Gujarat High Court
Satyen Kirit Dalal vs State Of Gujarat on 12 June, 2023
NEUTRAL CITATION
R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 2567 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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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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SATYEN KIRIT DALAL
Versus
STATE OF GUJARAT
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Appearance:
MR MANISH S SHAH(5859) for the Applicant(s) No. 1
MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1
MR RC KODEKAR(1395) for the Respondent(s) No. 2
MR ANIP A GANDHI(2268) for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 12/06/2023
ORAL JUDGMENT
1. This application is filed under Section 482 of the Code of Criminal Procedure, 1973 (`the Code' for short) praying to quash and set aside the FIR being RC- Page 1 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined 9/E/2002/Mumbai dated 7.11.2002 registered with CBI.EOW.Mumbai Branch. Dist.Mumbai for the offences punishable under Sections 120B, 409 and 420 of the Indian Penal Code and under Sections 13(2), 13(1)(d) of the Prevention of Corruption Act, 1988.]
2. Rule. Learned APP Mr.Dhawan Jayswal, learned advocate Mr.R.C.Kodekar and learned advocate Mr.Anip Gandhi waive service of notice of rule for respondent nos.1 to 3 respectively.
3. The brief facts leading to filing of this application are such that the uncle i.e. late Shri Mukund H Dalal (accused no.5) started banking with the complainant bank in the year 1976 and he being in the business of petrol pumps, has availed cash credit facility to the tune of Rs.5 lacs from the complainant bank. The complainant bank was providing financial facility like Local Bill Purchase (LBP) and Outstation Bill Purchase (OBP), Cash Credit facility (CC) etc. for which the complainant bank was charging interest. It is stated that the complainant bank has given financial facility to the applicant for a long period and as the interest rate of Page 2 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined LPB and OBP were getting higher, the applicant's uncle requested the complainant bank for enhancement of the financial facility from Rs.5.00 lacs cash credit limits to Rs.12.00 lacs in his firm M/s Desai Dalal and Co. and applied for another loan of Rs.30.00 lacs as cash credit and term loan for machinery for M/s Mukund Silk Mills. 3.1. It is further stated that as the application of enhancement of cash credit facility and application for term loan was getting delayed, the applicant along with his uncle had to avail financial facility under LPB and OBP to keep the business running. That, suddenly on 13.5.2022, the complainant bank informed the applicant that LPB facility will not be provided and the complainant bank stopped the financial facility without giving any opportunity and the applicant was asked to repay the entire amount and therefore, the applicant proposed to convert the negative balance into loan so that he can pay in equal installments, to which the bank official agreed and sanction letter was also given. However, thereafter, the sanction letter was asked to be returned and the loan was not granted.
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NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined 3.2 It is submitted that on 12.6.2022, with a view to show bonafide intention and willing to pay the entire outstanding amount offered to the bank to keep bunglow of uncle as security and therefore, though the loan was not granted, the uncle of the applicant executed Mortgage deed, irrevocable power of attorney and undertaking in favour of the bank. Even the permission to sell the security property and repay the dues was not granted and suddenly, the complainant bank filed the impugned complaint/FIR with the CBI, Mumbai againt their own bank officials and against the applicant and his uncle without any reason.
3.3 It is submitted that in the meantime, the complainant bank has initiated Debt Recovery Proceedings in the year 2005, against the applicant before DRT, Ahmedabad-II being Original Application No.49, 50 and 51 of 2005 whereby the permission to sell the security bunglow and pay the dues was granted and therefore they sold the bunglow and paid off the amount and No Due Certificate is also granted on 18.7.2008. 3.4 It is submitted in the meantime, the uncle of Page 4 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined the applicant i.e. accused no.5 expired and the proceedings against him were abated. It is this complaint/FIR which is sought to be quashed by way of filing this application.
4. Heard learned advocates for the parties. 4.1. Learned advocate Mr.Shah for the applicant has submitted that the FIR in question came to be filed on 7.11.2022 based on the complaint made by the Chief Vigilance Officer of the complainant bank wherein all allegations are against the bank manager and the bank officials who have, to show their performance, exceededly granted LPB and OBP facility to the Dalal group beyond the powers of manager to the bank. The permission was sought for on 13.1.2004 to sell the security bunglow and pay off the dues, which was not granted. Thereafter, the bank has initiated recovery proceedings before the DRT, Ahmedabad against the present applicant and other persons wherein after getting permission, the properties were sold by the Dalal group and all outstanding dues in question were repaid with accrued interest, for which Np Due Certificate was Page 5 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined granted on 18.7.2008.
4.2 Learned advocate Mr.Shah has submitted that the present applicant has approached this Court because the mother of the applicant has filed for Immigration Visa to USA to the applicant and his family as the parents, of the applicant aged 80 years and 70 years and residing alone from last many years in USA and they are not keeping good health and therefore the applicant has approached this Court under the circumstances during the period of Covid-19. Thereafter, the present application is taken up for hearing today. 4.3 He has further submitted that on bare reading of the FIR, no specific allegations are made out against the present applicant. The FIR is more or less having allegations against the bank manager as well as the other officers of the bank. He has further submitted that in view of the subsequent development, by which the applicant has paid entire dues to the bank, with accrued interest, no fruitful purpose will be served to continue the proceedings against the present applicant, more particularly, where Sections 409, 420 and 477A of the Page 6 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined Indian Penal Code (IPC for short) and Section 13 of the Prevention of Corruption Act 1988 (PC Act for short) are applied.
4.4 He has drawn my attention to Sections 406, 420 and 477A of the IPC and also to Section 13(1)(c) and 13(1)(d) and 13(2) of the PC Act and submitted that no prima facie case is made out against the present applicant. Moreover, considering the fact that in absence of any mens rea and when pursuant to the proceeding initiated by the bank in the DRT, the present applicant and other persons have already repaid entire dues, along with the interest to the bank and the bank has also issued no due certificate, this application requires to be allowed and the impugned FIR is required to be quashed qua the present applicant.
4.5 In support of his submissions, learned advocate for the applicant has relied on the various judgments of the Apex Court as well as this Court.
(1) In the case of Central Bureau of Investigation, SPE, SIU (X), New Delhi V/s Duncans Agro Industries Ltd., Calcutta reported in Manu/SC/0622/1996.
Page 7 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined (2) In the case of Nikhil Merchant V/s Central Bureau of Investigation and Ors., reported in Manu/SC/7957/2008. (3) In the case of Gian Singh V/s State of Punjab and Ors., reported in Manu/SC/0781/2012.
(4) In the case of CBI, ACB, Mumbai V/s Narendra Lal Jain and Ors., reported in 2014(5) SCC 364. (5) In the case of Sureshbhai Dhansiram Agrawal V/s State of Gujarat, in Criminal Miscellaneous Application No.33210 of 2016 decided on 23.12.2016.
(6) Tirthwshwar Plywood Pvt.Ltd. And Ors. V/s State of Gujarat and Ors. In Criminal Miscellaneous Application No.7809 of 2017 decided on 28.3.2019, whereby, as per the submission made by the applicant, identical facts like the present case are narrated.
5. Per contra, learned advocate Mr.Kodekar appearing for CBI-respondent no.2 has strongly opposed the prayers made in the present application and submitted that prima facie, strong case is made out against the present applicant. He has submitted that in the chargesheet, it is established by the documentary Page 8 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined and oral evidence that the accused no.1 Mr.K.R.Goyal, accused no.2 Mr.Rakesh Behl, accused no.3 Mr.Shiv Ram Meena, acting in criminal conspiracy with the accused no.4 Mr.Satyen Dalal (present applicant) and accused no.5 Mr.Mukund H Dalal, had abused the official position as public servant, committed criminal misconduct and caused undue pecuniary advantage to the Dalal group of accounts by adopting modus operandi whereby in 41 bank accounts, cheques of heavy amounts drawn on sister/associate concerns were given credit by them on the same day without waiting for advice of clearing/passing from Drawee Banks. Subsequently, most of such cheques were returned unpaid by the drawee banks and which should have been normally debited to the respective accounts but the accused branch officials used to dishonestly accept and allow another set of cheques which used to be sent in clearing in order to conceal that no liability in the firm's accounts of the applicant/accused Satyen K Dalal (accused no.4) and Mukund H Dalal (accused no.5).
5.1 He has also submitted that from the chargesheet, it is established by the various prosecution Page 9 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined witnesses that the accused bank officials allowed the credit facilities beyond their delegated powers resulting in the fraud and the person who has signed these cheques who is accused no.4-Satyen Dalal who has misappropriated those money and therefore this is not a case where the Court should exercise discretion and the accused are required to face trial before the concerned trial Court and after leading evidence, the concerned Court can decide proceeding of trial, more particularly, when the prima facie case and involvement of the present applicant is made out from the chargesheet. 5.2 He has also relied on the judgment of the Apex Court in the case of Rumi Dhar (Smt) V/s State of West Bengal and Another, reported in 2009(6) SCC 364, more particularly, paragraphs 13 and 14 thereof and submitted that since the applicant has taken part in conspiracy in defrauding the bank and serious charges of forgery or fraud is levelled against all the accused and now it is well settled principle of law that in a given case civil proceeding and criminal proceeding can proceed simultaneously and therefore this is not a fit case where the Court should exercise discretion in favour of the Page 10 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined present applicant. He, therefore, prayed to dismiss this application.
6. Learned APP Mr.Jayswal has submitted, by adopting the arguments of the learned advocate Mr.Kodekar for the CBI, that the Court should not exercise discretion in favour of the present applicant unless the trial gets over and therefore he prays to dismiss this application.
7. Learned advocate Mr.Anip Gandhi for the respondent no.3-bank has submitted that though the bank has received entire amount along with accrued interest during the pendency of the proceeding initiated by the bank before the DRT and by way of settlement, since there are serious charges levelled against the present applicant and other officers of the bank, the aspect of criminal liability can be considered appropriately by this Court after considering the position of law. Therefore, he has submitted that the Court may pass appropriate order in the totality of the facts and circumstances of the present case as, at this point of time, the bank has received entire money and such offence is committed by the accused at the earlier point Page 11 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined of time.
8. I have considered the rival submissions made at the bar and I have also considered the judgments cited at the bar.
9. At the outset, the provisions of law invoked in the FIR under the provisions of the IPC and PC Act are to be seen, which are as under:
"409. Criminal breach of trust by public servant, or by banker, merchant or agent:
Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.
420. Cheating and dishonestly inducing delivery of property:
Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which Page 12 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
477(A) Falsification of accounts:
Whoever, being a clerk, officer or servant, or employed or acting in the capacity of a clerk, officer or servant, wilfully, and with intent to defraud, destroys, alters, mutilates or falsified any book, electronic record, paper, writing, valuable security or account which belongs to or is in the possession of his employer, or has been received by him for or on behalf of his employer, or wilfully, and with intent to defraud, makes or abets the making of any false entry in, or omits or alters or abets the omission or alteration of any material particular from or in, any such book, electronic record, paper, writing, valuable security or account, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.
Explanation - It shall be sufficient in any charge under this section to allege a general intent to defraud without naming any particular person intended to be defrauded or specifying any particular sum of money intended to be the subject of the fraud, or any particular day on which the offence was committed.Page 13 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined Sections 13(1)(c), 13(1)(d) and 13(2) of the PC Act read as under:
"Criminal misconduct by a public servant:
13(1) A public servant is said to commit the offence of criminal misconduct,
(c) if he dishonestly or fraudently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or
(d) if he, - (I) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (iii) while holding office as public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest or (2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than four years but which may extend to ten years and shall also be liable to fine."Page 14 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
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10. Now, a glance at the settled position of law in various judgments of the Hon'ble Apex Court as well as this Court will be beneficial.
11. In the case of Nikhil Merchant (supra), it is held in paragraphs 20 to 24 as under:
"20. Having carefully considered the facts of the case and the submissions of learned Counsel in regard thereto, we are of the view that, although, technically there is force in the submissions made by the learned Additional Solicitor General, the facts of the case warrant interference in these proceedings.
21. The basic intention of the accused in this case appears to have been to misrepresent the financial status of the company, M/s Neemuch Emballage Limited, Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional amounts of credit to which the company was not otherwise entitled.
22. Despite the ingredients and the factual content of an offence of cheating punishable under Section 420 IPC, the same has been made compoundable under Sub-section (2) of Page 15 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined Section 320 Cr.P.C. with the leave of the Court. Of course, forgery has not been included as one of the compoundable offences, but it is in such cases that the principle enunciated in B.S.Joshi's case (supra) becomes relevant.
23. In the instant case, the disputes between the Company and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues of the Bank have been cleared and the Bank does not appear to have any further claim against the Company. What, however, remains is the fact that certain documents were alleged to have been created by the appellant herein in order to avail of credit facilities beyond the limit to which the Company was entitled. The dispute involved herein has overtones of a civil dispute with certain criminal facets. The question which is required to be answered in this case is whether the power which independently lies with this Court to quash the criminal proceedings pursuant to the compromise arrived at, should at all be exercised?
24. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B. S. Joshi's case (supra) and the compromise arrived at between the Company and the Bank as also clause 11 of the consent terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not be allowed to stand in the way in the quashing of the Page 16 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined criminal proceedings, since, in our view, the continuance of the same after the compromise arrived at between the parties would be a futile exercise."
12. In the case of Gian Singh (supra), it is held by the Hon'ble Apex Court that the Court should exercise its inherent power to quash the proceedings in order to meet with the ends of justice.
13. In the case of Narendra Lal Jain and Ors. (supra), the Hon'ble Apex Court has referred to the case of Gian Singh (supra) and Nikhil Merchant (supra) and observed in paragraphs 9,10 and 11 as under:
"9.Learned counsel has further pointed out that the charges framed against the accused-respondents are under Section 120-B/420 of the Indian Penal Code and the respondents not being public servants, no substantive offence under the PC Act can be alleged against them. The relevance of the views expressed in para 61 of the judgment of this Court in Gian Singh (supra), noted above, to the present case is seriously disputed by the learned counsel in view of the offences alleged against the respondents. Learned counsel has also submitted that by the very same impugned order of the High Court the criminal proceeding against one Nikhil Page 17 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined Merchant was declined to be quashed on the ground that offences under Sections 468 and 471 of the IPC had been alleged against the said accused. Aggrieved by the order of the High Court the accused had moved this Court under Article 136 of the Constitution. In the decision reported in Nikhil Merchant v. Central Bureau of Investigation and another 4this Court understood the charges/allegations against the aforesaid Nikhil Merchant in the same terms as in the case of the accused-respondents, as already highlighted. Taking into consideration the ratio laid down in B.S. Joshi (supra) and the compromise between the bank and the accused Nikhil Merchant (on the same terms as in the present case) the proceeding against the said accused i.e. Nikhil Merchant was quashed by the Court taking the view that the power and the Section 482, Cr.P.C. and of this Court under Article 142 of the Constitution cannot be circumscribed by the provisions of Section 320, Cr.P.C. It is further submitted by the learned counsel that the correctness of the view in B.S. Joshi (supra) and Nikhil Merchant (supra) were referred to the three Judges Bench in Gian Singh (supra). As already noted, the opinion expressed in Gian Singh (supra) is that the power of the High Court to quash a criminal proceeding under Section 482, Cr.P.C. is distinct and different from the power vested in a criminal court by Section 320, Cr.P.C. to compound an offence. The conclusion in Gian Singh (supra), therefore, was that the decisions rendered in B.S. Joshi (supra) and Nikhil Page 18 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined Merchant (supra) are correct.
10.In the present case, as already seen, the offence with which the accused-respondents had been charged are under Section 120-B/420 of the Indian Penal Code. The civil liability of the respondents to pay the amount to the bank has already been settled amicably. The terms of such settlement have been extracted above. No subsisting grievance of the bank in this regard has been brought to the notice of the Court. While the offence under Section 420, IPC is compoundable the offence under Section 120-B is not. To the latter offence the ratio laid down in B.S. Joshi (supra) and Nikhil Merchant (supra) would apply if the facts of the given case would so justify. The observation in Gian Singh (supra) (para 61) will not be attracted in the present case in view of the offences alleged i.e. under Sections 420/120B, IPC.
11.In the present case, having regard to the fact that the liability to make good the monetary loss suffered by the bank had been mutually settled between the parties and the accused had accepted the liability in this regard, the High Court had thought it fit to invoke its power under Section 482,Cr..P.C. We do not see how such exercise of power can be faulted or held to be erroneous. Section 482 of the Code inheres in the High Court the power to make such order as may be considered necessary to, inter alia, prevent the Page 19 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined abuse of the process of law or to serve the ends of justice.
While it will be wholly unnecessary to revert or refer to the settled position in law with regard to the contours of the power available under Section 482, Cr.P.C. it must be remembered that continuance of a criminal proceeding which is likely to become oppressive or may partake the character of a lame prosecution would be good ground to invoke the extraordinary power under Section 482, Cr.P.C."
14. In the case of Tirthwshwar Plywood Pvt.Ltd. And Ors. (supra), it is held in paragraphs 13 to 19 as under:
"13. During the period from 15.9.1994 to 21.5.1997, NSIC Limited, Ahmedabad, paid total amount of Rs.7,68,000/- against RMA scheme and the company has made payment of dues of Rs.2,27,000/- and failed to make payment of remaining amount of Rs.11,68,021/- including interest and said NSIC Limited officials failed to recover this dues from the company. Due to this, NSIC Limited, Ahmedabad, suffered a wrongful monetary loss of Rs.11,68,021/- as on 31.3.2000 and the accused gained wrongfully.
14. In the present case, charge framed against the accused is for the offence under Section 120 (B) read with Section 420 of IPC. Section 415 of the Indian Penal Code defines "cheating", which reads thus:Page 20 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined "Section 415. Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
14.1 The ingredients to constitute an offence of cheating are as follows:-
i) there should be fraudulent or dishonest inducement of a person by deceiving him;
ii) (a) the person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or
(b) the person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and
iii) in cases covered by (ii) (b) above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.
A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces Page 21 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined another person to deliver any property is liable for the offence of cheating.
15. Section 420 of the Penal Code reads thus:
"Section 420. Cheating and dishonestly inducing deliver of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and 7 which is capable to being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
15.1 The ingredients to constitute an offence under Section 420 are as follows:
(i) A person must commit the offence of cheating under Section 415; and
(ii) The person cheated must be dishonestly induced to
(a) deliver property to any person; or
(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. Cheating is an essential ingredient for an act to constitute an offence under Section 420.Page 22 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
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16. Admittedly, in the present case, the entire exercise was regarding sanctioning of loan. It is also admitted fact that certain amount of loan was repaid by the accused at the relevant time also and the remaining amount was not paid. Therefore, for recovery of the amount, proper course was to file necessary civil litigation before appropriate Court, however, instead of doing so, present criminal proceedings have been initiated. Moreover, as per the facts available on record, remaining amount has also been paid by the applicant company and "No Due Certificate" has been issued by NSIC Limited. Of course, heavy reliance has been placed on letter dated 4.7.2014 written by the complainant to the Superintendent of Police stating that the Corporation has settled the account only regarding Recovery Certificate dues and not against the CBI case. This is an internal correspondence between CBI and the complainant and even if it is considered that the right to pursue CBI case is kept open, then also basic ingredients of the offence under Section 420 of IPC are required to be made out, which are not made out in the present case.
17. Therefore, the only case against the applicants is failure to repay the amount of loan availed from NICS Limited. However, it has come on record that a settlement is arrived at M/s.Tirtheshwara Plywood Limited and NSIC Limited- original complainant. As per this settlement, M/s.Tirtheshwara Plywood Private Limited has paid an Page 23 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined amount of Rs.12 Lacs to the original complainant-NSIC. Not only that the complainant-NSIC has also issued a "No Due Certificate" in this regard, specifically stating that the account of the unit is closed as per the record of the Corporation. Therefore, the allegation of nonpayment of amount of loan availed do not survive in view of settlement arrived at and No Due Certificate issued by NSIC Limited.
18. Assuming for the moment that the applicants have failed to repay the amount borrowed by them from the respondent No.2, even then the same would not even constitute an offence of cheating. 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 process, to say that he committed an act of cheating. It may be pertinent to mention here that the amount in dispute is already paid back by the accused, therefore, there is no loss or damage caused to the complainant also. Considering the totality of the circumstances, this appears to be a fit case in which this Court can exercise its inherent powers under Section 482 of the Code for quashing the proceedings.
19. It is also pertinent to note that the charge sheet has been filed for the offences punishable under the Prevention of Corruption Act, but there is no prima facie material to Page 24 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined substantiate the charge against the present applicants. It is not the case of the prosecution that the present accused have indulged in the act of either taking or giving bribe. Therefore, the charges under the Prevention of Corruption Act are also not sustainable against the present accused."
15. In the case of Rumi Dhar (Smt) (supra), which is cited by learned counsel for CBI, it is held in paragraphs 13 and 14 as under:
"13. The appellant is said to have taken part in conspiracy in defrauding the Bank. Serious charges of falsification of accounts and forgery of records have also been alleged. Although no charge against the appellant under the Prevention of Corruption Act has been framed, indisputably, the officers of the Bank are facing the said charges.
14. It is now a well-settled principle of law that in a given case, a civil proceeding and a criminal proceeding can proceed simultaneously. Bank is entitled to recover the amount of loan given to the debtor. If in connection with obtaining the said loan, criminal offences have been committed by the persons accused thereof including the officers of the Bank, criminal proceedings would also indisputably be maintainable."Page 25 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023
NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined
16. Now, in light of the aforesaid, if we look to the facts of the present case, it clearly transpires that at the relevant point of time, the applicant has availed cash credit facility. Thereafter, the applicant has made several requests to convert nature of facility which the bank has acceded to and due to that, there was some amount remaining outstanding. Considering the tenor of the FIR, the entire allegation is mainly levelled against the bank manager as well as the bank officials of the bank that some facilities beyond their power was granted to the Dalal group whom the applicant represent. However, thereafter during the pendency of the proceedings before the DRT, the applicant-Dalal group has already repaid the amount and there is nothing outstanding as on today, which shows the bonafide on the part of the applicant in not misusing the funds of the bank.
17. In view of the judgment in the case of Tirthwshwar (supra), where identical facts were there and this Court had exercised powers under Section 482 of the Code, I am of the opinion that no fruitful purpose would be served to continue the proceedings pursuant to the impugned FIR.
18. In view of the above discussion and also in Page 26 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023 NEUTRAL CITATION R/CR.MA/2567/2021 JUDGMENT DATED: 12/06/2023 undefined view of the judgment of the Hon'ble Supreme Court in the case of State of Haryana V/s Bhajan Lal reported in AIR 1992 SC 604 and in the case of Inder Mohan Goswami and Another versus State of Uttaranchal reported in (2007) 12 SCC 1, whereby it is held that powers under Section 482 of the Code 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', I am of the opinion that no fruitful purpose will be served in continuing the present proceedings against the present applicant as, prima facie, no ingredients worth the sections invoked in the FIR are made out.
19. In this view of the matter, this is a fit case to exercise the inherent powers under Section 482 of the Code. Accordingly, this application is allowed. The impugned FIR being RC-9/E/2002/Mumbai dated 7.11.2002 registered with CBI.EOW.Mumbai Branch. Dist.Mumbai, as well as subsequent proceedings, if any, arising out of the same FIR are hereby quashed and set aside qua the present applicant. Rule is made absolute. Direct service is permitted.
(SANDEEP N. BHATT,J) SRILATHA Page 27 of 27 Downloaded on : Sat Sep 16 20:10:41 IST 2023