Andhra HC (Pre-Telangana)
B.V. Raghavaiah Choudary And Ors. vs The Station House Officer, Ccs, Dd, ... on 25 June, 2003
Equivalent citations: 2004(2)ALD(CRI)200, 2003(6)ALT779
ORDER V. Eswaraiah, J.
1. This Writ Petition is filed to issue a writ of certiorari to call for the records relating to Crime No.272 of 2000 on the file of the 1st respondent and quash the same holding that the criminal proceedings against the petitioner are illegal, improper, unjust, malafide and not maintainable and further to declare that the report of the 2nd respondent do not disclose any offence.
The 2nd respondent is the Assistant General Manager of the Andhra Pradesh State Cooperative Bank Limited, Troop Bazar, Hyderabad. The 1st and 2nd Petitioners are the Directors of M/s Masters Pearls Limited with its registered office at Ameerpet and the site office at Kothapet Village, Vetapalem Mandal, Prakasam District. The Andhra Pradesh State Cooperative Bank Limited, Troop Bazar, Hyderabad, (herein after referred as 'the bank') sanctioned a term loan of Rs. 300 lakhs for establishment of a Pearl culture project comprising of Hatchery and culture farm, with 5 million seed and 7.20 lakh pearls per annum at Kothapet, Vetapalem Mandal, Prakasam District, on terms and conditions communicated through fax letter dated 30-08-1997. The term loan was released in installments on the respective dates, which are as follows:
DATE AMOUNT SANCTIONED 08-12-1997 Rs. 98.20 Lakhs 17-07-1998 Rs. 65.00 Lakhs 18-11-1998 Rs. 71.88 Lakhs 20-11-1998 Rs. 12.23 Lakhs 04-01-1999 Rs. 48.37 Lakhs 18-05-1999 Rs.4.32 Lakhs TOTAL Rs. 300.00 Lakhs
2. It is stated by the learned counsel appearing for the petitioner that the bank officials inspected the project site on 07-10-1997, 10-10-1997 and on 15-10-1997 and satisfied with the installation of the project and therefore they have released the installment amounts from time to time as stated above.
3. It is stated that the 1st petitioner is the Managing Director, the 2nd petitioner Sri G. Uama Varaprasada Rao and one N.V. Subba Rao, are the Directors of the company. 5th and 6th petitioners are the co-guarantors to the said loan.4th petitioner is the wife and the3rd petitioner is the brother of the 1st petitioner respectively. 3rd and 4th petitioners offered collateral properties as mortgage towards the loan in addition to the mortgage of immovable properties of the promoters/ guarantors of the unit and hypothecation of movables, plant and machinery.
4. The loan was required to be repaid in eight equal half yearly installments of Rs. 37.50 lakhs each, commencing from 30-09-1999. The company informed the bank vide its letter dated 15-09-1999 that the culture operations were commenced by stocking 4.00 lakh oysters seeds in two tanks on 12-09-1999 against 12 tanks. It is stated that 12 tanks are vacant without stocking of any oyster seeds including the two tanks reported to have been stocked. The bank came to know that the oyster seeds were not at all stocked. For the reasons of not stocking, even in 2 tanks also, the company stated that the oysters died in the process of transportation itself due to traffic jam at Vetapalem on 23-09-1999, but the company failed to produce the relative invoices, weigh bills, books of accounts etc., pertaining to the purchase and transportation of oysters and to show evidence to the effect that the oysters were procured and transported. Then the bank suspected that there is a clear intention on the part of the Directors of the company and the petitioners to cheat the bank and a preliminary enquiry has been made and a report was also submitted to the Zonal Office, Ongole unit of the bank, in which it is stated that the company did not install the third generator at the unit and the persons working at the unit have not responded and therefore a letter was addressed directing the Managing Director of the company to visit the bank for discussions on 03-01-2000 and on 07-02-2000, but he did not attend the meeting. The bank issued letter dated 15-03-2000, i.e., the recalling notice, calling for repayment of the loan along with interest accrued thereon and also a demand notice dated 17-07-2000 calling for payment of the loan of Rs.300.00 lakhs with interest of Rs.83.00 lakhs. It is stated that the officials of the bank head office made inquiries and visited the head office and the unit office of the petitioners company, in which it is revealed that Smt. G. Lakshmi Suseela wife of the 1st petitioner (4th petitioner) and Sri B.V.S. Satyanaraya brother of the 1st petitioner (3rd petitioner), who mortgaged their properties in favour of the company started a new line of activity in software and started a new company i.e., M/s Master.com Software Limited, Hyderabad, in the same premises at Ameerpet, Hyderabad. The 1st petitioner is the Managing Director of the said Software Company also. When the loan was not repaid, during the course of enquiry, it was noticed on 10-10-2000 that important loan documents executed by the company and its guarantors and the mortgagors with the bank were found missing in the bank, and therefore the bank lodged a police complaint before the 1st respondent on 28-10-2000. The complaint lodged by the 2nd respondent reads as follows:
"Ref: ADV/IF/H/331/Dated:28-10-2000 To The Station House Officer Abids Police Station, Abids, Hyderabad - 500 001 Sir, Sub: Prosecution to be initiated against Sri B.V. Raghavaiah Chowdary and others for the act of theft of Loan documents from the office of the A.P. State Coop. Bank Ltd., Hyderabad fraud, Criminal breach of trust, cheating and Criminal misappropriation - Regarding. .. .. ..
M/s Master pearsl Ltd., 113, Sri. Nilaya Enclave, near New Science College, Ameerpet, Hyderabad have availed a loan facility to a tune of Rs.300.00 Lakhs on the security of the personal guarantees of 1) Sri B.V. Raghavaiah Chowdary, Managing Director, 2) Dr. N.V. Subba Rao, Director, 3) Sri G. Uma Prasad Rao, Director, 4) Sri D. Samba Siva Rao and 5) Sri P. Leela Krishna Murthy, Hopothecationof stocks, Plant and machinery etc. and equitable mortgage of immovable properties belonging to Smt. B. Lakshmi Suseela w/o Sri B.V. Raghavaiah Chowdary and Sri B.V.S. Satyanarayana S/o Nagabhushanam. The company has not commenced operations, the loan was not utilized for the purpose for which it was sanctioned, no responsible person was present when our officials visited the site, the Managing Director of the company has not responded to our several calls made to him, not furnished books of accounts and committed default of payment under principal and interest to the tune of Rs.90.85 lakhs (as on 30-09-1999). Based on which a recall notice dated 15-03-2000 was sent and all the registered covers returned undelivered except, in respect of Sri D. Samba Siva Rao and Dr. N.V. Subba Rao. It is therefore, clear that the Company, M/s Master Pearls Limited, committed clear breach of contract by not maintaining the account in terms of the Loan Agreement and the account became non performing as per the Reserve Bank of India norms. In view of the above circumstances, we were left with no other alternative other than recalling the entire loan together interest accrued thereon and initiate appropriate legal action. The Company though gave the above address for correspondence but had been operating from the Flat No.502, Sri. Nilaya Enclave, Near New Science College, Ameerpet, Hyderabad. Our apprehension is that the company has indulged in diversion of funds and deliberate and willful act of avoidance of the loan repayment. It is worth mentioning at this stage that Smt. Lakshmi Suseela w.o. Sri B.V. Raghavaiah Chowdary and Sri B.V.S. Satyanarayana s/o Nagabhushanam(brother of Sri B.V. Raghavaiah Chowdary) promoted another company from the same premises of office referred to above in the name and style of M/s. Master.Com Software Limited. We have reasonable apprehension that the loan amount availed from our Bank by the aforesaid Company is diverted for promoting second company. The second company, truly speaking, is promoted by the Directors of the aforesaid company in the name of Smt. B. Lakshmi Suseela w/o Sri B.V. Raghavaiah Chowdary and Sri B.V.S. Satyanaryana (Brother of Sri B.V. Raghavaiah Chowdary) and other relatives as Directors. If the Corporate viel is lifted the true facts would come out. The said two directors viz., Smt. B. Lakshmi Suseela and Sri B.V.S. Satyanarayana are therefore guilty of entering into a criminal conspiracy to defraud our Bank by diversion of funds, misappropriation of hypothecated assets and floating a company in the name of Master.Com Software Ltd., to escape from the law. Sensing the fraud played on this bank by the management of Master Pearls, A.P. State Coop. Bank, vide letter dt.12-09-2000, approached SEBI with a request to withhold the proceeds of public issue of Master.Com Software Ltd., till the defaults to APCOB are cleared. It is worth mentioning at this stage that some of the documents executed by the company and its Directors/Guarantors/Mortgagors are lost in our Bank and we apprehend that the same Directors have colluded with some of our staff and committed theft of some of the important loan documents to escape the liability and to defeat the justice. The loss of documents was noticed on 10-10-2000. The following loan documents are not traceable on our file and lost.
1. Letter of Continuity dt.12-9-1997 containing 3 pages.
2. Loan Agreement dt.12-9-1997 containing 8 pages.
3. Agreement of Hypothecation on the Movable dt.12-9-1997 containing 15 pages.
4. Three Separate Guarantee Bonds executed by the Directors dt.12-9-1997 each containing 6 pages.
5. Memorandum of Deposit of title Deeds by the Unit dt.12-9-1997 containing 5 pages.
6. Memorandum of Deposit of Title Deeds executed by Smt. Lakshmi Suseela dt.12-9-1997 containing 4 pages.
7. Memorandum of Deposit of title deeds executed by Sri. B.V.S. Satyanarayana dt.12-9-1997.
8. Memorandum of Deposit of Title Deeds executed by Sri. B.V. Raghavaiah Chowdary dated.12-9-1997 containing 4 pages.
9. Memorandum of Deposit of Title Deeds executed by Sri B.V.S. Satyanarayana dated.26-5-1997 containing 3 pages.
10. Memorandum of Deposit of Title Deeds executed by Sri. B.V. Ragavaiah Chowdary dated.26-5-1997 containing 6 pages.
11. Deed of Guarantee dated.26-5-1997 executed by Sri. D. Samba Siva Rao containing 6 pages.
12. Deed of Guarantee dated.26-5-1997 executed by Sri P. Leela Krishna Murthy containing 6 pages.
13. Two Blank Cheques bearing Nos.875027 and 875028 drawn on Indian Bank, Eluru-deposited by the Unit. The circumstances now lead us to believe that the loss of document from our files is not a chance happening, but a well planned criminal act by the Management of the Master Pearsl Ltd., represented by its Managing Director Sri B.V. Raghavaiah Chowdary and his family members. Thus it is submitted that the Directors are guilty of indulging in conspiracy to commit theft of the original loan documents, diversion of the company's funds for promoting the second company in the name of their spouse and nearest relatives with the sole purpose of making wrongful gain for causing wrongful loss to our Bank. Unless and until there is a serious investigation from your end, the truth would not come out. In view of the above circumstances, we request you to take action on this complaint, register a case of theft, criminal conspiracy cheating and criminal breach of trust against the said Directors/Guarantors, Mortgagors of M/s Master Pearls Ltd., whose addresses are mentioned below.
1. a) The Managing Director, M/s Master Pearls Ltd., Regd. Office: 113, Sri Nilayam Enclave, Near New Science College, Ameerpet, Hyderabad.
b) The Managing Director, M/s Master Pearls Ltd., Site Office, Door No.11-172, Opp. Dy. E.E. (P.R.) Office, Kottapeta, Chirala.
c) Sri B.V. Raghavaiah Chowdary Managing Director, M/s Master Pearls Ltd., Flat No.502, Sri. Nilaya Enclave, Near New Science College, Ameerpet, Hyderabad.
d) Sri B.V. Raghavaiah Chowdary Managing Director/Guarantor, M/s Master Pearls Ltd., 25-11-20/4, N.R. pet, Eluru-534006.
2. Dr. N.V. Subba Rao, Director M/s Master Pearls Ltd., 5-87-18, Main Road, Lakshmipuram, Guntur-522 007.
3. Sri G. Umavara Prasada Rao, s/o Sri. Suryanarayana Director, M/s Master Pearls Ltd., Veeravalli (PO & Village), Krishna District.
4. Sri B. Venkata Siva Satyanarayana S/o Nagabhushanam, Mortgagor, M/s Master Pearls Ltd., Kothuru, Pedapadu Mandal, West Godavari District.
5. Smt. B. Lakshmi Suseela W/o Sri B.V. Raghavaiah Chowdary Mortgagor, M/s Master Pearls Ltd., 25-11-20/4, N.R. Pet, Eluru-534 006.
6. Sri D. Samba Siva Rao, Guarantor, M/s Master Pearls Ltd., Door No.c-383, NGOs Colony, Vanasthalipuram, Hyderabad.
7. Sri P. Leela Krishna Murthy Guarantor, M/s Master Pearls Ltd., Sanathnagar Colony, Chirala, Prakasam District.
We request you to register the case and furnish the copy of the FIR for our record.
Yours faithfully, Sd/-
Asst. General Manager(IF)
5. On the said complaint the 1st respondent registered a case in FIR No.272 of 2000 on 30-10-2000 under Sections 420, 406, 409 r/w 379 of the Indian Penal Code.
6. Questioning the said FIR, this writ petition is filed and this Court admitted the writ petition on 13-11-2000, granting interim stay of investigation into the offences under Sections 420, 406 and 409 of the Indian Penal Code only and insofar as the offence under Section 379 of the Indian Penal Code, is concerned, it was observed that the respondents are at liberty to continue the investigation. It is stated that as the offences under Sections 420, 406, 409 are coupled with Section 379 of the Indian Penal Code further investigation was not made by the 1st respondent and to proceed with the investigation, the 1st and 2nd respondents filed counters and petition to vacate the stay. But, the interim stay granted was made absolute on 19-02-2001 and that is how the writ petition itself came up for final hearing.
7. It stated in the complaint that as many as 13 important loan documents are found missing and the bank apprehended that the some Directors of the company have colluded with some of the staff of the bank and committed theft of the important documents to escape the liability and to defraud the bank. There are allegations of indulging in criminal breach of trust, conspiracy, theft and cheating. Unless investigation is made by the police, it cannot be known as to who are the staff members of the bank involved in the criminal breach of trust. Therefore, the police also rightly registered a case under Section 409 of IPC, which deals with criminal breach of trust by the staff of the bank. When a property was missing from the bank, after making preliminary inquiry, the bank was left with no other alternative except to lodge a criminal complaint to investigate with regard to the theft of the important loan documents. There are allegations against the petitioners that there is an intention at the inception itself, to cheat the bank and not to repay the loan amount. In furtherance of the said criminal intention they have not purchased the oyesters and the company did not stock the oyster seeds in any of the 14 tanks and also did not purchase the third generator, but on the other hand, amounts were diverted by floating another company by the same persons and in the same premises. Thus, it is stated that there are ingredients of cheating, criminal breach of trust, theft and also conspiracy. Unless these allegations are investigated into by the police, it is difficult to say that the reading of the complaint do not constitute a offence under the aforesaid Sections.
8. It is stated that Sri N.V. Subba Rao, who is one of the directors of the company addressed a letter dated 25-11-2000 informing that he never gave any personal guarantee and that his signature was forged by the 1st petitioner and he further alleged that the loan availed from the bank was diverted to M/s Dolphin Services Company in Dallas, Texas, promoted by the 1st petitioner's brother's son. Whether the funds have been diverted to some foreign company as alleged by the said N.V. Subba Rao or to the company M/s Master.Com Software Limited, are the matters for investigation. As already noticed, the 3rd petitioner is the brother of the 1st petitioner and the 4th petitioner is the wife of the 1st petitioner and 5th and 6th petitioners are the guarantors to the loan transaction and therefore, allegation has been made that all the petitioners are involved in the missing of the said documents executed by the petitioners and therefore there is a reasonable suspicion that theft had taken place with the active connivance of the petitioners with the staff of the bank. Unless and until an investigation is made by the police, the truth may not come out.
9. Sri P. Gangaiah Naidu, learned senior counsel appearing for the petitioners relied on a judgment of the Apex Court in G. SAGAR SURI & ANOTHER v. STATE OF U.P. & ANOTHER, 2000(1) Supreme 332 and submitted that registration of the case against the petitioners is nothing but abuse of process of law and if the company defaulted in repayment of the loan installments, it is a matter to be taken in proper civil forum but not through criminal process of law.
10. In the aforesaid case, proceedings under Section 138 of the Negotiable Instruments Act, for dishonur of the cheque by the loanee, were initiated and when the criminal complaint under Section 138 of the N.I. Act was already pending against the accused, which will take care to punish the accused there was no occasion for the complainant to prosecute them under Sections 406 and 420 of the Indian Penal Code. Therefore, the facts of that case have no application to the facts of the case on hand.
11. In the case of MAHAVIR PRASHAD GUPTA & ANOTHER .v. STATE OF NATIONAL CAPITAL TERRITORY OF DELI & OTHERS, AIR 2000 SC 3101 the Supreme Court held that as per the judgment of the STATE OF HARYANA .v. BHAJAN LAL, , no doubt the High Court can interfere in rarest of rare cases where the allegations made in the FIR 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. But, however, if a complaint discloses an offence as stated in the FIR in the instant case, the police have to enquire whether there was any criminal breach of trust by the petitioners and the staff of the bank and theft and cheating. These are the matters to be investigated by the police. I am of the opinion that questioning of the FIR is not in the interest of justice since I am of the opinion that the allegations made in the complaint, in the instant case, make out a prima facie case for registering a case with the police.
12. No doubt this court in a given case held that FIR can be set aside and quashed either under Article 226 of the Constitution of India or under Section 482 of the Code of Criminal Procedure, but in my considered opinion, the present case is not one of such cases where the complaint requires to be quashed.
13. A full Bench of this Court, to which I am a party, in case of Gangaram Kandaram v. Sunder Chikha Amin and Ors., (FB) this court held in Paragraph No.11 as follows:
"11. Recently, the Supreme Court in the case of Rajesh Bajaj v. State NCT of Delhi and Ors. , reported as 1999 SCC (Crl.) 401, held that it is not necessary that a complaint should verbatim reproduce in the body the ingredients of offence of Section 420. If the factual foundation for the offence has not been laid in the complaint, the Court should not hasten to quash criminal proceedings during investigation stage merely on the premise that one or two ingredients have not been stated with details. For quashing an FIR, the information in the complaint must be so bereft of even the basic facts which are absolutely necessary for making out the offence. Bhajanlal case is followed in many subsequent cases by the Supreme Court.
14. In view of the aforesaid facts and circumstances, I am of the opinion that unless investigation is made and the material evidences are gathered by examining different persons, including the staff of the bank, with regard to the theft of the documents, diversion of the funds, intention of the petitioners with regard to the criminal breach of trust and cheating, etc., it is difficult to hold that the registration of the crime against the petitioners is abuse of process of law. Further, without any investigation it cannot be presumed and assumed that the complaint does not make out an offence under Sections 420, 406 and 409 r/w Section 397 of the Indian Penal Code. Hence, I do not find any merits in writ petition and the same is liable to be dismissed.
15. Accordingly, the writ petition is dismissed. However, it the circumstances, there will be no orders as to costs.