Karnataka High Court
M/S Kusum Alloys Limited vs The Delhi Special Establishment By on 2 April, 2018
Equivalent citations: AIRONLINE 2018 KAR 2701
Author: Aravind Kumar
Bench: Aravind Kumar
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 02ND DAY OF APRIL, 2018
BEFORE
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
CRIMINAL PETITION NO.1274/2017
BETWEEN:
1. M/S KUSUM ALLOYS LIMITED
NO.9, VISHVESHWARAIAH INDUSTRIAL
AREA, MAHADEVAPURA,
WHITEFIELD, BENGALURU-48
REP. BY ITS DIRECTOR
ASHOK.K. KEJRIWAL
2. ASHOK.K. KEJRIWAL
AGED ABOUT 51 YEARS
S/O LATE ATMARAM KEJRIWAL
R/AT NO.26/23,
SANKEY ROAD CROSS
BENGALURU-560052.
... PETITIONERS
(BY SRI. M.T. NANAIAH, SR. COUNSEL A/W
SMT. RACHITHA NANAIAH, ADVOCATE)
AND:
1. THE DELHI SPECIAL ESTABLISHMENT
BY CENTRAL BUREAU OF
INVESTIGATION (C.B.I)
32, GANGANAGAR
BENGALURU-560 032.
2. MR. R. HITHENDRA
SUPERINTENDET OF POLICE
CBI BS AND FC
2
32, GANGANAGAR
BENGALURU-560032.
... RESPONDENTS
(BY SRI. P. PRASANNA KUMAR, ADVOCATE)
THIS CRIMINAL PETITION IS FILED UNDER SECTION
482 CR.PC. PRAYING TO QUASH THE ENTIRE
PROCEEDINGS IN SPL. C.C.NO.33/2011 REGISTERED BY
1ST RESPONDENT POLICE FOR THE OFFENCES P/U/S
120B, 409, 419, 420, 468, 471 OF IPC AND SECTION 13(2),
13(1)D OF P.C. ACT THE CASE IS NOT PENDING ON THE
FILES OF XXI ADDL. CITY CIVIL AND S.J., BANGALORE
AND DISMISS THE COMPLAINT.
THIS CRIMINAL PETITION COMING ON FOR
ADMISSION THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
Petitioners who are accused Nos.12 & 15 in Spl.C.C No.33/2011 registered by first respondent for the offences punishable under Sections 120B, 409, 419, 420, 468, 471 of IPC read with Sections 13(2), 13(1)(d) of Prevention of Corruption Act (hereinafter referred to as 'PC Act' for short), pending on the file of XXI Additional City Civil and Sessions Jude, Bengaluru are before this Court for quashing of said proceedings.
2. I have heard the arguments of Sri. M. T. Nanaiah, learned Senior Counsel appearing on behalf of 3 petitioners and Sri. P. Prasanna Kumar, learned Standing Counsel appearing for respondent - CBI. Perused case papers.
3. At the outset, it requires to be noticed that petitioners herein had filed an application under Section 227 of Cr.P.C. for discharge and the ground urged therein which are identical and replica of the grounds urged in the present petition. Learned Sessions Judge vide order dated 25.03.2013 had rejected said application and being aggrieved by the same, petitioners had approached this Court in Crl.R.P. No.434/2013, which petitioners came to be dismissed vide order dated 29.02.2016 by opining that there was no apparent illegality or perversity found to invoke the revisional jurisdiction vested in this Court and it was also opined by the coordinate bench that there are serious allegations made against these petitioners and as such, revision petition came to be dismissed. Seeking recall of the said order an interlocutory applications - I.A.Nos.1/2016 and 2/2016 came to be filed by 4 petitioners which was also dismissed by the Coordinate Bench on 05.01.2017 on the ground that there was no ground made out to review the order passed on 29.02.2016. Said order reads as under:
"This petition was rejected vide considered order dated 29.02.2016. In that view of the matter, there is no ground to review the order as sought in I.A.1/16 or I.A..2/16.
Hence, both applications are
dismissed. However, liberty is
reserved to the petitioners to agitate the matter in accordance with law before proper forum, within one month."
(Emphasis supplied by me) In the light of liberty so granted, petitioners are yet again agitating the same issue before this Court in the present petition by invoking extra-ordinary jurisdiction.
4. It is the contention of Sri. M. T. Nanaiah, learned Senior counsel appearing for petitioners that a company by name M/s. Innovative Ventures Private Limited had borrowed certain amounts from Union 5 Bank of India, Bengaluru and case of the prosecution against petitioners is that petitioner No.2 (accused No.12) had entered into a criminal conspiracy along with accused Nos.2, 3 and 14 in the matter of availing loan in the name of said company and had submitted a Preliminary Feasibility Report to the Bank seeking a term loan of Rs.814.20 lakhs and working capital limit of Rs.150 lakhs for setting up of a 30,000 tpa (turn over per annum) sponge iron plant at Bengaluru Rural District. In furtherance of it, in the matter of submission of invoices/ bills regarding supply of machineries/ equipments, accused Nos.5 and 10 had supplied fake and fabricated invoices/ bills to the second petitioner and he inturn had submitted said bills to the Bank and had borrowed the said loan amount which has since been paid to the Union Bank of India, Asset Recovery Branch, Avenue Road, Bengaluru which fact is also admitted by the Bank by issuing a Settlement Certificate dated 07.03.2017 and when the offences charged against the petitioners are under Sections 120(B), 409, 420, 467 & 471 of IPC read with 6 Sections 13(2) r/w 13(1)(d) of PC Act, continuation of the proceedings against petitioners would be an abuse of process of law and even on the admitted material placed by the prosecution, it would not end in conviction of the petitioners and as such, petitioners undergoing the ordeal of trial should be prevented by this Court by exercising inherent jurisdiction and quashing the proceedings in order to prevent abuse of process of law.
He would also elaborate his submission by contending that petitioners are not at all "public servants" and the provisions of Prevention of Corruption Act cannot be made applicable to them and as such, the certificate issued by the Bank disclosing that the amounts due to the Bank having been re-paid by the borrowers, the ingredients of Section 420 of IPC is also not attracted and as such, proceedings should be quashed.
In support of his submission, he has relied upon the following authorities:
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(1) Central Bureau of Investigation vs., Sadhu Ram Singla and others - 2017 Crl. L. J. 2269;
(2) Nikhil Merchant Vs., Central Bureau of Investigation and Another -
(2008)9 SCC 677;
(3) Gian Singh Vs., State of Punjab and another - 2012 (5) KLJ 476 (SC);
(4) Central Bureau of
Investigation, ACB, Mumbai, Vs.,
Narendral Lal Jain and others - (2014) 5 SCC 364.
5. Per contra, Sri. P. Prasanna Kumar, learned Standing Counsel appearing for CBI, supports the continuation of the proceedings against the petitioners by contending that present petition itself is not maintainable since petitioners had suffered an order passed by this Court in Criminal Revision Petition No.434/2013 on 29.02.2016 and the liberty given by this Court vide order dated 05.01.2017 while rejecting I.A.Nos.1/2016 and 2/2016 was for the limited purpose of permitting the petitioners to raise this ground as a ground before the trial Court and not reserving liberty to re-agitate the matter in the present petition. Even 8 otherwise, he would also contend on merits that petition is liable to be dismissed since the issue involved relates to fabrication and submission of fake bills in furtherance of a common object of defrauding a public financial institution and as such, under similar circumstances, Hon'ble Apex Court in the following cases has held that High Court should be slow in interfering by exercise of extraordinary jurisdiction. Hence, relying upon the following judgments, he has prayed for dismissal of the petition.
1. State of Tamil Nadu, represented by Inspector of Police, Central Crime Branch, Vs., R. Vasanthi Stanley and Another - (2016) 1 SCC 376;
2. Central Bureau of Investigation Vs., Maninder Singh- (2016) 1 SCC 389;
3. Parbatbhai Aahir alias Parbatbhai Bhimsinhbhai Karmur and Others Vs., State of Gujarat and another- (2017) 9 SCC 641.
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6. Having heard the learned Advocates appearing for parties, this Court is of the considered view that following point would arise for consideration:
"Whether proceedings initiated
against petitioners in
Spl.C.C.No.33/2011 for the offences punishable under Sections 120(B), 409, 419, 420, 468 & 471 IPC read with Sections 13(2) & 13(1)(d) of PC Act requires to be quashed or not?"
7. Union Bank of India, Avenue Road Branch, Bengaluru detected certain financial fraud and as such, proceedings in question came to be initiated on the strength of complaint lodged which resulted in registration of FIR and after investigation, charge sheet came to be filed in Spl.C.C.No.33/2011 against petitioners for the offences punishable under Sections 120(B), 409, 419, 420, 468 & 471 IPC read with Sections 13(2) & 13(1)(d) of PC Act. It requires to be noticed at the first instance that petitioners herein had 10 filed an application under Section 227 Cr.P.C. for discharge and learned Sessions Judge, by order dated 25.03.2013 had rejected said application which came to be confirmed by this Court in Crl.R.P.No.434/2013 vide order dated 29.02.2016 by arriving at a conclusion that there is no illegality or perversity for invoking revisional jurisdiction or exercise of revisional jurisdiction. Even interlocutory applications filed for recalling of said order was also rejected. However, an observation came to be made by the co-ordinate Bench while dismissing said applications and said observation reads as under:
"Hence, both applications are dismissed. However, liberty is reserved to the petitioners to agitate the matter in accordance with law before proper forum, within one month."
Contending that in view of liberty granted to the petitioners to invoke extraordinary jurisdiction of this Court, present petition is filed for quashing of proceedings raising similar and identical grounds as was urged in Crl.R.P.No.434/2013.
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8. Though this Court is inclined to accept the contention of Sri Prasanna Kumar, learned Standing counsel appearing for respondent to dismiss the petition on the ground that petitioners cannot re-agitate the same issue yet again, in view of the arguments canvassed by Sri M.T.Nanaiah, learned Sr.counsel appearing for petitioners that even on merits , petitioners have case for quashing of the proceedings, this Court has also examined said contention by examining the entire charge sheet material and also case law relied upon by the learned Sr.counsel appearing for petitioners in the interest of justice.
9. Hon'ble Apex Court, in catena of judgments, have held that exercise of inherent power under Section 482 Cr.P.C. can be resorted to : (1) to secure ends of justice; or (2) to prevent the abuse of process of the Court or law particularly where complainant and accused have settled their differences and have arrived at an amicable arrangement and continuation of 12 criminal proceedings after such compromise having been arrived at between them would tantamount to abuse of process of law, inasmuch as, continuation of such proceedings would not subserve the ends of justice or it would be burdensome for the accused to appear before jurisdictional Court and undergo ordeal of trial. There may be circumstances where from of charge sheet material available on record, prosecution would not be able to prove the guilt of the accused and in such circumstances directing the accused to undergo prolonged trial would be of no consequence to either of the parties and it would be yet another ground for this Court to exercise extraordinary jurisdiction.
10. Hon'ble Apex Court In GIAN SINGH vs STATE OF PUNJAB reported in 2012(5) Kar.L.J. 476 (SC) was examining as to whether offences which were not compoundable under Section 320 of Cr.P.C. can be quashed under Section 482 of Cr.P.C. and it came to be held that exercise of inherent jurisdiction is distinct and different from the power given to a criminal court for 13 compounding the offence under Section 320 of the Code. It was further held that said power is of wide plenitude with the guideline engrafted in such power. It is also held that inherent power of High Court under Section 482 of Cr.P.C. has no statutory limitation and has to be exercised with great caution.
11. In the case of CENTRAL BUREAU OF INVESTIGATION, ACB, MUMBAI vs NARENDRA LAL JAIN & OTHERS reported in (2014) 5 SCC 364 Hon'ble Apex Court has opined that quashment of criminal proceedings in respect of non compoundable offence on the basis of a compromise, High Court can invoke its power under Section 482 of Cr.P.C., since continuation of criminal proceedings are likely to become oppressive or may partake the character of lame prosecution.
12. In the case of NIKHIL MERCHANT vs CENTRAL BUREAU OF INVESTIGATION AND ANOTHER reported in (2008) 9 SCC 677 Hon'ble Apex Court has held that on a compromise entered into 14 between parties by which the parties withdrew all claims and allegations against each other, technicality, held should not come in the way of quashing of criminal proceedings, since continuance of same would be a futile exercise.
13. It is in this background, Sri M.T.Nanaiah, learned Senior Counsel appearing for petitioner has very heavily relied upon judgment of Hon'ble Apex Court in the case of CENTRAL BUREAU OF INVESTIGATION vs SADHU RAM SINGLA & OTHERS reported in 2017 CRL.L.J 2269 to buttress his argument that continuation of criminal proceedings against petitioners in the instant case would not sub-serve the ends of justice particularly, in the background of settlement having been arrived at between the Bank and the borrowing company under One Time Settlement Scheme of the Bank, whereunder the lending Bank has issued a Settlement Certificate dated 07.03.2017. He has further submitted that continuation of the proceedings against petitioners in the changed scenario, would be abuse of 15 process of law. Though at first blush said argument looks attractive, it is not so or in other words, it requires to be rejected for reasons for more than one. Firstly, in the facts obtained in the said case viz., in SADHU RAM SINGLA's case, settlement was arrived at between the Borrower and the Bank and it was held that continuation of criminal case where complainant and accused had settled their differences and had arrived at an amicable arrangement and as such continuation of criminal proceedings against accused would not be justified. In fact, Hon'ble Apex Court has noticed in SADHU RAM SINGLA's case that during the pendency of proceedings before the learned Special Judicial Magistrate, CBI, Patiala, Punjab, a compromise was arrived at between the Bank and respondent - company under a One Time Settlement scheme of the Bank and Bank had released the securities and guarantees of respondents and withdrew recovery proceedings pending in DRT and had intimated nothing was due from respondents to the Bank. An application under Section 320(2) IPC was filed for compounding offence 16 and it came to be dismissed by trial Court and allowed by the High Court. While confirming the said order of High Court, observations came to be made by Hon'ble Apex Court. In fact, the point of law canvassed had been kept open with the following observations by the Hon'ble Apex Court:
"16. In view of the discussion we made in the preceding paragraphs, in our opinion, it would be proper to keep the said point of law open. However, in the given facts, we dismiss this appeal."
14. Judgment of Hon'ble Apex Court in NARENDRA LAL JAIN , which was very heavily relied upon by the learned Senior Counsel appearing for petitioner wherein exercise of the extraordinary jurisdiction by the High Court was not interfered by the Hon'ble Apex Court was on the premise that there was a compromise entered into by the Bank with the borrower and there was specific clause in the consent decree or a joint memo/compromise petition filed whereunder, it was agreed and declared by both the parties that 17 disputes between them were purely civil nature and appellants (Bank) have no grievance of whatsoever nature including that of the CBI complaint against respondents (accused). It is in this background, jurisdiction exercised by the High Court quashing the proceedings was not interfered.
15. Hon'ble Apex Court in the case of STATE OF TAMIL NADU, REPRESENTED BY INSPECTOR OF POLICE, CENTRAL CRIME BRANCH vs R.VASANTHI STANLEY AND ANOTHER reported in (2016)1 SCC 376, after noticing NARENDRA LAL JAIN's case as well as NIKHIL MERCHANT's case referred to supra has held that High Court was in error in quashing proceedings by exercising power under Section 482 Cr.P.C. though having unrestricted and undefined power and such power should not be capriciously or arbitrarily exercised and should be exercised only in appropriate cases to do real and substantial justice for the administration of which alone the courts exist. In fact, their Lordships have referred to judgment in the 18 case of STATE OF MAHARASHTRA vs VIKRAM ANANTRAI DOSHI reported in (2014)15 SCC 29 whereunder it has been held that availing of money from a nationalized bank as alleged by the investigating agency vividly exposits fiscal impurity and in a way, financial fraud. It has been further held:
"The ultimate victim is the collective interest. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the nation."
It has been further held that it has the potentiality to usher in economic crisis and further held that it is not such a case where one can pay the amount and obtain a 'no-dues certificate' and enjoy the benefit of quashing of criminal proceedings on the hypothesis that nothing more remains to be done. Since collective interest of which the Court is the guardian, cannot be a silent or mute spectator to allow the proceedings to be withdrawn or for that matter, yield to the ingenuous dexterity of the accused persons to invoke jurisdiction 19 under Article 226 of the Constitution or under Section 482 of the Code and quash the proceedings.
16. Further, in the case of CBI vs MANINDER SINGH reported in (2016)1 SCC 389 has held that prosecution against economic offenders, if any, are not allowed to continue, it was the entire community which would be aggrieved and courts have to guard the collective interest of the society.
17. Yet again, Hon'ble Apex Court in the case of PARBATBHAI AAHIR ALIAS PARBATBHAI BHIMSINHBHAI KARMUR & OTHERS vs STATE OF GUJARAT & ANOTHER reported in (2017)9 SCC 641 having enumerated the contingencies under which Section 482 Cr.P.C. jurisdiction can be exercised by the High Court, though not exhaustive but illustrative, has further held that exception to the principle set out in the propositions at paragraphs 16.8 and 16.9, economic offences involving the financial, land, economic well being of the State have implications which lie beyond the domain of a more dispute between private 20 disputants. It has been further held that High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance.
18. Keeping these principles in mind, when the facts on hand are examined, it would clearly emerge from the charge sheet material that C.W.69 - N. Naseer Ahmed had approached accused No.12-second petitioner to get some bills in the name of M/s Innovative Ventures Pvt. Ltd. for which he asked for 1% commission. He has also stated that there was no transaction of materials to M/s. Innovative Ventures Pvt. Ltd and entire transaction was bogus one done on the instructions of second petitioner-accused No.12. Accused No.12 was the Managing Director of M/s.Kusum Alloys Ltd. - accused No-15. It is the case of prosecution that accused No -12 transferred Rs.524 Lakhs fraudulently collected in cash from the term loan 21 account of M/s. Innovative Ventures Pvt. Ltd through third parties. It is also the case of prosecution that out of the loan amount, Rs.301.50 lakhs was transferred to the account of M/s. Kusum Alloys Ltd. - first petitioner herein held at Union Bank of India, Palakkad, Kerala and then transferred to its account at Bangalore held at Vijaya Bank towards repayment of outstanding liability of M/s.Kusum Alloys Limited -first petitioner herein. In fact, learned Sessions Judge while considering the application filed by the petitioners for discharge, at paragraph 43 of his order dated 25.03.2013 has in detail stated as to how monies borrowed from the Union Bank of India, Indore were routed through the said company and the role played by first petitioner - accused No -15 in this regard. In the light of said material available on record, it cannot be gainsaid by the petitioners that proceedings are required to be quashed in exercise of power vested in this Court under Section 482 Cr.P.C. Hence, this Court is of the considered view that there is no merit in this petition and accordingly, it stands rejected.
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In view of rejection of the criminal petition, I.A.1/2017 for stay does not survive for consideration and accordingly, it is hereby rejected.
Sd/-
JUDGE *sn/dr/sp