Gujarat High Court
Sudhir Sharadbhai Sule vs State Of Gujarat on 7 March, 2022
Author: Ilesh J. Vora
Bench: Ilesh J. Vora
R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 19993 of 2013
With
R/CRIMINAL MISC.APPLICATION NO. 12150 of 2012
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ILESH J. VORA Sd/-
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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SUDHIR SHARADBHAI SULE
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
MR KB ANANDJIWALA(134), SENIOR COUNSEL WITH MR. VISHAL
ANANDJIWALA, FOR THE APPLICANT IN CRMA NO.19993 OF 2013
MR ZUBIN BHARDA, FOR THE APPLICANT IN CRMA NO.12150 OF 2012
MR DEEP D VYAS(3869) FOR THE RESPONDENT(S) NO. 2
MR MANAN MEHTA, APP FOR THE RESPONDENT(S) NO. 1
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CORAM:HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 07/03/2022
COMMON ORAL JUDGMENT
1. Common issue raised in the present applications and facts are also common and therefore, both the applications were heard together and disposed of by this common order.
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2. The applicants herein, have preferred the present applications invoking extraordinary jurisdiction of this Court under Section 482 of the Code of Criminal Procedure, seeking quashment of the FIR being C.R.No.I-95/2012 registered with Navsari Town Police Station, Dist. Navsari, for the offences punishable under Sections 418, 420, 421, 423, 424, 467, 468, 471, 472, 474, 120(b), 193, 196 & 197 of the Indian Penal Code.
3. The legal issue raised in the present applications that, an advocate cannot be prosecuted for non exhibiting greater professional care and competence while submitting non- encumbrance certificate to a bank.
4. Brief facts leading to filing the applications are that, accused Nos.1 and 2 being owners of shops No.L-12, L-13 and L-16 obtained loan from Bank of Baroda by creating mortgage on the shops properties and first charge of Bank of Baroda was created on 19.08.2004. While considering the loan request, the Bank of Baroda had referred all the documents to panel advocate - accused No.3 for verification of papers and issuance of Title Clearance Certificate in favour of accused Nos.1 and 2. The Bank of Baroda after verification of the original documents including NOC from the society and considering the Title Clearance Certificate, sanctioned the loan and accordingly amount had been disbursed. In the year 2006, accused Nos.1 and 2 after having availed loan facility from Bank of Baroda and having created the equitable mortgage on three shops, approached Dena Bank branch, Navsari for loan on the same title deed of the property, which has already been mortgaged with the Bank of Baroda. The Dena Bank after considering the documents, referred the loan papers to the panel advocate - accused No.3 - Suresh Sule for issuance of Title Clearance Certificate and upon receiving the certificate, Dena Bank sanctioned the loan.
Page 2 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 In the aforesaid facts, respondent No.2 complainant, lodged an FIR inter alia, stating that, despite the title deeds, pledged with Bank of Baroda, accused Nos.1 and 2 have hatched conspiracy to defraud the Dena Bank and being a part of the conspiracy, accused No.3 to facilitate the accused Nos.1 and 2, issued a Title Clearance Certificate, so as to enable them to obtain the loan and intentionally, did not disclose the true facts of the mortgage and submitted false certificate.
So far applicant Satish Sharma is concerned, he has been arraigned as accused No.4 in the alleged FIR inter alia alleging that, in the year 2007, accused Nos.1 and 2 being owners of Shop Nos.12 and 13 of Akshar Coop. Housing Soc. Ltd., obtained a loan from Bank of Baroda by depositing original title deeds and while sanctioning the loan, bank has referred the documents to the applicant Satish Sharma for his opinion on the title of the shop property and accordingly, he issued a Title Clearance Certificate with respect to shop Nos.L12 and L13 that the properties are free from all encumbrances.
Respondent No.2 is the flat holder of Akshar Coop. Hous. Soc. Ltd., and being a vigilant person of the society and keeping in mind the financial interest of the nationalized bank, he thought it fit to lodge an FIR against the accused Nos.1 & 2, who have obtained the loan and they are the beneficiaries of transaction as well as two advocates (accused Nos.3 and 4) alleging that, the applicants herein were part of conspiracy hatched by the accused Nos.1 and 2 to obtain the loans from different banks by submitting forged documents and thereby, they have committed offence of cheating, criminal breach of trust, forgery for the purpose of cheating with an intention to cause wrongful loss to the bank.
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5. This Court has heard Mr. K.B.Anandjiwala, learned Senior Counsel assisted by Mr. Vishal Anandjiwala, learned counsel, Mr. Zubin Bharda, learned counsel, Mr. Deep D. Vyas, learned counsel and Mr. Manan Mehta, ld. APP for the respective parties.
5 (1). Rule. Ld. Counsel appearing for the respective respondents waive Rule.
6. Mr. K.B.Anandjiwala, learned Senior Counsel and Mr. Zubin Bharda, learned counsel appearing for the applicants raised the following contentions :-
(a) That both the applicants are practicing advocates and since long, they are on panel advocates of various banks including banks referred in the FIR. There is nothing on record to indicate that, the applicants were parties to the alleged conspiracy hatched by accused Nos.1 and 2, to obtain loans from various banks by depositing title deeds of properties. So far the applicants are concerned, the only act attributed is that, they had issued Title Clearance Certificate as sought by the concerned bank. Therefore, they had performed their duty by extending a legal opinion in the form of Title Clearance Certificate and while giving the certificates, they taken all care and caution as required and keeping in mind interest of the bank, without suppressing anythings, they issued the certificates. In that context, it was submitted that, it cannot be said that, the applicants had issued a false report and had connived with loanee accused with an ulterior motive of usurping the public money.
(b) That, the applicants were neither in any way associated with the accused Nos.1 and 2, who have obtained the loan, nor they had received any monetary benefits from the alleged transactions entered into by the accused with the concerned Page 4 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 bank. Thus, therefore, in absence of any evidence to show that, the applicants have aided or abetted to accused Nos.1 and 2 for obtaining loans, it prima facie does not prove that the applicants herein were part of alleged criminal conspiracy hatched by accused Nos.1 and 2 and therefore, the allegations made in the FIR, 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 applicants.
(c) Lastly, it was submitted that, the FIR has been lodged with a view to harass the applicants. Respondent No2.
Complainant is also a practicing lawyer at Navsari town. In the year of 2006, respondent No.2 availed a loan from Bank of Baroda for purchasing a vehicle and computer, for which he did not repay the said loan amount, as a result of which, the bank had decided to initiate legal proceedings against the respondent No.2 and before initiation of proceedings, legal notice through applicant Satish Sharma, who has been arraigned as accused No.4 in the FIR, had been served notice upon respondent No.2 calling upon him to repay the outstanding amount of loan. Thus, therefore, present FIR is malaciously instituted with an ulterior motive with wreaking vengeance on the accused applicants and with a view to spite them due to private and personal grudge, as the applicants are neither office bearers of Akshar Coop. Hous. Soc. Ltd,. nor any notice served upon the society or its member for the alleged due amount of loan obtained by the accused Nos.1 and 2. So it was submitted that, no cause arises to respondent No.2 to lodge the present FIR arraigning the present applicants as accused against whom no offence is made out. Hence, continuing the proceedings is nothing, but sheer harassment to the applicants and an abuse of process of Court.
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7. In support of the aforesaid contentions, learned Counsels for the applicants relied upon the judgment of the Supreme Court in the case of Central Bureau of Investigation, Hyderabad Vs. K. Narayan Rao, [(2012) 9 SCC 512], to submit that, the criminal liability arise only when the lawyer had participated in a plan to defraud the bank.
8. Mr. Deep Vyas, learned counsel for the complainant and Mr.Manan Mehta, learned APP for the State have vehemently opposed the applications, submitting that, the applicants are facing charge of criminal conspiracy alleged to have been hatched by accused Nos.1 and 2 to defraud the bank and therefore, whether the applicants were party to the alleged conspiracy or not would be a matter of evidence and therefore, at this stage, court may not exercise the inherent powers in favour of the applicants. It was submitted that, the applicants could not have issued title clearance certificates so far loan sought for from the Dena Bank branch at Navsari as the property on which loan was sought was already mortgaged with Bank of Baroda. In this background facts, at this stage it cannot be said that, the applicants have not committed offence and are not liable for prosecution.
9. In view of the facts and circumstances of the present case, the question which falls for consideration is, whether case is made out for exercising inherent power vests with this Court under Section 482 of the Code ?
10. So as to appreciate the submissions advanced by the learned counsel for the respective parties, it is necessary to take into account the settled law on the inherent powers of the High Court. It is no more res integra that, exercise of power under Section 482 of the Cr.P.C, to quash a criminal proceeding is only when an allegation made in the FIR or the chargesheet do not constitute the ingredients of the offences alleged. The power of the High Court is an inherent Page 6 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 power to secure the ends of justice or to prevent any abuse of process of any Court. This is an extraordinary power of the High Court like Article 226 of the Constitution of India and while exercising it, the court must careful and cautious before invoking it to ensure that if this power is not invoked, the litigant would suffer irreparable loss and injury and it would be manifest injustice and abuse of process of law.
11. I have very carefully considered the averments of the complaint. If we read the FIR carefully, it appears that, there is no dispute about the loan obtained by the accused Nos.1 and 2 from the different banks, by depositing the title deeds of the shops as referred in the FIR. The applicants are penal advocates of the Bank of Baroda and Dena Bank and in their official duty, they issued a Title Clearance Certificate, opining that, the property is free from charges and all encumbrances and has clearly marketable title. The issue arise when the Dena Bank sanctioned the loan by creating mortgage of the shops properties, upon which Bank of Baroda had first charge as it had sanctioned the loan on the same property. The applicants herein were asked by the Bank to issue Title Clearance Certificate in favour of the applicant Nos.1 and 2. A clause reading of the FIR would show that, only allegation against the applicants to the fact that, they suppressed the material facts and issued false certificates. Except this, there is no allegation against them that, the applicants were part of the said criminal conspiracy hatched by accused Nos.1 and 2 and knowingfully well about the earlier transactions and with financial benefits, they had issued the certificates. Therefore, prima facie, the ingredients of the conspiracy as alleged are missing so far role of the applicants are concerned. The applicants were never part of the alleged loan transactions, nor accused Nos.1 and 2 have asked the applicants - lawyers to issue certificate and therefore, there is no material or allegation connecting the applicants in the alleged conspiracy.
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12. In the aforesaid facts, so far the applicants are concerned, their role as conspirators are not established and therefore, allegations set out in the complaint, do not constitute the offence as referred above. The Apex Court in the case of K. Narayan Rao (supra), held that, the criminal liability of the lawyer arise only when the lawyer was an active participant in a plan to defraud the bank. Here in the present case, there is no allegation that, they were abetted or aided in the alleged conspiracy to defraud the bank and there was an overtact on their part. It is relevant to mention paragraphs 27, 28, 29, 30, 31 and 32 of the above cited judgment of the Apex Court, which reads thus:
"27. In the banking sector in particular, rendering of legal opinion for granting of loans has become an important component of an advocate's work. In the law of negligence, professionals such as lawyers, doctors, architects and others are included in the category of persons professing some special skills. A lawyer does not tell his client that he shall win the case in all circumstances. Likewise a physician would not assure the patient of full recovery in every case. A surgeon cannot and does not guarantee that the result of surgery would invariably be beneficial, much less to the extent of 100% for the person operated on. The only assurance which such a professional can give or can be given by implication is that he is possessed of the requisite skill in that branch of profession which he is practising and while undertaking the performance of the task entrusted to him, he would be exercising his skill with reasonable competence. This is what the person approaching the professional can expect. Judged by this standard, a professional may be held liable for negligence on one of the two findings, viz., either he was not possessed of the requisite skill which he professed to have possessed, or, he did not exercise, with reasonable competence in the given Page 8 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 case, the skill which he did possess.
28. In Jacob Mathew v. State of Punjab2 this Court laid down the standard to be applied for judging. To determine whether the person charged has been negligent or not, he has to be judged like an ordinary competent person exercising ordinary skill in that profession. It is not necessary for every professional to possess the highest level of expertise in that branch which he practices.
29. In Pandurang Dattatraya Khandekar v. Bar Council of Maharashtra3 this Court held that: (SCC p. 562, para 8) "8. There is a world of difference between the giving of improper legal advice and the giving of wrong legal advice. Mere negligence unaccompanied by any moral delinquency on the part of a legal practitioner in the exercise of his profession does not amount to professional misconduct."
30. Therefore, the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank. In the given case, there is no evidence to prove that A6 was abetting or aiding the original conspirators.
31. However, it is beyond doubt that a lawyer owes an "unremitting loyalty" to the interests of the client and it is the lawyer's responsibility to act in a manner that would best advance the interest of the client. Merely because his opinion may not be acceptable, he cannot be mulcted with the criminal prosecution, particularly, in the absence of tangible evidence that he associated with other conspirators. At the most, he may be liable for gross negligence or professional misconduct if it is established by acceptable evidence and cannot be charged for the offence under Sections 420 and 109 IPC along with other conspirators without proper and acceptable link between them. It is further made clear that if there is a link or evidence to connect him with the other conspirators for causing loss to the institution, undoubtedly, the prosecuting Page 9 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 authorities 2 (2005) 6 SCC 1 3 (1984) 2 SCC 556 are entitled to proceed under criminal prosecution. Such tangible materials are lacking in the case of the respondent herein.
32. In the light of the above discussion and after analysing all the materials, we are satisfied that there is no prima facie case for proceeding in respect of the charges alleged insofar as respondent herein is concerned. We agree with the conclusion of the High Court in quashing the criminal proceedings and reject the stand taken by CBI."
13. The principle of law laid down in the case of K. Narayan's case was followed with approval by the Supreme Court subsequently in the matter of Surendra Nath Pandey & Ors. Vs. State of Bihar and Ors. by observing as under:-
"4. The High Court by the impugned judgment has refused to quash the First Information Report (FIR) on the ground that the same prima facie discloses commission of the offences alleged against the Appellants who are the panel advocates of the Bank. A reading of the FIR would go to show that the allegations levelled against the Appellants is that as panel advocates they had furnished false Search Report/NEC/legal opinion with regard to the properties/land documents in order to cheat the Bank and to facilitate obtaining of loan by the concerned persons. On investigation of the FIR, a chargesheet has been submitted, a copy of which is enclosed to the present Appeal Paper Book. A reading of the charge sheet does not refer to any specific finding of investigation.
5. Taking into account the contents of the FIR, we are left with the impression that the said allegations are bald and omnibus and do not make any specific reference to the role of the Appellants in any alleged conspiracy. In Central Bureau of Investigation v. K. Narayana Rao [(2012) 9 SCC 512] to which one of us (Ranjan Gogoi, J.) was a party, it has been held by this Court that a criminal prosecution on the Page 10 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 basis of such bald and omnibus statement/allegations against the panel advocates' of the Bank ought not to be allowed to 4 MANU/SC/1216/2015 proceed as the same constitute an abuse of the process of the Court and such prosecution may in all likelihood be abortive and futile. ...
6. Taking into account the aforesaid facts and the ratio of the law laid down by this Court in Central Bureau of Investigation v. K. Narayana Rao (supra), we are of the view that the High Court was plainly wrong in refusing to interdict the proceedings against the Appellants. We, therefore, set aside the order of the High Court and quash the proceedings in G.R. No. 710 of 206 arising out of Agiaon (G) P.S. Case No. 20 of 2006 pending before the Chief Judicial Magistrate, Bhojpur, Ara insofar as the two Appellants Surendra Nath Pandey and Suresh Prasad are concerned."
14. Reverting to the facts of the present case in light of the aforesaid legal propositions, the applicants had issued title Clear Certificates as sought by the bank concerned and while issuing certificates, they did not have any connection with the accused Nos.1 and 2, who have obtained the loan and considering their role, if the allegations made in the FIR are accepted in their entirety, do not prima facie constitute any criminal offence. It is to be noted that, respondent No.2 being defaulter of Bank of Baroda, before initiation of recovery proceedings against him, he had been served with a legal notice, issued by the applicant Satish Sharma, who was the lawyer of the Bank. The Dena Bank has already initiated criminal proceedings against accused Nos.1 and 2 for the alleged transactions as referred in the FIR without arraigning the applicants lawyers who had issued the title clearance certificates. Thus, it is evident that, both the banks have accepted the Title Clearance Certificates and there is no any allegation by the bank authorities that, while issuing the certificates, the lawyers have suppressed the material facts and submitted false certificates. Even the opinion sought by the Dena Bank from another lawyer with respect to Page 11 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 alleged transaction clearly establishes that, the documents submitted for loan purpose are in proper and legal manner and found to be valid.
15. In view of the foregoing reasons and considering the peculiar facts and circumstances of the present case, it is necessary to refer parameters 1, 3 & 7 laid down by the Apex Court in the case of State of Haryana & Ors. Vs. Bhajan Lal [(1992) Suppl. 1 SCC 335] for exercising extraordinary power of quashing the criminal proceedings, which reads thus:-
"(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.
(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 (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."
16. The present case is squarely covered by the principles laid down in the case of K. Narayan Rao (supra) and parameters 1, 3 & 7 of Bhajan Lal's case (supra).
17. In view of the aforesaid discussions, case is made out for quashing of the FIR and consequential proceedings arising therefrom and allowing the proceedings to continue would amount to abuse of process of the Court. Accordingly, both the applications Page 12 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022 R/CR.MA/19993/2013 JUDGMENT DATED: 07/03/2022 are allowed and FIR being C.R.No.I-95/2012 registered with Navsari Town Police Station, Dist. Navsari, for the offences punishable under Sections 418, 420, 421, 423, 424, 467, 468, 471, 472, 474, 120(b), 193, 196 & 197 of the Indian Penal Code and consequential proceedings arising therefrom are hereby quashed qua the applicants.
Rule is made absolute.
Direct service is permitted.
Sd/-
(ILESH J. VORA,J) SUCHIT Page 13 of 13 Downloaded on : Sat Dec 24 12:20:20 IST 2022