Gujarat High Court
Suresh Singal S/O. Chhajuram Singal & 4 vs State Of Gujarat & on 5 May, 2017
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/SCR.A/5629/2015 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 5629 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
==========================================================
SURESH SINGAL S/O. CHHAJURAM SINGAL & 4....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
==========================================================
Appearance:
MR. BHADRISH S RAJU, ADVOCATE for the Applicant(s) No. 1 - 5
MR RC KODEKAR, ADVOCATE for the Respondent(s) No. 2
MS SHRUTI PATHAK, APP for the Respondent(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 05/05/2017
CAV JUDGMENT
By this writ-application under Article 226 of the Constitution of India, the writ-applicants - original accused have prayed for the following reliefs :
Page 1 of 33HC-NIC Page 1 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT "(a) To allow this petition;
(b) To issue appropriate writ, order or direction quashing and setting aside the impugned FIR being RC No.13(E)/2008-CBI, BS & FC, Mumbai as well as the charge-sheet being CBI Special Case No.2/2010 pending before ACJM, CBI, Ahmedabad dated 27.05.2010 arising out of the said FIR;
(c) Pending admission, hearing and final disposal of this petition, to stay further proceedings of the impugned charge-sheet being CBI Special Case No.2/2010 pending before ACJM, CBI, Ahmedabad dated 27.05.2010 arising out of the said FIR (Annexure-A);
(d) To quash and set aside the order dated 09.07.2015 passed by the Ld.Special Judge, CBI in CBI Criminal Revision Application No.1/2012 (Annexure-G);
(e) To pass any other and further orders as may be deemed fit and proper to this Hon'ble Court."
The quashing of the proceedings of the CBI Special Case No.2 of 2010 pending before the Additional Chief Judicial Magistrate, CBI, Ahmedabad, is substantially prayed for on the ground that the writ-applicants have paid the amount due and payable to the Bank of Maharashtra by availing of the scheme of One Time Settlement. The Bank has also no objection if the proceedings are quashed. However, the prosecuting agency, i.e. the CBI, has strong objection in accepting such settlement arrived at between the writ-applicants and the Bank and quashing the prosecution on such ground.
Mr.N.D.Nanavati and Mr.S.V.Raju, the two learned senior counsel appearing for the writ-applicants, vehemently submitted that 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, the continuance of the Page 2 of 33 HC-NIC Page 2 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT criminal proceedings would become oppressive and would partake the character of a lame prosecution.
In support of such submission, strong reliance has been placed on the decision of the Supreme Court in the case of Central Bureau of Investigation, ACB, Mumbai v. Narendra Lal Jain and others, (2014)5 SCC 364.
Both the learned senior counsel further submitted that when the company is accused, its Directors can be roped in only if there is sufficient incriminating evidence against them coupled with the criminal intent. It is submitted that the doctrine of vicarious liability would not apply in the case on hand because the offences alleged are under the Indian Penal Code.
In support of such submission, strong reliance is placed on the decision of the Supreme Court in the case of Sunil Bharti Mittal v. Central Bureau of Investigation, (2015)4 SCC
609. Reliance is also placed on the decision of the Supreme Court in the case of Gian Singh v. State of Punjab and another, 2012 AIR SCW 5333.
On the other hand, this application has been vehemently opposed by Mr.R.C.Kodekar, the learned standing counsel appearing for the CBI. Mr.Kodekar submits that merely because the dues of the Bank have been paid under the One Time Settlement scheme, the same by itself would not absolve the accused persons of the crime alleged to have been committed. Mr.Kodekar submits that the allegations against Page 3 of 33 HC-NIC Page 3 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT the writ-applicants are very serious. The case on hand is one of an economic offence. In such circumstances referred to above, Mr.Kodekar prays that there being no merit in this application, the same be rejected.
It appears from the materials on record that the writ- applicants herein had filed discharge application before the trial Court under Section 239 of the Code of Criminal Procedure which came to be rejected vide order passed by the Additional Chief Judicial Magistrate, Special CBI Court No.2, Ahmedabad (Rural), Mirzapur, Ahmedabad, dated 15th October 2011.
Being dissatisfied with the order passed by the trial Court rejecting the discharge application, a Criminal Revision Application No.1 of 2012 was filed in the court of the learned Special Judge, CBI, Ahmedabad. The said Revision Application came to be rejected by the Special Judge vide order dated 9 th July 2015. While rejecting the Revision Application, the revisional court observed as under :
"Thus, in view of the foregoing discussion the order below Exhs.39, 44, 47, 41, 50 and 52 in Special Case No.2/2010 i.e. the impugned judgement, is erroneous and it is trite that where the revisional court finds that the trial court has giving finding which is incorrect or illegal or improper and passed its sentence or order on such findings, the revisional court is required to interfere with such order in the facts and circumstances of the case. In the present case, the lower court has held that the case which has been compromised is of a civil and commercial nature and that the Bank of Maharashtra has not suffered any financial loss. Whereas, the fact remains that the Bank had to forgo a huge chunk of its claim under the compromise purshis, which was for first time, dishonoured and honoured only on second time. Furthermore, the Bank was dealing with the tax payers' Page 4 of 33 HC-NIC Page 4 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT money and the element of fraud and misappropriation are prima facie made out. The contents of paragraphs 2 & 3 of this judgment indicate the same. In the present case Letters of Credit were opened and by presenting alleged fictitious and fraudulent documents, the amount of Letters of Credit were routed back to the account of accused No.1. At the risk of repetition, it is stated that prima facie case against the accused has been elaborately mentioned at the beginning of the present judgment. Hence, this court does not subscribe to the view that the present proceedings only concern the civil or commercial transactions between the bank and the accused. As a result, the order of the learned Additional Chief Judicial Magistrate, Special CBI Court No.2, Ahmedabad passed below Exhs.39, 44, 47, 41, 5 and 521 in Special CBI Case No.2/2010 is required to be set-aside. Hence the following final order."
At this stage, let me look into the allegations levelled against the writ-applicants.
"Annexure I RC 13(E)/2008/CBI/BS & FC/MUMBAI CHARGE Column No.16 That, the Central Bureau of Investigation (CBI), Bank Securities & Fraud Cell (BS&FC), Mumbai registered a criminal case vide RC No.13(E)2008 on 08.12.2008 U/Sec.120-B r/w. Sec.420, 467, 468 and 471 IPC and Sec.13(2) r/w.13(1)(d) of PC Act, 1988, against Shri Suresh C.Singhal (A-1). Mrs.Sangeeta S.Singhal (A-2) and others for the alleged criminal offences of criminal conspiracy to cheat the Bank of Maharashtra in the matters of sanction and release of various credit facilities including LC facility to Micro Group of Companies during the period 1998 to 2005 to the tune of Rs.14.20 Crore.
2. That, a conspiracy was hatched amongst
(i) Shri Suresh C. Singhal (A-1), Director of Micro Group of Companies.
(ii) Smt. Sangeeta S. Singhal (A-2), Director of Micro Group of Companies.Page 5 of 33
HC-NIC Page 5 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT
(iii) M/s. Micro Polyester Pvt. Ltd. (A-3)
(iv) M/s. Prime Polyweave Ltd. (A-4)
(v) M/s.Goodluck Synthetics Pvt. Ltd. (A-5)
(vi) Shri Jignesh Bhutwala (A-6), Proprietor/partner of M/s. Suraj Corporation.
(vii) Shri Dinesh Dwivedi (A-7), Proprietor/partner of M/s. Shree Durga Traders
(viii) Shri Rohit K.Gohil (A-8), Proprietor of M/s. Tejshree Corporation.
(ix) Shri Anil Panikkar @ Ramesh Kumar Patel (A-9), Proprietor of M/s. Chetana Synthetics.
(x) Shri Tarachand Sharma (A-10) Authorized signatory of M/s. Tirupati Textiles and
(xi) Shri Pravat Kumar Biswal (A-11), Proprietor of M/s. Mahavir Textiles, the object of which was to cheat the public funds of Bank of Maharashtra, in the matter of availing LC facilities during 1998 to 2005 by the companies (A-3) to (A-5) floated by Shri Suresh C. Singhal (A-1) and Mrs. Sangeeta Suresh Singhal (A-2).
RESULT OF INVESTIGATION
3. That Micro/Prime Group of Companies were promoted by Sh.Suresh Singhal (A-1). The promoters/directors are Sh. Suresh Singhal (A-1) and his wife Mrs. Sangeeta Singhal (A-2). Micro Group consists of following companies.
i) M/s. Micro Polyester Pvt Ltd.
ii) M/s. Prime Potyweave Ltd.
iii) M/s. Goodluck Synthetics Pvt Ltd.
These companies were enjoying working capital limit (funded and non funded) with Bank of Maharashtra, Ring Page 6 of 33 HC-NIC Page 6 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT Road Branch, Surat.
M/s. Micro Polyester Pvt. Ltd. [A-3)
4. The activities of this company was to manufacture texturised yarn and twisted yam of different qualities from POY from the factory located at village Tarsadi, Surat. This company was formed during 1994-1995 by Mrs. Sangeeta Singhal (A-2) and Shri Vinod Singhal as the directors. Shri Suresh Singhal (A-1) also became a director of the company from May 1995. A current Account was opened by Shri Suresh Singhal (A-1) and Smt. Sangeeta Singhal (A-2) in the name of M/s. Micro Polyester Pvt Ltd., (A-3) with Bank of Maharashtra, Ring Road Branch, Surat on 18.04.1998 vide A/c. No.3317. Both the directors were authorised to operate this account. The CC limits enjoyed by the company in the Central Bank of India during the year 1998 was only Rs.40 lacs. This account was transferred to BoM, Ring Road Branch, Surat. The credit facilities initially granted to M/s. Micro Polyester Pvt. Ltd. was only Rs.135 lacs in the year 1998 and these facilities were enhanced from time to time as per the details given below.
(Rs. in Lacs)
Facility 30.10.199 11.8.199 18.2.200 8.9.200 2004 05.3.2005
8 9 2 3
Cash Credit 50 280 350 410 - Realigned CC
Stock facility of
Rs.810 lacs
Cash Credit 35 125 140 200 -
by clubbing
Book Debt
Bill 15 - - - - STL Rs.50
discounting lacs +
DA Basis Enhancement
of Rs.20 lacs
Inland LC 35 75 100 200 -
DA Basis
STL - - - - 50
Total 135 480 590 810 50 880
5. That on an application made by Shri Suresh Singhal (A-1) for enhancement of facilities, the then Branch Manager Shri C.V. Mhasde, prepared a proposal for enhancement of facilities. In this proposal he mentioned that the company has purchased three texturising machines worth Rs.350 lac and installed Process House worth Rs.250 lac without taking any term loan. Further, Shri Suresh Singhal (A-1) and Mrs. Sangeeta Singhal (A-2) Page 7 of 33 HC-NIC Page 7 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT utilized the CC limit sanctioned as Working capital towards Purchase of Plant and Machinery instead of purchase of raw material, indicating diversion of funds.
Stock Statement
6. That the bank was calculating the Drawing Powers on the basis of Stock Statement furnished by the company and was releasing the sanctioned limits on the basis of the drawing power. During the period 30.11.2004 and 8.12.2004 Shri Suresh Singhal (A-1) and Mrs. Sangeeta Singhal (A-2) submitted false stock statement showing a stock position at Rs.4.11 crores and debtors position at Rs.10.64 crores. The bank officials visited the factory premises on 05.12.2004. In their visit report they specifically mentioned that there was almost no stock physically and the machineries were not working. They did not find any stock in the company as mentioned in the stock statement dtd. 30.11.2004 which clearly showed that the company was furnishing false stock statement. These stock statements have been signed by Shri Suresh Singhal (A-1). Thus, the company and accused directors of company had deliberately and intentionally submitted false and bogus figures to the BoM with fraudulent intentions to cheat the bank.
M/s. PRIME POLYWEAVE LTD. (A-4)
7. That the company M/s.Prime Polyweave Ltd. opened current account on 22.06.1998 vide A/c. No.3363 with BoM, Surat. The directors of the company are Shri Suresh Singhal (A-1) and Smt. Sangeeta Singhal (A-2). The activities of this company was to manufacture texturized yarn and twisted yarn of different qualities from POY from the factory of the company located at village- Karanj, Surat and address is given as 2025, Jash Textile & Yarn Market, Ring Road, Surat. Shri Suresh C. Singhal (A-
1) and Mrs. Sangeeta S. Singhal (A-2) applied for credit facilities from Bank of Maharashtra, Ring Road Branch, Surat from 1999 and these facilities were reviewed/enhanced from time to time on the basis of figures furnished by Shri Suresh C. Singhal (A-1) and Mrs. Sangeeta S. Singhal (A-2) as per the details given below:
(Rs. in Lacs) Facility 30.12.1999 08.04.2002 2004 19.03.2005 Page 8 of 33 HC-NIC Page 8 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT Cash Credit (Stock) 65 100 - Realigned CC facility of Cash Credit (Book 65 80 -
Rs.230 lacs by
Debt)
clubbing STL
Inland LC DA Basis 30 50 - Rs.15 lacs
STL - - 15
Total 160 230 15 245
M/s.GoodLuck Synthetics Pvt. Ltd. (A-5)
8. That the company M/s. Good Luck Synthetics of which Sh. Suresh Singhal (A-1) & Smt. Sangeeta Singhal (A-2) were the directors. The activities of this company was to manufacture texturised yarn, crimp yarn, twisted yarn & art silk fabrics of different qualities from POY from the factory of the company located at village Karanj, Surat. On the basis of the details/figures furnished by A-1 and A-2 the credit facilities were granted to M/s. Goodluck Synthetic Pvt. Ltd. in 1999 and these facilities were reviewed time to time. The details of the sanction is as follows:
(Rs. in Lacs) Facility 31.12.1999 2004 19.03.2005 Cash Credit (Stock) 115 - Realigned CC facility of Cash Credit (Book 115 -
Rs.280 lacs by
Debt)
clubbing STL
Inland LC DA Basis 50 - Rs.15 lacs
STL - 15
Total 280 15 295
9. That on sanctioning various credit facilities to the Micro Group of companies, as per the terms and conditions of sanction/enhancement, Shri Suresh Singhal (A-1) and Mrs. Sangeeta S.Singhal (A-2) had executed Guarantee Bond, Declaration-cum-undertaking, Mortgagors affidavit and Equitable Mortgage in Bank's favour under their signatures and submitted to the bank.
The Cash Credit Limit and LC limit were also released on the written request of Shri Suresh Singhal (A-1) and Mrs Sangeeta S. Singhal (A-2). Alongwith Cash Credit facility, the Inland LC facility was also sanctioned to the Micro Group of Companies.
LETTER OF CREDIT Page 9 of 33 HC-NIC Page 9 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT
10. That between 08.02.2001 to 31.12.2004 total number of 362 LCs were opened by the BoM on behalf of M/s. Micro Polyester Pvt. Ltd. Between 29.03.2001 to 29.12.2004 total number of 128 LCs were opened on behalf of M/s. Prime Polyeweave Ltd. and between 16.08.2001 to 29.12.2004 total number of 134 LCs were opened on behalf of M/s. Goodluck Synthetics Pvt. Ltd; Thus, total number of 624 LCs were opened by the Bank in favour of Micro Group of Companies during the above said period.
11. That, during the period 08.02.2001 to 31.12.2004 in all total 478 LCs were opened by Bank of Maharashtra, Ring Road Branch, Surat on the application made by Shri Suresh Singhal (A-1) showing beneficiary as M/s. Suraj Corporation, which was commission agent firm and having Current account alongwith bill discounting facility with United Bank of India, Surat. Shri Jignesh Bhutwala (A-6) and Shri Dinesh Dwivedi (A-7) were the partners in M/s. Suraj Corporation. In the LC though name of the beneficiary has been shown as M/s Suraj Corporation, it is further shown in the LC that the goods to be dispatched from M/s. Pooja Synthetics or M/s. Pioneer Synthetics or M/s. Naweevan Synthetics or M/s. Supriya Fab to Micro Group of companies which are fictitious. The LCs opened in the name of Suraj Corporation were discounted through United Bank of India, Surat. 0n receiving confirmation from Bank at Maharashtra about the LCs. the UBI discounted the bills raised by the partners of M/s Suraj Corporation against the LCs, on the strength of the LCs opened by Bank of Maharashtra, Ring Road Branch, Surat and after deducting the branch commission credited the remaining amount of the discounted amount to the account of M/s Suraj Corporation
12. That during the period 08.02.2001 to 31.12.2004 in all total 19 LCs were opened in the name of M/s. Shree Durga Traders who was having Current Account alongwith bill discounting facility with United Bank of India, Surat. Shri Dinesh Dwivedi (A-7) and Shri Mukesh Dwivedi were partners in M/s. Shree Durga Traders and doing the business as commission agent. That in the LC, though the name of the beneficiary has been shown as M/s Shree Durga Traders, it is further shown in the LC that the goods to be dispatched from M/s. Pooja Page 10 of 33 HC-NIC Page 10 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT Synthetic or M/s. Pioneer Synthetics or M/s. Navjeevan Synthetics or M/s. Supriya Fab to Micro Group of companies which are fictitious. On receiving confirmation from Bank of Maharashtra, the UBI discounted the bills raised by the partners of M/s. Shree Durga Traders against the Lcs, on the strength of the LCs opened by Bank of Maharashtra, Ring Road Branch, Surat and after deducting the branch commission credited the remaining amount of the discounted amount to the account of M/s. Shree Durga Traders.
13. That during the period 15.06.2004 to 31.12.2004 total 128 number of LCs were issued in the name of Tejashree Corporation, who was having Current account with IDBI, Ghod Dod Road Branch, Surat. Shri Rohit Kumar Gohil (A-8) (HUF) was one of the partners in Tejashree Corporation. He was not available during the course of investigation as at present he is in UK. While opening of LC the name of beneficiary is shown as M/s.Tejashree Corporation and it is further shown in the LC that goods to be dispatched from M/s. Pooja Synthetics or M/s. Pioneer Synthetics or M/s.Navjeevan Synthetics or M/s. Supriya Fab to Micro Group of companies which are fictitious. On receiving confirmation from Bank of Maharashtra, the IDBI had discounted the bills raised by the M/s. Tejshree Corporation against the LCs, on the strength of the LCs opened by Bank of Maharashtra, Ring Road Branch, Surat and after deducting the branch commission credited the remaining amount of the discounted amount to the account of M/s. Tejashree Corporation.
14. That, on getting credit from concern banks the proprietors/partners of M/s. Suraj Corporation, M/s. Shree Durga Traders and M/s. Tejashree Corporation had issued cheques in the name of fictitious suppliers such as M/s. Pioneer Synthetics or M/s. Pooja Synthetics or M/s. Navjivan Synthetics or M/s. Supriya Fab. These cheques had been collected by the employee of Shri Suresh Singhal (A-1). The said cheques issued in the name of fictitious suppliers were deposited in the third party A/c such as M/s. Chetana Synthetics or M/s. Tirupati Textiles or M/s. Mahavir Textiles. The proprietor of M/s. Chetana Synthetics was Sh. Anil Panikar @ Ramesh Kumar Patel (A-9). The Authorised Signatory of M/s. Tirupati Textiles was Shri Tarachand Sharma (A-10) and the Proprietor of Page 11 of 33 HC-NIC Page 11 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT M/s. Mahavir Textiles was Shri Pravat Kumar Biswal (A-
11). These proprietors/authorised signatory were the employees of Shri Suresh Singhal (A-1) and were not involved in manufacturing or supplying of any kind of Raw Material. On getting credit from United Bank of India or IDBI, Sh. Anil Panikkar @ Ramesh Kumar Patel (A-9), Shri Tarachand Sharma (A-10) and Shri Pravat Kumar Biswal (A-11) had issued cheques in the name of Micro Group of Companies without any underlying business transactions and the credit received in the A/c of Micro Group of Companies was utilized to clear the earlier LCs, making payment of term loan obtained from other Banks etc.
15. That the purported supplier M/s. Supriya Fab was a non existence firm and the address mentioned is actually occupied by M/s. Gajadhar Fabrics of Shri Pravinkumar Meharia, who denied having allowed the address to be used for Supriya Fab.
16. That, the LC documents such as Bill of Exchange, invoice, Credit Note, Lorry Receipt have been obtained from the Banks. It is shown in the lorry receipt that the consignment was transported through transporter namely Shreeyas Roadlines, of Surat. The fictitious nature of the supplier is further corroborated with the fact that the name of the Transporter M/s. Shreeyas Roadlines does not exist. The vehicle numbers written over the consignment copy of Shreeyas Roadlines have been ascertained from RTO, Surat. They confirmed that most of the numbers mentioned in the Lorry Receipts furnished to the bank are that of passenger Auto Rickshaws and scooter. Some of the Auto Rickshaw owners have been examined who confirmed this fact that their auto rickshaw was in used for carrying passengers only and not carrying any kind of goods.
17. That after getting credit in the account, M/s. Suraj Corporation, M/s. Shree Durga Traders or M/s. Tejshree Corporation had issued cheques in the name of Suppliers as mentioned in the LC such as M/s. Pioneer Synthetics or M/s. Pooja Synthetics or M/s.. Navjivan Synthetics or M/s. Supriya Fab. These cheques were collected by the employee of Shri Suresh Singhal (A-1), director of Micro Group of Companies. The said cheques issued in the name of so called suppliers were deposited in third party Page 12 of 33 HC-NIC Page 12 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT account such as M/s. Chetana Synthetics, M/s. Tirupati Textiles and M/s. Mahaveer Textiles, all operated as per the instructions of Shri Suresh C. Singhal (A-1).
18. That the account of Chetana Synthetics was opened in the name of one Shri Ramesh Kumar Patel vide A/c. No. 5750 on 16.04.2001 with Texco Bank, Surat. The address of the firm is shown as 3014, Jash Market, Ring Road, Surat, and the Tel. No. is given as 650960. This account was introduced by M/s. Supriya Fab who was having Current Account vide A/c No.5201.
19. During the visit at the address of M/s.Chetana Synthetics at Shop No.3014, Jash Market, Ring Road, Surat, it is revealed that this shop is belongs to Shri Anand Jain and on verifying the telephone number as mentioned in the A/c. Opening form, it is revealed that this number is allotted to Shri Suresh Singhal and installed in the office of Micro Group of Companies at Shop No 2025-2026 of Jash Market, Ring Road, Surat.
20. That, on going through the A/c. opening forms of Pure Reality Pvt. Ltd opened vide A/c. No. 53034784764 and Surat Products Pvt. Ltd. maintained with State Bank of Indore, Surat and on seeing the photograph of A/c holder it is revealed that Shri Anil Panikkar (A-9) impersonated as Ramesh Kumar Patel while opening the A/c. of Chetana Synthetics with Texco Bank, Surat. The officials of State Bank of Indore and Texco Bank also confirmed this fact.
21. That Shri Suresh C. Singhal (A-1) has got opened the a/c. of M/s Supriya Fab, through which a/c. the funds of Bank of Maharashtra, Ring Road Branch, Surat were diverted. The NC of M/s. Supriya Fab, who introduced the account of M/s. Chetana Synthetics was opened on 19.06.2000 and the address is given as 2027, Jash Market, Ring Road, Surat that is of Micro Group of Companies and the telephone no. is the same as shown in NC. Opening form of Chetana Synthetics i.e. 653960 is also of Micro Group of companies and allotted in the name of Shri Suresh Singhal (A-1).
22. That, Shri Suresh Singhal (A-1) and Mrs. Sangeeta Singhal (A-2) in pursuance of the conspiracy diverted the funds of Bank of Maharashtra, Ring Road Branch, Surat, Page 13 of 33 HC-NIC Page 13 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT through the account of Tirupati Textiles. This account was opened by Shri Indrajeet Ghosh on 26.02.2004 vide account no.8080 with Texco Bank, Surat. Business is shown as trading and Tel. No. is shown as 2363601. It is observed that Shri Indrajeet Ghosh had given authorization in the name of Shri Tarachand Sharma (A-
10). All the cheques issued by M/s. Tirupati Textiles in favour of M/s. Micro Group of Companies were under the signature of Sh. Tarachand Sharma (A-10). Shri Tarachand Sharma was working as an employee with M/s. Akshat Papers Ltd., a sister concern of Micro Group of Companies. Sh. Indrajeet Ghosh was also working with Micro Group of Companies. That in pursuance of the conspiracy Shri Suresh Singhal had instructed Shri Indrajeet Ghosh and as per the instructions, he had given the authorization in favour of Shri Tarachand Sharma (A-10) to the Texco Bank, Surat. It is confirmed by the BSNL, Surat that the telephone no.2363601 shown in the A/c. opening form was allotted to Shri Suresh Singhal (A-1), having address of Shop No.2020-A, Raghukooi Market, Surat. During investigation, the details of director of Micro Group of companies have been obtained from Registrar of Companies, Gujarat showing the name of Shri Indrajeet Ghosh one of the directors of Micro Polyester Pvt. Ltd. but actually he was one of the employee of Micro Group of Companies.
23. That, the Labour's Payment Register, Pay sheet/salary Register, computer print out of salary statement of Akshat papers were collected from Shri Suresh Singhal (A-1) in which the name of Shri Tarachand Sharma is shown as employee and he had signed on a revenue stamp while getting salary for the month of Dec. 2007. Sh. Tarachand Sharma (A-10) became authorized signatory of M/s. Tirupati Textiles as Shri Indrajeet Ghosh was working in the factory premises of Micro Group Co. at Tarsadi Village about 30 Kms. away from the bank and the office of Micro Group of Companies.
24. That the A/c. of Tirupati Textiles was introduced by Shri Vinod Sharma in the capacity of a proprietor of M/s. Parvati Textiles. As confirmed by witnesses Shri Vinod Sharma was also working with Micro Group of Companies as an employee, where Shri Suresh Singhal (A-1) was one of the directors. Address of Parvati Textiles is shown as 4008, Trade House, Ring Road, Surat. A copy of sale deed Page 14 of 33 HC-NIC Page 14 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT of Shop No.4008 submitted by Shri Vinod Sharma at the time of opening of account disclosed that this sale deed was made between Shri Suresh Singhal and Shri MD Purohit and this shop has been mortgaged as collateral security with BoM, Surat. The A/c. of M/s. Parvati Textiles was introduced by M/s. Akshat Papers Ltd. under the signature of Shri Suresh Singhal (A-1).
25. That Tirupati Textiles and Parvati Textiles were shown as debtors in debtors statement submitted by Shri Suresh Singhal (A-1) one of the directors of Micro Group of Companies. The proprietors of these firms were salaried employees of Micro Group of Companies. Therefore, it is evident that Shri Suresh Singhal (A-1) has submitted bogus debtors statement to the bank.
26. That Shri Pravat Kumar Biswal (A-11) has opened an A/c. in the name of M/s. Mahaveer Textiles on 12.12.2002 with Finco Bank, Surat. Shri Pravat Kumar Biswal (A-11) was also working as an employee with Micro Group of companies at Tarsadi. As directed by Shri Suresh Singhal (A-1) and Shri Rajesh Gohil, he opened this account in the name of M/s. Mahaveer Textiles with Finco Bank. His name is also shown as director of M/s. Micro Polyester Pvt. Ltd. and M/s. Goodluck Synthetics Pvt. Ltd. and confirmed by Registrar of Companies, Ahmedabad vide their letter dtd. 18.08.2009. This fact has also been corraborated with witnesses.
27. That the Micro Group of Companies were having Inland LC limit of Rs.300 lacs with the Bank of Maharashtra. Almost all the LCs issued of round amount of Rs.5 lacs each. All the LCs were opened in the name of M/s. Suraj Corporation or M/s. Shree Durga Traders or M/s. Tejashree Corporation. These firms were Commission Agent and not involved in manufacturing of any kind of raw material. That the company was getting LCs issued for allegedly supply of Raw Material. These firms had raised bogus bills against LCs and got discounted the bills and funds were diverted through various A/c's back to the A/c. of Micro Group of Companies maintained with Bank of Maharashtra. All the LCs were opened on the request of Micro Group of Companies by showing beneficiary M/s. Suraj Corporation or M/s. Shree Durga Traders or M/s. Tejashree Corporation but there was no genuine underlying Page 15 of 33 HC-NIC Page 15 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT business transaction. One of the cycle of fund flow without transactions is given below:
For e.g. LC No. 192/2002 was opened on 03.07.2002 in favour of Suraj Corporation for the supply of Polyester Yarn (POY) for Rs.5.5 lacs and that the goods should be supplied from Pioneer Synthetics. M/s. Suraj Corporation of Surat is a commission agent based in Surat and owned by Shri Jignesh Bhutwala (A-6) and Shri Dinesh Dwivedi (A-7). On 04.07.2002, Suraj Corporation submitted invoices and bill of exchange favouring M/s. Micro Polyester Pvt. Ltd. and sent with the bills purportedly for supply of polyester yarn favouring M/s. Micro Polyester Pvt. Ltd. through United Bank of India where Suraj Corporation maintained its account. While submitting the bill, the invoice, credit note, lorry receipt etc. were enclosed. The material was shown to have been transported by truck No. GJ-5U-6341. The truck no. has been verified from the RTO, Surat and it is revealed that the vehicle No. GJ-5V-6341 is a Bajaj Auto Rickshaw and could not have transported 2 tons of yarns and hence the LR is forged. It is also revealed that M/s. Shreeyas Roadlines which have shown its address at No.4, Udana, Surat does not exist in that place at all. Similarly, investigation has also been carried out to indicate that M/s. Pioneer Synthetics never existed at No.53, GIDC, Gulwa, Surat. That the LRs issued to the banks was bogus and forged LR.
This bill was discounted by United Bank of India, Surat after confirmation and the LC amount was credited into the A/c. of M/s. Suraj Corporation under the bill discounting (BD) No.84/02 on 05.07.2002 after deducting the bank commission. A consolidated voucher for two more LCs was prepared and the amount was credited to this account. Prior to crediting the amount credit balance of M/s. Suraj Corporation was Rs.55,498/-, Shri Jignesh Bhutwala had issued cheque No.013285 dtd. 4.7.2002 for the amount Rs.5,34,629/- in favour of Chetana Synthetics instead of supplier M/s. Pioneer Synthetics as shown in LC. M/s. Chetana Synthetics was holding account with Textile Co-op. Bank, Surat. The account opening form indicates that it was a proprietary firm opened by one Shri Ramesh Kumar Patel. However, during investigation, it is revealed that the photo was belongs to one Shri Anil Pannikar (A-9) an employee of Shri Suresh Singhal {A-1).Page 16 of 33
HC-NIC Page 16 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT He was not involved in manufacturing or supplying of any kind of raw material. Credit received from M/s. Suraj Corporation in the account of M/s. Chetna Synthetics was transferred by way of cheque No.57211 dtd 06.07.2002 for Rs.5,34,629/- which was credited into the account of M/s. Micro polyester Pvt. Ltd. with BoM.
28. That, the role of M/s.Suraj Corporation is also clearly indicated as though this company claimed that supplies were made from M/s.Pioneer Synthetics, no payments were made to M/s. Pioneer Synthetics. Shri Jignesh Bhutwala (A-6) had intentionally issued cheque in the name of Chetana Synthetics instead of Pioneer Synthetics and thus the payment was made to M/s. Chetana Synthetics which clearly shows the criminal conspiracy of the partners of M/s. Suraj Corporation. Similar such instances to show such fraudulent flow of funds. Some of the instances have been identified and diversion of funds indicates, which is shown in the chart enclosed herewith Annexure-A. MISUTILIZATION OF FUND OF WORKING CAPITAL LIMIT
29. That Shri Suresh Singhal (A-1), submitted a cheque No.550922 of M/s. Micro Polyester Pvt. Ltd. on 08.12.2000 for Rs.5 lacs for transferring the said amount to his SB A/c. No. 7268. The debit entry is reflected in the Statement of A/c. of M/s. Micro Polyester Pvt. Ltd. This cheque was produced alongwith a debit voucher dtd. 08.12.2000. The entry of crediting this amount is reflected in the statement of A/c. of 7268. On the same day Shri Suresh Singhal produced a cheque No.068361 dtd. 08.12.2000 for Rs.4,90,580/-requesting for issuing three demand drafts in the joint name of Kantibhai Ranchodbhai, Kikiben Ranchodbhai and Ushaben Kantiben Umarigar amounting Rs.2 lacs, Rs.2 lacs and Rs.90,000/- respectively and subsequently, the demand draft no. 256655, 256656 & 256657 were issued as shown in DD Application form.
30. That, a copy of sale deed No.6275 of 2000 of property at RS. No.466, paiki 3-1 mauje-Vesu, Surat have been seized from the bank which shows that the above said property had purchased by Shri Suresh Singhal from Kantibhai Ranchodbhai, Kikiben Ranchodbhai and Page 17 of 33 HC-NIC Page 17 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT Ushaben Kantiben Umarigar for Rs.4,90,000/-. The payment of said property was made through above said Dds, which is also reflected in the sale deed. That Shri Suresh Singhal (A-1) had purchased property by diverting the fund of CC Account and utilized for his own purpose.
31. That, the copies of sale deeds have been collected from the Bank of Maharashtra, Ring Road Branch, Surat vide receipt memo dtd 08.08.2009. On verifying these sale deeds, it is revealed the land of Survey No.466, Paiki 3-1 of Mouje-Vasu, Surat which was purchased by Shri Suresh Singhal (A-1) again sold to M/s. Pure Reality Pvt. Ltd. for Rs.4,95,000/- on 13.07.2005. It is further revealed that the partners of Pure Reality Pvt. Ltd. were Shri Anil Panikkar (A-9) and Shri Ajay Sharma (both are the employees of Shri Suresh Singhal (A-1)). This property was purchased through Ch. Nos. 830651 to 830655 dtd. 12.07.2005 for Rs.4,95,000/- of State Bank of Indore, Ring Road Branch, Surat. and the said amount was credited in the account of Pure Reality Pvt Ltd. through a commission agent by Shri Rajesh Gohil, the CA of Shri Suresh Singhal (A-1).
32. That, the above revealed that there was the conspiracy between Shri Suresh C. Singhal (A-1), Smt. Sangeeta S. Singhal (A-2), Shri Jignesh Bhutwala (A-6), Shri Dinesh Dwivedi (A-7), Shri Rohit K. Gohil (A-8), Shri Anil Panikkar @ Ramesh Kumar Patel (A-9), Shri Tarachand Sharma (A-10) and Shri Pravat Kumar Biswal (A-11) to cheat Bank of Maharashtra of its funds in the matter of availing various facilities for the 3 companies/firms of Shri Suresh Singhal (A-1) and Smt. Sangeeta Singhal (A-2). The LCs were opened by the bank on the request of A-1 and A-2 which were discounted through the firms of Shri Jignesh Bhutwala (A-
6). Shri Dinesh Dwivedi (A-7), Shri Rohit K. Gohil (A-8) who submitted false invoices and LRs to their Bank UBI and IDBI without any underlying business transactions. This fund was diverted in the account of Micro Group of Company through Shri Anil Panikkar @ Ramesh Kumar Patel (A-9). Shri Tarachand Sharma (A-10) and Shri Pravat Kumar Biswal (A-11) who were the employees of Shri Suresh Singhal (A-1) and Smt. Sangeeta Singhal (A-
2). In the above manner, in pursuance of the conspiracy, Bank of Maharashtra was cheated to the tune of Rs.14.20 crores.
Page 18 of 33HC-NIC Page 18 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT
33. That, the aforesaid acts on the part of the accused persons disclosed commission of offences punishable U/secs.120-B IPC r/w. 420, 419, 467, 468, 471 IPC against A-1 to A-11. This also indicate commission of specific offence of Sec.420 of IPC by A-1, A-2, A-3, A-4, A-5, A-6, A-7 & A-8, specific offence of Sec.419 of IPC by A-9, specific offences of Sec.467, 468 & 471 of IPC by A-6, A- 7, A-8, specific offence of Sec.467 of IPC by A-9 and specific offence of Sec.471 of IPC by A-9, A-10 & A-11."
The No Due Certificate issued by the Bank of Maharashtra dated 11th April 2011 reads as under :
"The Director M/s.Micro Polyster Pvt. Ltd.
2025-2026, Jash Textile and Yarn Market Ring Road, Surat Dear Sir, Sub : No Due Certificate As per your request, we issue this NOC to you.
"As per Banks compromise sanction No.AV14/Recovery/ Comp/Micro/2008 dtd. 27.12.2008 and subsequent sanction and upon receiving a sum of Rs.825.00 lakhs, towards ledger balance and Rs.99.70 lakhs towards delayed period payment w.e.f. 01.04.2009, the bank has settled the accounts by compromise and has sacrificed to an extent its rightful share of amount.
Accordingly it is hereby informed that the following accounts of Micro Group, stand closed by compromise with no dues remaining;
Micro Polyester Pvt Ltd 20116509008
Prime Polyweave Pvt Ltd 20116482916
Goodluck Synthetics Pvt Ltd 20116509019
Our Bank shall not grant any fresh credit facilities to the company i.e. Micro Group, including its Directors/Guarantors or to any firm/company, where they Page 19 of 33 HC-NIC Page 19 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT are associated.
Yours faithfully, Sd/-
(R.S.Sodhi) Chief Manager Ring Road Surat Branch."
It appears that the civil proceedings initiated before the Debts Recovery Tribunal-II at Ahmedabad being the Original Application No.3 of 2007 also came to be disposed of in view of the consent terms arrived at between the parties reduced into writing.
Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is, whether I should quash the prosecution against the writ-applicants herein on the ground of settlement with the Bank of Maharashtra.
It appears that in the case of Narendra Lal Jain (supra), perhaps the attention of Their Lordships was not drawn to the earlier decision of the Supreme Court in the case of Sushil Suri v. Central Bureau of Investigation and another, (2011)5 SCC
708. In the said case, the Supreme Court took the view that mere settlement with the Bank would not absolve the persons from their criminal liability. The settlement would bring to an end the civil liability but the criminal liability would still remain. I may quote the relevant observations thus :
"15. Before embarking on an evaluation of the rival submissions, it would be instructive to briefly notice the scope and ambit of the inherent powers of the High Court Page 20 of 33 HC-NIC Page 20 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT under Section 482 of the Cr.P.C.
16. Section 482 of the Cr.P.C. itself envisages three circumstances under which the inherent jurisdiction may be exercised by the High Court, namely: (i) to give effect to an order under the Cr.P.C.; (ii) to prevent an abuse of the process of Court; and (iii) to otherwise secure the ends of justice. It is trite that although the power possessed by the High Court under the said provision is very wide but it is not unbridled. It has to be exercised sparingly, carefully and cautiously, ex debito justitiae to do real and substantial justice for which alone the Court exists. Nevertheless, it is neither feasible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction of the Court. Yet, in numerous cases, this Court has laid down certain broad principles which may be borne in mind while exercising jurisdiction under Section 482 of the Cr.P.C. Though it is emphasised that exercise of inherent powers would depend on the facts and circumstances of each case, but, the common thread which runs through all the decisions on the subject is that the Court would be justified in invoking its inherent jurisdiction where the allegations made in the Complaint or Charge-sheet, as the case may be, taken at their face value and accepted in their entirety do not constitute the offence alleged.
17. In one of the earlier cases in R.P. Kapur v. State of Punjab7this Court had culled out some of the categories of cases where the inherent powers under Section 482 of the Cr.P.C. could be exercised by the High Court to quash criminal proceedings against the accused. These are:
7AIR 1960 SC 866 : (1960 Cri LJ 1239).
"(i) where it manifestly appears that there is a legal bar against the institution or continuance of the proceedings e.g. want of sanction;
(ii) where the allegations in the first information report or the complaint taken at their face value and accepted in their entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the Page 21 of 33 HC-NIC Page 21 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT charge."
18. In Dinesh Dutt Joshi v. State of Rajasthan and Anr.8, while explaining the object and purpose of Section 482 of the Cr.P.C., this Court had observed thus:
"6.......The principle embodied in the section is based upon the maxim: quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsa esse non potest i.e. when the law gives anything to anyone, it gives also all those things without which the thing itself would be unavailable. The section does not confer any new power, but only declares that the High Court possesses inherent powers for the purposes specified in the section. As lacunae are sometimes found in procedural law, the section has been embodied to cover such lacunae wherever they are discovered. The use of extraordinary powers conferred upon the High Court under this section are however required to be reserved, as far as possible, for extraordinary cases."
19. Recently, this Court in A. Ravishankar Prasad and Ors. (2009 AIR SCW 3942 : 2009 Cri LJ 3437) (supra), relied upon by learned counsel for the CBI, referring to several earlier decisions on the point, including R.P. Kapur (AIR 1960 SC 866 : 1960 Cri LJ 1239) (supra); State of Haryana and Ors. v. Bhajan Lal and Ors.9; Janata Dal v. H.S. Chowdhary and Ors.10; B.S. Joshi and Ors. (supra); Nikhil Merchant (supra) etc. has reiterated that the exercise of inherent powers would entirely depend on the facts and circumstances of each case.
20. It has been further observed that :
"23....The inherent powers should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material."Page 22 of 33
HC-NIC Page 22 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT
21. Bearing in mind the object, scope and width of power of the High Court under Section 482 of the Cr.P.C., enunciated above, the question for consideration is whether on facts in hand, the High Court was correct in law in declining to exercise its jurisdiction under the said Section?
22. Having examined the case in light of the allegations in the Charge-sheet, we are of the opinion that the view taken by the High Court in the matter cannot be flawed and deserves to be affirmed.
23. It is manifest from a bare reading of the Charge- sheet, placed on record, that the gravamen of the allegations against the appellant as also the co-accused is that the Company, acting through its directors in concert with the Chartered Accountants and some other persons:
(i) conceived a criminal conspiracy and executed it by forging and fabricating a number of documents, like photographs of old machines, purchase orders and invoices showing purchase of machinery in order to support their claim to avail hire purchase loan from PSB;
(ii) on the strength of these false documents, PSB parted with the money by issuing pay orders and demand drafts in favour of the Company; and
(iii) the accused opened six fictitious accounts in the banks (four accounts in Bank of Rajasthan and two in Bank of Madura) to encash the pay orders/bank drafts issued by PSB in favour of the suppliers of machines, thereby directly rotating back the loan amount to the borrower from these fictitious accounts, and in the process committed a systematic fraud on the Bank (PSB) and obtained pecuniary advantage for themselves.
Precise details of all the fictitious accounts as also the further flow of money realised on encashment of demand drafts/pay orders have been incorporated in the Charge- sheet. Additionally, by allegedly claiming depreciation on the new machinery, which was never purchased, on the Page 23 of 33 HC-NIC Page 23 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT basis of forged invoices etc.; the accused cheated the public exchequer as well.
24. As afore-stated, in the Charge-sheet, the accused are alleged to have committed offences punishable under Section 120-B, read with Sections 420, 409, 468 and 471, IPC. We feel that at this preliminary stage of proceedings, it would neither be desirable nor proper to return a final finding as to whether the essential ingredients of the said Sections are satisfied. For the purpose of the present appeal, it will suffice to observe that on a conspectus of the factual scenario, noted above, prima facie, the Charge-sheet does disclose the commission of offences by the appellant under the afore-noted Sections. The essential ingredient of the offence of "criminal conspiracy", defined in Section 120-A, IPC, is the agreement to commit an offence. In a case where the agreement is for accomplishment of an act which by itself constitutes an offence, then in that event, unless the Statute so requires, no overt act is necessary to be proved by the prosecution because in such a fact- situation criminal conspiracy is established by proving such an agreement. In other words, where the conspiracy alleged is with regard to commission of a serious crime of the nature as contemplated in Section 120-B read with the proviso to sub-section (2) of Section 120-A, IPC, then in that event mere proof of an agreement between the accused for commission of such crime alone is enough to bring about a conviction under Section 120-B and the proof of any overt act by the accused or by any one of them would not be necessary. (See: Suresh Chandra Bahri v. State of Bihar, 1995 Supp (1) SCC 80)
26. Similarly, the definition of "forgery" in Section 463, IPC is very wide. The basic elements of forgery are:
(i) the making of a false document or part of it and;
(ii) such making should be with such intention as is specified in the Section viz.
(a) to cause damage or injury to
(i) the public, or
(ii) any person; or Page 24 of 33 HC-NIC Page 24 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT
(b) to support any claim or title; or
(c) to cause any person to part with property; or
(d) to cause any person to enter into an express or implied contract; or
(e) to commit fraud or that fraud may be committed.
27. As stated above, in the instant case more than sufficient circumstances exist suggesting the hatching of criminal conspiracy and forgery of several documents leading to commission of the aforementioned Sections. We refrain from saying more on the subject at this juncture, lest it may cause prejudice to the appellant or the prosecution.
28. We may now advert to the decision of this Court in the case of Nikhil Merchant (supra), on which great emphasis was laid, on behalf of the appellant. In that case a Charge-sheet was filed by the CBI against the accused under Section 120-B read with Sections 420, 467, 468, 471, IPC read with Sections 5(2) and 5(1)(d) of the Prevention of Corruption Act, 1947 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The allegation under the Charge-sheet was that the accused persons had conspired with each other in fraudulently diverting the funds of the Bank. Offence alleging forgery was also included in the Charge-sheet. In the meantime, the suit for recovery of money filed by the Bank against the Company, to which the appellant in that case was also a party, was disposed of on a written compromise arrived at between the parties. Consequent upon the compromise of the suit and having regard to the contents of clause 11 of the consent terms, which stipulated that neither party had any claim against the other and parties were withdrawing all allegations and counter-allegations made against each other, the said appellant filed an application for discharge. The application was rejected by the trial court. A petition preferred under Section 482 of the Cr.P.C. was also dismissed by the High Court.
29. In further appeal to this Court, accepting the Page 25 of 33 HC-NIC Page 25 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT contention of the appellant that this Court could transcend the limitation imposed under Section 320 of the Cr.P.C. and pass orders quashing criminal proceedings even where non-compoundable offences were involved, quashing the criminal proceedings the Court observed thus:
"30. In the instant case, the disputes between the Company and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues of the Bank have been cleared and the Bank does not appear to have any further claim against the Company. What, however, remains is the fact that certain documents were alleged to have been created by the appellant herein in order to avail of credit facilities beyond the limit to which the Company was entitled. The dispute involved herein has overtones of a civil dispute with certain criminal facets. The question which is required to be answered in this case is whether the power which independently lies with this Court to quash the criminal proceedings pursuant to the compromise arrived at, should at all be exercised ?
31. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S. Joshi case and the compromise arrived at between the Company and the Bank as also Clause 11 of the consent terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not be allowed to stand in the way in the quashing of the criminal proceedings, since, in our view, the continuance of the same after the compromise arrived at between the parties would be a futile exercise."
30. A bare reading of the afore-extracted paragraphs would indicate that the question posed for consideration in that case was with regard to the power of this Court under Article 142 of the Constitution of India to quash the criminal proceedings in the facts and circumstances of a given case and not in relation to the powers of the High Court under Section 482 of the Cr.P.C. The Court came to the conclusion that it was a fit case where it should exercise its powers under Article 142 of the Constitution.
Page 26 of 33HC-NIC Page 26 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT In our opinion, Nikhil Merchant (2008 AIR SCW 750 : AIR 2008 SC 428) (supra) does not hold as an absolute proposition of law that whenever a dispute between the parties, having overtones of a civil dispute with criminal facets is settled between them, continuance of criminal proceedings would be an exercise in futility and, therefore, should be quashed.
31. Similarly, in B.S. Joshi and Ors. (2003 AIR SCW 1824 :
AIR 2003 SC 1386) (supra), which has been relied upon in Nikhil Merchant (supra), the question for consideration was whether the High Court in exercise of its inherent powers can quash criminal proceedings or FIR or Complaint for offences which are not compoundable under Section 320 of the Cr.P.C. It was held that Section 320 cannot limit or affect the powers of the High Court under Section 482 of the Cr.P.C., a well settled proposition of law. We are of the opinion that Nikhil Merchant (supra) as also the other two judgments relied upon on behalf of the appellant are clearly distinguishable on facts.
32. It needs little emphasis that even one additional or different fact may make a world of difference between the conclusions in two cases and blindly placing reliance on a decision is never proper. It is trite that while applying ratio, the Court may not pick out a word or sentence from the judgment divorced from the context in which the said question arose for consideration. (See: Zee Telefilms Ltd. and Anr. v. Union of India and Anr.12). In this regard, the following words of Lord Denning, quoted in Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Anr.13, are also quite apt:
"22. 'Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive'."
33. In the present case, having regard to the modus Page 27 of 33 HC-NIC Page 27 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT operandi adopted by the accused, as projected in the Charge-sheet and briefly referred to in para 17 (supra), we have no hesitation in holding that it is not a fit case for exercise of jurisdiction by the High Court under Section 482 of the Cr.P.C. as also by this Court under Article 142 of the Constitution of India. As noted above, the accused had not only duped PSB, they had also availed of depreciation on the machinery, which was never purchased and used by them, causing loss to the exchequer, a serious economic offence against the society.
34. The view we have taken above, gets fortified by a recent decision of this Court in Rumi Dhar (2009 AIR SCW 2890 : AIR 2009 SC 2195, para 23) (supra), wherein while dealing with a fact-situation, akin to the present case, referring to the decision in Nikhil Merchant (supra), the Court declined to quash criminal proceedings in that case, observing thus:
"24. The jurisdiction of the Court under Article 142 of the Constitution of India is not in dispute. Exercise of such power would, however, depend on the facts and circumstances of each case. The High Court, in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure, and this Court, in terms of Article 142 of the Constitution of India, would not direct quashing of a case involving crime against the society particularly when both the learned Special Judge as also the High Court have found that a prima facie case has been made out against the appellant herein for framing the charge."
35. We respectfully concur with the afore-extracted observations. In the final analysis, we hold that merely because the dues of the bank have been paid up, the appellant cannot be exonerated from the criminal liability. Therefore, the Charge-sheet against him cannot be quashed."
It also appears that the attention of Their Lordships was not drawn to one another decision of the Supreme Court in the case of Central Bureau of Investigation v. Jagjit Singh, Page 28 of 33 HC-NIC Page 28 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT (2013)10 SCC 686. I may quote the relevant observations thus :
"9. From the impugned order, it would be evident that in view of such amicable settlement made between the respondent and the Bank officials, learned Judge of the High Court by the impugned order set aside the criminal proceedings with the following observation:-
"Be that as it may, there cannot be any rigid formula in regard to permitting the parties to effect a compromise. The offences alleged are undoubtedly non-compoundable and certainly, of serious nature.
The question that arises whether in view of such amicable settlement between the parties, any fruitful purpose is likely to be served by allowing the criminal proceedings to proceed further.
In the present case, as indicated earlier and that too, being rightly shown by the learned senior counsel, Mr. De, for reasons not known, the principal accused, Sanjib Kumar Chatterjee, had been left out.
In the aforesaid facts and circumstances, I am inclined to hold that further proceedings of the case before the learned trial court is not likely to serve any fruitful purpose and, as such, in exercise of this court's inherent jurisdiction, the same be quashed bond at once.
This disposes of C.R.R. No.719 of 2010."
10. Learned senior counsel for the appellant submitted that by a mere settlement between two offenders, the personal intent of criminal conspiracy under Sections 420 and 471, IPC which are even otherwise not compoundable cannot be compounded. According to him, the impugned order passed by the learned Judge of the Calcutta High Court is in the teeth of well established and settled law laid down by this Court.
11. Per contra, according to the respondent, it is always open to the Court to quash the criminal proceedings if Page 29 of 33 HC-NIC Page 29 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT the dispute is of civil nature and if matter is settled between the parties. It was contended that the dispute being civil in nature and the parties to the dispute being reached settlement, the High Court rightly set aside the criminal proceedings arising out of the same very dispute.
12. The very same issue fell for consideration recently before a three-Judge Bench of this Court in Gian Singh v. State of Punjab and another, 2012 (10) SCC 303 : (2012 AIR SCW 5333). In the said case, this Court discussed the relative scope of inherent power of the High Court under Section 482, Cr.PC to quash criminal proceedings involving non-compoundable offences in view of compromise arrived at between the parties. That was a case wherein when the special leave petition came up for hearing, a two-Judge Bench vide order reported in Gian Singh v. State of Punjab and another, (2010) 15 SCC 118 : (AIR 2011 SC (Supp) 657) doubted the correctness of the decisions of this Court in B.S. Joshi and others v. State of Haryana and another, (2003) 4 SCC 675 : (AIR 2003 SC 1386), Nikhil Merchant v. Central Bureau of Investigation and another, 2008 (9) SCC 677 : (AIR 2009 SC 428) and Manoj Sharma v. State and others, (2008) 16 SCC 1 : (AIR 2008 SC (Supp) 1171) and referred the matter to a larger Bench. Hence, the question before the Bench was with regard to the inherent power of the High Court under Section 482, Cr.PC in quashing the criminal proceedings against an offender who has settled his dispute with the victim of the crime but the crime in which he was allegedly involved was not compoundable under Section 320, Cr.PC.
13. Discussing different provisions and taking into consideration the different decisions of this Court, the larger Bench in Gian Singh (supra) held as follows:-
"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 Page 30 of 33 HC-NIC Page 30 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT 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 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 Page 31 of 33 HC-NIC Page 31 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT 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."
14. In the present case, the specific allegation made against the respondent-accused is that he obtained the loan on the basis of forged document with the aid of officers of the Bank. On investigation, having found the ingredients of cheating and dishonestly inducing delivery of property of the bank (Section 420, IPC) and dishonestly using as genuine a forged document (Section 471, IPC), charge-sheet was submitted under Sections 420/471, IPC against the accused persons.
15. The debt which was due to the Bank was recovered by the Bank pursuant to an order passed by Debts Recovery Tribunal. Therefore, it cannot be said that there is a compromise between the offender and the victim. 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 nor anything on record to suggest that the offenders were entitled to secure the order in the ends of justice.
16. In the instant case, the High Court has not considered the above factors while passing the impugned order. Hence, we are of the opinion that the High Court erred in addressing the issue in right perspective."
In the case on hand, there are specific allegations against all the accused. The case of the CBI is that the accused persons hatched a conspiracy, and as a part of the well hatched conspiracy, committed various other offences Page 32 of 33 HC-NIC Page 32 of 33 Created On Sat May 06 01:25:11 IST 2017 R/SCR.A/5629/2015 CAV JUDGMENT punishable under Sections 420, 419, 467, 468 and 471 of the Indian Penal Code.
The role of the accused no.2, a lady Director and wife of the original accused no.1, also figures at many places. I find it difficult to discharge her from the prosecution on the ground that the doctrine of vicarious liability does not apply to the offences under the Indian Penal Code. In view of specific allegations there is no question of invoking vicarious liability.
In the overall view of the matter and keeping in mind the two decisions of the Supreme Court, one, in the case of Jagjit Singh (supra), and the another, in the case of Sushil Suri (supra), I should not interfere and quash the proceedings in exercise of powers under Article 226 of the Constitution of India.
In such circumstances, this application fails and is hereby rejected.
At this stage, Mr.Bhadrish Raju, the learned counsel appearing for the applicants, makes a request that the interim order earlier granted by this Court may be continued for a further period of eight weeks.
In the facts and circumstances of the case, the request is accepted. The interim order earlier granted by this Court shall continue for a period of eight weeks from today.
(J.B.PARDIWALA, J.) MOIN Page 33 of 33 HC-NIC Page 33 of 33 Created On Sat May 06 01:25:11 IST 2017