Gujarat High Court
Vikrambhai Prabhudas Duvani vs State Of Gujarat on 2 January, 2023
Author: Gita Gopi
Bench: Gita Gopi
R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION NO. 1072 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE GITA GOPI
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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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VIKRAMBHAI PRABHUDAS DUVANI & 1 other(s)
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
MR.NANDISH H THACKAR(7008) for the Applicant(s) No. 1,2
MR HARDIK MEHTA, APP for the Respondent(s) No. 1
MR RITURAJ M MEENA(3224) for the Respondent(s) No. 2
MR SK BAGGA(5891) for the Respondent(s) No. 2
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CORAM:HONOURABLE MS. JUSTICE GITA GOPI
Date : 02/01/2023
ORAL JUDGMENT
1. Rule. Mr. Hardik Mehta, learned APP waives service of Rule on behalf of the respondent- Page 1 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 State and Mr. Rituraj Meena, learned advocate waives service of Rule on behalf of the respondent no.2.
2. This application has been filed under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as "Cr.P.C.") for quashing the FIR bearing CR No.I-139/2016 registered with "A" Division Police Station, Junagadh for offences punishable under sections 406, 420, 120(B), 467, 468, 471 and 114 of IPC as well as Criminal Case no.1170 of 2017.
3. Mr. Nandish Thackar, learned advocate for the petitioners submits that pending the petition, the petitioners have accepted the OTS proposal in the NPA account of M/s. Rachana Seeds Industries Pvt. Ltd. and in accordance to the OTS scheme and after meeting and discussion with the higher authority, the Management Committee of the Page 2 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 Bank, in the meeting held on 27.12.2018, had approved OTS for Rs.15 crores (plus ECGC claim of Rs.21.05 crore available for appropriation) against the Bank dues as on 30.9.2018 plus waiver of future interest and cost with effect from 1.10.2018 in full and final settlement of the NPA account on the terms and conditions as were agreed upon with the Punjab National Bank, whereby the loan for the development of the business was secured. Mr. Nandish Thacker submits that a prayer is made under Section 482 of the Cr.P.C. for quashing the FIR bearing CR no.I-139/2016 registered with "A" Division Police Station, Junagadh and further terminating Criminal Case no.1170 of 2017 submitting that there is no any criminality in the form of cheating or fraud with the Bank to invoke Sections 406, 420, 120B, 467, 468, 471 and 114 of the IPC against the Page 3 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 petitioners since the petitioners had paid regular interest over the cash credit facilities from the respondent-Bank from the year 2001 and the petitioners were given cash credit facility after due diligence by the respondent-Bank, where equivalent securities were provided by the petitioners to the Bank. Mr. Thacker submits that forgery which is alleged is with regard to the discrepancy in the stock register and the physical stock and none of the documents disclose any forgery to satisfy the ingredients of Sections 463 and 464 of the IPC. Mr. Thacker further submits that because of financial crunch, the petitioners could not regularly maintain the stock and there had been occasional delay in paying the interest amount. Mr. Thacker relying upon the judgment in the case of Nikhil Merchant v. CBI, reported in (2008) 9 SCC Page 4 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 677 submits that when the Bank had settled with the petitioners by way of OTS offer and the settlement and the Sarfaesi action was also in abeyance under the supplementary agreement between the parties and the charge under security/title deeds were decided to be released on receipt of the entire OTS amount along with the interest, if any, it is stated that on account of compromise between the parties, he made a prayer for quashing the FIR contending that continuation of the criminal proceedings would be a futile exercise.
4. While countering the arguments, Mr. Meena submits that initial loan (cash credit limit of Rs.12,00,000/-) was granted by the respondent - Bank and thereafter, the limit was increased to the tune of approximately over Rs.50 crores which was given on Page 5 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 condition that the petitioners were required to maintain certain degree of stock and to send details of stock every month between 1st day of month to 10th day of the month. Mr. Meena submits that on receiving the stock statement dated 31.8.2016 showing stock of Rs.55,81,09,816/-, the officer of the respondent - Bank visited the premises of the Company on 17.9.2016 and during the visit, to the shock and surprise of the officers of the Bank, there was high level of discrepancy between the stock statement given by the petitioners and the actual stocks and since no satisfactory response was received from the concerned officers of the Company, the Bank gave a notice to the petitioner's Company for explaining the low level of the stocks dated 22.9.2016 and as no response was received from the petitioners, criminal complaint was filed Page 6 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 against the Directors and guarantors of the Company.
5. Mr. Meena submits that the investigating officer, after registration of the FIR, recorded statements of various witnesses including employees of the Company and one such statement of Mr. Shailesh Joshi disclosed the fact that entire industry is closed and currently, there was no stock and similar statement was also given by Sandeep Kumar Rathod who was employee of the Company and according to the statement, industry was closed and the entire stock had been exported. Mr. Meena submits that since the entire stock has been disposed of and sold out, it clearly demonstrates that the sole intention of the petitioners from the very beginning was to cheat the Bank and when the said fact was revealed in a surprise check Page 7 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 by the Bank, the petitioners decided to sell the remaining stock leaving the Bank in a precarious situation. Mr. Meena relying upon the judgment in the case of State of Maharashtra, through CBI v. Vikram Anantrai Doshi & Ors., reported in (2014) 15 SCC 29 submits that even if the Bank has settled with the petitioners by way of OTS scheme, the criminality of the petitioners would not disappear and the nature and gravity of the offence and societal impact is required to be considered while deciding the matter as repayment of money fraudulently obtained from the Bank and issuance of no due certificate would not be enough to quash the FIR since the intention of the petitioners from the very beginning was to commit fraud and to cheat the Bank by claiming the credit facility to the tune of more than Rs.50 crores.
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6. As per the facts, the petitioners were in the business of manufacturing and trading in groundnut, groundnut seeds, oil seeds, onion, garlic, grains and other agriculture products and manufacture of plastic sheets, granules etc. in the name and style of M/s. Rachana Seeds Industries Pvt. Ltd. - a partnership firm and thereafter, the firm got registered under the Companies Act from 3.3.2011 and which continued the business in the name and style of M/s. Rachana Seeds Industries Pvt. Ltd. Prior to it being private limited Company, the firm had approached the complainant-Bank for availing loan facilities in the year 2000. The cash credit limit of Rs.12 lacs was granted and thereafter, the complainant-Bank enhanced the loan amount to Rs.27 lacs on 5.3.2001 against the collateral security of the factory premises. Thereafter again, on Page 9 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 approaching the Bank in 2002, loan limit was enhanced upto Rs.100 lacs on 28.11.2002 and in 2003, the limit was extended to Rs.250 lacs on 27.11.2003. In the year 2005, the Bank had enhanced the amount upto Rs.450 lacs on 5.4.2005. In the year 2006, the limit was extended to Rs.730 lacs on 16.1.2006. On 12.3.2007, the amount was enhanced to Rs.908 lacs, on 17.1.2008 to Rs.958 lacs, 20.5.2009 to Rs.1986 lacs, 28.3.2012 to Rs.1999.77 lacs, 15.9.2012 to Rs.3337.77 lacs, while on 28.3.2014, the limit was extended to Rs.4080 lacs and on 18.3.2015, the amount was enhanced to Rs.50.62 crores. As per the case of the petitioners during all these years, the account was regularly maintained and there was no overdrawing, which fact gets supported from the executive summary given by the Bank during the last renewal. Page 10 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 Executive summary of M/s. Rachana Seeds Industries Pvt. Ltd., Junagadh CC Ahmedabad to conduct all the account was recorded as satisfactory. The operations/servicing/ utilisation levels of FB, NFB, sub-limits during the review period drawings in the CC account remained within sanctioned limit and there has been no overdrawing. The primary security and the collateral security was accordingly observed and there was no adverse report from the bureau/media/web and the report suggests that there was no deviation and on satisfaction to the observations made in the executive summary, the limit was extended. As per the complaint, on receiving the stock statement on 17.9.2016, the complainant as Branch Manager of the Bank along with his Bank officer had made a local inspection to verify the stock of M/s. Rachana Seeds Page 11 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 Industries Pvt. Ltd. on making a stock inspection at Dolatpara and Sadguru Industries to verify the stock of M/s. Rachana Seeds Industries Pvt. Ltd., Junagadh, the complainant found that no stock was maintained as per the statement and the Bank Manager did not receive any satisfactory reply. Thereafter, on 22.9.2016, notice was issued for clarification, but the notice was not replied. Hence, the complainant informed the same to the Circle Head Branch Manager, Ahmedabad and on instruction of filing a police complaint, FIR was registered. The fact remains on record that by way of OTS scheme as agreed upon, the dues have been paid by way of final payment and no dispute has been raised with regard to final payment. The allegation as could be found from the FIR is to the effect that the Page 12 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 Branch Manager along with the Bank staff had gone for the inspection of the actual stock comparing with the stock statement and the Manager found that stock was not maintained as per the statement. The accusation is under Sections 406, 420, 120(B), 467, 468, 471 and 114 of IPC.
7. Mr. Hardik Mehta, learned APP submits that the defence whatsoever may be available during the trial on the facts which would be established during the process and thus, submits that an opportunity is required to be provided to the prosecution to lead the evidence to establish the offence as alleged against the petitioners. Hence, Mr. Mehta submits that the FIR should not be quashed at the initial stage.
8. In quashing of prosecution at initial stage, the test is as to whether unrebutted Page 13 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 allegation made in the complaint establishes the offence or not. It has to be seen whether the averment in the complaint made out would constitute the offence as alleged. Section 420 of the IPC has been invoked. The essential ingredients to attract Section 420 are (i) cheating, (ii) dishonest inducement to deliver property etc. or to make, alter, destroy any valuable security or anything and (iii) mens rea of the accused at the time of making inducement. Making of false representation is one of the essential ingredients to constitute the offence of cheating under Section 420 of the IPC. In order to bring a case for the offence of cheating, it is not merely sufficient to prove that a false representation has been made but it is further necessary to prove that the representation was false to the knowledge of the accused and was made in Page 14 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 order to deceive the complainant. Here in this case, while granting the enhancement to the credit limit upto Rs.50.62 crores on 18.3.2015, a proposal for renewal-cum- enhancement was considered and the executive summary of the Bank in connection with M/s. Rachana Seeds Industries Pvt. Ltd. reflects that from the earlier financial dealings and enhancement of the credit limit, the conduct of the Company was found to be satisfactory. It was also found that during the limit period drawing in the CC account remained within sanctioned limit and there was no overdrawing. The executive summary of the Company provided for the Branch at Junagadh is signed by the Chief Manager, DGM (Credit), GM (Credit). The observations vide Paragraphs 1 to 9 are reproduced hereinbelow to understand the fact as to whether the ingredients of Section 420 of the IPC would Page 15 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 get attracted.
"1. Proposal for renewal cum enhancement of FBWC limit from Rs.36.50 crore to Rs.46.00 crore, renewal cum enhancement of NFB limit from Rs.2.50 crore to Rs.3.00 crore and review of existing TL with O/s of Rs.1.62 crore.
2. Main promoter - Mr. Vikram P Duvani & Mr. Sunnmy V. Duvani dealing with PNB since 2000.
3. Established in the year 2000 partnership concern & converted in Pvt. Ltd. Company in 2011/Location of Reg/Corporate Office - survey No.9, Rajkot Road, Dolatpara, Junagadh-362001.
4. Internal Risk Rating - PNB B2 (47.65%) - Marginally acceptable Risk/External RR-Care B+ (Risk weight - 150%).
5. Activity is manufacturing, Page 16 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 trading and export of groundnut, groundnut seeds, oil seeds, onion, garlic, grains and other agricultural products.
6. The Company has achieved sales of Rs.93.94 crore during FY 2013-14 against achievement of Rs.113.36 crore during FY 2012-13, sales decline due to delay in setting up of a new production line wherein groundnuts will be sorted by machine automatically and replace manual handling which will increase the quality production, reduce the cost and increase the profitability of the Company as whole and delay in compliance of new rule and buyers either were cancelling the orders due to delay or bearing heavy penalty" Now Company estimates sales of Rs.156.74 crore during FY 2014-15.
The Company has earned PBT of Rs.0.83 crore during FY 2013-14 against PBT of Rs.0.90 crore during Page 17 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 FY 2012-13 Now Company estimate PBT of Rs.2.97 crore during FY 2014-15.
7. TNW increased from Rs.3.91 crore as at 31.03.13 to Rs.5.56 crore as at 31.03.14 due to retention of profit and induction of fresh share capital on premium.
8. Current ratio is 1.09 as at 31.03.14 which is below from benchmark level of 1.33. However, Company has estimated current ratio of 1.27 as at 31.03.15 and 1.32 as on 31.03.16.
9. Conduct of account is satisfactory/Operations / Servicing /Utilisation levels of FB, NFB, sub limits - during the review period drawing in the CC account remained within sanctioned limit. There has been no overdrawing."
9. The executive summary itself shows that from the year 2000, the Company which was Page 18 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 initially a firm was availing loan facilities from the Bank. The cash credit limit was extended and collateral security was provided. The dealings of the Company with the Bank for the loan facilities had been reflected hereinabove which suggests that continuously from the year 2000 upto 2015, the Bank was providing cash credit facility to the Company. The conduct was found satisfactory. There was no overdrawing, nor there was any adverse report from credit bureau, nor it was found that the Company was deviating from the policies and thus, it cannot be stated that the Company from the very beginning had made any false representation with the knowledge to deceive the complainant; thus, Section 420 of the IPC would not get attracted in the matter.
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10. In the case of International Advanced Research Centre for Powder Metallurgy And New Materials (ARCI) & Ors. v. Nimra Cerglass Technics (P) Ltd. & Anr., reported in 2015 LawSuit (SC) 885, the Hon'ble Apex Court held that distinction between breach of contract and the cheating would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention of the accused was dishonest at the time when accused made a promise and entered into a transaction with the complainant to part with the property or money, then, the liability is criminal and the accused is guilty of the offence of cheating. While on the other hand, if at all it is established that a representation made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused Page 20 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 and the only right which the complainant acquires is the remedy for breach of contract in a Civil Court.
11. The decision in the case of S.W. Palanitkar & Ors. v. State of Bihar & Anr. reported in (2002) 1 SCC 241 has been referred in the case of International Advanced Research Centre for Powder Metallurgy And New Materials (ARCI) (supra), wherein it has been held as under:-
"21 In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating."Page 21 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023
R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023
12. In the present case, the allegation which has been made by the complainant, as a Branch Manager, that after submitting the statement of stock, on physical verification at the time of inspection, he could not find actual stock as stated in the statement. The reliance has been placed on the statement given by the employees before the police stating that the Company was closed and the stock has been sold out. The forgery in the form of creating any false document could not be shown in the very complaint itself and thereafter, as per the FIR, the Bank Manager did not receive the satisfactory reply, thus, the notice was issued, and, there was no reply to the notice and the FIR was required to be registered. The condition precedent for offence under Sections 467 and 471 of the IPC is forgery and the condition precedent for forgery is making a false Page 22 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 document. The only statement by the Bank Manager is that the stock statement which was submitted was inferred to be false on verification and during physical inspection, the stock was not found at the place. To attract the provision of Section 464 of the IPC, the Hon'ble Apex Court in the case of Mohammad Ibrahim & Ors. v. State of Bihar & Anr. reported in (2009) 8 SCC 751, it has been observed as under:-
"14. An analysis of section 464 of Penal Code shows that it divides false documents into three categories:
1. The first is where a person dishonestly or fraudulently makes or executes a document with the intention of causing it to be believed that such document was made or executed by some other person, or by the authority of some other person, by whom or by whose authority he knows it was not made Page 23 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 or executed.
2. The second is where a person dishonestly or fraudulently, by cancellation or otherwise, alters a document in any material part, without lawful authority, after it has been made or executed by either himself or any other person.
3. The third is where a person dishonestly or fraudulently causes any person to sign, execute or alter a document knowing that such person could not by reason of (a) unsoundness of mind; or (b) intoxication; or (c) deception practised upon him, know the contents of the document or the nature of the alteration.
In short, a person is said to have made a `false document', if
(i) he made or executed a document claiming to be someone else or authorised by someone else; or (ii) he altered or tampered a document; or (iii) he obtained a document by practicing deception, or from a Page 24 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 person not in control of his senses.
12.1 The facts of the case were considered in the case of Mohammad Ibrahim & Ors. (supra) to explain the concept of 'false document'. To understand 'forgery', the relevant Paragraphs are as under:-
15. The sale deeds executed by first appellant, clearly and obviously do not fall under the second and third categories of `false documents'. It therefore remains to be seen whether the claim of the complainant that the execution of sale deeds by the first accused, who was in no way connected with the land, amounted to committing forgery of the documents with the intention of taking possession of complainant's land (and that accused 2 to 5 as the purchaser, witness, scribe and stamp vendor colluded with first accused in execution and registration of the said sale Page 25 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 deeds) would bring the case under the first category.
16. There is a fundamental difference between a person executing a sale deed claiming that the property conveyed is his property, and a person executing a sale deed by impersonating the owner or falsely claiming to be authorised or empowered by the owner, to execute the deed on owner's behalf. When a person executes a document conveying a property describing it as his, there are two possibilities. The first is that he bonafide believes that the property actually belongs to him. The second is that he may be dishonestly or fraudulently claiming it to be his even though he knows that it is not his property. But to fall under first category of `false documents', it is not sufficient that a document has been made or executed dishonestly or fraudulently. There is a further requirement that it should have been made with the Page 26 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 intention of causing it to be believed that such document was made or executed by, or by the authority of a person, by whom or by whose authority he knows that it was not made or executed.
17. When a document is executed by a person claiming a property which is not his, he is not claiming that he is someone else nor is he claiming that he is authorised by someone else. Therefore, execution of such document (purporting to convey some property of which he is not the owner) is not execution of a false document as defined under section 464 of the Code. If what is executed is not a false document, there is no forgery. If there is no forgery, then neither section 467 nor section 471 of the Code are attracted."
13. The question arose for consideration in Central Bureau of Investigation v. Duncans Agro Industries Ltd., Calcutta, 1996 (5) SCC
591. It related to a complaint against the Page 27 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 accused for offences of criminal breach of trust. It was alleged that a floating charge was created by the accused debtor on the goods by way of security under a deed of hypothecation, in favour of a bank to cover credit facility and that the said goods were disposed of by the debtor. It was contended that the disposal of the goods amounted to criminal breach of trust. Negativing the said contention, the Hon'ble Apex Court, after stating the principle as to when a complaint can be quashed at the threshold, held thus:-
"[A] serious dispute has been raised by the learned counsel as to whether on the face of the allegations, an offence of criminal breach of trust is constituted or not. In our view, the expression 'entrusted with property' or 'with any dominion over property' has been used in a wide sense in Page 28 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 Section 405, IPC. Such expression includes all cases in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression 'entrusted' appearing in Section 405, IPC is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression 'trust' in Section 405, IPC is a comprehensive expression and has been used to denote various kinds of relationship like the relationship of trustee and beneficiary, bailor and bailee, master and servant, Page 29 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 pledger and pledgee. When some goods are hypothecated by a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee. In the instant case, a floating charge was made on the goods by way of security to cover up credit facility. In our view, in such case for disposing of the goods covering the security against credit facility, the offence of criminal breach of trust is not committed."
(emphasis supplied) Page 30 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023
14. Under what circumstances, the Company came to be closed and why there was no stock available would be for the accused to explain during the civil proceedings, if at all, why the account had been declared as NPA and against that NPA account, OTS scheme was approved and the amount had been accepted by the Bank. The forgery in terms of the explanation referred hereinabove is also not proved. Prima facie, there would not be any case of forgery. Considering the fact that the OTS scheme was approved, the amount has been accepted, and, prima facie, when there is no case of cheating or any fraud or forgery since the Bank was dealing with the firm from the year 2000 and subsequently too, after being a Company, the credit facility was enhanced on proper verification and even the executive summary supports the case of the petitioners- Page 31 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 accused, which clarifies that no dishonest representation or inducement could be found or inferred; thus, discretion is exercised as per the principles laid down in the case of State of Haryana V. Bhajan Lal and others, reported in AIR 1992 SC 604, wherein the Hon'ble Apex Court formulated as many as seven categories of cases, wherein the extraordinary power under Section 482 of the Cr.P.C. could be exercised by the High Court to prevent abuse of process of the Court. It was clarified that it was not possible to lay down precise and inflexible guidelines or any rigid formula or to give an exhaustive list of circumstances in which such power could be exercised. The Hon'ble Apex Court in the said case made the following observations:-
"8.1. In the exercise of the extra-ordinary power under Article Page 32 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 226 or the inherent powers under Section 482 of the Code of Criminal Procedure, the following categories of cases are given 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 guide in myriad kinds of cases wherein such power should be exercised:
(a) 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;
(b) where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an Page 33 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code;
(c) 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;
(d) 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 Section 155(2) of the Code;
(e) 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 Page 34 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 accused;
(f) 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;
(g) 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."
15. Thus, in view of observation and reasons given hereinabove and taking into consideration the facts and circumstances of the case and the complaint in entirety prima Page 35 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023 R/CR.MA/1072/2018 JUDGMENT DATED: 02/01/2023 facie does not constitute any offence or make out a case against the accused, thus, the impugned FIR and subsequent proceedings arising therefrom are required to be quashed and set aside.
16. In the result, the petition is allowed. The FIR bearing CR No.I-139/2016 registered with "A" Division Police Station, Junagadh and the proceedings initiated in pursuance thereof are quashed and set aside qua the present petitioners. Rule is made absolute to the aforesaid extent. Direct service is permitted.
(GITA GOPI,J) Maulik Page 36 of 36 Downloaded on : Sat Jan 07 20:38:30 IST 2023