Patna High Court
K.V.Krishnamurthy @ K.B.Krishnamurty vs State Of Bihar & Anr on 24 January, 2011
Author: Rakesh Kumar
Bench: Rakesh Kumar
CRIMINAL MISCELLANEOUS No.6111 OF 2003
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In the matter of an application under Section
482 of the Code of Criminal Procedure,1973.
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K.V.KRISHNAMURTHY @ K.B.KRISHNAMURTY S/O KUMBOKONAM
VENKATESAN, CHAIRMAN-CUM-MANAGING DIRECTOR, BANK OF
INDIA, HEAD OFFICE, EXPRESS TOWER, NARIMAN POINT,
MUMBAI.
... ... PETITIONER.
Versus
1. THE STATE OF BIHAR
2. SHRI SUBHASH CHANDRA GUPTA, S/O RAMESHWAR PRASAD GUPTA,
RESIDENT OF PIPRA, P.O. DAMODARPUR, DISTRICT EAST
CHAMPARAN.
... ... OPPOSITE PARTIES.
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For the Petitioner : Mr. Ajay Kumar Sinha, Adv.
For the State : Mr. A.M.P. Mehta, A.P.P.
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P R E S E N T
THE HON'BLE MR. JUSTICE RAKESH KUMAR
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Rakesh Kumar,J. The sole petitioner, while invoking
inherent jurisdiction of this Court under
Section 482 of the Code of Criminal
Procedure, has prayed for quashing of an
order dated 6.1.2003 passed by Shri B.D.
Rai, Judicial Magistrate, Ist Class, Patna
in Complaint Case No.2335(C) of 2002. By the
said order, learned Magistrate has taken
cognizance of offence under Sections 409,
420 and 120B of the Indian Penal Code and
directed for summoning the accused persons
including the petitioner.
2. Short fact of the case is that
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opposite party no.2 filed a complaint in the
court of Chief Judicial Magistrate, Patna
vide Complaint Case No.2335(C) of 2002
arraying the petitioner and other five
persons as accused for commission of
offences under Sections 409, 420 and 120B of
the Indian Penal Code. It was alleged by the
complainant that Accused No.1 i.e. M/S
Mafatlal Finance Company Ltd., Mumbai
published an application form for attracting
the public under its fully secured Bonds
scheme as well as Fixed Deposit Scheme at
Higher rate of interest. The complainant and
his family members deposited their money in
fully secured Bonds and detail of same was
mentioned in the complaint petition. As per
complaint petition, the Company had given
three dates for payment of one bond for
Rs.1,000/- i.e. on 4.10.1999, amount payable
was Rs.1700/-, 4.10.2000, it was Rs.2,000/-
and on 4.10.2001, it was Rs.2400/-. It was
alleged that complainant, vide his letter
dated 4.10.1999, surrendered original
debenture certificate for redemption
payment. However, Company did not make
payment in the year 1999. Subsequently, he
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got a notice issued to the Company for
payment. As per complaint, the Company, vide
letter dated 6.9.2000, intimated the
complainant that the Company had announced
early redemption on 1.10.1999 and then on
1.10.2000 and Company had received the
complainant's request for redemption on
1.10.1999 i.e. after the first redemption
closure date. Hence, the original debenture
certificates of the complainant were
retained and it was clarified that same will
be considered under the redemption option to
on 1.10.2000. The complainant further
asserted that even after lapse of the year
2001, the complainant was neither paid
principal amount nor interest despite
several request. After filing the complaint
petition, the complainant was examined on
S.A. and he also produced certain documents.
Thereafter, by order dated 6.1.2003, the
learned Magistrate took cognizance of the
offence under Sections 409, 420 and 120 B of
the Indian Penal Code and directed for
summoning all the accused persons including
the petitioner.
3. Shri Ajay Kumar Sinha, learned
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counsel appearing on behalf of the
petitioner, while challenging the initiation
of the criminal proceeding as well as the
impugned order, has argued that from bare
perusal of the complaint petition, no
criminal offence is made out. It was
submitted that from the facts narrated in
the complaint petition as well as statement
of the complainant on S.A., it is evident
that it was purely a civil dispute and on
such allegation, the processes of criminal
court may not be allowed to be abused. Shri
Sinha, learned counsel for the petitioner,
while referring averments made in the
present petition, submits that the
petitioner was a Chairman-cum-Managing
Director of the Bank of India, Head Office,
Mumbai and was not responsible for payment
of debenture on redemption/maturity. It was
submitted that the Bank of India as trustee
of debenture floated by the Company M/S
Mafatlal Finance Ltd. (Accused No.1) had
acted in accordance with law. It was further
submitted that the petitioner was appointed
as Chairman and Managing Director of the
Bank of India by the Central Government,
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Ministry of Finance only in the year 2000.
In the present case, without availability of
prosecution sanction issued by the competent
authority, the learned Magistrate had taken
cognizance of the offence and summoned the
petitioner without any competence or
authority. As per Shri Sinha, the order or
cognizance is also liable to be set aside in
absence of prosecution sanction. Moreover,
in the case, application forms were
published in the year 1996 and the
petitioner had joined the offence as
Chairman and Managing Director of the Bank
of India in the year 2000 that too by the
order of Central Government, Ministry of
Finance. In case of floating debentures by
Accused No.1 i.e. M/S Mafatlal Finance
Company Ltd., the Bank of India had agreed
to become a trustee for the benefit of the
holders of the debenture and deeds were
entered in between the Mafatlal Finance
Company and the Bank of India. As per terms
and condition, the Company i.e. M/S Mafatlal
Finance Company Ltd. was liable for payment
of the secured redeemable debentures from
time to time and as security for re-payment
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of debentures and interest thereon, the
Company had placed certain securities with
the Bank of India so that Bank can enforce
in case the Company fails to make payment of
debentures on maturity. The Company had
executed the trust deed and created security
in favour of the Bank in the year 1996 and
as per Clause Nos. 31 and 41 g of the Trust
deed dated 25.5.1996, no offence can be
attracted against the petitioner Bank in
case of failure to make payment by Company.
Learned counsel for the petitioner has
referred certain provisions of the Trust
deed. It would be appropriate to refer the
same, which are as follows :-
"Clause:-31. The trustees may
with the consent in writing of
the holder or holders of at
least three fourths in value of
the debentures or by a special
resolution passed at a meeting
of the debenture holders held in
accordance with the provisions
of the seventh schedule
hereunder written, raise or
borrow moneys on the security of
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the mortgaged premises or any
part thereof ranking either in
priority or pari-passu or
subsequent to these present as
the Trustees with such concern
are sanction shall decide for
the purpose of making any
payment under or by virtue of
these presents or in relation to
the exercise of any powers
duties or obligations of the
trustees or the Receiver
hereunder or otherwise in
relation to the mortgaged
premises of these presents or
for the purpose of paying off or
discharging any mortgage or
charge for the time being
charged on the mortgaged
premises or any part thereof or
any costs, charges, losses and
expenses which shall be incurred
by the expenses which shall be
incurred by the Trustees or any
of them under or by virtue of
these presents and the Trustees
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may raise and borrow such moneys
as aforesaid at such rate or
rates of interest and generally
on such terms and conditions as
the trustee shall think fit and
for the purpose aforesaid may
execute and do all such
assurances and things as they
shall think fit".
" Clause:-44. The trustees shall
not be liable for any default,
omission or delay in performing
or exercising any of the powers
or trusts herein expressed or
contained or any of them or in
enforcing the covenants herein
contained or any of them or in
giving notice to any person or
persons of the execution hereof
or in taking any other steps
which may be necessary expedient
or desirable for the purpose of
perfecting or enforcing the
security hereby intended to be
created or of completing
perfecting or protecting the
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title or rights of the trustees
to or over any of the mortgaged
premises or for any loss or
injury which may be occasioned
by reason thereof unless the
Trustees shall have been
previously requested by notice
in writing to perform exercise
or do any of such powers,
trusts, acts or things or to
take any such steps as aforesaid
by the holder or holders of
atleast two third of the
debentures for the time being
outstanding or by a special
resolution of a meeting of
debentures holders passed in
accordance with the provisions
of the seventh schedule
hereunder written. As the
Trustees shall not be bound to
perform exercise or to do any
such powers, acts or things or
to take any such steps unless
and until sufficient money shall
have been provided or provision
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to the satisfaction of the
trustees made for providing the
same by or on behalf of the
debenture-holders or some of
them in order to provide for
costs, charges and expenses
which the Trustee may incur or
may have to pay in connection
therewith".
4. It was further submitted that
after coming to know about default by the
Company in relation to re-payment of
debentures, immediately a suit vide Suit
No.572 of 2002 in the High Court of
Judicature at Bombay for the purposes of
enforcement was filed and on 5.3.2002, the
Bombay High Court had granted injunction in
favour of the Bank restraining the Company
from disposing of or alienating or parting
with possession or creating any third party
rights in respect of suit securities.
Thereafter, even Accused No.1 i.e. Mafatlal
Finance Company Ltd. had also convened a
meeting of debenture holder on 14.3.2003 as
per order of Bombay High Court passed in
Suit No.572 of 2002 to consider the scheme
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of re-payment proposed by the Company. It
was submitted that the Bank of India and its
officials had properly acted in the interest
of debenture holders under the Trust deeds
and terms of the S.E.B.I. rights/regulations
and directions. Shri Sinha, on the aforesaid
facts and circumstances, submits that no
criminal offence is made out. It was
submitted that on the aforesaid facts, it
can hardly be termed as a civil dispute for
which criminal court may not be allowed to
proceed further. It has been categorically
submitted that on the basis of averments
made in the complaint petition or statement
of the complainant recorded on S.A., no
offence under Sections 420, 409 and 120B of
the Indian Penal Code is made out. In
support of his argument, learned counsel for
the petitioner has relied on a judgment of
apex court reported in 2009(4) SCC 696
(Dalip Kaur & ors. Vrs. Jagnar Singh &
anr.). It was submitted that neither it was
a case of cheating, criminal breach of trust
or a case of conspiracy. Accordingly, it has
been submitted that it is a fit case in
which this Court may exercise inherent
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jurisdiction in favour of the petitioner.
5. Despite valid service of notice,
the opposite party no.2 has preferred not to
appear. However, Shri A.M.P. Mehta, learned
Additional Public Prosecutor appearing on
behalf of the State, has opposed the prayer
of the petitioner, but he was not in a
position to support the accusation made in
the complaint petition regarding commission
of any offence.
6. Besides hearing learned counsel
for the petitioner and State, I have also
perused the materials available on record
particularly the complaint petition. After
going through the complaint petition, the
court is of the opinion that no specific
allegation of commission of any offence has
been leveled so far as petitioner is
concerned, only the petitioner has been
arrayed as one of the accused in the
complaint petition. Even the disclosure made
in the complaint petition makes it clear
that it was a dispute of purely civil nature
and the learned Magistrate was not required
to take notice of such allegation and as
such the court is of the opinion that the
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learned Magistrate has grossly erred in
passing the impugned order i.e. dated
6.1.2003, which is required to be interfered
with. The court is of the opinion that it is
a fit case for exercising inherent
jurisdiction in favour of the petitioner and
as such the impugned order of cognizance
dated 6.1.2003 and entire criminal
proceeding arising out of Complaint Case
No.2335(C) of 2002 pending in the court of
Judicial Magistrate, Ist Class, Patna, so
far as petitioner is concerned, is hereby
set aside and petition stands allowed.
( Rakesh Kumar,J.)
PATNA HIGH COURT
Dated 24th January,2011
N.A.F.R./N.H.