Gujarat High Court
Vipulbhai Chandrakantbhai Gosaliya vs State Of Gujarat on 8 October, 2021
Author: B.N. Karia
Bench: B.N. Karia
R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION NO. 8626 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE B.N. KARIA
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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 ?
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VIPULBHAI CHANDRAKANTBHAI GOSALIYA
Versus
STATE OF GUJARAT
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Appearance:
MR BB NAIK, SENIOR ADVOCATE WITH NISARG H VYAS(9431) for the
Applicant(s) No. 1,2
MR BJ TRIVEDI(921) for the Respondent(s) No. 2
MR JT TRIVEDI(931) for the Respondent(s) No. 2
MS JIGNASA B TRIVEDI(3090) for the Respondent(s) No. 2
MR HK PATEL, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE B.N. KARIA
Date : 08/10/2021
CAV JUDGMENT
1. By way of present petition, petitioners have prayed for following reliefs:
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R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 "A) This Hon'ble Court may be pleased to admit and allow this petition.
B) This Hon'ble Court may be pleased to issue an appropriate writ, order or direction quashing and setting aside the complaint and F.I.R. bearing I-C.R. No.80/2005 registered on 25.03.2005 with C-Division Police Station, Bhavnagar, the chargesheet no.131/2005, dated 05.10.2005 and the additional chargesheet no.I-131/2005, dated 03.06.2007,and all the subsequent proceedings thereon.
C) Such other and further reliefs as this Hon'ble Court may deem just, fit and expedient be granted in favour of the petitioners."
2. The brief facts of the case are as under:
2.1 The petitioners have sought for quashing of the complaint registered against the petitioners bearing C.R. No.I-
80/2005 with C-Division Police Station, Bhavnagar for the offence punishable under Sections 406, 409, 420, 467, 468, 471, 477A, 120B, 34 and 114 of the Indian Penal Code (hereinafter referred to as "the IPC" for short) on 25.03.2005. In pursuance of the said FIR charge-sheet came to be filed against the petitioner No.2 and other co-accused vide Chargesheet No.131/2005 on 05.10.2005, whereas the petitioner no.1's name came to be added vide additional charge-sheet no.I-131/2005 on 03.06.2007. In pursuance of Page 2 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 filing of the charge-sheet, learned Chief Judicial Magistrate of Bhavnagar was pleased to frame charge and cases vide Criminal Case No.2748/2007 and Criminal Case No.8956/05 came to be initiated against the petitioners, respectively. 2.2 The petitioner no.1 was the valuer for collateral properties for the loans of subject transactions, whereas petitioner no.2 was the loan officer with respondent No.2-bank at the relevant point of time. The only allegation against the petitioner No.1 is of exaggerated valuation, where allegation against the petitioner no.2 is of granting loans in the subject transactions. Respondent No.2 was the co-operative bank, which had granted the loans in the subject transactions. 2.3 In the said cases, the main accused Kalpanaben Khantilal Shah, who was the borrower had paid up the entire dues of the respondent no.2 bank, and had also obtained no- due certificate to that effect. In light to the said facts, one quashing petition vide Special Criminal Application no.5456/2018 came to be filed before this Court. The said petition came to be disposed of vide order dated 06.09.2018 (Coram: Hon'ble Mr. Justice A.J. Desai) where the Hon'ble Court was pleased to allow the petition and quash the subject Page 3 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 FIR and subsequent proceedings qua the applicant for the reason that no fruitful result could be achieved from continuation of such proceedings and that it might be unnecessary harassment to the applicant to continue with the trial. It is also a case of the petitioners on merits less complaint and hence in consideration of the above factual background the same is challenged by way of present petition before this Court.
3. Heard learned advocates for the respective parties and learned APP for the respondent- State.
4. Learned advocate for the petitioners submits that the complaint, if read as it is, no ingredients of the offence u/s 406, 409, 420, 467, 468, 471, 477A, 120B, 34 and 114 of the I.P.C are made out against the petitioners. That no role has been attributed to the petitioners in the complaint, FIR or the charge-sheet. Moreover, no evidence incriminating the petitioners has come on record during the investigation. Even if the complaint and charge-sheet are read as it is, ingredients of offence punishable under Sections 406, 409, 420, 467, 468, 471, 477A, 120B, 34 and 114 of the I.P.C are not made out. That petitioner No.1's role was only to issue a valuation Page 4 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 report (an expert opinion) which was claimed to be on higher side as compared to value shown in sale-deed and by that way he had allegedly conspired with borrower.
5. That the petitioner No.2 was the loan officer with the respondent no.2-bank at the relevant point of time. As per the rules and by-laws of the bank, the powers of sanctioning loans were held by the Board of Directors of the bank and in the entire process of loan sanctioning, petitioner no.2's role was only clerical in nature.
6. Learned advocate for the petitioners further argued that in the similar set of facts, respondent-bank had filed one more FIR vide C.R. no.I-81/2005 before the C-Division Police Station, Bhavnagar. Thereby, this Hon'ble Court was pleased to quash the FIR and subsequent proceedings vide order dated 13.09.2013 in Special Criminal Application no.4725 of 2013 against all the accused persons upon repayment of loan by the borrowers. In support of his arguments, learned advocate for the petitioners has further submitted that Hon'ble Supreme Court has dealt with similar issues in the cases of Gian Singh vs. State of Punjab (2012) 10 SCC 303 and Madan Mohan Abbot vs. State of Punjab (2008) 4 SCC 582 and Page 5 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 Central Bureau of Investigation v. Akhilesh Singh Case No. Appeal (Crl.) 727 of 1997 dated 08.04.2004. It was argued by learned advocate for the petitioners to quash the proceedings, which are practically not fruitful.
7. Learned advocate for the respondent no.2-original complainant has strongly opposed the submissions made by learned advocate for the petitioners and submitted that involvement of the petitioners is clearly made out by the complainant himself in his complaint. It is further submitted that after registering the complaint, police machinery started investigation and chargesheet was filed for the offence against the petitioner no.2 on 05.10.2005 and name of the petitioner no.1 was added thereafter by filing the additional chargesheet on 03.06.2007. It is further submitted that the prayer cannot be accepted by the Court for quashing the criminal complaint and merely because the FIR against the borrower is quashed, quashing of the criminal complaint is not tenable in the present case. It is further submitted that the petitioner no.1 was the valuer, who failed to protect the interest of the respondent no.2-bank, and therefore, there is no question of quashing the criminal proceedings against the petitioners. In support of his arguments, he has relied upon the judgment in Page 6 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 the case of CBI, ACB Mumbai Vs. Narendra Lal Jain and others reported in 2014 LawSuit (SC) 145 (Criminal Appeal No.517 of 2014, dated 28.02.2014) and argued that criminal proceedings against parties other than the borrowers, who had paid up the dues of the bank, would continue. It is further submitted that there is no scope for quashing the criminal complaint qua the petitioners as the valuer arrived at a valuation, which cannot be expected from even a layman and never from a qualified valuer. That gravity and complicity of the petitioners is prima facie established from the fact that the land purchased for a consideration of Rs.1.82 lakhs was treated to be valued at Rs.28.45 lakhs in a period of just five days of the purchase. It is further submitted that if the borrower Kalpanaben Khantilal Shah has been exonerated as the petitioner no.1 was a valuer, who was supposed to take proper care, but failed to do so. It is further submitted that paramount importance is that the land purchased for a consideration of Rs.1.82 lakhs was treated to be valued at Rs.28.45 lakhs in a period of just five days of the purchase. It is further submitted that the petitioner no.1 being a valuer, who was duty bound to check certain basic aspects, has acted in a manner which is indicative of his complicity and Page 7 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 involvement in the crime, and therefore, the petition preferred for quashing the FIR deserves to be dismissed. It is further submitted that in the case of quashing of the complaint filed by the borrower, which was allowed, as she had paid up the dues under One Time Settlement Scheme, her case cannot be compared with the present petitioner, who despite that he was an officer of the bank, who ought to have taken due care and caution failed to do so. Hence, it was requested by learned advocate for the respondent no.2 to dismiss the petition.
8. Learned APP for the respondent-State has supported the arguments advanced by Mr.B.J. Trivedi, learned advocate for the original complainant and submitted that considering the facts and circumstances of the case, it is inappropriate on the part of this Court to quash the criminal proceedings as the allegations made by the prosecution pertains to availing of loan by preparing the valuation report and placing it before the Bank Authorities, which was absolutely forged. It is further submitted that settlement was arrived at between borrower or guarantor with the respondent no.2-Bank Authority cannot be entertained for the purpose of quashing criminal cases. It is further submitted that even if there are settlement and dues have been cleared, in such type of cases, Page 8 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 accused cannot be escaped from the criminal compatibility without trial. In support of his arguments, learned APP for the respondent-State has relied upon this judgment reported in AIR 2015 SC Page.3691 and 2016(1) SCC Page No.389. Ultimately, it was requested by learned APP for the respondent-State to dismiss the present petition.
9. Having heard learned advocates for the respective parties and learned APP for the respondent-State, it appears from the contents of the petition as well as complaint, role of the petitioner no.1 was only to issue a valuation report (an expert opinion) which was claimed to be an higher side as compared to value shown in the sale deed and by that way, he had allegedly conspired with borrower. It also appears that the petitioner no.2 was the Loan Officer with the respondent no.2- bank at the relevant time. Valuation Report dated 08.01.2000 prepared by the petitioner no.1 is also considered by the Court. As per the rules of the bank, the powers of sanctioning loans were held by the Board of Directors of the bank. As per the submissions made by learned advocate for the petitioners, in the entire process of loan sanctioning, role of the petitioner no.2 was only clerical in nature. It is not in dispute that Kalpanaben Khantilal Shah, who happens to be a main Page 9 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 accused and was the borrower, had paid up the entire dues of the respondent no.2-bank and had also obtained No Due Certificate to that effect. From the record, it appears that she had filed Special Criminal Application No.5456 of 2018 before this Court and the said petition came to be disposed of vide order dated 06.09.2018 (Annexure-D) by the Coordinate Bench of this Court (Coram: Hon'ble Mr. Justice A.J. Desai), wherein this Court was pleased to allow the petition and quash the subject FIR and subsequent proceedings qua that petitioner. It also appears from the record that in the similar set of facts, the respondent-bank had also filed one more FIR being C.R.No.I-81 of 2005 registered before the "C" Division Police Station, Bhavnagar, wherein Hemantbhai Champaklal Shah preferred Criminal Misc. Application (for quashing and setting aside the FIR/Order) No.4725 of 2013. This Court, vide order dated 13.09.2013, was pleased to allow the petition by quashing and setting aside the complaint i.e. C.R.No.I-81 of 2005 registered with "C" Division Police Station, Bhavnagar against all the accused persons upon repayment of loan by the borrowers. It appears from the affidavit filed by the petitioner no.1 that the subject report prepared by the petitioner no.1 was issued to the property owner i.e. borrower for the subject Page 10 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 transaction. In the entire chargesheet as well as in the FIR, it appears that no charge of conspiracy between the petitioners and the borrower - accused has been made out. These ingredients of charges levied upon the borrower - accused have also not been made out against the present petitioners and mere failure of the borrower to repay the bank loan would not attract any criminality on the part of the petitioner no.1 being a valuer or the petitioner no.2 being an employee of the respondent no.2-bank. The Hon'ble Supreme Court, in the case of Satishchandra Ratanlal Shah Vs. State of Gujarat and another (in Criminal Appeal No.9 of 2019 dated 03.01.2019), has observed in Paragraphs Nos.11 to 18, as under:
"11. Coming to the aspect of quashing of the charges, it is well settled that such exercise needs to be undertaken by the High Court in exceptional cases. It is also well settled that the framing of charges being initial stages in the trial process, the court therein cannot base the decision of quashing the charge on the basis of the quality or quantity of evidence rather the enquiry must be limited to a prima facie examination. [refer to State of Bihar vs. Ramesh Singh, 1977 CriLJ 1606].
12. Having observed the background principles applicable herein, we need to consider the individual charges against the appellant. Turning to Section 405 read with 406 of IPC, we observe that the dispute arises out of a loan transaction Page 11 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 between the parties. It falls from the record that the respondent no.2 knew the appellant and the attendant circumstances before lending the loan. Further it is an admitted fact that in order to recover the aforesaid amount, the respondent no. 2 had instituted a summary civil suit which is still pending adjudication. The law clearly recognizes a difference between simple payment/investment of money and entrustment of money or property. A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustment.
13. In this context, we may note that there is nothing either in the complaint or in any material before us, pointing to the fact that any property was entrusted to the appellant at all which he dishonestly converted for his own use so as to satisfy the ingredients of Section 405 punishable under Section 406 of IPC. Hence the learned Magistrate committed a serious error in issuing process against the appellants for the said offence. Unfortunately, the High Court also failed to correct this manifest error.
14. Now coming to the charge under Section 415 punishable under Section 420 of IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168). In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached the respondent no. 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, the respondent no. 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication.Page 12 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022
R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred.
15. Moreover, this Court in a number of cases has usually cautioned against criminalizing civil disputes, such as breach of contractual obligations [refer to Gian Singh v. State of Punjab, (2012) 10 SCC 303]. The legislature intended to criminalize only those breaches which are accompanied by fraudulent, dishonest or deceptive inducements, which resulted in involuntary and inefficient transfers, under Section 415 of IPC.
16. However, the High Court appears to have been carried away by the moral element involved in the breach of promise and made certain observations. Being a policy consideration, such suggestions need to be restricted. The aforementioned observations of the High Court were not only unnecessary for the adjudication of this matter, but the same could have been understood as casting some kind of aspersions on the accused. This clearly reflected a loaded dice situation against the appellant herein.
17. In our considered opinion, the High Court should have maintained judicial restraint and desisted from making such general observations at this stage of the criminal proceeding, as they may have had a bearing on the adjudication of the trial. Therefore, the observations made in paragraphs 42 and 43 of the impugned judgment stand expunged.Page 13 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022
R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021
18. In view of the above, we are unable to uphold the impugned order passed by the High Court in Criminal Miscellaneous Application No. 4033 of 2012 and the same is hereby set aside. The application filed by the appellant under Section 482 of Cr.P.C. is allowed and the proceedings initiated based on the FIR instituted at the instance of respondent no. 2 are hereby quashed."
10. It is undisputed fact that no averments are made in the complaint by the respondent no.2 against the present petitioners that any property was entrusted to the petitioners at all which they dishonestly covered for their own use so as to satisfy the ingredients of Sections 405 punishable under Section 406 of the IPC. None of the petitioners were liable to return the loan amount advanced by the respondent no.2 to any other accused. The petitioner no.1 being a valuer of the subject property which was given to the owner of the property and not to the respondent no.2, cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention was shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if we read the complaint and material produced on record and taken on their face value, no such dishonest representation or inducement could be found or inferred.
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11. In the similar facts of the case and issue, in the case of CBI, ACB, Mumbai Vs. Narendra Lal Jain and others (supra), the Hon'ble Supreme Court has observed that civil liability of the respondents to pay the amount to the bank has already been settled amicably. No subsisting grievance of the bank in this regard was brought to the notice of the Court. The Hon'ble Supreme Court has observed in Paragraph No.11 as under:
"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."
12. Examining the facts of the case that main accused Page 15 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022 R/SCR.A/8626/2018 CAV JUDGMENT DATED: 08/10/2021 Kalpanaben Khantilal Shah, who was the borrower, had paid up the entire dues of the respondent no.2-bank and also obtained No Due Certificate to that effect. In light of the said facts, one quashing petition being Special Criminal Application No.5456 of 2018 came to be filed by her before this Court and the said petition came to be disposed of vide order dated 06.09.2018 where this Court was pleased to allow the petition and quash the subject FIR and subsequent proceedings qua that petitioners for the reason that no fruitful result could be achieved from continuation of such proceedings and it would be unnecessary for the petitioners before this Court to continue with the trial. Considering the factual background of the present case, no ingredients of the offence punishable under Sections 406, 409, 420, 467, 468, 471, 477A, 120B, 34 and 114 of the IPC are made out against the petitioners and as no evidence incriminating the petitioners has come on record during the investigation, no useful purpose would be served by permitting the prosecution to continue. It is, therefore, a fit case to exercise of inherent powers under Section 482 of the Code of Criminal Procedures, 1973.
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13. For the foregoing reasons, the petition succeeds and is hereby allowed accordingly. FIR being I-C.R.No.80 of 2005 registered with "C" Division Police Station, Bhavnagar dated 25.03.2005 and Chargesheet No.131 of 2005 dated 05.10.2005 and Additional Chargesheet No.I-131 of 2005 dated 03.06.2007 and all subsequent proceedings are hereby quashed and set aside. Rule is made absolute accordingly.
(B.N. KARIA, J) rakesh/ Page 17 of 17 Downloaded on : Sun Jan 16 22:45:48 IST 2022