Bombay High Court
Shri Jitendra Balmukund Dhoshi vs Union Of India Through The Inspector ... on 1 February, 2000
Equivalent citations: 2000(5)BOMCR648, 2000BOMCR(CRI)~
Author: Ranjana Desai
Bench: Ranjana Desai
ORDER Smt. R anjana Desai, J.
1. The petitioner, who is original accused No. 2 in Special Case No. 23 of 1990 pending in the Court of the Special Judge, Sessions Court, Greater Bombay, has filed this criminal application under section 482 of the Code of Criminal Procedure for quashing the process issued by the Special Judge in the said case on 10-1-1992.
2. Briefly stated the facts, which give rise to this application, are as under: The petitioner was the Director of M/s. Gypsy Footwear Private Limited having their registered office at 3-B, Sherbanoo, 111 M.K. Road, Bombay (the said company for short) and having factory at B-26, MIDC, Phase-I, Dombivli (East), Dist. Thane. At the relevant time, one Cyrus Jolley Shroff was the manager of the Kalbadevi Branch of the Bank. The said Cyrus Shroff is accused No. 1 in Special Case No. 23 of 1990. The said company had passed a resolution on 25-5-1987 for availing of credit facilities from the said bank. An account being account No. 211243 was opened in the said bank on 27-5-1987 by depositing Rs. 2000/-. This was opened by the petitioner and one V.J. Doshi in the capacity as directors of the said company. The specimen signature card was verified by the said Cyrus Shroff. By letter dated 19-5-1987 the said company applied for cash credit (hypothecation) facility of Rs. 20,00,000/- alongwith other facilities to the bank. The company's resolution dated 25-5-1987 was sent alongwith the said proposal. The said Cyrus Shroff strongly recommended the case of the said company and submitted it to the Zonal office of the Central Bank of India. On his recommendation, cash credit (hypothecation) limit alongwith other limits were sanctioned by the Zonal office with certain terms and conditions. The said terms and conditions were communicated to the said company on 10-6-1987. The said terms and conditions are as under :
"(1) Collateral Security by equitable mortgage of factory land and building situated at MIDC, Phase-I, Dombivali, Dist. Thane along with hypothecation of machineries and other block assets.
(2) Drawing Power in case of Cash Credit facility should be allowed only against paid stock.
(3) The unit should be got registered under SSI and the copy of the registration certificate to be held on Branch record etc."
3. On 23-6-87, a cheque book came to be issued in favour of the said company. On 24-6-87 the petitioner issued four account payee cheques, which were cleared by the said Cyrus Shroff. The particulars of the cheques are as under.
Sr.No. Cheque No. Amount Favouring to
1. 5051 Rs. 6,672.00 Oriental Insurance Co. Ltd.
2. 5052 Rs. 19,867.00
-do-
3. 5053 Rs. 5,00,000.00 Jayshree Enterprises.
4. 5054 Rs. 50,000.00 M/s. Keeta Kari
4. The F.I.R. lodged by the C.B.I. alleges that the petitioner entered into a criminal conspiracy with the said Cyrus Shroff to cheat the Central Bank. On 2-7-1987 the said Cyrus Shroff misreported to the zonal office that the said company had not been allowed to avail of the credit facilities as it had not fulfilled the terms and conditions. However, on 24-6-87 he had already cleared the abovementioned cheques. The said company did not possess the immovable property of factory situate at Dombivli and, therefore, formalities regarding collateral security by way of mortgage of the said property could not be completed and as the said company was not registered as S.S.I. Unit and as stock statement upto 28-2-88 was not submitted, there was obviously breach of the terms and conditions. It appears that the said company could not furnish the collateral security by way of mortgage of the said property as it stood in the name of Jayshree Enterprises which was a proprietory concern of the petitioner. In the absence of the stock statement, the drawing power of the said company became nil. However, even then the said Cyrus Shroff, by exercising his discretionary powers, which was only upto Rs. 2 lacs, allowed payments of cheques the value of which amounted to about Rs. 35,27,527.25. The petitioner arranged to open current account No. 0110240 in the name of one Shri Sharad Bhagwandas Shaha a proprietor of M/s. India Engineering Works at Abu Dhabi Commercial Bank, Churchgate, Bombay on 13-2-1988. The amount of Rs. 5,00,000/- and Rs. 14,00,000/- issued in the name of M/s. India Engineering Works from the said company vide cheque No. 005082 dated 15-2-88 and 005083 dated 19-2-88 respectively were credited in the said account of M/s. India Engineering Works. The entire amount was withdrawn in cash from the account of M/s. India Engineering Works by the petitioner and the said account was closed on 22-6-88. By letter dated 4-2-88 the said Cyrus Shroff misreported to the Bombay Metropolitan Zonal Office that the said company had complied with all the terms and conditions though the terms and conditions were not complied with. On these facts, the Inspector of Police, CBI, ACB, Bombay filed F.I.R. on 1-9-89 alleging that, the accused have committed offences punishable under section 120-B r/w 420 of the I.P.C. and under section 5(2) r/w 1(d) of the Prevention of Corruption Act, 1947. On the basis of the F.I.R. the Corruption Act, 1947. On the basis of the F.I.R. the case came to be registered.
5. After completion of the investigation, charge sheet was filed in the Court of Special Judge, Sessions Court, Greater Bombay. From the charge sheet, a copy of which was handed over to me by Shri Satpute, learned Counsel appearing for respondent No. 1, it is clear that the present petitioner, who is original accused No. 2 and the siad Cyrus Shroff original accused No. 1 have been charged under section 120-B r/w 420 of I.P.C. The said Cyrus Shroff is also charged under section 5(2) r/w section 5(1)(b) of the Prevention of Corruption Act, 1947. It is the process issued pursuant to the said charge sheet filed in the Court which is sought to be quashed by the petitioner.
6. I have heard Shri O.P. Soni, learned Counsel appearing for the petitioner, Shri Satpute, learned Counsel appearing for respondent No. 1 and Shri Adsule, learned A.P.P. who appears for the State of Maharashtra. I have been taken through the petition, the annexures and the relevant documents by the learned Counsel appearing for both sides.
7. Shri Soni has drawn my attention to a decree on admission passed in Suit No. 2611/90 filed on the Original Side of this Court dated 16th August, 1991. This suit was filed by the Central Bank of India to recover from the said company the amount borrowed by it under the cash credit facility to which, I have already made a reference in the preceding paragraphs. Admittedly, the entire decretal amount has been paid by the said company to the Central Bank of India and this fact is confirmed by the Central Bank of India by its letter dated 6th August 1992 addressed to the said Company. After noting the details of the decretal amount the letter records that the decretal amount is fully paid and part of the interest charged is also paid by the said Company. The decree on admission records that, the immovable property situate at Dombivli, Dist. Thane, stood mortgaged in favour of the bank to secure the repayment of the loan amount. Shri Soni urged that since the entire amount is admittedly paid by the said company to the bank and since the petitioner is only charged under section 120-B read with section 420 of the Indian Penal Code, which is a compoundable offence, this Court should quash the process issued by the Special Judge. He also urged that the said transaction was ex-fade of civil nature and there was no criminal intention on the part of the petitioner. He submitted that at the most, the petitioner would be guilty of breach of conditions imposed by the bank while granting the credit facility. He contended that there was no mens rea so far as the petitioner is concerned, and this is evident from the fact that the immovable property at Thane which was to be mortgaged to the bank stood in the name of said M/s. Jayshree Enterprises which was a proprietory concern of the petitioner. It took time for the petitioner to carry out the necessary formalities and get the permission of M.I.D.C. to mortgage the said premises in favour of the Central Bank of India. That could be done only as late as on 14th January 1992 when the necessary agreement was entered into between the petitioner, the said company and the bank. So far as the condition regarding registration of the unit under SSI is concerned, he contended that even that could not be done immediately because M/s. Jayshree Enterprises the proprietory concern of the petitioner was a SSI unit. It was taken over by the said company and the formalities required for transferring the said SSI certificate in the name of the said company took some time. He has drawn my attention to Exh. 'D' to the petition which is a certificate dated 5-6-92, which shows that the name of M/s. Jayshree Enterprises was deleted only on 5-6-92 and it was substituted by the name of the said company on the very day. Shri Soni therefore submitted that this delay is caused on account of the fact that the necessary procedure had to be carried out and there was no intention to defraud the bank. He submitted that this is further evident from the fact that even after this, the bank offered to the said company further credit facility. Exhibit 'G' to the petition indicates that the request of the said company for additional facility of Rs. 25,00,000/- accepted by the bank by letter dated 22nd August, 1991. Accordingly, the said company availed of the said credit facility. By letter dated 21-1-92 the bank further informed the said company that the existing facility of Bills Purchase limit of Rs. 25,00,000/ - will be allowed to the said company only upto 31-1-92 and in case the said company wanted continuation of the said facility they should complete the formalities noted therein. Mr. Soni submitted that as the said company did not want to continue with the said facility, it did not comply with the necessary conditions set out in the letter dated 21-1-92. Shri Soni submitted that this fact militates against any inference that the petitioner had any intention to cheat the bank. Shri Soni further contended that since the entire amount is paid, it cannot be said that the bank is now put to any wrongful loss. In any event, he submitted that since the offence of cheating is compoundable, this Court should consider this circumstance and quash and set aside the process issued as against the petitioner.
8. Shri Soni also submitted that the hank had frozen the account of the said company on account of the action taken by it against the said Cyrus Shroff. The petitioner had protested against the said action and, therefore, as a counter blast, the present case is filed.
9. In support of his submission that, considering the fact a decree on admission is passed and the entire decretal amount is paid this Court should quash the process, Shri Soni relied on the judgment of the Supreme Court in Central Bureau of Investigation, SPE, SIU (X), New Delhi v. Duncans Agro Industries Ltd., Calcutta, 1996 Cri.L.J. 3501. In that case, that M/s. National Tobacco Company, which was a division of Duncans Agro Industries Ltd. had availed of cash credit facility from United Bank of India, Royal Exchange Branch, Calcutta on Hypothecation of stocks etc. with it. In 1984 M/s. Duncans Agro Industries Ltd. made an application before the Calcutta High Court and obtained an order from the High Court on August 10, 1984 that National Tobacco Company, a division of Duncans Agro Industries Ltd. would henceforth function under the name and style of New Tobacco Company Limited. After approval of the said scheme M/s. Duncans Agro Industries Ltd. approached the United Bank to transfer the credit limits standing in their name to M/s. New Tobacco Company Ltd. The basic allegation against the accused was that, in order to defraud the bank and nullify the assurances given to the bank M/s. Duncans Agro Industries Ltd. entered into a memorandum of understanding with M/s. New Tobacco Co, on March 6, 1986 in order to render the very basis of the scheme approved by the High Court infructuous and to complete the delinking of Duncans Agro Industries Ltd. and New Tobacco Company so that the assets of Duncans Agro Industries Ltd. would remain out of reach of its creditors. The stock worth about Rs. 12 crores were either fraudulently or dishonestly removed or disposed of without any payment to the bank although the same was hypothecated with the bank. It appears that a complaint came to be filed against the officials of Ms. Duncans Agro Industries Ltd., New Tobacco Co. Ltd., and National Tobacco Co. It was alleged that they were guilty of offence under section 120-B r/w section 409, 420, 468 and 471 of the Indian Penal Code. The bank filed suits for recovery of the dues. The said suits came to be compromised on receiving the payments from the concerned companies. The Supreme Court observed that basically, it was a civil dispute. The offence of cheating was compound-able and the decree on admission amounts to compounding of the offence. The bank officials were not charged. In view of this, the Supreme Court quashed the complaint. Shri Soni contended that the ratio of the said case will be applicable to the facts of the present case.
10. Shri Soni then relied on another judgment of the Supreme Court in Madhavrao Jiwaji Rao Scindia and another etc. v. Sambhajirao Chandrojirao Angre and others etc., . In that case, there was a trust created where one of the trustees was a settler. The allegation was that two Officers of the trust in conspiracy with trustee Madhavrao and his wife Smt. Madhavi had created documents showing tenancy in respect of the flat in favour of Smt. Madhavi. A complaint was filed by a trustee by name Angre in the Court of Metropolitan Magistrate at Bombay alleging offence punishable under section 406, 467 read with sections 34 and 120-B of the Indian Penal Code. It appears that during the course of the proceedings Madhavi surrendered the tenancy. In view of this, the Supreme Court observed that where the chances of ultimate conviction are bleak and no useful purpose is likely to be served by allowing criminal prosecution to continue the Court may, while taking into consideration the special facts of the case, quash the proceeding even though it may be at a preliminary stage. In the facts of the case the Supreme Court held that the High Court had rightly quashed the proceeding. Shri Soni contended that though charge-sheet is filed, in view of the decree on admission, the chances of conviction of the petitioner are bleak and applying the ratio of the Supreme Court judgment in Madhavrao Scindia's case, this Court should quash the proceedings. He then relied on the judgment of the Himachal Pradesh High Court in Anil Kumar and another v. Ajay Butail and another, 1992 Cri.L.J. 2282 in support of his submission that when a transaction involved is essentially of a civil nature and the amounts are recovered, the criminal proceedings ought not to be continued. He therefore submitted that this is pre-eminently a fit case where this Court should quash the process.
11. As against this, Shri Satpute, Learned Counsel appearing for respondent No. 1 urged that the petitioner and the said Cyrus Shroff are charged under section 120-B read with section 420 of I.P.C. when there is a charge of conspiracy, Shri Satpute submitted, the case of the present petitioner cannot be separated from that of accused No. 1. He also submitted that the F.I.R. filed on 1-9-89. Charge sheet came to be filed on 28-2-90. While the petitioner persuaded the bank to advance the credit facility to the said company as far back as on 3-6-87, the conditions were not complied with till the C.B.I. took some steps in the matter. It is only after the case was registered that the petitioner tried to comply with the conditions. He pointed out that the name of M/s. Jayshree Enterprises came to be deleted as late as on 5-6-92. The decree on admission is on August 16, 1991. The permission from M.I.D.C. to lease the immovable property at Thane was sought as late as on 5-12-92. On 22-6-88 the entire amount of Rs. 19,00,000/- was withdrawn in cash by the petitioner from the account of Ms. India Engineering Works and the account was closed. This conduct, according to Shri Satpute, is not consistent with the conduct of a man who claims to be honest, He also submitted that the modus operandi of the petitioner and accused No. 1 does not suggest that his is a case of civil nature. According to Shri Satpute, the ingredients of cheating are very much evident and the complaint does make out a prima facie case against the petitioner. He submitted that the case on which reliance is placed by Shri Soni have no application to the facts of the present case. He argued that in the case of Duncans Agro. Industries Ltd. (supra) the bank officials were not charged. The investigation had not been completed till 1991 even though there was no impediment to complete the investigation. It is against this background that the Supreme Court, considering that the amounts were paid, quashed the proceedings. The facts of that case cannot be equated with the facts of the present case. In this case the bank officer is charged alongwith the petitioner under section 120-B read with section 420 I.P.C. The bank officer is also charged for offences under the Prevention of Corruption Act, 1947. The investigation is complete and the chargesheet is filed. Therefore the ratio of the said case will not be applicable to the present case. According to Mr. Satpute the other two cases namely, Anil Kumar and another v. Ajai Butail and another, 1992 Cri.L.J. 2281 and Madhavrao Jiwaji Rao Scindia and another v. Sambhajirao Chandrojirao Angre & others, are also distinguishable on facts. He therefore submitted that the petition deserves to be dismissed.
12. I have given my anxious consideration to the arguments advanced by the learned Counsel appearing for both sides. In my opinion, the fact that the entire amount has been paid to the bank by the petitioner is not an innocuous circumstance. The investigating agency has charged the petitioner under section 120-B read with section 420 of the I.P.C. Significantly after this decree on admission, the bank has again offered credit facility to the petitioner. The petitioner has in fact, availed of the said credit facility. These facts cannot be lightly brushed aside. At the same time, one cannot lose sight of the fact that there is a charge of conspiracy against the present petitioner. Accused No. 1 is charged for the offence under the Prevention of Corruption Act. Shri Satpute has rightly pointed out that, the loan was sanctioned on 3-6-87. It was communicated to the company on 10-6-87, but the compliance with the requisite conditions was only after the F.I.R. was lodged on 1-9-89 and after the charge-sheet came to be filed on 20-2-90. In my opinion, it is not possible for this Court to come to a conclusion that the complaint in this case does not make out any offence at all. It is well settled that powers under section 482 of Criminal Procedure Code have to be used in exceptional cases and where the complaint does not make out any case at all. Since such are not the facts in the present case, I am not inclined to quash the proceedings. However in view of the later circumstance in the form of a decree on admission, the petitioner may, if he is so advised, approach the trial Court for discharge on the ground that there are no sufficient grounds for proceeding against the petitioner. If such an application is made, the learned Special Judge seized of the matter shall deal with the same independent of any observations made by me in this judgment and strictly on merits. This Court has not opined on the merits of the case.
13. Before parting I must record that Shri Soni the learned Counsel for the petitioner argued the case very ably.
14. The petition is dismissed.
15. At this stage, Shri Soni requests that this Court should stay the proceeding. In the circumstances, the prayer for stay is rejected.
16. Petition dismissed.