Gujarat High Court
Shafi Mahommad Allahbaksh Khedawala vs State Of Gujarat & on 14 October, 2015
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/SCR.A/2015/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CRIMINAL APPLICATION (DIRECTION) NO. 2015 of 2015
TO
SPECIAL CRIMINAL APPLICATION NO. 2024 of 2015
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SHAFI MAHOMMAD ALLAHBAKSH KHEDAWALA....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
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Appearance:
RAFIK LOKHANDWALA, ADVOCATE for the Applicant(s) No. 1
MR DHARMESH V SHAH, ADVOCATE for the Respondent(s) No. 2
MS. STUTI Y JANI, ADVOCATE for the Respondent(s) No. 2
PUBLIC PROSECUTOR for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 14/10/2015
COMMON ORAL ORDER
1. Since the issue involved in all the captioned applications is the same, those were heard analogously and are being disposed of by this common order.
2. The applicants before me are the former directors of a Cooperative Bank, namely, The Textile Processors Co-Op. Bank Ltd. (now under liquidation) situated in Ahmedabad. One of the employees of the Bank lodged a first information report bearing I-C.R. No.4 of 2007 registered with the Gayakwad Haveli Police Station, Ahmedabad for the offence punishable under sections 406, 420, 467, 468, 471 and 120B of the Indian Penal Code and section 46 of the Banking Regulations Act. It was alleged therein that the applicants herein, in their capacity Page 1 of 10 HC-NIC Page 1 of 10 Created On Sun Oct 18 01:36:58 IST 2015 R/SCR.A/2015/2015 ORDER as directors of the Bank, had disbursed huge loan amounts to various individuals. It was also the case of the first informant that false documents were produced by the loanees for the purpose of availing of the loan facility. It was also alleged that the applicants herein, in their capacity as directors, were negligent while sanctioning the loan amounts. At the time of the registration of the first information report, it was noticed that Rs.2,48,50,000/- was the amount due and payable to the Bank by the loanees.
3. It appears that the applicants herein were arrested by the police. Some of them were ordered to be released by the trial court while the others were ordered to be released by this Court. At the time of their release on bail, certain terms and conditions were imposed. To put it briefly, all the applicants herein together deposited an amount of Rs.68,02,342/- by way of security deposit with the Bank. It appears, prima facie, that such amount was deposited by way of security by the applicants since the case against them was that on account of their negligence, the Bank had to suffer a huge financial loss. After the deposit of the amount, the same was put in a fixed deposit at the rate of 9% interest per annum. The amount of Rs.68,02,342/- which was deposited by the applicants herein some time in the year 2007 has yielded till date an amount of Rs.44,51,445/- by way of interest.
4. It appears that after the Bank went in liquidation, recovery was undertaken and the Bank was able to recover Rs.2,10,65,438/-.
5. It also appears that as on today, there is no prosecution against the applicants. I am saying so because a Coordinate Page 2 of 10 HC-NIC Page 2 of 10 Created On Sun Oct 18 01:36:58 IST 2015 R/SCR.A/2015/2015 ORDER Bench of this Court, way back in the year 2013, quashed the prosecution. One of the orders passed in the Special Criminal Application No.2394 of 2011 dated 10th December, 2013 reads as under;
"1. Mr. Dipen Dave, learned advocate for the fourth respondent has placed on record a communication dated 5th December, 2013 of the fourth respondent addressed to him. The same is taken on record.
2. Rule. Mr. Himanshu Patel, learned Additional Public Prosecutor waives service of notice of rule on behalf of the first respondent and Mr. Dipen Dave, learned advocate waives service of notice of rule on behalf of the fourth respondent. Having regard to the facts of the case and with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing today.
3. By this petition under Article 226 of the Constitution of India, the petitioner seeks quashing of the first information report registered vide Gaekwad Haveli Police Station I-C.R. No.4/2007.
4. An employee of the Textile Processors Co-operative Bank Limited lodged the above referred first information report against the petitioner herein and others alleging commission of the offences punishable under sections 406, 420, 467, 468, 471 and 120 of the Indian Penal Code and section 46 of the Banking Regulations Act. The allegations made in the complaint are to the effect that the accused persons availed of huge loans from the bank on the basis of false documents and ultimately did not repay an amount of Rs.2,48,50,000/- with interest and accordingly committed the offence of section 406 as well as other offences. It appears that over a period of time, the said accused persons have repaid a substantial amount of Rs.2,10,65,438/- to the bank and amounts of Rs.12,90,877/- as well as Rs.10,94,423/- are still outstanding against which security deposits of Rs.72,02,342/- are lying with the bank. The Textile Processors Co-operative Bank Limited has been taken into liquidation and the Liquidator has, by a communication dated 5th December, 2013 addressed to Page 3 of 10 HC-NIC Page 3 of 10 Created On Sun Oct 18 01:36:58 IST 2015 R/SCR.A/2015/2015 ORDER the learned advocate for the fourth respondent, stated the aforesaid facts and has stated that the if the first information report in question is quashed, the bank is not likely to suffer any economic loss.
5. Mr. P.S. Champaneri, learned advocate for the petitioner has submitted that in the light of the fact that the accused persons have paid a substantial amount of the outstanding amount and in respect of the remaining amount, sufficient security deposits have been deposited, the bank has no objection if the first information report in question and all proceedings pursuant thereto are quashed. Under the circumstances, no fruitful purpose would be served in prosecuting the petitioner. The first information report in question is, therefore, required to be quashed.
6. Mr. Dipen Dave, learned advocate for the fourth respondent - Liquidator has submitted that in the light of the fact that the outstanding amount due and payable to the bank has been paid and in respect of the remaining amount, there is more than sufficient security deposit lying with the bank, there cannot be any objection to the first information report being quashed.
7. This court has also heard Mr. Himanshu Patel, learned Additional Public Prosecutor for the first respondent.
8. Before adverting to the merits of the case, it may be germane to refer to the decision of the Supreme Court in Gian Singh v. State of Punjab, (2012) 10 SCC 303, wherein the Supreme Court after considering its earlier decisions in this regard held thus:
"61. The position that emerges from the above discussion can be summarised thus: the power of the High Court in quashing a criminal proceeding or FIR or complaint in exercise of its inherent jurisdiction is distinct and different from the power given to a criminal court for compounding the offences under Section 320 of the Code. 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 Page 4 of 10 HC-NIC Page 4 of 10 Created On Sun Oct 18 01:36:58 IST 2015 R/SCR.A/2015/2015 ORDER where the offender and the victim have settled their dispute would 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. In other words, the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and the wrongdoer and whether to secure the ends of justice, it is appropriate that the criminal case is put to an end and if the answer to the above question(s) is in the affirmative, the High Court shall be well within its jurisdiction to quash the criminal proceeding."
9. In Madan Mohan Abbot v. State of Punjab, (2008) 4 SCC 582, the Supreme Court was dealing with a case Page 5 of 10 HC-NIC Page 5 of 10 Created On Sun Oct 18 01:36:58 IST 2015 R/SCR.A/2015/2015 ORDER whereby the High Court had declined the prayer for quashing of the prosecution for the offences punishable under Sections 379, 406, 409, 418, 506/34 IPC despite a compromise entered into between the complainant and the accused. The High Court had taken the view that since the offence punishable under section 406 was not compoundable, the settlement between the parties could not be recognised nor the pending proceedings quashed. The court summed up the approach to be adopted in such cases in the following words:
"6. We need to emphasise that it is perhaps advisable that in disputes where the question involved is of a purely personal nature, the court should ordinarily accept the terms of the compromise even in criminal proceedings as keeping the matter alive with no possibility of a result in favour of the prosecution is a luxury which the courts, grossly overburdened as they are, cannot afford and that the time so saved can be utilised in deciding more effective and meaningful litigation. This is a common sense approach to the matter based on ground of realities and bereft of the technicalities of the law."
10. On a perusal of the allegations made in the first information report, it is apparent that the same relates to nonreturn of the loan amount taken by the accused persons. The dispute involved is more in the nature of a civil dispute which is purely personal in nature. Subsequently, the accused persons have paid a substantial amount of the outstanding dues and in respect of the remaining amount, more than sufficient security deposits are lying with the bank. In these circumstances, the fourth respondent no longer appears to be desirous of prosecuting the petitioner herein. In the aforesaid premises, no fruitful purpose would be served if the proceedings are permitted to continue. This is, therefore, a fit case for exercise of inherent powers under section 482 of the Code.
11. For the foregoing reasons, the application succeeds and is accordingly allowed. The first information report registered vide Gaekwad Haveli Police Station I-C.R. No.4/2007 is hereby quashed and set aside qua the petitioner herein. Rule is made absolute accordingly."
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R/SCR.A/2015/2015 ORDER
6. These applications are filed with a prayer that since the Bank has been able to recover the entire amount from the loanees with interest, the amount which was deposited by the applicants herein, i.e., Rs.68,02,342/- by way of security deposit should be refunded with interest.
7. All these applications have been vehemently opposed by Mr. Shah, the learned counsel appearing for the Bank. The liquidator of the Bank has filed an affidavit-in-reply, inter alia, stating as under;
"I, Saiyed Iqbalhusen Inayatali Liquidator of respondent No.2 Bank, Opp Anjuman High School, Gol Limda, Astodiya Ahmedabad, filing this reply as under.
1. It is submitted that present petition is not maintainable because the prayer made in the petition is at premature stage. Since the amount directed to deposit by different Hon'ble Court as a security deposit, against the outstanding of defaulter whom has fraudulently granted loan by Board of Directors. It is also submitted that out of total outstanding amount as per complain the three account yet not clear by the defaulters and outstanding in all three accounts is Rs.43,71,104/- as on 30.09.2015. Therefore, till the all three accounts are cleared no direction can be issued by this Hon'ble Court to repay the amount in the interest of public money. The copies of statement prepared by the bank for all 10 matters and outstanding of 3 different accounts are annexed hereto mark as annexure RI colly to the reply. This Hon'ble Court may be pleased to permit the bank to file reply in first matter and may be treated reply of all matters since issue are common.
2. It is submitted that the deponent bank is under liquidation and the liquidation process also going on final stage, as per section 110 of Gujarat Cooperative Society Act. If any surplus funds remain with the bank then in that case with the permission of the State Register, the interest can be granted to the petitioner till then no interest can be awarded in favour of the petitioner.
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R/SCR.A/2015/2015 ORDER
3. It is submitted that the factual aspect mention in the petition is not dealing with this reply para wise, non dealing reply Para wise may not be treated as a admission on part of the bank. So far as ground canvas in the petition are concern that the applicants are not involve in any misappropriation of the bank fund and they have not acted dishonestly and fraudulently at this stage such contention cannot be decided because the amount deposited in the bank is one of the condition of bail against the mismanagement of the funds of the bank. Therefore, till the entire account of defaulters are not clear. No such modification of condition or release the amount order can be passed.
4. It is submitted that the deponents has not filing reply in details about the proceeding preferred by the petitioners which was suppressed and reserved it's right to file further reply in case of necessity.
5. In view of this according to the deponent the prayer made in each petition are at premature stage and petition is required to be rejected with heavy cost.
What is stated hereinabove are true and correct according to my knowledge, information and belief and believe the same to be true.
Solemnly affirmed on this 3rd day of September, 2015 at Ahmedabad."
8. Mr. Shah submitted that it is true that the Bank has been able to recover all the dues from the loanees except the amount of Rs.43,71,104/- due and payable as on 30th September, 2015. Mr. Shah submitted that the Bank intends to adjust this amount with the security deposit, i.e., the amount deposited by the applicants.
9. Mr. Shah also fairly submitted that the prosecution was quashed as referred to above with the consent of the Bank.
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R/SCR.A/2015/2015 ORDER
10. Paragraphs- 6 and 10 of the order passed by this Court referred to above are important. In para-6 of the order, the learned Judge has recorded the submission of the learned advocate for the Bank that the outstanding amount due and payable to the Bank had been paid and with respect to the balance amount, there was more than sufficient security deposit lying with the Bank and in para-10, the learned Judge observed that the accused persons (i.e. the loanees) had paid a substantial amount of the outstanding dues.
11. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for my consideration is whether the applicants are entitled to the refund of the principal amount with interest deposited with the Bank by way of security.
12. Although, some resistance has been offered by the Bank in this regard, yet I am of the view that the amount which was deposited by the applicants was with an understanding that the same was with a view to secure the interest of the Bank. Since the allegations against the applicants were that they were negligent in discharge of their duties so far as disbursement of the loan amount was concerned, they, on their own, without prejudice to their rights and contentions, had volunteered to deposit the amount. Now when the Bank has been able to successfully recover the entire amount from the loanees, it is expected of the Bank, i.e., the liquidator to refund the amount of Rs.68,02,342/- to the applicants, i.e, the principal amount. The liquidator shall verify from the records as regards the amount paid by a particular applicant and while making good the refund of the amount, he will, accordingly, Page 9 of 10 HC-NIC Page 9 of 10 Created On Sun Oct 18 01:36:58 IST 2015 R/SCR.A/2015/2015 ORDER make the payment to each of the applicants by way of a demand draft or an account payee cheque. The liquidator shall undertake this exercise and complete the same within a period of 15 days from today and make the payment to the applicants. At this stage, the learned advocate appearing for the applicants submitted that so far as the interest amount is concerned, the right to claim may be kept open in the event if the Bank is able to recover Rs.43,71,104/-. If the Bank is able to recover this amount from the loanees, it shall be open for the applicants to apply afresh for refund of the said amount.
13. With the above, these applications are disposed of. Direct service is permitted.
(J.B.PARDIWALA, J.) Vahid Page 10 of 10 HC-NIC Page 10 of 10 Created On Sun Oct 18 01:36:58 IST 2015