordance with law. We may hasten to add that our
observations in the present appeal are solely in the context of
adjudicating the justifiability of order of quashing of the criminal
proceeding and it would not have any bearing at the time of trial.
And we so clarify.
2014- Sept. Month - http://judis.nic.in/supremecourt/imgst.aspx?filename=41939
THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 2048 OF 2014
(Arising out of S.L.P. (Crl.) No. 6461 of 2011)
State of Maharashtra Through CBI … Appellant
Versus
Vikram Anantrai Doshi and Others …Respondents
J U D G M E N T
Dipak Misra, J.
The centripodal issue that strikingly emerges, commanding the
judicial conscience to ponder and cogitate with reasonable yard-stick
of precision, for consideration how far a superior court should
proceed to analyse the factual score in exercise of its inherent
jurisdiction bestowed upon it under Section 482 of the Code of
Criminal Procedure or under Article 226 of the Constitution of India,
to quash the criminal proceeding solely on the ground that the parties
have entered into a settlement and, therefore, the continuance of the
criminal proceeding would be an exercise in futility, or the
substantial cause of justice warrants such quashment to make the
parties free from unnecessary litigation with the assumed motto of not
loading the system with unfruitful prosecution, of course with certain
riders, one of which, as regards the cases pertaining to commercial
litigations, appreciation of predominant nature of civil propensity
involved in the lis or social impact in the backdrop of the facts of
the case. The primary question that we have posed has a substantial
supplementary issue; i.e. should the courts totally remain oblivious
to the prism of fiscal purity and wholly brush aside the modus
operandi maladroitly adopted, as alleged by the prosecution, on the
part of industrial entrepreneurs or the borrowers on the foundation
that money has been paid back to the public financial institutions.
We think not, especially regard being had to the obtaining factual
matrix in the case at hand.
2. Presently to the factual exposition. On the basis of a written
complaint of chief vigilance officer, Bank of Baroda a case was
registered against the respondents on 6.1.2006 and after completion of
investigation a report was filed before the Special Court, CBI cases,
Mumbai with a prayer to forward the chargesheet to the learned
Magistrate who was competent to take cognizance of the offences as
the involvement of R.C. Sharma, the concerned Bank Officer, a public
servant, in the crime in question, could not be prima facie found
during the investigation. As the facts would undrape, on 3.2.2006
upon perusal of the chargesheet the learned Special Judge, CBI cases
directed to place the chargesheet before the appropriate court and
accordingly a fresh chargesheet was filed before the ACMM, 19th Court,
Esplanade, Mumbai vide criminal case no. 82/CPW/2006 for commission of
offences punishable under Section 120-B, Section 406, 20, 467, 468 and
471 IPC against the accused persons.
3. On a perusal of the charge sheet, it is evincible that there are
allegations to the effect that Vikram Doshi, A 1, Vineet Doshi, A 2,
and Sanjay J. Shah, A 3, made number of applications to the Bank of
Baroda for sanction of various credit facilities, stating that they
wanted to induct the said bank as a new consortium member to replace
the existing members, namely, the UTI Bank and the Federal Bank. They
requested the said Bank to sanction 15% of the total Working Capital
facility sanctioned by the consortium of Banks, so that, that much
amount could be transferred to the UTI bank and Federal Bank to take
over the existing liabilities with the said two banks. It was revealed
during investigation that the account of the company, with the
consortium of banks as well as the finance institutions, was highly
irregular and in the said condition the accused persons approached the
Bank for sanction of loan. In the application to the Bank, the accused
persons concealed the fact relating to the dues outstanding against
them. Thereafter, when asked for the outstanding position with the
existing consortium members, the accused persons willfully and with
the criminal intent to mislead the Bank of Baroda, furnished wrong
statements about the outstanding position by giving considerably
lesser amount as outstanding than the actual.
4. As further alleged, the amount of loan sought was sanctioned on
24.01.2003 by one Mr. K.K. Aggarwal, General Manager and communicated
to the branch. As per the terms and conditions of the said Term Loan,
the primary security for the same was the first charge to be created
on the fixed assets of the company ranking pari passu with the
existing Term Lending Institutions. The primary charge for the cash
credit and working capital demand loan was the hypothecation of
current assets such as stocks, stocks in trade, raw materials and book
debts, and, that apart, one of the important terms and conditions was
that the CC, WCDL and Term Loan amounts were to be directly paid to
the company’s account with the UTI Bank and Federal Bank so as to take
over the liabilities as well as the securities mortgaged with the two
banks. Despite the said situation, the Bank on 29.01.2003 intimated
the sanction to ATCOM, the company in question. It is further
demonstrable from the chargesheet that A-1 and A-2, with the intention
to escape personal liabilities, made A-3 and one Mr. Chirag Gandhi
directors in ATCOM and got all the loan documents including the Demand
Promissory Note (DPN) signed by the said persons. The terms and
conditions of the sanction was that the entire Working Capital of
Rs.570.00 lakhs (Rs.114.00 lakhs + Rs.456.00 lakhs) and the Term Loan
of Rs.360.00 lakhs were to be directly paid to the UTI Bank and
Federal Bank. Consequently, the Term Loan was released and paid as per
the sanction terms and conditions. As alleged, A-1 induced the Bank to
release the sanctioned Working Capital Funds to the Current Account
and from the said account money was dishonestly diverted to his own
accounts with SBI and Dena Bank, to bring down the outstanding
liabilities in those accounts. As per the Chargesheet, Rs.114.00 lakhs
of Cash Credit (the Fund Based portion of Working Capital) and
Rs.456.00 lakhs (the Demand Based portion of Working Capital) were
released into the Current Account on 27.03.2003. Thus, the total funds
released into the Current Account was Rs.560.00 lakhs out of which A-1
dishonestly transferred Rs.352.00 lakhs to SBI and about Rs.200.00
lakhs to Dena Bank, which amounted to diversion of concerned Bank’s
funds dishonestly and caused wrongful loss to the said Bank.
5. As is evident from the chargesheet the transfer of funds of CC and DL
to the current account was with a dishonest intention to further
divert the funds from the current account, and for transfer of the
said funds of CC and WCDL. A-1 used the cheque leaf available with
him for the Current Account and substituted out the words “Current
Account” and substituted them with “Cash Credit”. It has come out in
the investigation that in order to further divert the funds from the
Current Account, A-3 used to issue “Pay Yourself cheques” by obtaining
Banker’s Cheque favouring their account with SBI and Dena Bank. It is
also perceivable from the chargesheet that though the accused A-1 and
A-3 knew that the said Working Capital was sanctioned only for the
purpose of taking over the liabilities of UTI Bank and Federal Bank
yet they dishonestly diverted the funds to SBI and Dena Bank. The
sanctioned money, as alleged, was not used for the purpose it was
availed of and the sanction terms and conditions were violated as a
consequence of which the Bank could not get the charge in pari passu
with the other consortium Banks. The said diversion of funds by A-1
and A-3 deprived the Bank of its security and the entire loan became
unsecured.
6. The investigation further revealed that A-1 got letter of credits
(hereinafter referred as “LCs”) issued from SBI and Dena Bank in
favour of fictitious companies propped by the accused and used the
said LCs to siphon the funds from these Banks. The LCs beneficiary
firms, favoring whom the A-2 and A-3 had requested the LCs to be
issued, were companies existing only on paper without any commercial
activity. The said fictitious companies got the LCs discounted by
attaching their bogus bills and portion of these discount proceeds
were used for personal benefits of A-1 and a certain portion was
routed back to ATCOM. On the due dates, ATCOM did not discharge its
liabilities with SBI and Dena Bank. In the chargesheet, the
particulars of the names of fictitious companies have been given. The
said list covers 10 companies. It has been further mentioned in the
chargesheet that the Proprietors/Directors of these fictitious
companies had issued false bills under their signatures and discounted
these false bills backed by the LCs, with the discounting Banks, at
the instance of one Kanakranjan Jain. Some of these
Proprietors/Directors are the employees and domestic servants of said
Kanakrajan Jain.
7. After so stating the chargesheet proceeds as follows:
“That, in two of these fictitious companies, viz., M/s Anew
Electronics & M/s Covet Securities, Sh. Vikram Doshi (A-1)
and Sh. Vineet Joshi, (A-2) were Directors for some period
of time. These two companies were maintaining their
accounts at United Western Bank. Sh. Vikaram Doshi (A-1)
was also having his personal account in the same bank. From
these two Accounts Sh. Vikram Doshi had received a sum of
Rs. 1, 48,50,000/-. This amount was utilized by him towards
purchase of residential flat. Thus it is clear that the
accused persons under the garb of business requirements had
obtained credit facilities from the bank but had utilized
the funds for acquiring immovable property for personal
use. In order to clear the liability generated because of
such illegal acts, they had induced the Bank of Baroda to
sanction the credit facilities, which facility was
dishonestly used by them. The entire amount sanctioned and
released by the Bank of Baroda is outstanding and nothing
has been repaid. Because of the acts of the accused, the
facilities sanctioned by the Bank of Baroda are rendered
without any securities and the bank has thus suffered
wrongful loss.”
8. During the pendency of the case before the trial court on 30th March
2009 the informant, Bank of Baroda, had transferred its debts to a
trust IARC – BOB-01-07 under the control of Kotak Mahindra Bank. The
accused, Vikram Doshi, settled the disputes and paid Rs.42 lacs for
settling the dispute. On that basis, Kotak Mahindra Bank issued a “no
due certificate” to M/s Atcom Technology Limited stating that on
receipt of Rs.42 lacs, there was no amount outstanding and payable by
them in respect of facility advanced by Bank of Baroda. The said bank
also confirmed that the guarantees issued by Vikram Doshi stood
discharged.
9. After the receipt of such “No dues certificate” the respondent
preferred a petition under Section 482 of the Cr.P.C. bearing Criminal
Application No. 2239 of 2009 before the High Court of Judicature at
Bombay and the learned Single Judge vide order dated 24.2.2010 quashed
the criminal proceedings pending before the learned Addl. Metropolitan
Magistrate. The learned Single Judge referred to one of its earlier
orders and came to hold as follows:-
“Both the offices under Sections 406 and 420 are compoundable
with the permission of the court. As already discussed
hereinabove, the Bank has already given its No Due Certificate to
the borrower i.e. ATCOM. It can clearly be seen that even if
the matter is permitted to go for trial, no fruitful purpose
would be served, except burdening the criminal Courts which are
already over-burdened.”
10. To arrive at the same conclusion the High Court relied on the decision
in Madan Mohan Abbot v. State of Punjab[1] and distinguished the
pronouncement in A. Ravishanker Prasad (supra).
11. We have heard Ms. Pinky Anand, learned ASG and Mr. P.K. Dey, learned
counsel for the Central Bureau of Investigation and Arunabh Chowdhury
and Mr. Anupam Lal Das for the respondents.
12. In the backdrop of aforesaid facts the seminal question that arises is
whether in the obtaining factual matrix the High Court is justified in
quashing the criminal proceeding. Learned counsel for the appellants
submits that the High Court has erroneously opined that the remaining
offences are 406 and 420 of IPC whereas the chargesheet, also included
other offences against the accused persons. It is further contended
that the chargesheet was not filed against the public officer as the
allegation against public officer could not be substantiated during
the investigation and the High Court without appreciating the gravity
of the other offences has quashed the proceeding which makes the order
absolutely vulnerable in law. Learned counsel for the respondent
would contend that when “No due certificate” was obtained from the
bank and the matter had been settled the High Court has correctly
quashed the proceeding and hence, it does not warrant any
interference.
13. At this juncture, we are obligated to state that when the High Court
decided, the issue was whether a proceeding could be quashed in
exercise of inherent jurisdiction in respect of the non-compoundable
offences and principle of law in that regard was not in a state of
certainty. The said position has been made clear by this Court that
High Court has the jurisdiction to quash a criminal proceeding under
Section 482 of the Code in respect of non-compoundable offences
barring certain nature of crimes.
14. To appreciate the complete picture in proper perspective we think it
seemly to refer to the relevant decisions in the field. In Rumi Dhar
v. State of W.B.[2] while dealing with an order declining to discharge
the accused under Section 239 of the Code by the learned Special Judge
which has been affirmed by the High Court, a two-Judge Bench referred
to the decision in Central Bureau of Investigation v. Duncans Agro
Industries Ltd.[3] and Nikhil Merchant v. C.B.I.[4] came to hold as
follows:-
“14. It is now a well-settled principle of law that in a
given case, a civil proceeding and a criminal proceeding can
proceed simultaneously. Bank is entitled to recover the
amount of loan given to the debtor. If in connection with
obtaining the said loan, criminal offences have been
committed by the persons accused thereof including the
officers of the Bank, criminal proceedings would also
indisputably be maintainable.”
In the said case, the Court took note of the fact the compromise
entered into between the Oriental Bank of Commerce and the accused
pertaining to repayment of loan could not form the foundation of
discharge of the accused. The two-Judge Bench appreciated the stand
of the C.B.I. before the High Court that the criminal case against the
accused had started not only for obtaining loan but also on the ground
of criminal conspiracy with the Bank officers and accordingly upheld
the order passed by the High Court.
15. In Central Bureau of Investigation v. A. Ravishanker Prasad and
Others[5], the Court was dealing with the fact situation wherein the
accused persons had committed offences such as forgery, fabrication of
documents and used the said documents as genuine. There was
allegation that they had entered into conspiracy with the Bank
officers for availing huge credit facilities. In course of the
pendency of the criminal proceedings, the accused persons had settled
the outstanding dues by paying a sum of rupees 157 crores and on that
basis preferred an application under Section 482 of the Code for
quashing of the criminal proceeding and the High Court quashed the
proceedings on the basis of the settlement. Be it stated, the trial
had progressed in the said case and 92 witnesses had already been
examined. The question that arose before this Court was whether such
a proceeding should have been quashed. The Court distinguished the
decision in Duncans Agro Industries Ltd.‘s case and opined that the
tenor of the language implied therein indicates that quashing of the
complaint depends on the facts of each case. The Court also
distinguished the decision in Nikhil Merchant’s case.
16. A three-Judge Bench in the case of Gian Singh v. State of Punjab and
Another[6] while answering the reference whether the High Court has
the jurisdiction under Section 482 of the Code to quash a proceeding
in respect of non-compoundable offences, after referring to number of
authorities, ruled that Section 482 of the Code, as its very language
suggests, saves the inherent power of the High Court which it has by
virtue of it being a superior court to prevent abuse of the process of
court or otherwise to secure the ends of justice. The words, “nothing
in this Code” which means that the provision is an overriding
provision and the said words leave no manner of doubt that none of the
provisions of the Code limits or restricts the inherent power. The
Bench proceeded to state that the guideline for exercise of such power
is provided in Section 482 itself i.e. to prevent abuse of the process
of any court or otherwise to secure the ends of justice and in
different situations, the inherent power may be exercised in different
ways to achieve its ultimate objective. Formation of opinion by the
High Court before it exercises inherent power under Section 482 on
either of the twin objectives, (i) to prevent abuse of the process of
any court, or (ii) to secure the ends of justice, is a sine qua non.
The Court further added that it is the judicial obligation of the High
Court to undo a wrong in course of administration of justice or to
[pic]prevent continuation of unnecessary judicial process and the
maxim ex debito justitiae is inbuilt in such exercise for the whole
idea is to do real, complete and substantial justice for which it
exists.
After so stating, the three-Judge Bench addressed to the issue
pertaining to the quashing of a criminal proceeding on the ground of
settlement between an offender and the victim and in this context, it
ruled thus:-
“61. Inherent power is of wide plenitude with no statutory
limitation but it has to be exercised in accord with the
guideline engrafted in such power viz.: (i) to secure the ends of
justice, or (ii) to prevent abuse of the process of any court. In
what cases power to quash the criminal proceeding or complaint or
FIR may be exercised where the offender and the victim have
settled their dispute would [pic]depend on the facts and
circumstances of each case and no category can be prescribed.
However, before exercise of such power, the High Court must have
due regard to the nature and gravity of the crime. Heinous and
serious offences of mental depravity or offences like murder,
rape, dacoity, etc. cannot be fittingly quashed even though the
victim or victim’s family and the offender have settled the
dispute. Such offences are not private in nature and have a
serious impact on society. Similarly, any compromise between the
victim and the offender in relation to the offences under special
statutes like the Prevention of Corruption Act or the offences
committed by public servants while working in that capacity,
etc.; cannot provide for any basis for quashing criminal
proceedings involving such offences. But the criminal cases
having overwhelmingly and predominatingly civil flavour stand on
a different footing for the purposes of quashing, particularly
the offences arising from commercial, financial, mercantile,
civil, partnership or such like transactions or the offences
arising out of matrimony relating to dowry, etc. or the family
disputes where the wrong is basically private or personal in
nature and the parties have resolved their entire dispute. In
this category of cases, the High Court may quash the criminal
proceedings if in its view, because of the compromise between the
offender and the victim, the possibility of conviction is remote
and bleak and continuation of the criminal case would put the
accused to great oppression and prejudice and extreme injustice
would be caused to him by not quashing the criminal case despite
full and complete settlement and compromise with the victim.”
17. Recently, in Narinder Singh & Ors. v. State of Punjab & Anr.[7], a two-
Judge Bench placed reliance on Gian Singh’s case (supra) and Dimpy
Gujral v. Union Territory through Administrator[8] and distinguished
the decision in State of Rajasthan v. Sambhu Kevat[9], and came to
hold that in the facts of the said case the proceedings under Section
307 deserved to be quashed. The two-Judge Bench laid down certain
guidelines by which the High Courts would be guided in giving adequate
treatment to the settlement between the parties and exercising its
power under Section 482 of the Code while accepting the settlement and
quashing the proceedings or refusing to accept the settlement. Some
of the guidelines which are relevant for the present purpose are
reproduced below :-
“(II) When the parties have reached the settlement and on that
basis petition for quashing the criminal proceedings is filed, the
guiding factor in such cases would be to secure:
(i) ends of justice, or
(ii) to prevent abuse of the process of any Court.
While exercising the power the High Court is to form an opinion
on either of the aforesaid two objectives.
(III) Such a power is not be exercised in those prosecutions
which involve heinous and serious offences of mental depravity or
offences like murder, rape, dacoity, etc. Such offences are not
private in nature and have a serious impact on society.
Similarly, for offences alleged to have been committed under
special statute like the Prevention of Corruption Act or the
offences committed by Public Servants while working in that
capacity are not to be quashed merely on the basis of compromise
between the victim and the offender.
(IV) On the other, those criminal cases having overwhelmingly and
pre-dominantly civil character, particularly those arising out of
commercial transactions or arising out of matrimonial relationship
or family disputes should be quashed when the parties have
resolved their entire disputes among themselves.
(V) While exercising its powers, the High Court is to examine as
to whether the possibility of conviction is remote and bleak and
continuation of criminal cases would put the accused to great
oppression and prejudice and extreme injustice would be caused to
him by not quashing the criminal cases.”
18. At this stage it is apt to notice a three-Judge Bench decision in CBI,
ACB, Mumbai v. Narendra Lal Jain & Ors.[10] In the said case during
the investigation pertaining to the culpability of the accused in the
crime, the concerned bank had instituted suits for recovery of the
amount claimed to be due from the respondents and said suits were
disposed in terms of the consent decrees. On the basis of the said
consent decrees an application for discharge was filed which was
rejected by the trial court but eventually was allowed by the High
Court. Be it stated, charges were framed under Section 120-B/420 IPC
by the learned trial Judge against the private parties. As far as
bank officials are concerned, charges were framed under different
provisions of the Prevention of Corruption of Act, 1988. Being
dissatisfied with the said order, the CBI had preferred an appeal by
obtaining special leave and in that context the court observed that
the accused respondent had been charged under Section 120-B/420 IPC
and the civil liability of the respondent to pay the amount had
already been settled and further there was no grievance on the part of
the bank. Taking note of the fact that offence under Section 420 of
IPC is compoundable and Section 120-B is not compoundable, the Court
eventually opined thus:-
“11. In the present case, having regard to the fact that the
liability to make good the monetary loss suffered by the bank had
been mutually settled between the parties and the accused had
accepted the liability in this regard, the High Court had thought
it fit to invoke its power under Section 482 Cr.P.C. We do not
see how such exercise of power can be faulted or held to be
erroneous. Section 482 of the Code inheres in the High Court the
power to make such order as may be considered necessary to, inter
alia, prevent the abuse of the process of law or to serve the
ends of justice. While it will be wholly unnecessary to revert
or refer to the settled position in law with regard to the
contours of the power available under Section 482 CR.P.C. it must
be remembered that continuance of a criminal proceeding which is
likely to become oppressive or may partake the character of a
lame prosecution would be good ground to invoke the extraordinary
power under Section 482 Cr.P.C.”
19. Slightly more recently in Gopakumar B. Nair v. CBI and Anr.[11] the
Court referred to the paragraph 61 of Gian Singh’s Case, distinguished
the decision in Narendra Lal Jain (supra) regard being had to the fact
that the accused persons were facing charges under Section 120-B r/w
Section 13(2) r/w 13 (1) (d) of the 1988 Act and Section 420/471 of
IPC and came to hold that substratum of the charges against the
accused-appellant were not similar to those in Narendra Lal Jain
(supra) wherein the accused was charged under Section 120-B read with
Section 420 IPC only. After so stating the Court observed as follows:-
“The offences are certainly more serious; they are not private
in nature. The charge of conspiracy is to commit offences
under the Prevention of Corruption Act. The accused has also
been charged for commission of the substantive offence under
Section 471 IPC. Though the amount due have been paid the
same is under a private settlement between the parties unlike
in Nikhil Merchant (supra) and Narendra Lal Jain (supra)
where the compromise was a part of the decree of the Court.
There is no acknowledgement on the part of the bank of the
exoneration of the criminal liability of the accused-appellant
unlike the terms of compromise decree in the aforesaid two
cases. In the totality of the facts stated above, if the High
Court has taken the view that the exclusion spelt out in Gian
Singh (supra) (para61) applies to the present case and on
that basis had come to the conclusion that the power under
Section 482 CrPC should not be exercised to quash the criminal
case against the accused, we cannot find any justification to
interfere with the said decision.”
20. The present obtaining factual score has to be appreciated on the
anvil of aforesaid authorities. On a studied scrutiny of the
principles stated in Gain Singh (supra) it is limpid that the three-
Judge Bench has ruled that proceeding in respect of heinous and
serious offences and the offences under prevention of corruption Act
and all other offences committed by public servants while working in
that capacity are not to be quashed. That apart, the court has also
emphasized on offences having a serious impact on society. It has
been further laid down that criminal cases having overwhelmingly and
predominantingly civil flavour stand on a different footing for the
purposes of quashing, particularly the offences arising from
commercial, financial, mercantile, civil partnership or such like
transactions or the offences arising out of matrimony relating to
dowry, etc. or the family disputes where the wrong is basically
private or personal in nature. In Narendra Lal Jain (supra) the three-
Judge Bench quashed the proceeding as the charges were famed under
Section 120/420 IPC in respect of the private respondents. In
Gopakumar B. Nair’s case the court distinguished the decision in
Narendra Lal Jain (supra) and opined that the accused had also been
charged for the commission of offence under Section 471 of IPC and on
that basis declined to interfere with the order passed by the High
Court which had refused to quash the criminal proceeding.
21. In the case at hand, as per the chargesheet the respondents had got
LCs issued from the bank in favour of fictitious companies propped up
by them and the fictitious beneficiary companies had got letters of
credits discounted by attaching their bogus bills. The names of 10
fictitious companies have been mentioned in the chargesheet. Thus,
allegation of forgery is very much there. As is manifest from the
impugned order, the learned Single Judge has not adverted to the same.
It is not a simple case where an accused has borrowed money from the
bank and diverted it somewhere else and, thereafter, paid the amount.
It does not fresco a situation where there is dealing between a
private financial institution and an accused, and after initiation of
the criminal proceedings he pays the sum and gets the controversy
settled. The expose’ of facts tells a different story. As submitted
by the learned Counsel for CBI the manner in which the letters of
credits were issued and the funds were siphoned has a foundation in
criminal law. Learned counsel would submit that it does not depict a
case which has overwhelmingly and predominatingly civil flavour. The
intrinsic character is different. Emphasis is laid on the creation of
fictitious companies.
22. In this context, we may usefully refer to a two-Judge Bench
decision in Central Bureau of Investigation v. Jagjit Singh[12]
wherein the court being moved by the CBI had overturned the order of
the High Court quashing the criminal proceeding and in that backdrop
had taken note of the fact that accused persons had dishonestly
induced delivery of the property of the bank and had used forged
documents as genuine. Proceeding further the Court opined as follows:-
“The offences when committed in relation with banking activities
including offences under Sections 420/471 IPC have harmful effect
on the public and threaten the well-being of the society. These
offences fall under the category of offences involving moral
turpitude committed by public servants while working in that
capacity. Prima facie, one may state that the bank is the victim
in such cases but, in fact, the society in general, including
customers of the bank is the sufferer. In the present case,
there was neither an allegation regarding any abuse of process of
any court not anything on record to suggest that the offenders
were entitled to secure the order in the ends of justice.”
23. We are in respectful agreement with the aforesaid view. Be it
stated, that availing of money from a nationalized bank in the manner,
as alleged by the investigating agency, vividly exposits fiscal
impurity and, in a way, financial fraud. The modus operandi as
narrated in the chargesheet cannot be put in the compartment of an
individual or personal wrong. It is a social wrong and it has immense
societal impact. It is an accepted principle of handling of finance
that whenever there is manipulation and cleverly conceived
contrivance to avail of these kind of benefits it cannot be regarded
as a case having overwhelmingly and predominantingly of civil
character. The ultimate victim is the collective. It creates a
hazard in the financial interest of the society. The gravity of the
offence creates a dent in the economic spine of the nation. The
cleverness which has been skillfully contrived, if the allegations are
true, has a serious consequence. A crime of this nature, in our view,
would definitely fall in the category of offences which travel far
ahead of personal or private wrong. It has the potentiality to usher
in economic crisis. Its implications have its own seriousness, for it
creates a concavity in the solemnity that is expected in financial
transactions. It is not such a case where one can pay the amount and
obtain a “no due certificate” and enjoy the benefit of quashing of the
criminal proceeding on the hypostasis that nothing more remains to be
done. The collective interest of which the Court is the guardian
cannot be a silent or a mute spectator to allow the proceedings to be
withdrawn, or for that matter yield to the ingenuous dexterity of the
accused persons to invoke the jurisdiction under Article 226 of the
Constitution or under Section 482 of the Code and quash the
proceeding. It is not legally permissible. The Court is expected to
be on guard to these kinds of adroit moves. The High Court, we humbly
remind, should have dealt with the matter keeping in mind that in
these kind of litigations the accused when perceives a tiny gleam of
success, readily invokes the inherent jurisdiction for quashing of the
criminal proceeding. The court’s principal duty, at that juncture,
should be to scan the entire facts to find out the thrust of
allegations and the crux of the settlement. It is the experience of
the Judge comes to his aid and the said experience should be used with
care, caution, circumspection and courageous prudence. As we find in
the case at hand the learned Single Judge has not taken pains to
scrutinize the entire conspectus of facts in proper perspective and
quashed the criminal proceeding. The said quashment neither helps to
secure the ends of justice nor does it prevent the abuse of the
process of the Court nor can it be also said that as there is a
settlement no evidence will come on record and there will be remote
chance of conviction. Such a finding in our view would be difficult
to record. Be that as it may, the fact remains that the social
interest would be on peril and the prosecuting agency, in these
circumstances, cannot be treated as an alien to the whole case. Ergo,
we have no other option but to hold that the order of the High Court
is wholly indefensible.
24. Ex consequenti, the appeal is allowed, and the order passed by the
High Court is set aside and it is directed that the trial shall
proceed in accordance with law. We may hasten to add that our
observations in the present appeal are solely in the context of
adjudicating the justifiability of order of quashing of the criminal
proceeding and it would not have any bearing at the time of trial.
And we so clarify.
………………………………J.
[Dipak Misra]
………………………………J.
[Vikramajit
Sen]
New Delhi;
September 19, 2014.
-----------------------
[1] (2008) 4 SCC 582
[2] (2009) 6 SCC 364
[3] (1996) 5 SCC 591
[4] (2008) 9 SCC 677
[5] (2009) 6 SCC 351
[6] (2012) 10 SCC 303
[7] 2014(4) SCALE 195
[8] AIR 2012 SCW 5333
[9] 2013(14) SCALE 235
[10] 2014 3 SCALE 137
[11] 2014 4 SCALE 659
[12] (2013) 10 SCC 686
