Madras High Court
Unknown vs Union Government Of India
Author: T. Mathivanan
Bench: T. Mathivanan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED.27.03.2012 CORAM: THE HONOURABLE MR.JUSTICE T. MATHIVANAN Crl.O.P.Nos.8348 & 9611 of 2011 R.Subramanium (Crl.O.P.No.8348 of 2011) Green Signal Bio Pharma Pvt. Ltd., rep by its Managing Director Sundarapanipoornan (Crl.O.P.No.9611 of 2011) ... Petitioners Vs. Union Government of India by Additional Superintendent of Police, CBI/ACB/Chennai. ... Respondents Prayer: Petition is filed under Section 482 Cr.P.C, praying to call for the records pertaining to the case in Cr.No.RC MA1 2011 A 0012 pending investigation on the file of the respondent and quash the same. For Petitioner : Mr.N.R.Elango, Senior Counsel For Mr.D.Vikaram Raj (Crl.O.P.No.8348 of 2011) Mr.A.Ramesh, Senior Counsel For Mr.B.Ravi (Crl.O.P.No.9611 of 2011) For Respondents : Mr.N.Chandrasekaran Spl.Public Prosecutor for CBI Cases C O M M O N O R D E R
Invoking the inherent jurisdiction of this court under Section 482 Cr.P.C. the petitions in Crl.O.P.Nos.8348 & 9611 of 2011 have been filed seeking the relief of quashing the criminal proceedings pertaining to the case in Crime No.RC/MA-1/2011 A 0012 pending investigation on the file of the respondent.
2. The petitioner R.Subramanium in Crl.O.P.No.8348 of 2011 is the first accused and the other petitioner viz., company under the name and style of Green Signal Bio Pharma Pvt. Ltd., Rep. by it's Managing Director, Mr.Sundarapanipoornan in Crl.O.P.No.9611 of 2011 is the second accused.
3. The respondent Union Government of India represented by the Additional Superintendent of Police CBI/ACB/Chennai in both the petitions is one and the same. the relief which is sought for in both the petitions, and the subject matter which is in issue in both the petitions, is also one and the same. These two petitions have therefore, been heard together and disposed of in this common order.
4. Before we delve into the facts which are absolutely necessary for the disposal of these petitions, this court finds that it may be quite relevant to place it on record the duties and responsibilities of the officials concerned while dealing with the complaints which are deserved and competent to be taken up for registration and investigation.
This Court may put it in this way:
5. Industry, impartiality and integrity are the three cardinal principles, motto and mission as well of the Central Bureau of Investigation (in short CBI) which is the highest investigating agency of our land, intend to uphold the Constitution of India and law of the land, to provide leadership and direction to police forces and to act as the nodal agency in enhancing interstate and international cooperation in law enforcement.
6. Apart from judiciary the people of the land are reposing confidence and faith upon the functioning of this renowned institution. It shall not cave in itself to be criticized unfairly.
7. Complaints and source of information comes under Chapter 8 of CBI (Crime) Manual.
In clause 8.2 it is envisaged that the Superintendent of Police (including those working in the Special Units) are required to have a preliminary look at each complaint and decide whether it falls within the purview of CBI and would merit its attention. In case the complaint pertains to a subject outside the purview of CBI or the allegations contained therein are too trivial or vague it should be forwarded at the earliest to the department concerned with an endorsement that no enquiry has been made by CBI. The disposal would be noted in the records maintained for this purpose.
8. In clause 8.3 it is stated that all other complaints would be analyzed with a view to see whether a criminal offence can be made out requiring any action by CBI. In case, the analysis reveals that the complaint deals with a substantial issue which falls within the ambit of CBI and needs further verification, the permission of the Competent Authority will be obtained to verify the same. The Competent Authority is one who could order registration of a regular case for the particular rank of officer against whom the complaint has been made.
9. In Clause 8.5, in order to ensure uniformity in dealing with complaints, the following broad guidelines are given.
Ordinarily, no verification of complaint of the following nature should be taken up except for special reasons;
(i)Complaints which are anonymous and pseudonymous.
(ii)Complaints containing vague and unverifiable allegations.
(iii)Where the allegations relate to service matters, which can be better looked into the departmental authorities.
(iv)Complaints of petty nature not involving specific allegations of bribery or corruption which can be better dealt with by the Vigilance Wing of the department or local police.
(v)Complaints not otherwise falling within the purview of CBI.
(vi)Complaints which have already been looked in to or are being looked into by the department or its Vigilance Wing and the allegations prima facie do not reveal that these would require an open investigation by CBI.
(vii)Complaints pertaining to matters/incidents, which have occurred in the distant past.
(viii)Complaints involving only State Government servants or private individuals and which are of no interest to CBI."
10. Chapter 10 of Vigilance Manual deals with Regular Cases and the Registration and First Information Report as well.
11. Clause 10.1 says that on receipt of a complaint or after verification of an information or on completion of a Preliminary Enquiry taken up by CBI if it is revealed that prima facie a cognizable offence has been committed and the matter is fit for investigation to be undertaken by Central Bureau of Investigation, a First Information Report should be recorded under Section 154 Criminal Procedure Code and investigation taken up. While considering registration of an FIR, it should be ensured that at least the main offence/s have been notified under Section 3 of the Delhi Special Police Establishment Act.
12. Clause 10.2 says that while registering the FIR, the legal requirements of Section 154 Cr.P.C. should be fully complied with.
13. The strict compliance and adherence to the above guidelines are sin qua non for the officials, whenever they happens to register and take up a case for investigation. The clauses, enumerated in the above CBI (Crime) Manual, are the complete shape of track to be followed by the investigating officers, who are responsible to take up the investigation in respect of a cognizable offence.
14. In this connection, this Court likes to place reliance upon a decision of the Apex Court in Noor Aga vs. State of Punjab and another, reported in 2008 (56) BLJR 2254. In this case, while speaking on behalf of the Division Bench, His Lordship Hon'ble Mr.JUSTICE S.B.SINHA has observed in paragraph Nos.122, 123 and 124 in the following manner:
122. Guidelines issued should not only be substantially complied, but also in a case involving penal proceedings, vis-a-vis a departmental proceeding, rigours of such guidelines may be insisted upon. Another important factor which must be borne in mind is as to whether such directions have been issued in terms of the provisions of the statute or not. When directions are issued by an authority having the legal sanction granted therefor, it becomes obligatory on the part of the subordinate authorities to comply therewith.
123. Recently, this Court in State of Kerala and Ors. v. Kurian Abraham (P) Ltd., and Anr. MANU/SC/0801/2008 : (2008) 3031 ITR 284 (SC), following the earlier decision of this Court in Union of India v. Azadi Bachao Andolan MANU/SC/0784/2003 : (2003) 263 ITR 707 (SC) held that statutory instructions are mandatory in nature.
124. Logical corollary of these discussions is that the guidelines such as those present in the Standing Order cannot be blatantly flouted and substantial compliance therewith must be insisted upon for so that sanctity of physical evidence in such cases remains intact. Clearly, there has been no substantial compliance of these guidelines by the investigating authority which leads to drawing of an adverse inference against them to the effect that had such evidence been produced, the same would have gone against the prosecution.
15. In so far as the instant case on hand is concerned, the petitioners have sought the intervention of this Court to quash the criminal proceedings, pertaining to the case in Crime No.RC MA1 2011 A 0012, which has been registered against them by the respondent, after pressing into service of the inherent jurisdiction of this Court under Section 482 Cr.P.C.,
16. Section 482 of the Code of Criminal Procedure, 1973 deals with saving of inherent power of High Court. It reads as follows:
Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice.
17. Section 482 Cr.P.C., encompasses the following three essential ingredients:
i. to give effect to an order under Cr.P.C., ii. to prevent an abuse of process of Court, and iii. to otherwise secure the ends of justice.
18. The first sentence of this Section ensures that nothing in this Code shall be deemed to limit or affect the inherent powers of this Court. Amongst the above mentioned three ingredients, the third ingredient viz., to otherwise secure the ends of justice, does have wider amplitude and its plenitude connotes the meaning that the Court's hand should be long enough to subserve the ends of justice. Courts have been constituted to implement the law laid down by the legislators. It is common judicial parlance that while implementing the law, the Courts are required to interpret it.
19. The special features, which appear in the instant case, drive the Court to take the assistance of the decision of the Apex Court in Madhavrao Jiwajirao Scindia and others vs. Sambhajirao Chandrojirao Angre and others, reported in (1988) 1 SCC 692, in which the Apex Court has held that:
It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilized for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage.
20. In State of Haryana and Others vs. Bhajan Lal and Others, reported in 1992 Supp. (1) SCC 335, the Hon'ble Supreme Court of India, after considering a catena of decisions relating to the exercise of extraordinary power under Article 226 of the Constitution of India or the inherent powers under Section 482 Cr.P.C., has given the following categories of cases by way of illustration wherein such power could be exercised either to prevent the abuse of process of the Court or otherwise to secure the ends of justice.
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 made 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 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.
21. Prior to this, the Apex Court in R.P.Kapur vs. State of Punjab, reported in AIR 1960 SC 866 has summarized the following categories of cases, where inherent power can and should be exercised to quash the proceedings:
i. where it manifestly appears that there is a legal bar against the institution or continuance of the proceedings;
ii. where the allegations in the First Information Report or Complaint taken at their face value and accepted in their entirety do not constitute the offence alleged;
iii. where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge.
22. This Court, after having made a close and meticulous analysis of the related materials available on record, has come to the conclusion that the instant case on hand viz., the case in Crime No.RC MA1 2011 A 0012, which has been registered against the petitioners herein comes under the category Nos.1, 3, 5 and 7, which are engrafted in Bhajan Lal's case, reported in 1992 Supp. (1) SCC 335 and under category No.2, which has been carved out by the Apex Court in R.P.Kapur's case reported in AIR 1960 SC 866 and the above circumstance would suggest that the intervention of this Court is absolutely necessary to prevent the abuse of process of Court and also to secure the ends of justice.
23. In the instant case the respondent, Additional Superintendent of Police, CBI/ACB/Chennai has registered a case in Crime No.RC MA1 2011 A 0012 under Section 120 B r/w 420 of IPC and under Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act 1988 against the petitioners viz., (1) Mr.R.Subramanium, the then Chief Manager, Union Bank of India, T.Nagar Branch, Chennai. (2) M/s.Green Signal Bio Pharma Pvt. Ltd., represented by its Managing Directior Mr.Sundara Paripooranan and Director Smt.B.Dakshayani.
24. It is alleged that this case has been registered on receipt of reliable information. It is obvious to note here that the respondent has never disclosed the source of information from where it is received.
25. In the first information report the respondent has alleged that;
During the period 2007-08, Mr.R.Subramanium (A1) petitioner in Crl.O.P.No.8348 of 2011, the then Chief Manager, Union Bank of India, T.Nagar Branch, Chennai had entered into a criminal conspiracy with A2 company M/s.Green Signal Bio Pharma Pvt. Ltd., (petitioner in Crl.O.P.No.9611 of 2011) represented by its Managing Directior Mr.Sundara Paripooranan and Director Smt.B.Dakshayani to cheat Union Bank of India, T.Nagar Branch, Chennai.
26. In pursuance of the said criminal conspiracy A2 company had submitted a loan proposal for a term loan of Rs.10.00 Crores and a cash credit facility of Rs.4.00 Crores to establish the project of a BCG Vaccine manufacturing unit for a term loan of Rs.1.00 Crores and cash credit facility of Rs.4.00 Crores. In support of the loan proposal A2 had offered collateral security of two properties with highly inflated values of Rs.350 lakhs and Rs.3570 lakhs when the properties were worth about Rs.10 lakhs and Rs.27 lakhs respectively.
27. The petitioner Mr.R.Subramanium (A1) knowing fully well of the non-viability of the project, financial feasibility, and repaying capacity of the company, scrutinized the proposal of the second accused company with an intention to unduly favour the accused company and recommended sanction of Rs.10.00 Crores term loan and Rs.4.00 Crores cash credit facility. Based on the false recommendations of Mr.R.Subramanium (A1) the loan was sanctioned on 2012.2007 to the second accused company.
28. In pursuance of the criminal conspiracy, Mr.R.Subramanium (A1) had disbursed the entire loan amount of Rs.14.00 Crores without creating equitable mortgage over the collateral security to the extent of 35% of bank exposure and without taking credit process audit report.
29. In furtherance of the conspiracy A2 company represented by its Directors had again submitted a proposal for an additional cash credit facility of Rs.1.00 Crore during the year 2008 for expanding Micro Lab and Animal House with breeding facility, which was also sanctioned by the bank on the recommendation of Mr.R.Subramanium (A1), without complying with the earlier sanction conditions of the term loan and cash credit. It is also alleged that the case of the petitioners/accused persons had resulted in outstanding due of Rs.13.44 Crores as on date and thereby caused wrongful loss to the bank and corresponding wrongful gain to themselves. The loan accounts were treated as non-performing assets (NPA) twice earlier.
30. Heard Mr.N.R.Elango learned senior counsel appearing on behalf of Mr.D.Vikaram Raj learned counsel for the petitioner in Crl.O.P.Mo.8348 of 2011 and Mr.A.Ramesh learned senior counsel appearing on behalf of Mr.B.Ravi learned counsel for the petitioner in Crl.O.P.Mo.9611 of 2011 and Mr.N.Chandrasekaran learned Special Public Prosecutor for CBI Cases.
31. It is manifested from the records that the petitioner in Crl.O.P.Mo.9611 of 2011 has been in pharmaceutical business since April 2000. In the year 2002, the petitioner had started importing pharmaceutical raw materials, packing materials and they have also taken steps for manufacturing vaccines. It is also manifested from the records that the petitioner had entered into an agreement with M/s.Pasteur Institute of India, Coonoor on 27.11.2006 for the supply of two vials each of Rubella an Measles Vaccine seed stock and also agreed to supply the cell lines and technology. The company had supplied the same with necessary technology transfer documents relevant for production of respective vaccines, to M/s.Pasteur Institute of India, Coonoor.
32. In the meanwhile at the instance of one private competitor company M/s.Serum Institute of India Ltd., Pune the respondent had registered a case against the petitioner company. Since the initiation of criminal proceedings was malafide and abuse of process the petitioner had filed a petition in Crl.O.P.No.4389 of 2009 before this court under Section 482 Cr.P.C. for quashing the proceedings. After hearing both sides, this court had quashed the above said criminal proceedings against the petitioners company on 30.04.2009. Challenging the above said order dated 30.04.2009, and made in Crl.O.P.Mo.4389 of 2009 the respondent has preferred SLP in SLP(crl)No.8555 of 2009 before the Apex Court and the matter is still pending. It is significant to note here that no stay has been granted.
33. In so far as the present case on hand is concerned, Mr.A.Ramesh the learned senior counsel appearing for the petitioner in Crl.O.P.No.9611 of 2011 has adverted to that the petitioner had applied for a term loan of Rs.10.00 Crores and working capital limit of Rs.4.00 Crores and an additional term loan of Rs.1.00 Crore which were sanctioned against the existing land and building including all technical facilities with plant and machinery at the unit of the petitioner situated at Gummidipoondi and 33 acres of land of industrial use at Tiruvallur pledging of promoters shares along with personal guarantee.
34. He has also submitted that the land which was given as collateral security was evaluated by the empanelled evaluators at Rs.94 lakhs on the ground that it was landlocked and NOC had to be obtained from the Public Works Department. He has also added that an additional land at Rs.13 lakhs was purchased by the petitioner so as to have access to the existing 33 Acres of land and the same was also given to bank as collateral security yet it was valued much less. Hence the petitioner had sought for revaluation and the petitioner had also deposited the title deeds of promoter owned land and property at Gummidipoondi as an additional security.
35. He has maintained that though the term loan was sanctioned to the petitioner with interest at the rate of BPLR -2.25%, the bank had unilaterally revised the rate of interest to BPLR +4.5% and debited the same to the petitioners account. He has also maintained that the petitioner had paid the entire interest so debited under protest and that the account was never categorized as non performing asset but it was categorized as standard and performing asset.
36. Mr.A.Ramesh the learned senior counsel for the petitioner has also submitted that so far, the petitioner had repaid 12.81 Crores towards the principle and interest as per the schedule and that the remaining installments have not fallen due. He has also added that the deliberate allegations that the acts of the petitioner had resulted in outstanding due of Rs.13.40 Crores and thereby caused a wrongful loss to the bank and wrongful gain to themselves per se are contrary to truth.
37. As seen from the first information report the whole case of the prosecution oscillates on the pivot of granting of loan to the petitioner company by the Union Bank of India as if it amounts to criminal conspiracy and cheating and that the account has become NPA and an amount of Rs.13.44 Crores is due. In this connection Mr.A.Ramesh learned senior counsel has canvassed that the above allegations have been falsified by the statement of account and the letter from bank saying that the account is a standard and the dealings are satisfactory.
38. Notwithstanding this he has also based his arguments on the following grounds;
a) The initiation and continuation of criminal proceedings as against the petitioner is malafide and abuse of process.
b) The first information report did not disclose any cognizable offence much less under Section 120 B or under Section 420 IPC as against the petitioner.
c) The allegations leveled in the first information report did not constitute any cognizable offence.
d) The present criminal case has been registered against the petitioner company as well as against the first accused without any bonafide reason and the that this case has been registered only as a counter blast to the order of indictment made by this court against the respondent.
e) The respondent in violation of the provisions of the Code of Criminal Procedure and the fundamental rights guaranteed under Article 19 and 20 of the Constitution of India has registered the present case in RC MA1 2011 A 0012 dated 22.02.2011 which overlaps with the time period of the earlier first information report which was quashed by this court against which an SLP(crl.) No.8555 of 2009 is pending before the Apex Court.
f) The respondent had managed to obtain the papers unofficially from the Union Bank of India by intimidating the bank officials at the point of time when there was no pending investigation and this would clearly show that this case has been registered at the behest of a rival company which is opted to throttle the petitioner company to maintain monopoly in the field of vaccine manufacture.
39. Mr.A.Ramesh the learned senior counsel has also argued that the CBI has registered the present case only after perusing the records maintained by the bank for the loan account but they have given ex facie incorrect information only with a view to harass Mr.Sundara Paripooranan, who was arrayed as the third accused in the previous FIR and at whose instance the criminal proceedings in the previous FIR was quashed in respect of the second and the third accused.
40. He has also argued that as per the averments of the first information report relating to the present case on hand it seemed as if the second accused company has been represented by the Directors Mr.Sundara Paripooranan and Smt.Dakshayani when both ceased to be directors of the Company on the date of registration of the first information report and this fact was well known to the CBI. In fact in the counter filed by the petitioner company in the SLP before the Apex Court one Mr.Mullaivalavan had signed as authorized signatory and the copy of the same was served to CBI also. He would submit further that it is obligatory on the part of the respondent i.e., CBI to specify in the complaint that Mr.Sundara Paripooranan and Tmt.Dakshayani were in charge and responsible for the conduct and day today affairs of the business of the company and that in the absence of specific allegations they could not be compelled to face the ordeal or rigmarole of the criminal trial.
41. In support of his contention he has placed reliance upon the decision in State (NCT of Delhi) vs. Rajiv Khurana, reported in 2010 11 SCC 469.
42. According to the case of prosecution, the acts of the petitioners in Crl.O.P.Nos.9611 and 8348 of 2011 had resulted in an outstanding due of Rs.13.44 Crores as on 22.02.2011, on which date the instant case has been registered in Crime No.RC MA1 2011 A 0012 and thereby caused wrongful loss to that extent to the Bank and corresponding wrongful gain to themselves. It is also the case of the prosecution that the loan accounts were treated as Non-Performing Assets (NPA) twice earlier.
43. In this regard the petitioners have contended that the above allegations made by the prosecution in the first information report have been falsified by the statement of account and the letter from the Bank showing that the account is a standard one and the dealings are satisfactory.
44. It appears from the materials available on record that on 31.10.2007, the petitioner company in Crl.O.P.No.9611 of 2011 viz., Green Signal Bio Pharma Private Limited had addressed a letter to the petitioner in Crl.O.P.No.8348 of 2011, the Then Chief Manager, Union Bank of India, requesting to provide credit facilities to the extent of Rs.20.00 Crores (Rs.10.00 Crores towards term loan and another Rs.10.00 Crores towards working capital).
45. The material disclose that the Company had enclosed necessary documents for processing the above facilities. It is also pertinent to note here that it is revealed that prior to sending of this letter for requesting credit facilities, the Company had deliberation with the Bank.
46. On 09.11.2007, the Bank had sent a letter to the Company, wherein the Bank had referred their earlier letter dated 27.10.2007 and requested the Company to furnish certain details/informations to enable them to process the company's request for credit facilities and for being placed before their higher authorities for their sanction. It also appears that the Company had furnished certain informations and based on the informations, the Bank had submitted the proposals to the competent authorities for the sanction of credit facilities, who had also sought certain additional informations/clarifications.
47. In paragraph No.5 of the above letter, the Bank had requested the Company to let them to know as to whether the 33 Acres of land acquired at Thiruvallur is reclassified for industrial use. They had also requested the Company to furnish the date of purchase and sale deed, price of the property and to inform the details of the expansion programme envisaged including the time frame stipulated for the expansion and estimated total outlay funding pattern etc.,
48. The Company had also sent a reply on 07.11.2007 to the Bank to the queries raised by the Bank. As it appears from the letter dated 09.11.2007, in Clause 5.1, with regard to the query as to whether the 33 Acres of land Thiruvallur is reclassified for industrial use, the Company had stated that:
'There is no specific classification allotted by the Government for usage of this land. Hence, the land can be used either for Commercial / Industrial or Residential Purpose. Copy of the letter issued by the District Town and Country Planning Authority has been enclosed.'
49. In Clause 5.2, with regard to the query of date of purchase and sale deed price of the property, the Company had stated that:
'The land has been purchased from various parties in the month of June, July and September, 2006. The total value of the property as per sale deeds is Rs.27 Lakhs.'
50. In Clause 8.1, with regard to the query as to whether the Company will be in position to offer to any other collateral security other than the agricultural property of 33 Acres, the Company had stated that:
'The company is ready to offer the existing land and buildings including all technical facilities with plant and machinery, furniture and fittings etc., at Gummidipoondi and in addition the 33 Acres of land at Thiruvallur can be offered as collateral security. Also please note that the 33 Acres of land is not agricultural property. There is no specific classification allotted by the Government for usage of this land. Hence the land can be used either for Commercial / Industrial or Residential purpose. Copy of the letter issued by the District Town and Country Planning Authority has been enclosed.'
51. It may also be quite relevant to note here that on 16.11.2007, a letter has been addressed to the Company by NODAL Regional Office of Union Bank of India, which appears to have been signed by one Mr.M.P.Varghese, Deputy General Manager. In this letter, the Company's request for providing working capital limit of Rs.10.00 Crores and term loan of Rs.10.00 Crores for the BCG Vaccine Project has been referred. The letter reads as under:
'We are glad to convey In-Principle approval for the working capital and term loan limits subject to satisfactory Techno-Economic Viability report of the project and compliance of our Bank's terms and conditions.'
52. From the above context, it is thus made clear that the NODAL Regional Office of the Union Bank of India had In-Principle approved for the working capital and term loan limits as requested by the Company. This letter further reads that:
'This letter is issued for expediting approval/clearance from various agencies towards implementation of the project by the company.'
53. It appears from the Communication dated 27.12.2007 sent by the Bank to the Company, wherein the Bank has stated that we are pleased to inform you that our Competent Authority has sanctioned the following credit facilities on the various terms and conditions set out thereunder. The details of the facility, limit, margin, ROI and security are as under:
Facility Limit Margin ROI Security Working Capital Rs.4.00 Crores 25% for stocks and 50% for Book debts BPLR = presently 13.25%* Hyp. Of fully paid & insured stocks of Chemicals, vials & consumables not older than 180 days and against Book debts not older than 180 days for supplies to BCG lab, Guindy and 90 days for others.
Second Charge on all the fixed assets of the company.
Term Loan Rs.10.00 Crores 25% BPLR EM of lease hold factory land and buildings and Exclusive first charge of all the fixed assets of the company and second charge on the current assets.
Subject to approval by the Competent Authority at Central Office Mumbai otherwise the applicable rate of interest for working capital is BPLR + 1% and for term loan BPLR + 1.50%.
Repayment : The term loan instalment along with interest is repayable in 10 half yearly installments with a moratorium of one year. Interest charged during moratorium period to be serviced.
54. On 08.01.2008, a meeting appears to have been held between the Company officials and the Banking officials. As seen from the Minutes of meeting among other subjects, the Managing Director of the Company i.e.Mr.N.Sundaraparipooranan had requested the Bank to consider the following favourably:
i. To delete the pre-closure clause with 2% penalty.
ii. To reduce the interest rate to 11%.
iii. To reduce the processing fees.
55. In this connection, the Bank has stated that Our General Manager pointed out that point Nos.(i) and (ii), will be taken up with our Central Office to consider favourably. For Point No.(iii), General Manager pointed out that the same cannot be considered. Hence, it is thus clear that 13.25% of interest, which was levied for working capital of Rs.4.00 Crores as well as term loan of Rs.10.00 Crores was subsequently reduced to 11% in the above said meeting.
56. It is pertinent to note here that in the meeting held at Field General Manager's Office, Chennai, the following persons on behalf of the Company as well as on behalf of Bank had participated:
Company Officials:
1. Shri Sundaraparipooranan Managing Director of the Company,
2. Shri Mullaivalavan General Manager (Projects), Bank Officials:
1.Shri P.Y.Nagar General Manager, FGMO, Chennai,
2.Shri M.P.Varghese Deputy General Manager, NRO, Chennai,
3.Shri B.N.Vihari Asst. General Manager, FGMO, Chennai,
4.Shri V.L.Vaidya Asst. General Manager, CPC-SME, Chennai,
5.Shri R.Subramanian Chief Manager, T.Nagar Branch, Chennai,
6.Shri S.Rajamannar Senior Manager (Technical), CPC-SME.
57. Subsequent to that the letter dated 03.04.2008, which seems to have been addressed by the Company to the Managing Director of the Bank has made reference to joint discussion, which they had with the Company on 08.01.2008. In this connection, the Bank has stated that As per your request in the above meeting, we are pleased to inform you that the competent authority has approved the following modifications in the existing terms of sanction conveyed to you earlier. The rate of interest for the term loan as well as working capital limit has been revised to BPLR-2.25% (at present our BPLR is 12.75%).
Existing terms Modification approved Prepayment penalty of 2% will be levied in respect of the term loan in case of take over by other banks.
Waived ROI-BPLR + 1% for Working Capital BPLR + 1.50% for term loan BPLR 2.25% for Working Capital BPLR 2.25% for term loan Besides this, as it is seen from the communication dated 05.04.2008 from the Bank to the Managing Director of the Company, an additional term loan of Rs.1.00 Crore for establishing animal testing facility and Microbiology facility was also sanctioned to the Company.
58. From the letter of the Company dated 25.09.2008 addressed to the Chief Manager, Union Bank of India, it is understood that the Company had submitted the original registered memorandum of deposit of title deeds of their property situated at Kunnavalam, Thiruvallur District towards equity mortgage for the term loan and working capital limit sanctioned to them.
59. In respect of repayment of the installments to the Bank, Mr.A.Ramesh, learned senior counsel has argued that already the Company had paid five installments and towards interest the Company had paid a sum of Rs.3.08 Crores and hitherto the Company had paid a sum of Rs.12.81 Crores towards principal and interest.
60. While advancing his argument, he has also made reference to the letter of the Bank dated 04.02.2011, wherein in Column No.5, it has been stated that the Company had availed the term loan-I of Rs.10.00 Crores and term loan-II of Rs.1.00 Crore and cash credit of Rs.4.00 crore. In column No.10, it is stated that the authorised capital is Rs.20.00 Crores and paid-up capital is Rs.10.43 Crores as per the audited financial statement of 31.03.2010. In Column No.13, with regard to classification of the account, it has been stated as 'STANDARD' and in Column No.14, with regard to the experience as to their dealings, it has been stated as 'SATISFACTORY'.
61.In this connection, Mr.A.Ramesh, learned senior counsel, has submitted that as certified by the Bank on 04.02.2011, the account maintained by the Company was standard and the performance of the Company was also described as satisfactory. He has also canvassed that nowhere it is stated that the account maintained by the Company was non-performing asset as held by the respondent and that the allegations made in the first information report are nothing but a fertile imagination of CBI to foist a case as against the Company at the behest of some hidden mighty-personality only for the purpose of paralysing the business activities of the Company.
62.It is also more significant to refer the letter dated 22.03.2011, which seems to have been addressed to the Company by the Bank, wherein the Bank has informed that For term loans the interest upto 28.02.2011 and the installment due on 01.01.2011 has been serviced and there are no overdue in the accounts as on date.
63.It is to be underlined that the present case in Crime No.RC MA1 2011 A 0012 has been registered against the petitioners on 22.02.2011. In this connection, it is imperative on the part of this Court to highlight the Certificate issued by the Bank on 04.02.2011. In the said Certificate, in Column Nos.13 and 14, it has been stated that the account was standard and the experience as to their dealings with the Bank was also stated as satisfactory. This certificate was given by the Bank eighteen days prior to the registration of the case.
64. As observed herein above, there was no overdue as on 22.03.2011 as it is seen from the letter of the Bank addressed to the Company.
65. From the above letter, this Court is able to discern that the account maintained by the Company is a performing asset and it was never categorized as non-performing asset.
66. It is manifested from the records that the Company has availed Rs.10.00 Crores towards term loan-I, Rs.1.00 Crores towards term loan-II and another cash credit facilities to the tune of Rs.4.00 Crores.
67. The learned senior counsel has submitted that the Company has sofar paid Rs.12.81 Crores with interest and this has been certified by the Bank on 04.02.2011 saying that the account was standard and the performance of the Bank was also satisfactory and in the letter dated 22.03.2011 the Bank has also stated that for the term loans the interest upto 28.02.2011 and the installment due on 01.01.2011 has been serviced and there are no overdue in the accounts as on 22.03.2011.
68. From the above facts, this Court is of considered view that the question of wrongful loss to the Bank does not arise.
69. In sofar as the petitioner Mr.R.Subramanium, the then Chief Manager, Union Bank of India, T.Nagar Branch, in Crl.O.P.No.8348 of 2011, is concerned, it is not the case of the respondent that Mr.R.Subramanium, the then Chief Manager had suo motu sanctioned the loan in favour of the Company.
70. In this connection, it may be quite relevant to refer once again the letter dated 16.11.2007 sent by the Union Bank of India, NODAL Regional Office to the Company wherein the Bank has referred the applications submitted by the Company for working capital limit of Rs.10.00 Crores and term loan of Rs.10.00 Crores for the BCG Vaccine Project. In the above said letter, the Bank had in-principle approved for the working capital and term loan limits subject to satisfactory Techno-Economic Viability report of the project and compliance of the Bank's terms and conditions.
71. As observed herein before, it is significant to note here that the Company had requested the Bank to provide the above said facilities after submitting necessary proposal. After compliance of terms and conditions of the Bank, the Bank had sanctioned a sum of Rs.10.00 Crores towards term loan-I, Rs.1.00 Crores towards term loan-II and cash credit facilities to the tune of Rs.4.00 Crores.
72. After thorough analysation of the materials tagged along with these petitions, this Court finds that the petitioner Mr.R.Subramanium, the then Chief Manager, Union Bank of India, T.Nagar Branch has not violated any norms of the Bank and equally he has not acted suo motu or voluntarily to facilitate the Company.
73. In support of this view, it may be better to refer the communication of the Union Bank of India, CPC (SME), FGMO, Chennai, dated 20.12.2007 to the Company, in which it is stated that Our T.Nagar, Chennai Branch has submitted the proposal vide letter No.ADV/RS/CHN/1157, dated 07.11.2007 recommending for sanction of Term Loan of Rs.10.00 Crores and WC limit of Rs.10.00 Crores for the BCG Vaccine Manufacture Project of M/s.GREEN SIGNAL BIO PHARMA P LIMITED. The unit was inspected by our senior Manager (technical) on 26.10.2007 and certain additional information were called for from the company for compilation of T.O. report and for processing of the proposal. The matter was regularly followed up with the company & branch. In the meantime NRO Chennai has conveyed In principle approval to the company vide letter No.RO/RAD/2831, dated 16.11.2007 subject to Satisfactory Techno-economic viability report of the project and compliance of our Bank's terms and conditions.
74. From the above context, it is thus clear that the higher authority of the Bank viz., NODAL Regional Office had approved for the working capital and term loan limits subject to satisfactory Techno-Economic Viability report of the project and compliance of Bank's terms and conditions.
75. Clause No.31 of the above said communication reads that:
In view of the foregoing and considering the recommendations of the branch, we recommend for sanction of the following credit limits subject to satisfactory Techno economic viability report of Senior Manager (Technical) & recommendations of CAG of FGMO, Chennai as per our usual terms and conditions besides those mentioned in the branch proposal and herein below:
Nature of facility Limit Margin % Int./Comm.
Security CC (Hyp) 400.00 25% for stocks & 50% for Book debts BPLR Hyp. of fully paid & insured stocks of Chemicals, vials & consumables not older than 180 days and against Book debts not older than 180 days for supplies to BCG lab, Guindy and 90 days for others.
Second Charge on all the fixed assets of the company.
Term Loan 1000.00 25% BPLR EM of lease hold factory land and buildings and Exclusive first charge of all the fixed assets of the company and second charge on the current assets.
76. Apart from this, in Clause No.28 of the above said communication, it is stated that Senior Manager (technical) has conducted the inspection of the unit on 26.10.2007 and certain additional information including DPR was called for from the company for compilation of his report. The branch has since submitted the DPR and other details vide letter No.ADV/RS/986, dated 20.12.2007, T.O. report will be submitted shortly.
77. The Minutes of Credit Approval Grid Meeting appears to have been held at FGMO, Chennai on 26.12.2007 under Meeting No.220. In the Meeting of the credit approval grid, the following members were present:
1Shri V.L.Vaidya Asst.General Manager (CPC-SME), Chennai, Member Secretary 2 Shri M.P.Varghese Dy.Gen.Manager, NRO, Chennai 3 Shri B.N.Vihari Asst. General Manager (Credit) 4 Shri A.Thiruvengadam Chief Manager (P & D) 5 Shri R.S.Raghavan Chief Manager (CRLD) 6 Shri D.Krishnakumar Senior Manager (RMD) Ultimately, the Credit Approval Grid had recommended the proposal for sanction/approval of FBWC Rs.400.00 lacs, term loan of Rs.1000.00 lacs, total Rs.1400.00 lacs.
78.On verification of the available materials, it reveals that on 17.05.2008, the Bank had sent a communication to the Company with regard to the valuation report on the collateral security. At the end of the letter, the Bank had requested the Company to make necessary arrangement for pledging of the share certificates issued in the name of the promoters as stipulated in our sanction letter.
79.Another communication dated 20.06.2008 sent by the Bank to the Company reveals that the Bank had requested the Company to provide additional collateral security to the extent of around Rs.3.94 Crores to make good the short-fall in the collateral value as agreed in the above meeting.
80.In pursuant to the above letter, a communication seems to have been sent to the Company from the credit department to the General Manager's Office, Chennai on 31.12.2009. In the above communication, from clause No.20(b)(i) it reveals that the Company had furnished the collateral security as requested by the Bank. The details with regard to the nature and value of collateral security are given as under:
Nature/Description of collateral security indicating area & location of property Value (Rs.in lacs) Date of valuation along with name of Valuer Remarks Vacant land bearing Survey No.22, 23, 24, 28, 29, 43, 50 & 51 parts admeasuring 32,145 Acres and vacant land bearing Survey No.48/2 admeasuring 1.87 Acres (total area 34.015 acres) situated in Kunnavalam Village of Thiruvallur Taluk in Thiruvallur District-623 210 189.00 Dt.05.11.2009 P.R.Seshadri Owned by Green Signal Bio Pharma Pvt., Ltd., The above property was revalued after the company had acquired additional area of 1.87 acres of land to have an access to the existing area of 32.145 acres. The existing land was valued at Rs.96.44 lacs by the panel valuer in June 2009 due to inaccessibility.
Further branch reported that Mr.Sundara Paripooranan (chairman & MD of the company) had offered another property situated at Plot No.C & D, 37, Veerapandi Nagar, 1st Street, Choolaimedu, Chennai-94. According to panel valuer PSY Raju, property is reportedly valued for Rs.45.44 lacs. However, EM formality of the property and registration with SRO is yet to be completed.
81.The tabular Column II under Clause 22(a) of the above said communication reveals that FGMO, Chennai vide office note number GMO: CR: 1551, dated 18.05.2009 while permitting substitution of property have stipulated that all other pending stipulation except 35% collateral security be complied with.
82.After traversing all the material facts, Mr.N.R.Elango, learned senior counsel appearing for the petitioner in Crl.O.P.No.8348 of 2011 has submitted that as alleged by the prosecution, the petitioner Mr.R.Subramanium, the then Chief Manager, Union Bank of India has not undervalued the properties offered by the Company as security, but it was duly valued by a panel appointed by the Company. He has also adverted to that out of Rs.14.00 Crores, the Company had repaid Rs.12.01 Crores and hence the question of wrongful loss to the Bank would not arise and he has also canvassed that the first information report is nothing but an abuse of process of law and Court.
83.Countering the submissions made by Mr.Ramesh, learned senior counsel appearing for the Company and Mr.N.R.Elango, learned senior counsel appearing for Mr.R.Subramanium, the then Manager of the Union Bank of India, Mr.N.Chandrasekaran, learned Special Public Prosecutor for CBI Cases, has submitted that this Court might consider at this juncture as to whether cognizable offence is made out or not.
84.He has also argued that the averments of the first information report has disclosed the commission of cognizable offences under Sections 120(B) r/w 420 I.P.C., and under Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 and after registration of the case, the investigation has been taken up and it is in progress and at this stage it might not be proper on the part of this Court to stifle and scuttle the progress of the investigation.
85.He has also submitted that the case in Crime No.RC MA1 2011 A 0012 has been pending before the learned Principal Special Judge for CBI Cases, Chennai and since the investigation is in preliminary stage, the question of quashing the criminal proceedings would not arise. He would submit further that all the documents have not yet been collected from the Bank owing to financial year closure and further documents have to be collected.
86.He has also maintained that the petitioner Mr.R.Subramanium, the then Chief Manager, Union Bank of India knowing fully well that the value of the properties are inflated, to suit the proposal, had recommended sanction of facilities to A2 Company. He would further submit that the petitioner Mr.R.Subramanium had also recommended the proposal of A2 citing that the Company has got orders from foreign buyers without verification of any document or correspondence submitted by the Company to the Bank.
87.He has also adverted to that the Company had obtained the technology from the competitor itself in BCG Lab, Guindy. With regard to the conduct of the petitioner Mr.R.Subramanium, the learned Special Public Prosecutor for CBI Cases has submitted that in his proposal he had stated that the Company had already appointed two top Scientists and that the persons so employed needed training. He has also added that the petitioner Mr.R.Subramanium had also opined in his proposal that the Company had enjoyed good reputation for the quality of products, whereas by that time the Company had not even commenced its production. He would submit further that the Company had boosted the projected profits for the year 2008 and 2009 as Rs.5.00 Crores and Rs.18.00 Crores respectively, which the petitioner Mr.R.Subramanium had failed to evaluate the viability of the projection.
88.He has also indicated that infact in the year 2008, the Company had only pre-operative expenses of Rs.1.96 Crores, as on 31.03.2009 and they were running at a loss of Rs.80.00 lakhs and as on 31.03.2010 it was running at a loss of Rs.259.00 lakhs and these facts would clearly indicate the deception and abuse of authority by the petitioner Mr.R.Subramanium. He would further submit that as on 23.03.2011, the outstanding in the Company's account is Rs.11.80 Crores.
89.In paragraph No.3 of the counter filed by the respondent, it has been stated that:
As regards the averments made by the petitioner/A1 regarding the role of senior officers in sanctioning the credit facilities to A2, it is revealed that the proposal for the loan for A2 was initiated when the then GM and DGM of Union Bank of India, visited the unit on 24.10.2007 on a reference received from the Central Office of the Bank. The DGM directed A1 to process and submit the proposal of A2 for starting a unit for production of BCG Vaccine. Thereafter, A1 inspected the unit and submitted the proposal for sanction of term loan for Rs.10.00 Crores and working capital facility of Rs.10.00 Crores. In this proposal, A1 showed the values of the two properties to be mortgaged as Rs.350 lakhs and Rs.3570 lakhs as stated by A2. The technical team had also conducted a study on the technical viability of A2 and submitted its report to the Bank. The financial viability was the sole responsibility of A1. However, the role of senior officers and the technical team will be the subject matter of investigation in this case and the investigation is in the preliminary stages.
90.Mr.N.Chandrasekaran, learned Special Public Prosecutor for CBI Cases has also submitted that it is not correct to say that there had been no default in payment and that the Bank had not termed the account as non-performing asset (NPA) as alleged.
91.In this connection, he would submit that the Company had defaulted in payment for more than three months during 2010 and the account was classified as non-performing asset. But, the materials available on record, do not suggest that the Company had committed default in payment for more than three months during the year 2010 and the materials also do not have reference to show that the account was classified as non-performing asset.
92.The other contentions made on behalf of the respondents in their counter are trivial in nature.
93.The learned Special Public Prosecutor for CBI Cases while advancing his argument has also also submitted that the arguments advanced on behalf of the petitioners that there was no default in repayment is not a good ground to quash the criminal proceedings.
94.In support of his contention, he has also placed reliance upon a decision of the Apex Court in Union of India and Others vs. Ramesh Gandhi, reported in CDJ 2011 SC 1167. In this case, with regard to the inherent jurisdiction of this Court under Section 482 Cr.P.C., the Apex Court has held that quashing the criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. While penning down the Judgment on behalf of the Division Bench, His Lordship Hon'ble Mr.JUSTICE J.CHELAMESWAR has also made reference to the decision in R.P.Kapur vs. State of Punjab, reported in AIR 1960 SC 866 and another decision in State of Haryana and Others vs. Bhajan Lal and Others, reported in 1992 SC 604.
95.It becomes necessary for this court to extract the last two paragraphs of the contents of the first information report;
"The above acts of accused persons resulted in an outstanding due of Rs.13.44 Crores as n date, thereby causing wrongful loss to that extent to the Bank and corresponding wrongful gain to themselves. The loan accounts were treated as Non-Performing Assets (NPA) twice earlier.
The above information prima facie disclose commission of offences punishable under Section 120-B r/w 420 IPC and Section 13(2) r/w 13(1)(d) PC Act, 1988 by A-1 Shri R.Subramanian, the then Chief Manager, Union Bank of India, T.Nagar Branch, Chennai, A-2 M/s.Green Signal Bio-Pharma Pvt. Ltd., Chennai represented by its managing director Shri P.SundaraParipooranan and Director Smt.B.Dakshayani"
96. The allegations levelled in the above paragrphs of the first information report are not in fair congruence with the facts and circumstances projected herein above. The allegations are totally inconsistent and found no basis. They are seemed to be so absurd and inherently improbable and it cannot be regarded that it discloses cognizable offences much less under Sections 120(B) r/w 420 I.P.C., and under Sections 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988.
97. Chapter V of Indian Penal Code deals with criminal conspiracy. Section 120-A defines what is criminal conspiracy. Section 120-A of IPC reads as under;
"Section 120A. - When two or more persons agree to do, or cause to be done, (1) an illegal act, or (2) an act which is not illegal by illegal means, such an agree-ment is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof."
98. Section 120-B of IPC is the punitive statute which imposes penalty for the commission of the offence of criminal conspiracy.
"Section 120-B.(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both."
99. To constitute the offence of criminal conspiracy under Section 120-B, the following three ingredients are very much essential.
i)An agreement between two or more persons;
ii)The agreement should be to do or cause to be done some illegal act or some act which is not illegal, by illegal means, provided that where the agreement is other than one to commit an offence, the prosecution must further prove;
iii)That some act besides the agreement was done by one or more parties in pursuance of it."
100. Section 120-B of IPC is comprising of two compartments i.e., Sub-Section 1 and Sub-Section 2. As contemplated under Sub-Section 1, the punishment depends upon the nature of offence, be it punishable with death, imprisonment for life or rigourous imprisonment for a term of two years or upwards, which the persons who have been accused of, are said to have conspired. As contemplated under Sub-Section 2, the punishment shall be with imprisonment of either description for a term not exceeding six months or with fine or with both for the offence of criminal conspiracy other than a criminal conspiracy to commit offence punishable under Sub-Section(1).
101. Section 120(A) I.P.C., itself is clear that all the agreements shall not constitute an offence of conspiracy provided it is done with an intention to commit an offence.
102. In order to prove the criminal conspiracy, which is punishable under Section 120(B) there must be direct or circumstantial evidence to show that there was an agreement between two or more persons to commit an offence. This clearly envisages that there must be a meeting of minds resulting in an ultimate decision taken by the conspirators regarding the commission of an offence. It is true that in most cases it will be difficult to get direct evidence of an agreement to conspire but a conspiracy can be inferred even from circumstances giving rise to a conclusive or irresistible inference of an agreement between two or more persons to commit an offence. This dictum is held by the Apex Court in State (Delhi Administration) vs. V.C.Shukla, AIR 1980 SC 1382.
103. From the averments of the first information report, this Court is not able to draw an inference that the petitioners were having pre-meeting of minds to cheat Union Bank of India, T.Nagar Branch in the matter relating to sanction of loan to the Company and thereby they caused a wrongful loss to the extent of Rs.13.44 Crores to the Bank and corresponding wrongful gain to themselves.
104. On coming to the offence of cheating under Section 420 I.P.C., the term 'cheating' has been defined under Section 415 I.P.C., as follows:
415. Cheating:
"Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
105. In S.W.Palanitkar and others vs. State of Bihar and another, reported in (2002) 2 SCC 241, the Apex Court has enlisted the ingredients of an offence of cheating. They are:
(i) there should be fraudulent or dishonest inducement of a person by deceiving him,
(ii) (a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or
(b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and
(iii) in cases covered by (ii) (b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property.
106. The term 'Deceiving' or 'Deceit' has been explained in Goss, (1860) 8 Cox 262 in the following manner:
Deceiving means causing to believe what is false, or misleading as to a matter of fact, or leading into error. Whenever a person fraudulently represents as an existing fact that which is not an existing fact, he commits this offence. A wilful misrepresentation of a definite fact with intent to defraud, cognizable by the senses-as where a seller represents the quantity of coal to be fourteen cwt. whereas it is in fact only eight cwt. but so packed as to look more; or where the seller, by manoeuvring, contrives to pass off tasters of cheese as if extracted from the cheese offered for sale whereas it is not-is a cheating.
107. In Halsubry's Laws of England, 4th Edn., Vol.7 para 248, page 150 the term 'Deceit' has been explained as under:
"A false and fraudulent representation as to a matter of fact, made in order to induce a person to act thereon."
108. Section 420 I.P.C., reads as follows:
"Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
109. With regard to the ingredients of Section 420 I.P.C., His Lordship Hon'ble Mr.JUSTICE K.G.BALAKRISHNAN while speaking on behalf of the Division Bench of the Hon'ble Supreme Court of India in Alpic Finance Ltd., vs. P.Sadasivan and another (2001) 3 SCC 513 has held as follows:
"To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence."
110. On coming to the present case on hand, this Court is of view that no prima facie case is made out either under Section 120(B) or under Section 420 I.P.C., as against the petitioners. As rightly addressed by Mr.A.Ramesh, and Mr.N.R.Elango, learned senior counsels, the complaint itself is vitiated as it did not constitute the offences as alleged.
111. The records apparently do not suggest that any one of the higher officials of the Union Bank of India has lodged the complaint as against the petitioners for the commission of the alleged offences. The first information report is also maintaining silence with regard to the source of information. The first sentence of the first information report starts with the words A reliable information has been received to the following effect that:.
112. If really the Bank suffers a loss to the tune of Rs.13.44 Crores, the Bank could have initiated proceedings under SARFAESI Act to recover the dues as the loan has been fully secured and the Bank is also safe as it is a secured creditor.
113. If really the Bank suffers a loss due to the conduct of the Company the Bank itself would have directly come forward to lodge a criminal complaint against the Company if it really wanted to prosecute the Company for cheating. Here, the respondent says that he had received a reliable information. In a criminal prosecution, there must be a transparency and the source of information must be let known to the person, who is being accused of so as to enable him to set up his defence as it is his fundamental right guaranteed under the Constitution of India under Article 21.
114. The source information reports, if not in all cases as defined in Clause 8.26 of CBI (Crime Manual) at least in deserved cases like the present case, could be disclosed. In the first information report the sentence "A reliable information received" seems to be ambiguous. This could be understood in both ways. One of such possible interference is "that the present FIR in Cr.No.RC MA1 2011 A 0012 has been registered by the respondent voluntarily only with an ulterior motive to take revenge against the company for having filed the criminal original petition in Crl.O.P.No.4389 of 2009 and got the earlier FIR No.RC 47(A)/2008 dated 27.09.2008 quashed." The term "A reliable information has been received" would also suggest that the present criminal proceedings are manifestly attended with malafide and has been instituted maliciously wrecking vengeance.
115. Clause 8.26 of CBI (Crime Manual) deals with collection of source information. It says that as a part of their duty and in terms of annual programme of work, all investigating and Supervisory Officers are required to collect quality information. It further contemplates that they have to ascertain as to whether any prima facie material is available to undertake an open probe.
116. Clause 8.28, says that a source information report may be classified as "secret". But this clause shall not be utilized to train the gun towards an innocent person.
117. As already observed in the foregoing paragraphs that the account maintained by the Company with the Bank was found to be standard and satisfactory as certified by the Bank itself through it's communication dated 04.02.2011.
118. It is not the case of the respondent that the Company had induced the petitioner in Crl.O.P.No.8348 of 2011, Mr.R.Subramanium, the Then Chief Manager, Union Bank of India, T.Nagar Branch, Chennai to sanction the loan fraudulently after making false representation, which the Company knew to be false. The respondent viz., C.B.I., has miserably failed to establish the fact that the Company was having fraudulent and dishonest intention at the time of submitting the loan proposal for the project of BCG Vaccine manufacturing unit.
119. Having regard to the related facts and circumstances, it is difficult to discern an element of deception in the whole transaction.
120. Equally, no material is available to substantiate the allegation that there was collusion between the Bank and the Company.
121. On coming to the allegations, regarding the commission of an offence under Sections 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988, by Mr.R.Subramanium, the Then Chief Manager, Union Bank of India, T.Nagar Branch, Chennai, this Court, after making strenuous and meticulous analysis of various communications exchanged between the Bank and Company and as the process of granting of loan was handled by higher officials other than Mr.R.Subramanium, who have time and again held meetings and ascertained the true facts of the Company and their prospective and present working, is of unambiguous view that no sign of offence under the Prevention of Corruption Act, 1988 is made out.
122. This Court is also of view that the offence of corruption shall not be thrust upon Mr.R.Subramanium, when the decision was taken by the higher officials viz., General Manager and Deputy General Manager in their official capacity after following proper procedures.
123. The term 'criminal misconduct by a public servant' has been defined in Section 13(1)(d) of the Prevention of Corruption Act, 1988 as under:
13. Criminal misconduct by a public servant.-
(1) A public servant if said to commit the offence of criminal misconduct.-
(a).........
(b).........
(c).........
(d)if he-
(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public, interest.
124. Sub-section (2) to Section 13 reads as follows:
(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than one year but which may extend to seven years and shall also be liable to fine.
125. To substantiate a charge under Section 13(1) of the Prevention of Corruption Act, 1988, the prosecution must establish the following ingredients namely:
(i) the accused is a public servant,
(ii) the nature and extent of the pecuniary resources or property which were found in his possession,
(iii)it must be proved as to what were his known sources of income i.e. known to prosecution,
(iv) it must prove, quite objectively, that such resources or property found in possession of the accused were disproportionate to his known sources of income.
Once the above ingredients are satisfactorily established, the offence of criminal misconduct under Section 13(1)(d) is complete, unless the accused is able to account for such resources or property.
126. In the present case on hand, the question of commission of offence under Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 does not arise.
127. The materials available on record reveals that the petitioner in Crl.O.P.No.8348 of 2011 Mr.R.Subramanium was directed by his senior management officials to conduct the Company, collect necessary papers and put up the proposals for sanction. It also appears that a feasibility study was conducted by the technical team.
128. In this regard, Mr.N.R.Elango, learned senior counsel appearing for Mr.R.Subramanium has submitted that the Government of India had supplied necessary seeds to the Company for manufacturing BCG Vaccine with a buy back arrangement of 80% of the production and therefore the selling of the product was not a problem and that in the whole of India there were only two companies making these BCG Vaccines, out of which one unit was called as PSU had been using outdated process for manufacture and hence the prospect of this Company after its teething period to perform and return the loan did not appear to be problem.
129. The records reveals that inspections of the site and verification of the documents and machineries were conducted by various officers and there was interaction at all levels of the Bank including the General Manager. A technical officer in the senior management cadre attached to Zonal Office inspected the unit vetted the detailed Project Report of the Company and submitted his report called Techno Economic Viability Report (TEV).
130. It is seen from the records that the sanctioning authority did not accept the security offered by the Company primarily and sought for an additional property to cover 35% of the loan amount. Accordingly, the Company had provided the personal property of it's Managing Director Mr.Sundaraparipooranan, which was a land of around 2000 sq.ft., at Choolaimedu, which was valued at Rs.45.00 lakhs.
131. Apart from this, the Directors of the Company had also created pledge of their shares in favour of Bank. Later, after various discussions the Company had purchased land to the extent of 2 Acres at Rs.27.00 lakhs, which has an approach to 33 Acres of land at Tiruvallur when it was pointed out by the Bank property valuer that the valuation would depend on the approach and it was suggested that the front portion be purchased for better value of the property.
132. It also appears that the Bank had secured abundantly for granting the loan. As already discussed, there were inspections of the facilities of the Company to ascertain the genuineness of the machines purchased using the loan sanctioned. It is also crystallized that the loan was never credited to the Company, but it was released along with margin money from the Company directly to the various vendors by way of demand drafts towards supply of materials made to the Company.
133. The materials attached with the petitions would go to show that the sanctioning authority did not go by the recommendation of the petitioner (Mr.R.Subramanium). But, a panel was nominated to review and to analyze the facts.
134. It is to be placed on record here that Mr.N.R.Elango, learned senior counsel has argued that the sanction of the process had indicated 35% of collateral security and in such case Rs.35.00 Crores would amount o 225% of the loan which by itself makes the whole allegations of the first information report illogical.
135. He has also indicated that the allegation is that an inflated amount of Rs.3570 lakhs was claimed for properties given as security and in this connection he would submit that the amount mentioned was Rs.35.70 lakhs and that it has been inadvertently printed as 3570 lakhs. However, the discussions of the Bank officials especially subsequent meeting as on 08.01.2008 would clearly suggest as Rs.4.90 Crores and hence a mere typing error at one instance cannot amount to collusion or conspiracy.
136. Mr.N.R.Elango, learned senior counsel has also argued that taking of Credit Process Audit is not within the job role of chief manager, but it is the role of sanctioning authority and while conveying sanction proposals, they appointed a Credit Process Auditor. Accordingly, the Credit Process Audit was done mainly to ensure that all the necessary documents have been obtained and all sanction terms have been complied with.
137. He has also submitted that the Credit Process Auditor was not appointed immediately and the petitioner was permitted by the competent authority in writing to release the loan before complying with the terms of sanction. He has also submitted that the Credit Process Audit was done as an abundant caution and the same is sometimes performed even after the release of loan as has been done in this case on 14.11.2008.
138. This Court, after making a comparative study of various communications, which took place between both sides during the sanction process and on considering the submissions made on behalf of the petitioners as well as on behalf of the respondent, is of considered view that the first information report, prima facie, does not disclose any offence of conspiracy, cheating or criminal misconduct as alleged by the respondent CBI.
139. Further, the averments of the first information report itself raises the following questions:
i. If not the Bank (higher officials of Mr.R.Subramanium), who has given the information, to the respondent alleging that the petitioners have caused wrongful loss to the Bank to the extent of Rs.13.44 Crores and corresponding wrongful gain to themselves, ii. Whether the respondent CBI suo muto initiated the criminal proceedings against the petitioners, iii. Who has directed the respondent CBI to launch criminal proceedings against the petitioners, and iv. What is the motive behind it.
Unfortunately, these questions are left unanswered by the respondent CBI.
140. The unusual conduct of the respondent leads this Court to presume that the contents of the first information report do not disclose the offence of criminal conspiracy, cheating (under Sections 120(B) r/w 420 I.P.C.,) and misuse of power and criminal misconduct (under Sections 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988.
141. In the result, the criminal original petitions are allowed and the criminal proceedings of the case in Crime No.RC MA1 2011 A 0012 against the petitioners are quashed. Consequently, connected miscellaneous petitions are closed.
To:
1.Union Government of India by Additional Superintendent of Police, CBI/ACB/Chennai prm krk