Allahabad High Court
Ajeet Pandey vs State Of U.P. Thru. Superintendent Of ... on 12 April, 2023
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 16 Case :- APPLICATION U/S 482 No. - 3477 of 2023 Applicant :- Ajeet Pandey Opposite Party :- State Of U.P. Thru. Superintendent Of Police Spe/Cbi New Delhi Counsel for Applicant :- Purnendu Chakravarty,Ashish Chaturvedi,Pranjal Jain Counsel for Opposite Party :- Anurag Kumar Singh Hon'ble Subhash Vidyarthi J.
1. Heard Sri N. K. Seth, Senior Advocate, assisted by Sri Purnendu Chakravarty and Sri Sachin Garg, Advocates, the learned Counsel for the applicant, and Sri Anurag Kumar Singh Advocate, the learned Counsel representing the respondent/C.B.I.
2. By means of the instant application filed under Section 482, Code of Criminal Procedure, 1973, the applicant has challenged the charge-sheet dated 30.6.2022 submitted by C.B.I. under Sections 120 B and 420 I.P.C. against (1) M/s Gangotri Enterprises Ltd., (2) Ajeet Pandey (the Applicant), (3) Vinay Shankar Tiwari, (4) Rita Tiwari, (5) M/s Royal Empire Marketing Pvt. Ltd. through its Director Ajeet Pandey, (6) M/s Kandarp Hotels Pvt. Ltd. through its Director Vinay Shankar Tiwari, in furtherance of F.I.R. No. RC2232020A0007, lodged on 08.10.2020 by the Zonal Manager, Bank of India, Lucknow Zone, under Sections 120-B, 420, 467, 468, 471 I.P.C., and Section 13 (2) read Section 13 (1) (d) of the Prevention of Corruption Act 1988 in Police Station AC-V, New Delhi. The applicant has also challenged the order dated 16.02.2023 passed by the learned Special Judicial magistrate (C.B.I.), Lucknow in Case No. 117555 of 2022, taking cognizance of the offences on the basis of the aforesaid charge-sheet and summoning the accused persons to face the trial.
3. It has been stated in the affidavit filed in support of the application that the applicant is the Managing Director of M/s Gangotri Enterprises Ltd. The applicant was also a Director of M/s Royal Empire Marketing Pvt. Ltd. till 24.04.2015 and of M/s Kandarp Hotels Pvt. Ltd. till 15.03.2017.
4. M/s Gangotri Enterprises Ltd. had taken some loans from the Consortium of seven Banks, the lead Bank being Bank of India. It had committed defaults in repayment of loans and the Banks have initiated seven separate proceedings for recovery of the loan amount before the Debt Recovery Tribunal (D.R.T.) and have issued notices under section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). In none of the recovery-proceedings initiated by the Banks, an allegation of cheating was levelled against the borrower Company- M/s Gangotri Enterprises Ltd., its directors or guarantors.
5. Bank of India has filed Company Petition No. 262 of 2019 before the National Company Law Tribunal, Allahabad on 13.07.2019, which has been admitted on 06.12.2021 and a Resolution Professional has been appointed by the Tribunal and the applicant's powers have been suspended as the Company is under CIRP (Corporate Insolvency Resolution Process) as per Insolvency and Bankruptcy Code, 2016. It has been stated that no allegation of cheating has been levelled in the aforesaid Company Petition. It has been contended by the applicant that the dispute is regarding a civil-commercial dispute and no element of criminality is involved in it.
6. It has further been stated on behalf of the applicant that in exercise of powers conferred by section 35-A of the Banking Regulation Act, 1949, the Reserve Bank of India has issued "Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016", with a view to provide a framework to Banks enabling them to detect frauds fairly and taking timely consequent actions, like reporting to the investigating agencies, so that the fraudsters should be brought to book early, examining staff accountability and do effective fraud risk management.
7. Clause 8.9.4 of the aforesaid Directions of 2016 provides that in case a bank decides to classify an account as fraud, it shall report the fraud to RBI within 21 days of detection and also report the case to CBI/Police. Further within 15 days of RFA/Fraud classification, the bank which has red flagged the account or detected the fraud would ask the consortium leader or the largest lender under MBA to convene a meeting of the JLF to discuss the issue. The meeting of the JLF so requisitioned must be convened within 15 days of such a request being received. In case there is a broad agreement, the account should be classified as a fraud; else based on the majority rule of agreement amongst banks with at least 60% share in the total lending, the account should be red flagged by all the banks and subjected to a forensic audit commissioned or initiated by the consortium leader or the largest lender under MBA.
8. Clause 8.9.5 of the aforesaid directions mandates that the forensic audit must be completed within a maximum period of three months from the date of the JLF meeting authorizing the audit. Within 15 days of the completion of the forensic audit, the JLF shall reconvene and decide on the status of the account, either by consensus or the majority rule as specified above. In case the decision is to classify the account as a fraud, the RFA status shall be changed to Fraud in all banks and reported to RBI and on the CRILC platform within a week of the said decision.
9. Sri. N. K. Seth, the learned Senior counsel for the applicant, submits that no action was taken by the lead Bank or any other Bank, as is provided in Clauses 8.9.4 and 8.9.5 of the aforesaid directions.
10. A letter dated 03.07.2017 issued by the Bank of India has been annexed with the affidavit, wherein it has been stated that "a JLF meeting was conducted amongst Consortium Member Banks on 19.06.2017 to decide upon closure forensic audit report. All Member Banks have agreed upon closure of forensic audit report, subject to submission/compliance of certain document/JLF Directives from the Company." In response to the aforesaid letter of the Bank of India M/s Gangotri Enterprises Ltd. had sent a letter dated 24.07.2017 to the Bank of India, annexing therewith the requisite documents.
11. The contention of Sri. N. K. Seth is that the JLF (Joint Lenders Forum) had decided upon closure of the Forensic Audit Report, subject to submission of certain documents, which documents were submitted by the applicant and, therefore, the Forensic Audit Report stood closed finally and no action can be taken subsequently on the basis of the aforesaid report after closure of the same.
12. After closure of the earlier Forensic Audit Report the Bank has sanctioned further credit facilities to M/s Gangotri Enterprises Ltd. by means of its letters dated 06.09.2017 and 07.12.2017 indicating that the Bank had no grievance against the borrower and was satisfied with its creditworthiness.
13. In spite of the aforesaid facts, the Zonal Manager, Bank of India sent a written complaint to the C.B.I. on 08.10.2020 complaining that the Company's investment in Group Companies was increased from Rs. 58 Crores as on 30.06.2012 to Rs. 119 Crores as on 31.03.2016, though there was no major capital contribution from promoter's side; that the loan given to the Group Companies have increased from Rs. 55.83 Crores as on 30.06.2015 to Rs. 154.01 Crores as on 31.03.2016; that the Company has created double charge in fixed assets; that all equipments owned by the Company are mortgaged with SERI Equipment (P) Ltd. Loan; that the Company has given guarantee exceeding the permitted maximum amount; that borrower has offered 32 immovable properties valuing around Rs. 100.00 Crores for equitable mortgage against the facilities offered' out of which 17 were agricultural properties valuing Rs. 31.68 crores which needed to be changed to non-agricultural/commercial use, but the same was not done despite several deadlines given by the Bank having elapsed; that the Company was supposed to route all receipts through Trust and Retention Account (TRA), but on review it was found that the inflows in TRA were very low/nil as the Company was not routing any transactions through the TRA since March 2015 and that the auditor had observed irregularities in financial statements of the Company. The complaint states that all the Banks, except Axis Bank, have declared the accounts of the Company as fraud on various dates.
14. The F.I.R. alleges that M/s Gangotri Enterprises Ltd. availed credit limits from a consortium led by Bank of India and it resorted to various unethical means such as diversion of funds, violation of statutory guidelines, breach of trust between the banker and the borrower, violation of audit standard, submission of forged/fabricated financial statements, non-disclosing the segment-wise result in the financials etc.; that the Company and its promoters have misappropriated Banks funds by diverting the same to purposes other than those for which it was sanctioned/disbursed, in the guise of undertaking Civil Construction - Infrastructure Development work, without having any genuine business transactions and it defaulted in meeting its payment obligations towards the Bank by diverting and siphoning off the Banks funds. The complaint further states that the borrowing Company, its Directors and guarantors had fraudulently committed the acts of misappropriation, criminal breach and cheating by diverting Banks funds for purposes other than for which the loans were availed by them, with a dishonest intention of causing wrongful loss to Member banks and wrongful gains to themselves and thereby they defrauded the banks and the said acts of the accused persons are punishable under Indian Penal Code and other substantive laws.
15. On the basis of the aforesaid complaint, the C.B.I. lodged a first information report (F.I.R.) bearing No. RC2232020A0007 on 08.10.2020 under Sections 120-B, 420, 468, 470 I.P.C. and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act 1988.
16. Sri N. K. Seth, Senior Advocate has submitted that before labelling the applicant's account as a ''fraud account' the Bank was required to comply with the principles of Natural Justice by providing an opportunity of hearing to the applicant, which has not been done in the present case. He has relied upon a judgment of Hon'ble Supreme Court in the case of State Bank of India and others Vs. Rajesh Agarwal and others, Civil Appeal No.7300 of 2022 and other connected appeals, decided on 27.03.2023.
17. Sri. Seth has further submitted that the fact that in the meeting of JLF a decision was taken to close the Forensic Audit Report and thereafter further credit facilities were sanctioned by the Banks to the Company, indicates that the Bank had no grievance against any action of the Company or its Directors. The F.I.R. lodged subsequent thereto is an abuse of the process of law and the proceedings initiated on the basis of such F.I.R. are liable to be quashed for the aforesaid reason also.
18. Sri Seth has further submitted that it is a case arising out of non-payment of loan amount, which is purely a civil dispute and initiation of criminal proceedings in such a case is a clear abuse of the process of law. He has placed reliance upon a decision of Hon'ble Supreme Court in the case of Professor R. K. Vijayasarathy and another Vs. Sudha Seetharaman and another (2019) 16 SCC 739, wherein the Hon'ble Supreme Court has held that: -
"the jurisdiction under Section 482 of the Code of Criminal Procedure has to be exercised with care. In the exercise of its jurisdiction, a High Court can examine whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute a criminal offence are not made out from a bare reading of the complaint, the continuation of the criminal proceeding will constitute an abuse of the process of the court."
19. Sri. Seth has submitted that from the allegations levelled in the charge sheet, the commission of offence under Section 420 is not made out.
20. Per contra, Sri Anurag Kumar Singh, representing the C.B.I. has vehemently opposed the application. He has submitted that in the case of State Bank of India (supra) the Hon'ble Supreme Court has categorically concluded that no opportunity of being heard is required before an F.I.R. is lodged and registered and, therefore, the F.I.R. and the consequent proceedings drawn on the basis thereof, including the charge sheet, the cognizance order and the summoning order cannot be challenged on the ground of violation of principles of natural justice while declaring the account of the applicant as ''fraud account'. He has submitted that the scope of jurisdiction under Section 482 of Code of Civil Procedure is very limited, as has been reiterated by Hon'ble Supreme Court in the case of Professor R. K. Vijayasarathy (Supra), that the court can examine only whether the ingredients required to constitute a criminal offence are made out from a bare reading of the complaint or not. Sri. Singh has further submitted that the act of the applicant in obtaining loans from the Bank for a particular purpose, and thereafter misappropriating the money by illegally transferring the same to its subsidiary companies and its conduct in routing the receipts through accounts other that RTA accounts, clearly amounts to cheating.
21. Sri Singh has submitted that earlier the applicant has filed a Writ Petition No. 21026 (M/B) of 2020 before this Court challenging the F.I.R. dated 08.10.2020 lodged by the Bank of India and the Writ Petition was dismissed by means of a judgment and order dated 08.02.2021 after holding that from the allegations made in the F.I.R. it cannot be said that no cognizable offence is disclosed against the petitioner.
22. Although, initially the F.I.R. has been lodged under Sections 120-B, 420, 468 and 471 I.P.C. and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act 1988, after investigation the C.B.I. has dropped the charges of commission of offences under Sections 468 and 471 I.P.C. and Section 13 (2) read with 13(1)(d) of Prevention of Corruption Act and a charge sheet has been submitted under Sections 120-B read with Section 420 I.P.C. only. It is mentioned in the charge sheet that further investigation in respect of the other accused persons is still going on.
23. I have considered the facts and circumstances of the case and submissions advanced by learned counsel for the parties and have also gone through the records placed before this Court.
24. Sri. Seth has laid much emphasis on the fact that the Bank has not taken actions as per the provisions contained in Clauses 8.9.4 and 8.9.5 of the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016, which require reporting the alleged fraud to RBI within 21 days of detection and reporting the case to CBI/Police and the forensic audit must be completed within a maximum period of three months from the date of the JLF meeting authorizing the audit, but the aforesaid facts do not make out a case for quashing of the charge sheet and the criminal proceedings firstly for the reason that the directions do not prescribe any time limit for lodging the F.I.R. and secondly, even if any limitation was prescribed by the Directives, the same would not override the statutory provision contained in Section 468 of the Criminal Procedure Code, which provides no limitation for taking cognizance of offences carrying a punish exceeding imprisonment for three years.
25. So far as the first Submission of Sri. N. K. Seth, that before labelling the applicant's account as a ''fraud account' the Bank was required to comply with the principles of Natural Justice by providing an opportunity of hearing to the applicant, which has not been done in the present case and as the applicant's account has been labelled as a ''fraud account', in violation of the principles of Natural Justice, the F.I.R. lodged in furtherance thereof is also vitiated for violation of the principles of natural justice.
26. In this regard it is significant to note that the applicant had already challenged the F.I.R. by filing Writ Petition No. 21026 (M/B) of 2020, which was dismissed by means of a judgment and order dated 08.02.2021 and the aforesaid judgment has attained finality. Therefore, it is not open anymore to the applicant to challenge the F.I.R. on the ground of violation of principles of natural justice at this stage, after filing of the charge-sheet.
27. Secondly, in so far as Classification of an account as fraud has adverse civil consequences against the borrowers, like debarring him from accessing institutional finance, such a debarment is akin to blacklisting the borrowers for being untrustworthy and unworthy of credit by banks and, therefore, before taking such an action which entails adverse civil consequences, an opportunity of hearing has to be provided. However, the Hon'ble Supreme Court has specifically held in State Bank of India and others Vs. Rajesh Agarwal and others that no opportunity of being heard is required before an FIR is lodged and registered and, therefore, the contention of Sri. Seth is negatived by the aforesaid judgment, which has been cited by himself.
28. The second submission of Sri. N. K. Seth is that JLF (Joint Lenders Forum) had closed the Forensic Audit Report and thereafter the Bank has sanctioned further credit facilities to M/s Gangotri Enterprises Ltd. on 06.09.2017 and 07.12.2017 indicating that the Bank had no grievance against the borrower and was satisfied with its creditworthiness. In this regard it is to state that after C.B.I. has carried out investigation, the charges have been established against the applicant. The action of the Banks in giving loan or additional loan to a borrower is a commercial decision of the bank and it cannot be a ground to quash the criminal proceedings, where the C.B.I. has found the charges to cheating to be established in investigation.
29. Sri. N. K. Seth has next submitted that it is a simple case of breach of agreement by committing default in repayment of loan, for which the Banks have already instituted proceedings before the D.R.T. and N.C.L.T. and in none of the proceedings, any allegation of commission of an offence has been levelled by the Bank and on this ground also the criminal proceedings initiated subsequently are liable to be quashed. In this regard, it is to be kept in mind that the scope of different kinds of proceedings are defined in law and in proceedings for recovery of money, a party is required to plead facts which are relevant and material for entitling him to get a money decree in his / her favour. There is no need to plead in proceedings for recovery of money that apart from committing a default in repayment of the loan, the borrower has committed an offence also and non-pleading of commission of the alleged offences in proceedings before the D.R.T. or N.C.L.T. will not create an estoppels against the Bank to lodge an F.I.R. and it will not create an estoppel against the C.B.I. in prosecuting the offender and in any case, it will not create an estoppels against the competent Court trying the accused persons.
30. In Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736, the Hon'ble Supreme Court held that: -
"A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not."
31. The last submission of Sri. Seth is that from the allegations levelled in the charge-sheet, the commission of offence under Section 420 is not made out and he has relied upon the decision in Professor R. K. Vijayasarathy (Supra).
32. The aforesaid case was decided on the basis of its peculiar facts that Rajiv Vijayasarathy Ratnam (the son of the appellants) and Savitha Seetharam (the daughter of the first respondent) were married on 24.05.2002. They moved to the United States of America and a child was born to them in 2009. Savitha was involved in a car accident on 05.02.2010 and proceedings were initiated against her abroad. It was alleged by the appellants that fearing the attachment of their son's property in the proceedings, an amount of Rs 20 lakhs was transferred by Rajiv to the bank account of the first respondent on 17-2-2010. Following a breakdown in marital relations, Savitha and Rajiv started living separately since October 2010. Multiple rounds of litigation ensued in various courts. Rajiv filed a civil suit for recovery of money against the first respondent for the return of the money allegedly transferred by him into her bank account. The first respondent filed a private complaint against the appellants, alleging that the amount of Rs 20 lakhs which was transferred by the son of the appellants was returned in cash to the appellants with interest of Rs 24,000 on 1-7-2010. It was alleged that the appellants and their son had colluded to siphon off the money and that the civil suit filed by the son of the appellants was without merit. The Magistrate passed an order under Section 156(3) of the Code of Criminal Procedure 1973 and a first information report was registered under Sections 405, 406, 415 and 420 read with Section 34 of the Penal Code, 1860. The High Court had dismissed the Writ Petition filed for quashing of the FIR and that order was challenged before the Hon'ble Supreme Court. In this factual background, the Hon'ble Supreme Court held that: -
"21. A court exercising its inherent jurisdiction must examine if on their face, the averments made in the complaint constitute the ingredients necessary for the offence.
* * *
22. The condition necessary for an act to constitute an offence under Section 405 of the Penal Code is that the accused was entrusted with some property or has dominion over property...
23. The condition necessary for an act to constitute an offence under Section 415 of the Penal Code is that there was dishonest inducement by the accused. The first respondent admitted that the disputed sum was transferred by the son of the appellants to her bank account on 17-2-2010. She alleges that she transferred the money belonging to the son of the appellants at his behest. No act on part of the appellants has been alleged that discloses an intention to induce the delivery of any property to the appellants by the first respondent. There is thus nothing on the face of the complaint to indicate that the appellants dishonestly induced the first respondent to deliver any property to them. Cheating is an essential ingredient to an offence under Section 420 of the Penal Code. The ingredient necessary to constitute the offence of cheating is not made out from the face of the complaint and consequently, no offence under Section 420 is made out."
33. However, in the present case, the C.B.I. has found that the Company and its Directors have criminally conspired with each other and diverted bank loans into its subsidiary/associate companies by way of investment in the form of share capital introduction amounting Rs.118.40 Crores till 31.12.2016, violating the terms and condition of sanction, terms of bank-loans. However, the borrower did not comply with the aforesaid terms and conditions of the TRA Agreement and routed the receivables to accounts other than TRA Account, in contravention of sanctioned terms. The Company had received Rs. 664 Crores in 15 non-TRA accounts that were active between 01.07.2014 to 31.03.2016. Part of these receipts were subsequently transferred to its group companies as investments as well as loans, creation of FDRs as margin for Letter of Credit, devolvement of LCs, payment to contractors, other misc. payments/transfers. The charge-sheet further states that various accounts were opened by the Company after execution of the Trust and Retention Account Agreement, the particulars whereof are mentioned in the charge-sheet which shows that all the accused persons malafidely and dishonestly violated the terms and conditions of sanction of the loan, with intention to cheat the lender banks. The charges prima facie make out a case for trial of the applicant for the offence alleged and it cannot be said at this stage that on the basis of the statements made in the charge-sheet itself, there is no case warranting trial of the applicant.
34. The principles regarding the scope of exercise of jurisdiction under Section 482 Cr.P.C. have been elaborated by the Hon'ble Supreme Court in the case State of Haryana Vs. Bhajan Lal, 1992 Supp (1) SCC 335 in the following words: -
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised:
(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (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 Act concerned, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."
35. After laying down the principles for exercise of the discretionary powers under Section 482 Cr.P.C. in Bhajan Lal (supra), the Hon'ble Supreme Court proceeded to add a word of caution in the following words:-
"103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice."
36. The expression "rarest of rare cases" used by the Hon'ble Supreme Court in Bhajan Lal has been explained in Jeffrey J. Diermeier v. State of W.B., (2010) 6 SCC 243, after referring to the law laid down by a Bench of three Judges in Som Mittal v. State of Karnataka (2008) 3 SCC 574 in the following words: -
"When the words "rarest of rare cases" are used after the words "sparingly and with circumspection" while describing the scope of Section 482, those words merely emphasise and reiterate what is intended to be conveyed by the words "sparingly and with circumspection". They mean that the power under Section 482 to quash proceedings should not be used mechanically or routinely, but with care and caution, only when a clear case for quashing is made out and failure to interfere would lead to a miscarriage of justice. The expression "rarest of rare cases" is not used in the sense in which it is used with reference to punishment for offences under Section 302 IPC, but to emphasise that the power under Section 482 CrPC to quash the FIR or criminal proceedings should be used sparingly and with circumspection."
37. In N. Soundaram v. P.K. Pounraj, (2014) 10 SCC 616, the Hon'ble Supreme Court has been pleased to explain the principles governing exercise of power under Section 482 in the following manner:-
"13. It is well settled by this Court in a catena of cases that the power under Section 482 CrPC has to be exercised sparingly and cautiously to prevent the abuse of process of any court and to secure the ends of justice. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court should refrain from giving a prima facie decision unless there are compelling circumstances to do so. Taking the allegations and the complaint as they were, without adding or subtracting anything, if no offence was made out, only then the High Court would be justified in quashing the proceedings in the exercise of its power under Section 482 CrPC. An investigation should not be shut out at the threshold if the allegations have some substance.
38. In Kaptan Singh vs. State of Uttar Pradesh and Others, (2021) 9 SCC 35, the Hon'ble Supreme Court was pleased to hold that while deciding an application under Section 482 Cr.P.C., the High Court is not required to go into the merits of the allegations and/or enter into the merits of the case as if the High Court is exercising the appellate jurisdiction and/or conducing the trial.
39. In a recent decision of the Hon'ble Supreme Court in the case of Central Bureau of Investigation vs. Aryan Singh and Ors., Criminal Appeals No. 1025-1025 of 2023, decided on 10.04.2023, the Hon'ble Supreme Court held that: -
"4.Having gone through the impugned common judgment and order passed by the High Court quashing the criminal proceedings and discharging the Accused, we are of the opinion that the High Court has exceeded in its jurisdiction in quashing the entire criminal proceedings in exercise of the limited powers Under Section 482 Code of Criminal Procedure and/or in exercise of the powers Under Article 226 of the Constitution of India.
4.1. From the impugned common judgment and order passed by the High Court, it appears that the High Court has dealt with the proceedings before it, as if, the High Court was conducting a mini trial and/or the High Court was considering the applications against the judgment and order passed by the learned Trial Court on conclusion of trial. As per the cardinal principle of law, at the stage of discharge and/or quashing of the criminal proceedings, while exercising the powers Under Section 482 Code of Criminal Procedure, the Court is not required to conduct the mini trial. The High Court in the common impugned judgment and order has observed that the charges against the Accused are not proved. This is not the stage where the prosecution/investigating agency is/are required to prove the charges. The charges are required to be proved during the trial on the basis of the evidence led by the prosecution/investigating agency. Therefore, the High Court has materially erred in going in detail in the allegations and the material collected during the course of the investigation against the Accused, at this stage. At the stage of discharge and/or while exercising the powers Under Section 482 Code of Criminal Procedure, the Court has a very limited jurisdiction and is required to consider "whether any sufficient material is available to proceed further against the Accused for which the Accused is required to be tried or not".
40. At this stage, this court is required to see as to whether on the basis of the averments made in the charge-sheet, a case for trial of the applicant is made out or not.
41. The F.I.R. alleges that M/s Gangotri Enterprises Ltd. availed credit limits from a consortium led by Bank of India and it resorted to diversion of funds, violation of statutory guidelines, breach of trust between the banker and the borrower, violation of audit standard, submission of forged/fabricated financial statements, non-disclosing the segment-wise result in the financials etc.; that the Company and its promoters have misappropriated Banks funds by diverting the same to purposes other than those for which it was sanctioned/disbursed, in the guise of undertaking Civil Construction - Infrastructure Development work, without having any genuine business transactions and it defaulted in meeting its payment obligations towards the Bank by diverting and siphoning off the Banks funds. It is alleged that the borrowing Company, its Directors and guarantors had fraudulently committed the acts of misappropriation, criminal breach and cheating by diverting Banks funds for purposes other than for which the loans were availed by them, with a dishonest intention of causing wrongful loss to Member banks and wrongful gains to themselves and thereby they defrauded the banks and the said acts of the accused persons are punishable under Indian Penal Code and other substantive laws.
42. The applicant had challenged the F.I.R. by filing Writ Petition No. 21026 (M/B) of 2020, which was dismissed by means of a judgment and order dated 08.02.2021 passed by a Division Bench of this Court by holding that from the allegations made in the F.I.R. it cannot be said that no cognizable offence is disclosed against the petitioner.
43. Thereafter the C.B.I. has carried out investigation and has submitted the charge-sheet, inter alia stating that Investigation was carried out in furtherance of the aforesaid F.I.R. and the C.B.I. had submitted a charge-sheet on 30.06.2022 stating that the investigation and analysis of trial balance of M/s Gangotri Enterprises Limited for the financial years 2012-13, 2013-14, 2014-15, 2015-16 and the first 9 months of the financial year 2016-17 disclosed that the Company and its Directors have criminally conspired with each other and diverted bank loans into its subsidiary/associate companies by way of investment in the form of share capital introduction amounting Rs.118.40 Crores till 31.12.2016, violating the terms and condition of sanction, terms of bank-loans dated 13.08.2011 and 30.11.2013.
44. The charge-sheet further states that in order to restructure the loans given to M/s Gangotri Enterprises, a Corporate Debt Restructuring (CDR) was approved on 30.09.2013, under which a Master Restructuring Agreement was executed between the Company and the lender banks, under which a Trust and Retention Account (TRA) was opened. The TRA Agreement provides that the borrower shall immediately on opening of the Trust and Retention Account, close all other accounts, which the borrower may have in any Bank and shall forthwith transfer all balances held by it in such accounts, to the Trust Retention Account. However, the borrower did not comply with the aforesaid terms and conditions of the TRA Agreement and routed the receivables to accounts other than TRA Account, in contravention of sanctioned terms. The Company had received Rs. 664 Crores in 15 non-TRA accounts that were active between 01.07.2014 to 31.03.2016. Part of these receipts were subsequently transferred to its group companies as investments as well as loans, creation of FDRs as margin for Letter of Credit, devolvement of LCs, payment to contractors, other misc. payments/transfers. The charge-sheet further states that various accounts were opened by the Company after execution of the Trust and Retention Account Agreement, the particulars whereof are mentioned in the charge-sheet which shows that all the accused persons malafidely and dishonestly violated the terms and conditions of sanction of the loan, with intention to cheat the lender banks.
45. At this stage, the Court is not required to go into the correctness of the allegations and that will be done by the Trial Court after the parties are given an opportunity to lead evidence in support of their respective case. What prima facie appears from the material placed before the court at this stage is that the allegations levelled against the applicant in the charge sheet submitted by C.B.I. after carrying out investigation, prima facie indicate commission of cognizable offences, which need to be tried by the Court.
46. In view of the above discussions, this Court is of the considered view that the there is no good ground to quash the charge-sheet and the proceedings initiated on the basis thereon.
47. The application under Section 482 Cr.P.C. lacks merit and the same is accordingly dismissed.
(Subhash Vidyarthi, J.) Order Date :- 12.4.2023/A.Nigam