Karnataka High Court
P Udaya Shankar Bhat vs N Govardhanareddy on 28 February, 2014
Author: K.N.Phaneendra
Bench: K.N. Phaneendra
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 28TH DAY OF FEBRUARY, 2014
BEFORE
THE HONOURABLE MR. JUSTICE K.N. PHANEENDRA
CRIMINAL PETITION No. 100093/2014
BETWEEN:
P. Udaya Shankar Bhat
56 years, S/o. late P. Krishna Bhat
Chief Manager, State Bank of Mysore
Siruguppa Branch, Siruguppa 583 121
Bellary District.
...PETITIONER
(By Sri. Harsh Desai, Advocate)
AND:
N. Govardhanareddy
42 years, S/o. Sanna Narasimha Reddy
Agriculturist and Managing Partner
Siddalingeshwara Rice Industries
Siruguppa 583 121, Bellary District
...RESPONDENT
(By Sri. V. M. Sheelvant, Advocate)
---
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This Criminal Petition is filed under Section 482 of Code
of Criminal Procedure, 1973, praying to quash the entire
proceedings in C.C.No.638/2013 on the file of the Civil Judge
& JMFC at Siruguppa and further dismiss the private
complaint.
This petition coming on for admission this day, the
Court made the following:
ORDER
The petitioner approached this Court seeking to quash the entire proceedings in C.C.No.638/2013 on the file of the Civil Judge and JMFC at Siruguppa and consequently to dismiss the private complaint lodged against the petitioner.
2. The brief facts that emanate from the records are that, the Sidalingeshwara Rice Industries in which respondent is also one of the partners availed a term loan of Rs.60 lakhs from the petitioner-bank i.e., State Bank of Mysore, Siruguppa branch and admittedly the said loan was discharged as per the terms of the contract. Even after discharge of the said loan, the bank authorities have retained the documents pertaining to the respondent. In spite of repeated requests and demands, except issuance of no due 3 certificate, the petitioner-bank has not at all returned the said documents of title, which were served by the bank by way of mortgage. It is alleged that, when the respondent, as a partner, approached the bank for return of the documents, the petitioner being the Manager of the said Bank, told the respondent that the title deeds were misplaced and in spite of best efforts, the petitioner could not trace them and ultimately requested the respondent to give a paper publication with regard to loss of those documents and take appropriate steps in accordance with law. It is further contention of the respondent that, having come to know that the documents are misplaced or lost in the bank, they gave paper notification in Prajawani daily newspaper having circulation in all over the State, particularly, in Shiraguppa taluk, specifically mentioning that the said documents pertaining to respondent partnership firm have been lost in the petitioner-bank. Thereafter it appears he has taken loan from the HDFC Bank, Koppal branch by means of producing 4 some copies of the documents, which were said to have been lost.
3. Thereafter, it appears the respondent issued a notice dated 26.09.2013 to the petitioner-bank narrating the above said factual aspects. The said notice was replied by the bank stating that the said documents were retained by the bank, which were produced by one Sri. P.Srinivas Reddy on 11.12.2008 and particularly the documents pertaining to RS No.18-A/2 standing in the name of Sri. P. Jayaram Reddy were deposited by him as collateral surety for the loan obtained by Sri. Siddalingeshwara Rice Industries. It is contended that the partners of the said firm by name P. Jayaram Reddy as well as K. Srinivasa Reddy have got some other loan transaction in the bank and therefore, the said documents were retained by the bank by exercising their right of lien, under Section 171 of the Indian Contract Act.
4. Being aggrieved by the said reply notice and alleging that the entrustment of those documents by the respondent 5 through one of the partners P. Jayaram Reddy has not been properly returned by the bank even after the discharge of the loan and the bank officers have committed breach of trust, it appears, a complaint came to be lodged before the JMFC, Siruguppa for the offences punishable under Sections 406, 418, 426 and 409 of Indian Penal Code, 1860. On receipt of the said complaint, the learned Magistrate proceeded to take cognizance and record the sworn statement of the complainant i.e., the respondent herein and thereafter, issued summons and process against the petitioner-Bank. Being aggrieved by the said order of the learned Magistrate, the present petition is filed.
5. Before adverting to the entire transaction between the parties and to ascertain whether the respondent has abused the process of the law in initiating such criminal complaint against the petitioner-Bank, it is just and necessary to bear in mind certain decisions of the Hon'ble Apex Court, which laid down the guidelines as to under what 6 circumstances the Court can interfere with the criminal proceedings pending before the Investigating Officer or before the Court. It is worth to note a decision reported in (2012) 9 SCC 460 in the case of Amit Kapoor Vs. Ramesh Chander and Another.
At paragraph 27.13 the Apex Court laid down that, "quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie."
6. In another decision reported in (2013) 6 SCC 740 in the case of Chandran Ratnaswami Vs. K. C. Palanisamy and Others.
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Apex Court has held that, quashment of proceedings, when warranted, abuse of process of Court, when can be held, criminal proceedings initiated to avoid civil liability/to convert purely civil dispute into criminal case- "Access jurisdiction", held, requires Courts to deal with legitimate litigation, but equally also requires quashment of proceedings where such litigation is abuse of process of Court - Criminal proceedings against appellants being abuse of process of court, but courts below allowing them to continue is unsustainable."
7. In fact a detailed discussion has been made and detail guidelines have also been laid down in a case of State of Haryana and Others Vs. Bhajan Lal and Others reported in 1992 Supp (1) SCC 335.
8. Wherein the Hon'ble Supreme Court laid down certain formulas and given some exhaustive list under what circumstances the Court can exercise its powers under Section 482 of Cr.P.C and under what circumstances it 8 should not exercise such powers. The said principles are as follows:
(1) Where the allegations 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 Magistrate as contemplated under Section 155(2) of the Code. 9 (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 thee 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 concerned Act (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 concerned Act, 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.
9. In another ruling reported in (2013) 3 SCC 330, between Rajiv Thapar and Others Vs. Madan Lal Kapoor, it is held that, 10 In order to invoke its inherent jurisdiction to quash the proceedings on the basis of defence material High Court has to be fully satisfied that material produced or relied on by accused leads to conclusion that his/her defence is based on sound, reasonable and indubitable facts; rules out and displaces assertions contained in charges leveled against accused without necessity of recording any evidence; should not have been refuted, or alternatively, cannot be justifiably refuted, being of sterling and impeccable quality i.e., a reasonable man should be persuaded to dismiss and condemn actual basis of accusations as false; and whether proceeding with the trial would result in an abuse of process of the Court and would not serve the ends of justice.
10. Keeping in mind the above said principles, this Court has to see whether the petitioner-Bank has made out any requisite or specific ground to come to a definite conclusion, that the complaint filed by the respondent against 11 the petitioner-Bank is an abuse of power of the Court and with a malicious intention such a complaint has been filed.
11. It is an undisputed fact that a firm by name M/s. Siddalingeshwara Rice Industries has obtained a term loan limit of Rs.75,00,000/- in the name of the said rice industries represented by Sri. P. Jayaram Reddy and the documents pertaining to survey No.18A/3 have been deposited by one Sri. P. Srinivasa Reddy on 11.12.2008. It is also admitted by the petitioner himself in the reply notice that, the said loan has been cleared. It is also admitted that they have retained those documents by exercising lien under Section 171 of the Indian Contract Act, as the partners of the said firm Sri. P. Jayaram Reddy and K. Srinivasa Reddy have got some other loan transaction with the bank and the Sri.P.Jayaram Reddy claiming himself as the Managing Partner of Siddalingeshwara Rice Industries, has not claimed those documents after discharge of the said loan by Siddalingeshwara Rice Industries.
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12. The respondent contended as one of the partners he made a request for return of the documents and that the petitioner-Bank has stated that those documents are lost and that this respondent can give a paper publication stating that those documents are lost. Accordingly, the respondent has given the paper publication. Those particular allegations made against the petitioner-Bank have not been admitted, but they are denied in the reply notice. On the contrary, it is stated that the said documents were retained with respect to some other loan transaction and therefore, there is no occasion for the Bank to return the said documents.
13. The learned Counsel for the respondent seriously drawn my attention to some of the documents, which he has produced today before the Court. One amongst them is dated 19.11.2012 issued by the State Bank of Mysore, Siraguppa Branch wherein the endorsement was given with reference to the term loan account No.64022335345, stating that the said loan amount was closed as on 17.11.2012. Another 13 document dated 30.11.2012 also shows that, in another current account in No.64023846847 pertaining to M/s. Siddalingeshwara Rice Industries, OD limit has been closed and the account is maintained as pure deposit account only.
14. The learned Counsel seriously contends that, while giving these two letters, the bank has never stated that the documents which were deposited by the partners of M/s.Siddalingeshwara Rice Industries with the petitioner- Bank have been retained with reference to some other loan transaction pertaining to the partners. On the other hand, he drawn my attention that, after a long lapse of time, i.e., on 18.09.2013, after respondent has availed a loan from HDFC bank, a letter was addressed by the petitioner-Bank to the Branch Manager of HDFC bank, stating that the original title deed mortgaged by M/s. Siddalingeshwara Rice Industries standing in the name of P. Jayaram Reddy were retained by the petitioner-Bank, and therefore, the HDFC bank is to 14 exercise caution and insist the party to bring No Objection from the petitioner-Bank.
15. Taking objection to the letter addressed to H.D.F.C. Bank the learned Counsel contended, when the petitioner-Bank has specifically orally informed that the documents were lost and made the respondent to give a paper publication and after giving paper publication, on the basis of copies of the documents the respondent has obtained loan, in order to cheat the respondent and to see that the HDFC bank would take action against the respondent, the said letter has been addressed. Hence, without permission of the respondent, the petitioner-Bank has retained the said documents and breached the trust reposed by the respondent in the petitioner-Bank. Therefore, he has rightly filed the complaint before the learned Magistrate.
16. I have carefully perused the paper notification issued in Prajawani newspaper on 09.06.2013, which was on Sunday, wherein it is categorically stated that "the property in 15 Survey No.18A/3 measuring 2 acre 40 cents and survey No.18/4 measuring 2 acres 92 cents standing the name of Sri. P. Jayaram Reddy, son of Laxmi Reddy, were lost and if any person is having possession of the said document, the same has to be returned to Sri. Jayaram Reddy".
17. Admittedly, this notification has not been issued by the respondent. Jayarama Reddy appears to have issued this particular publication. But there is no mention in the particular document whether these documents were pledged or these documents were secured by the Bank and the said documents were lost when they were in possession and custody of the bank. Further added to that, the notice issued by the respondent making allegations that the petitioner has, in fact, told the respondent to give such a paper notification. Said allegations have been denied by the petitioner herein. Further petitioner also pleads his ignorance about the paper publication.
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18. Looking to the above said circumstances, though the notice was issued on 26.09.2013 and prior to that on 09.06.2013 paper notification was issued. But prior to these two circumstances, there are absolutely no materials placed before the Court by the respondent to show whether himself and any of the partners of Siddalingeshwara Rice Industries have made any attempts to ask the bank authorities, i.e., the petitioner, by way of writing for return those documents or asking them why those documents were retained by the bank whether there was any other transaction pertaining to Siddalingeshwar Rice Mill or pertaining to any partner of the said firm.
19. In my opinion, in the absence of such materials before the Court, malafide intention or mens rea on the part of the petitioner to cheat or acted can be attributed in breach of trust to defraud the respondent. Further added to that, notice was issued on 26.09.2013, the same was replied on 17.10.2013. It is not the case of the respondent that they 17 never received this reply notice. In the reply notice it is categorically stated that the respondent has not at all deposited the title deeds pertaining to said loan. On the other hand, it was deposited by B.Sreenivas Reddy, particularly the properties in the name of Sri B. Jayaram Reddy. It is also categorically made it clear that those documents were secured as collateral security for the repayment of the debt. It is also stated that those documents were retained by the bank exercising lien u/S 171 of the Indian Contract Act. It is also requested in the said reply notice that Jayaram Reddy at no point of time has sought for return of title deeds pertaining to the mortgage transaction and that the respondent has also not made any application for return of those documents in the capacity of partner of the said firm. Even after issuance of this notice, it appears that on 30.10.2013 a private complaint was filed before the Court making allegations that these documents were retained by the petitioner bank in utter breach trust reposed by the respondent on the first petitioner. 18
20. When it is made clear by the petitioner that those original documents were retained by them in exercise of their right u/S 171 of the Contract Act I do not know how the respondent has presumed that there was a breach of trust on the part of the petitioner. In order to attract Sec. 418 of the Indian Penal Code, 1860, the petitioner must have an intention even at the initial stages of loan transaction or at the time of closure of the loan in order to cheat the respondent, he had such intention to retain those documents in the bank. But no such allegations are there in the complaint. The say that either at the time of loan transaction or at the time of closing of the account, the Bank Manager has retained the said documents with an intention to cheat or breach the trust reposed by the respondent in favour of the petitioner. I could understand that if this complaint was filed after making a request with the bank at the earlier stage and if the Bank has refused to return the documents without any genuine or sufficient reasons. In the absence of such materials, in my opinion, knowing fully well the petitioner has 19 retained the said documents, by exercising right u/S 171 of the Indian Contract over the property, this petitioner who has not made any request at any point of time, has rushed to the Criminal Court with the present complaint, in a hasty manner.
21. In my opinion, the said act of the respondent is nothing but abusing the process of the Court and if possible to see that the petitioner is forced to withdraw their letter written to H.D.F.C. Bank. Of course, there are materials to show that the respondent has received loans from H.D.F.C. Bank. The H.D.F.C. Bank knowing fully well the documents are lost, must have advanced loan in favour of the respondent. Even considering that the H.D.F.C. Bank has issued loan, they can also go against the property for recovery of their loan subject to the condition that the petitioner bank in favour of whom the property has been mortgaged have no other lien over the said property subject to that condition the rights of H.D.F.C. Bank is also protected. Under the said 20 circumstances, by looking to the factual aspects of this case there was absolutely no necessity for the respondent to rush to the Criminal Court, on the other hand he would have filed civil proceedings for recovery of those documents from the bank authorities.
22. Therefore, as rightly contended by the learned counsel, this is purely a civil transaction between the parties virtually converted into criminal proceedings. The party should not be unnecessarily dragged to the Criminal Court. Applying the principles of the Apex Court rulings cited above to the facts of this case and for the above said reasons, I am of the considered opinion, this is a fit case where continuance of the criminal proceedings amounts to abuse of process of Court. Further, it will cause great injustice and inconvenience to the petitioner, if such proceedings are not quashed and allowed to be continued.
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With these observations, the petition is allowed. Proceedings pending before the J.M.F.C. Siruguppa, in C.C. No. 638/2013 is hereby quashed.
SD/-
JUDGE gab/bvv