Gujarat High Court
Nikunj Mansukhlal Choksi vs State Of Gujarat on 25 July, 2023
NEUTRAL CITATION
R/CR.MA/13256/2018 ORDER DATED: 25/07/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION NO. 13256 of 2018
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NIKUNJ MANSUKHLAL CHOKSI
Versus
STATE OF GUJARAT
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Appearance:
H B SHETHNA(2436) for the Applicant(s) No. 1,2
MR VISHWAS K SHAH(5364) for the Respondent(s) No. 2
MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 25/07/2023
ORAL ORDER
1. Present petition is filed mainly for the following reliefs:-
"42. .........
(A) Be pleased to quash and set aside the FIR being CR I No.64/2002 registered before the DCB Police Station Surat and all proceedings arising out of it namely criminal case no.446/2003 pending before the court of CJM, Surat, qua the petitioners;"
2. The brief facts of the case are as under:-
2.1 The Diamond Jubilee Cooperative Bank Limited was doing banking business for more than 55 years as per RBI guidelines.
In the year 2000, one Abhishek Estate Private Limited through its Director, C.R.Patil (currently an MP from Navsari District) approached the Bank seeking an advance of about Rs.30 Crores. Chhotu Eknath Patil, brother of C.R.Patil and Gangaben Chandrakant Patil wife of C.R.Patil were other directors of Abhishek Estate Private Limited. An application for advance of Page 1 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined Rs.30 Crore was submitted to Zampa Bazar Branch, wherein petitioner nos.1 to 3 were performing their duty in their capacity as Chairman, Vice-Chairman and M.D. Advance of overdraft of Rs.30 Crores was applied for by said Abhishek Estate Private Limited to partly finance a project which involved construction about 25,000 flats, about 288 shops and 26 farm houses in Sachin GIDC area of Surat. Total cost of project at that point of time was about Rs.280 Crores. It was understood then that remaining finance was to be obtained from HUDCO and other local banks. Therefore, title clearance certificate was obtained from the concerned panel advocate of the bank, who opined that titles are clear and marketable. Valuation report was also obtained from Government Approved Valuer. Thereafter, mortgage was created on the property by paying about Rs.1.5 Crore stamp duty. Process Note was prepared by the bank officials and it was submitted to the Board of Directors.
2.2 On 17.11.2000, the Board of Directors sanctioned an advance of Rs.30 Crore to Abhishek Estate Private Limited. In 2002, Abhishek Estate Private Limited made another application for getting further advance of Rs.11 Crores, temporarily for two months, which was to be repaid from the loan from HUDCO by Abhishek Estate Private Limited . After processing such application, it was forwarded to the Board of Directors of the bank for final decision. On 30.3.2002, the Board of Directors sanctioned the loan of Rs.11 Crore, however, Abhishek Estate Private Limited was unable to pay the aforesaid amount. On 29.8.2002, for unforeseen reasons, Page 2 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined the bank faced liquidity crunch and the bank had to withdraw itself from clearing house due to Rs.1 Crore adverse balance.
2.3 On 2.9.2002, the bank was closed and the Directors were removed. The Registrar, Cooperative Societies, Gandhinagar, took charge of the bank from Directors and handed it over to District Registrar, Surat as an Administrator.
2.4 On 23.10.2002, FIR being C.R.No.I-64 of 2002 came to be filed before DCB Police Station, Surat, for the offences punishable under Sections 408, 409, 420, 467, 471, 114, 120 (B) and 34 of the Indian Penal Code against the petitioners as well as other directors, bank officers, borrowers, valuer and the Advocate of the bank.
2.5 Thereafter, the petitioners came to be arrested. Charge sheet was filed in the case on 18.1.2003 before the Court of Chief Judicial Magistrate, Surat. On 5.5.2003, supplement charge sheet was filed for the co-accused who were not available. In the meantime, the petitioners were released on bail.
2.6 On 23.6.2004, District Registrar, Surat handed over the bank to Official Liquidator. In 2008, loan was repaid by Abhishek Estate under One Time Settlement Scheme. On 20.9.2008, Lavad Case No.1180 of 2002 filed by the bank for recovery of the amount was withdrawn from the Board of Nominees at Surat. In 2009, the bank repaid dues of all the depositors. Co-accused of the present petitioner i.e. Branch Page 3 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined Manager, Consultant and General Manager preferred Criminal Misc. Application No.23151 of 2017 for quashing of FIR and other five directors also preferred Criminal Misc. Application No.25036 of 2017 and the main accused i.e. the borrower preferred Criminal Revision Application No.118 of 2018 challenging rejection of his discharge application by Surat Court. All these applications are allowed by this Court by a common order on 10.5.2018. In view of all these facts, present petition is filed by the petitioners.
3. Heard learned advocate Mr.H.B.Sethna for the petitioners, Mr.Vishwas Shah for respondent no.2 and Mr.Dhawan Jayswal, learned APP for the respondent-State.
4. Mr.Sethna, learned advocate for the petitioners has submitted that petitioner no.1 is a Chartered Civil Engineer and Government Approved Valuer, who valued the properties mortgaged to the bank and petitioner no.2 is an Advocate and Notary. He has submitted that considering the averments made in the FIR, there is huge scam of the bank money on account of giving advances from Diamond Jubilee Cooperative Bank and, during the pendency of the proceedings, proceedings against many co-accused have been quashed by this Court. He has further submitted the Chairman of the Bank has expired during the pendency of present petition and proceedings are pending only qua present petitioners and Managing Director of the Bank. He has submitted that considering the allegations made in the FIR, no ingredients of offence under Section 408, 409, 420, 422, 424, 467, 471 and Page 4 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined 120-B of IPC are satisfied against present petitioners. Role of present petitioners is at the best can be said to be that of professional experts, who have given opinion about the properties. He has further submitted that after filing of the complaint, the bank recovered huge amount from the borrowers and defaulters and, therefore, the bank is not under huge loss. He has further submitted that in view of the judgment of the Honourable Apex Court, in the case of Central Bureau of Investigation, Hyderabad v. K.Narayan Rao reported in 2012 (3) GLH 373 and has submitted that observations made by Honourable Apex Court regarding the responsibility of the Advocate while giving opinion to his client. In that case, advocate has issued title clearance certificate, on the basis of the documents produced on record and the Court has quashed the proceedings. He has submitted that at the best some negligence can be attributed to the present petitioners but mens rea cannot be attributed to present petitioners. He has submitted that considering totality of the facts and considering subsequent developments in the matter, no fruitful purpose will be served to continue present proceedings against present petitioners. He, accordingly, prayed to allow present petition. He has also relied upon various provisions of Cooperative Societies Act and the Indian Contract Act in support of his submissions.
5. Per contra, Mr.Vishwas Shah, learned advocate for respondent no.2 has submitted that prima facie offence is made out against present petitioners. He submitted that on bare reading of the complaint, it transpires that all the accused Page 5 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined have played some role in such offence, and it cannot be said the petitioners have not played any role. He submitted that petitioner no.1 is a Valuer of the bank and petitioner no.2 is Panel Advocate of the Bank and they are rightly made the accused in the offence. Therefore, this Court may not exercise its power in favour of present petitioners, as prima facie case is made out against them. However, he is not in a position to dispute the fact that other co-accused except the Managing Director have either expired or proceedings qua them are quashed by this Court. He has also fairly submitted that considering the role of the present accused persons, he has no objection if the same treatment is given to the petitioners, as has been given to other co-accused persons.
6. Learned APP, Mr.Dhawan Jayswal for the respondent- State has submitted that prima facie the case is made out against present petitioners. He submitted that huge scam is detected and merely quashing of proceedings qua other accused, is not a ground to quash the proceedings qua present petitioners, more particularly, when specific allegations are made against the present petitioners. He, therefore, prays that this Court may not exercise the powers under Section 482 of Criminal Procedure Code, which should be exercised very sparingly.
7. I have considered rival submissions made at bar. I have also considered the contents of the FIR. Before proceeding further, this Court may refer to the observations of the Hon'ble Supreme Court in the case of State of Haryana V/s Bhajan Page 6 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined Lal reported in AIR 1992 SC 604, wherein the Hon'ble Supreme Court has illustrated the cases wherein inherent powers under Section 482 of the Criminal Procedure Code could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice and observed as under:-
"In the backdrop of the interpretation of the various relevant provisions of the Code under Ch.XIV and of the principles of law enunciated by this court in a series of decisions relating to the exercise of the extraordinary power under Art.226 or the inherent powers under sec.482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.Page 7 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023
NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under sec.156(1) of the Code except under an order of a Magistrate within the purview of sec.155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under sec.156(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
Page 8 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."
8. It is also relevant to refer to the judgment of the Hon'ble Apex Court in the case of Inder Mohan Goswami and Another versus State of Uttaranchal reported in (2007) 12 SCC 1, more particularly para : 23 & 24 thereof, which read as under :-
"23. This Court in a number of cases has laid down the scope and ambit of courts' powers under Sec. 482 CrPC. Every High Court has inherent power to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court. Inherent power under Sec. 482 CrPC can be exercised:
[(i) to give effect to an order under the Code;] [(ii) to prevent abuse of the process of court, and] [(iii) to otherwise secure the ends of justice.]
24. Inherent powers under Sec. 482 CrPC though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified by the tests specifically laid down in this section itself'.
Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the statute."
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9. Now, so far as facts of the present case are concerned, there are specific allegations made against all the Board of Directors and the accused persons are very influential persons in the politics and, at the relevant point of time, all of them were arraigned as accused looking to their specific role as Director or the then Chairman and Director. Present petitioners, who were rendering services as Valuer of the property, which are mortgaged to the Bank as well as Panel Advocate, who is giving title clearance certificate to the bank about such property are also arraigned as accused. It transpires that ingredients of the Sections which are alleged in the FIR are prima facie not applicable and no specific act can be attributed to the present petitioners in commissions of offence. Considering the totality of the facts and material on record, Ingredients of the alleged offences under Section 408, 409, 420, 422, 424, 467, 471 and 120-B of IPC are not satisfied. Moreover, during the pendency of the proceedings, some of the accused persons have expired and the proceedings qua them are abated and proceedings qua some of the accused are also quashed by this Court, except the Managing Director of the Bank and present petitioners. Considering the role of the petitioners, as a Legal Advisor and Valuer of the Bank, even if there is lacuna on their part, at the best, it can be said to be their negligence and considering the material available on record, no specific evidence is found on record, which can connect the present accused with the offence. It is not established that they are willingly and actively involved in commission of offence. At this stage, it is relevant Page 10 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined to reproduce the observations made by Honourable Apex Court in the case of CBI v. K.Narayan Rao (supra):-
"21) In the earlier part of our order, first we have noted that the respondent was not named in the FIR and then we extracted the relevant portions from the charge-sheet about his alleged role. Though statements of several witnesses have been enclosed along with the charge-
sheet, they speak volumes about others. However, there is no specific reference to the role of the present respondent along with the main conspirators.
22) The High Court while quashing the criminal proceedings in respect of the respondent herein has gone into the allegations in the charge sheet and the materials placed for his scrutiny and arrived at a conclusion that the same does not disclose any criminal offence committed by him. It also concluded that there is no material to show that the respondent herein joined hands with A-1 to A-3 for giving false opinion. In the absence of direct material, he cannot be implicated as one of the conspirators of the offence punishable under Section 420 read with Section 109 of IPC. The High Court has also opined that even after critically examining the entire material, it does not disclose any criminal offence committed by him. Though as pointed out earlier, a roving enquiry is not needed, however, it is the duty of the Court to find out whether any prima facie material available against the person who has charged with an offence under Section 420 read with Section 109 of IPC. In the banking sector in particular, rendering of legal opinion for granting of loans has become an important component of an advocate's work. In the law of negligence, professionals such as lawyers, doctors, architects and others are included in the category of persons professing some special skills.
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23) A lawyer does not tell his client that he shall win the case in all circumstances. Likewise a physician would not assure the patient of full recovery in every case. A surgeon cannot and does not guarantee that the result of surgery would invariably be beneficial, much less to the extent of 100% for the person operated on. The only assurance which such a professional can give or can be given by implication is that he is possessed of the requisite skill in that branch of profession which he is practising and while undertaking the performance of the task entrusted to him, he would be exercising his skill with reasonable competence. This is what the person approaching the professional can expect. Judged by this standard, a professional may be held liable for negligence on one of the two findings, viz., either he was not possessed of the requisite skill which he professed to have possessed, or, he did not exercise, with reasonable competence in the given case, the skill which he did possess.
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26) Therefore, the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank. In the given case, there is no evidence to prove that A-6 was abetting or aiding the original conspirators.
27) However, it is beyond doubt that a lawyer owes an "unremitting loyalty" to the interests of the client and it is the lawyer's responsibility to act in a manner that would best advance the interest of the client. Merely because his opinion may not be acceptable, he cannot be mulcted with the criminal prosecution, particularly, in the absence of tangible evidence that he associated with other conspirators. At the most, he may be liable for gross negligence or professional misconduct if it is established by acceptable evidence and cannot be charged for the offence under Sections 420 and 109 of IPC along with other conspirators without proper and acceptable link between them. It is further made clear that if there is a link or evidence to connect him with the other conspirators for causing loss to the institution, Page 12 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined undoubtedly, the prosecuting authorities are entitled to proceed under criminal prosecution. Such tangible materials are lacking in the case of the respondent herein.
28) In the light of the above discussion and after analysing all the materials, we are satisfied that there is no prima facie case for proceeding in respect of the charges alleged insofar as respondent herein is concerned. We agree with the conclusion of the High Court in quashing the criminal proceedings and reject the stand taken by the CBI."
10. Considering aforesaid proposition of law, in the present case, there is no allegation or material available on record which indicates that the petitioners have actively participated in the crime by which they can be implicated in the offence and in absence of mens rea, the petitioners cannot be forced to face the proceedings of trial.
11. This Court has also considered judgment of Coordinate Bench passed in Special Criminal Application No.1089 of 2012, wherein it is observed as under:-
"7. The submissions, which have been made by both the sides are required to be considered in back ground of the facts that the petitioner as a practicing as Advocate on a panel of the bank is said to have issued the title clearance certificate on the basis of which the bank made advances. However, when the documents were produced in the bank by the borrower as it was sent for scrutiny of such documents like Village Form Nos.7/12 & 8-A to the office of the Mamlatdar had given opinion that Page 13 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined it is not genuine, which has led to filing of the complaint for the alleged offences. The offences alleged are with regard to making of the false or forged documents and producing before the bank for the purpose of advances. At the same time as per the practice, the bank has referred the same to the petitioner for the title clearance certificate and the petitioner is said to have made search from the office of the Sub-Registrar and Mamlatdar. On the other hand, it is also reflected that the petitioner is said to have stated that the documents submitted did not raise any suspicion, he had not doubted and has issued the title clearance certificate. This would imply that he has definitely remained negligent that without proper verification at the time of search or without proper verification of the revenue record and the entries in the revenue record, he issued title clearance certificate. However, at the same time even taking the statements and the averments in the FIR at the face value, there is no averment or allegation with regard to any involvement of the petitioner with other co-accused prior thereto i.e. before bank referred the said papers to the petitioners. In other words, there is no nexus between the petitioner and other co-accused and even to prima-facie suggest only that though such documents are not genuine, he has issued the title clearance certificate. This would imply that he has not been careful or rather negligent in issuing such certificate. Normally the Court would not interfere with such application for discharge under Section 239 of the Criminal Procedure Code as the Court below would have Page 14 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined considered prima-facie material for the purpose of deciding such application for discharge. Law regarding such application for discharge is well accepted. The Hon'ble Apex Court in a judgment in case of Smt. Om Wati & Anr. Vs. State, through Delhi Admn. & Ors., reported in AIR 2001 SC 1507 has made observations. However as discussed above, taking the material or the averments in the FIR as it is and taking the case of the prosecution at its face value, it has been that of negligent. As per the prosecution case, the applicant has been negligent or rather casual and it is not even prima- facie case suggesting any involvement of the petitioner- accused from the inspection. He has been implicated later on at the stage of title clearance certificate, which is issued by him and that is the role attributed to him. The bank had referred the papers to him and he has issued such title clearance certificate. But there is no prima- facie material suggesting any nexus with other co- accused suggesting any mens rea or in connivance from the inception. It is in this circumstances in the opinion of this Court, the present petition deserves to be allowed."
12. Considering the facts of the present case, it can be said that the petitioners have remained negligent in their duties as panel advocate or the valuer of the bank. However, it cannot be said that the petitioners committed fraud with the bank and it would imply that the petitioners have not been careful or rather negligent in their duty. In view of above, role of the petitioners can be considered only qua their negligence but Page 15 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023 NEUTRAL CITATION R/CR.MA/13256/2018 ORDER DATED: 25/07/2023 undefined they cannot be connected with the offence in absence of mens rea. Considering the aspect that other persons like Managers and Directors have also got some relief in the form of quashing of proceedings by this Court. By catena of decisions, it is held that inherent powers under Sec. 482 Criminal Procedure Code though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified by the tests specifically laid down in this section itself. Considering all these aspects, no fruitful purpose will be served to continue the proceedings pursuant to the impugned FIR against present petitioners.
13. In view of above, this Court deems it proper to exercise inherent powers under Section 482 of Criminal Procedure Code. Accordingly, present petition is allowed. Resultantly, this application is allowed. The impugned FIR being CR-I No.64/2002 registered before the DCB Police Station, Surat, and all proceedings arising out of it viz. Criminal Case No.446/2003 pending before the Court of learned Chief Judicial Magistrate, Surat, and all other consequential proceedings, if any, arising out of said FIR qua the petitioners are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. Direct service is permitted.
(SANDEEP N. BHATT,J) R.S. MALEK Page 16 of 16 Downloaded on : Sat Sep 16 22:46:05 IST 2023