We are in respectful agreement with the aforesaid view.
Be it stated, that availing of money from a nationalized bank
in the manner, as alleged by the investigating agency, vividly
exposits fiscal impurity and, in a way, financial fraud.
The
modus operandi as narrated in the chargesheet cannot be put
in the compartment of an individual or personal wrong. It is a
social wrong and it has immense societal impact.
It is an
accepted principle of handling of finance that whenever there
is manipulation and cleverly conceived contrivance to avail of
these kind of benefits it cannot be regarded as a case having
overwhelmingly and predominantingly of civil character. The
ultimate victim is the collective. It creates a hazard in the
financial interest of the society. The gravity of the offence
creates a dent in the economic spine of the nation. The
cleverness the
which
has
been
skillfully
contrived,
if
allegations are true, has a serious consequence. A crime of
this nature, in our view, would definitely fall in the category of
offences which travel far ahead of personal or private wrong.
It has the potentiality to usher in economic crisis.
Its
implications have its own seriousness, for it creates a
concavity in the solemnity that is expected in financial
transactions.
It is not such a case where one can pay the
amount and obtain a “no due certificate” and enjoy the benefit
of quashing of the criminal proceeding on the hypostasis that
nothing more remains to be done. The collective interest of
which the Court is the guardian cannot be a silent or a mute
spectator to allow the proceedings to be withdrawn, or for that
matter yield to the ingenuous dexterity of the accused persons
to invoke the jurisdiction under Article 226 of the Constitution
or under Section 482 of the Code and quash the proceeding.
It is not legally permissible. The Court is expected to be on
guard to these kinds of adroit moves.
The High Court, we
humbly remind, should have dealt with the matter keeping in
mind that in these kind of litigations the accused when
perceives a tiny gleam of success, readily invokes the inherent
jurisdiction for quashing of the criminal proceeding.
The
court’s principal duty, at that juncture, should be to scan the
entire facts to find out the thrust of allegations and the crux of
the settlement. It is the experience of the Judge comes to his
aid and the said experience should be used with care, caution,
circumspection and courageous prudence. As we find in the
case at hand the learned Single Judge has not taken pains to
scrutinize the entire conspectus of facts in proper perspective
and quashed the criminal proceeding.
The said quashment
neither helps to secure the ends of justice nor does it prevent
the abuse of the process of the Court nor can it be also said
that as there is a settlement no evidence will come on record
and there will be remote chance of conviction. Such a finding
in our view would be difficult to record. Be that as it may, the
fact remains that the social interest would be on peril and the
prosecuting agency, in these circumstances, cannot be treated
as an alien to the whole case. Ergo, we have no other option
but to hold that the order of the High Court is wholly
indefensible.
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 2048 OF 2014
(Arising out of S.L.P. (Crl.) No. 6461 of 2011)
State of Maharashtra Through CBI
... Appellant
Versus
Vikram Anantrai Doshi and Others
...Respondents
Dated;September 19, 2014.
The
centripodal
issue
that
strikingly
emerges,
commanding the judicial conscience to ponder and cogitate
with reasonable yard-stick of precision, for consideration how
far a superior court should proceed to analyse the factual
score in exercise of its inherent jurisdiction bestowed upon it
under Section 482 of the Code of Criminal Procedure or under
Article 226 of the Constitution of India, to quash the criminal
proceeding solely on the ground that the parties have entered
into a settlement and, therefore, the continuance of the
2
criminal proceeding would be an exercise in futility, or the
substantial cause of justice warrants such quashment to
make the parties free from unnecessary litigation with the
assumed motto of not loading the system with unfruitful
prosecution, of course with certain riders, one of which, as
regards
the
cases
pertaining
to
commercial
litigations,
appreciation of predominant nature of civil propensity involved
in the lis or social impact in the backdrop of the facts of the
case.
The primary question that we have posed has a
substantial supplementary issue; i.e. should the courts totally
remain oblivious to the prism of fiscal purity and wholly brush
aside the modus operandi maladroitly adopted, as alleged by
the prosecution, on the part of industrial entrepreneurs or the
borrowers on the foundation that money has been paid back
to the public financial institutions. We think not, especially
regard being had to the obtaining factual matrix in the case at
hand.
2. Presently to the factual exposition.
On the basis of a
written complaint of chief vigilance officer, Bank of Baroda a
case was registered against the respondents on 6.1.2006 and
3
after completion of investigation a report was filed before the
Special Court, CBI cases, Mumbai with a prayer to forward
the chargesheet to the learned Magistrate who was competent
to take cognizance of the offences as the involvement of R.C.
Sharma, the concerned Bank Officer, a public servant, in the
crime in question, could not be prima facie found during the
investigation. As the facts would undrape, on 3.2.2006 upon
perusal of the chargesheet the learned Special Judge, CBI
cases directed to place the chargesheet before the appropriate
court and accordingly a fresh chargesheet was filed before the
ACMM, 19th Court, Esplanade, Mumbai vide criminal case no.
82/CPW/2006 for commission of offences punishable under
Section 120-B, Section 406, 20, 467, 468 and 471 IPC against
the accused persons.
3. On a perusal of the charge sheet, it is evincible that there
are allegations to the effect that Vikram Doshi, A 1, Vineet
Doshi, A 2, and Sanjay J. Shah, A 3, made number of
applications to the Bank of Baroda for sanction of various
credit facilities, stating that they wanted to induct the said
bank as a new consortium member to replace the existing
4
members, namely, the UTI Bank and the Federal Bank. They
requested the said Bank to sanction 15% of the total Working
Capital facility sanctioned by the consortium of Banks, so
that, that much amount could be transferred to the UTI bank
and Federal Bank to take over the existing liabilities with the
said two banks. It was revealed during investigation that the
account of the company, with the consortium of banks as well
as the finance institutions, was highly irregular and in the
said condition the accused persons approached the Bank for
sanction of loan. In the application to the Bank, the accused
persons concealed the fact relating to the dues outstanding
against them. Thereafter, when asked for the outstanding
position with the existing consortium members, the accused
persons willfully and with the criminal intent to mislead the
Bank of Baroda, furnished wrong statements about the
outstanding position by giving considerably lesser amount as
outstanding than the actual.
4. As further alleged, the amount of loan sought was
sanctioned on 24.01.2003 by one Mr. K.K. Aggarwal, General
Manager and communicated to the branch. As per the terms
5
and conditions of the said Term Loan, the primary security for
the same was the first charge to be created on the fixed assets
of the company ranking pari passu with the existing Term
Lending Institutions. The primary charge for the cash credit
and working capital demand loan was the hypothecation of
current assets such as stocks, stocks in trade, raw materials
and book debts, and, that apart, one of the important terms
and conditions was that the CC, WCDL and Term Loan
amounts were to be directly paid to the company’s account
with the UTI Bank and Federal Bank so as to take over the
liabilities as well as the securities mortgaged with the two
banks. Despite the said situation, the Bank on 29.01.2003
intimated the sanction to ATCOM, the company in question.
It is further demonstrable from the chargesheet that A-1 and
A-2, with the intention to escape personal liabilities, made A-3
and one Mr. Chirag Gandhi directors in ATCOM and got all
the loan documents including the Demand Promissory Note
(DPN) signed by the said persons. The terms and conditions
of the sanction was that the entire Working Capital of
Rs.570.00 lakhs (Rs.114.00 lakhs + Rs.456.00 lakhs) and the
6
Term Loan of Rs.360.00 lakhs were to be directly paid to the
UTI Bank and Federal Bank. Consequently, the Term Loan
was released and paid as per the sanction terms and
conditions. As alleged, A-1 induced the Bank to release the
sanctioned Working Capital Funds to the Current Account
and from the said account money was dishonestly diverted to
his own accounts with SBI and Dena Bank, to bring down the
outstanding
liabilities
in
those
accounts.
As
per
the
Chargesheet, Rs.114.00 lakhs of Cash Credit (the Fund Based
portion of Working Capital) and Rs.456.00 lakhs (the Demand
Based portion of Working Capital) were released into the
Current Account on 27.03.2003. Thus, the total funds
released into the Current Account was Rs.560.00 lakhs out of
which A-1 dishonestly transferred Rs.352.00 lakhs to SBI and
about Rs.200.00 lakhs to Dena Bank, which amounted to
diversion of concerned Bank’s funds dishonestly and caused
wrongful loss to the said Bank.
5. As is evident from the chargesheet the transfer of funds of
CC and DL to the current account was with a dishonest
intention to further divert the funds from the current account,
7
and for transfer of the said funds of CC and WCDL. A-1 used
the cheque leaf available with him for the Current Account
and substituted out the words “Current Account” and
substituted them with “Cash Credit”. It has come out in the
investigation that in order to further divert the funds from the
Current Account, A-3 used to issue “Pay Yourself cheques” by
obtaining Banker’s Cheque favouring their account with SBI
and Dena Bank. It is also perceivable from the chargesheet
that though the accused A-1 and A-3 knew that the said
Working Capital was sanctioned only for the purpose of taking
over the liabilities of UTI Bank and Federal Bank yet they
dishonestly diverted the funds to SBI and Dena Bank. The
sanctioned money, as alleged, was not used for the purpose it
was availed of and the sanction terms and conditions were
violated as a consequence of which the Bank could not get the
charge in pari passu with the other consortium Banks. The
said diversion of funds by A-1 and A-3 deprived the Bank of
its security and the entire loan became unsecured.
6. The investigation further revealed that A-1 got letter of
credits (hereinafter referred as “LCs”) issued from SBI and
8
Dena Bank in favour of fictitious companies propped by the
accused and used the said LCs to siphon the funds from these
Banks. The LCs beneficiary firms, favoring whom the A-2 and
A-3 had requested the LCs to be issued, were companies
existing only on paper without any commercial activity. The
said fictitious companies got the LCs discounted by attaching
their bogus bills and portion of these discount proceeds were
used for personal benefits of A-1 and a certain portion was
routed back to ATCOM. On the due dates, ATCOM did not
discharge its liabilities with SBI and Dena Bank. In the
chargesheet, the particulars of the names of fictitious
companies
have
been
given.
The
said
list
covers
10
companies. It has been further mentioned in the chargesheet
that the Proprietors/Directors of these fictitious companies
had issued false bills under their signatures and discounted
these false bills backed by the LCs, with the discounting
Banks, at the instance of one Kanakranjan Jain. Some of
these Proprietors/Directors are the employees and domestic
servants of said Kanakrajan Jain.
7. After so stating the chargesheet proceeds as follows:
9
“That, in two of these fictitious companies,
viz., M/s Anew Electronics & M/s Covet
Securities, Sh. Vikram Doshi (A-1) and Sh.
Vineet Joshi, (A-2) were Directors for some
period of time. These two companies were
maintaining their accounts at United
Western Bank. Sh. Vikaram Doshi (A-1)
was also having his personal account in the
same bank. From these two Accounts Sh.
Vikram Doshi had received a sum of Rs. 1,
48,50,000/-. This amount was utilized by
him towards purchase of residential flat.
Thus it is clear that the accused persons
under the garb of business requirements
had obtained credit facilities from the bank
but had utilized the funds for acquiring
immovable property for personal use. In
order to clear the liability generated
because of such illegal acts, they had
induced the Bank of Baroda to sanction the
credit
facilities,
which
facility
was
dishonestly used by them. The entire
amount sanctioned and released by the
Bank of Baroda is outstanding and nothing
has been repaid. Because of the acts of the
accused, the facilities sanctioned by the
Bank of Baroda are rendered without any
securities and the bank has thus suffered
wrongful loss.”
8. During the pendency of the case before the trial court on
30th March 2009 the informant, Bank of Baroda, had
transferred its debts to a trust IARC – BOB-01-07 under the
control of Kotak Mahindra Bank. The accused, Vikram Doshi,
settled the disputes and paid Rs.42 lacs for settling the
10
dispute. On that basis, Kotak Mahindra Bank issued a “no
due certificate” to M/s Atcom Technology Limited stating that
on receipt of Rs.42 lacs, there was no amount outstanding
and payable by them in respect of facility advanced by Bank of
Baroda.
The said bank also confirmed that the guarantees
issued by Vikram Doshi stood discharged.
9. After the receipt of such “No dues certificate” the
respondent preferred a petition under Section 482 of the
Cr.P.C. bearing Criminal Application No. 2239 of 2009 before
the
High Court of Judicature at Bombay and the learned
Single Judge vide order dated 24.2.2010 quashed the criminal
proceedings pending before the learned Addl. Metropolitan
Magistrate.
The learned Single Judge referred to one of its
earlier orders and came to hold as follows:-
“Both the offices under Sections 406 and 420 are
compoundable with the permission of the court. As
already discussed hereinabove, the Bank has
already given its No Due Certificate to the borrower
i.e. ATCOM. It can clearly be seen that even if the
matter is permitted to go for trial, no fruitful
purpose would be served, except burdening the
criminal Courts which are already over-burdened.”
10. To arrive at the same conclusion the High Court relied on
the decision in Madan Mohan Abbot v. State of Punjab1 and
1
(2008) 4 SCC 582
11
distinguished the pronouncement in A. Ravishanker Prasad
(supra).
11. We have heard Ms. Pinky Anand, learned ASG and Mr.
P.K.
Dey,
learned
counsel
for
the
Central
Bureau
of
Investigation and Arunabh Chowdhury and Mr. Anupam Lal
Das for the respondents.
12.In the backdrop of aforesaid facts the seminal question
that arises is whether in the obtaining factual matrix the High
Court is justified in quashing the criminal proceeding.
Learned counsel for the appellants submits that the High
Court has erroneously opined that the remaining offences are
406 and 420 of IPC whereas the chargesheet, also included
other offences against the accused persons.
It is further
contended that the chargesheet was not filed against the
public officer as the allegation against public officer could not
be substantiated during the investigation and the High Court
without appreciating the gravity of the other offences has
quashed the proceeding which makes the order absolutely
vulnerable in law. Learned counsel for the respondent would
contend that when “No due certificate” was obtained from the
bank and the matter had been settled the High Court has
12
correctly quashed the proceeding and hence, it does not
warrant any interference.
13.At this juncture, we are obligated to state that when the
High Court decided, the issue was
whether a proceeding
could be quashed in exercise of inherent jurisdiction in
respect of the non-compoundable offences and
principle of
law in that regard was not in a state of certainty.
The said
position has been made clear by this Court that High Court
has the jurisdiction to quash a criminal proceeding under
Section 482 of the Code in respect of non-compoundable
offences barring certain nature of crimes.
14.To appreciate the complete picture in proper perspective
we think it seemly to refer to the relevant decisions in the
field. In Rumi Dhar v. State of W.B.2 while dealing with an
order declining to discharge the accused under Section 239 of
the Code by the learned Special Judge which has been
affirmed by the High Court, a two-Judge Bench referred to the
decision in Central Bureau of Investigation v. Duncans
2
(2009) 6 SCC 364
13
Agro Industries Ltd.3 and Nikhil Merchant v. C.B.I.4 came
to hold as follows:-
“14. It is now a well-settled principle of law
that in a given case, a civil proceeding and a
criminal
proceeding
can
proceed
simultaneously. Bank is entitled to recover
the amount of loan given to the debtor. If in
connection with obtaining the said loan,
criminal offences have been committed by
the persons accused thereof including the
officers of the Bank, criminal proceedings
would also indisputably be maintainable.”
In the said case, the Court took note of the fact the
compromise entered into between the Oriental Bank of
Commerce and the accused pertaining to repayment of loan
could not form the foundation of discharge of the accused. The
two-Judge Bench appreciated the stand of the C.B.I. before the
High Court that the criminal case against the accused had
started not only for obtaining loan but also on the ground of
criminal conspiracy with the Bank officers and accordingly
upheld the order passed by the High Court.
3
4
(1996) 5 SCC 591
(2008) 9 SCC 677
14
15.In Central Bureau of Investigation v. A. Ravishanker
Prasad and Others5, the Court was dealing with the fact
situation
wherein
the
accused
persons
had
committed
offences such as forgery, fabrication of documents and used
the said documents as genuine.
There was allegation that
they had entered into conspiracy with the Bank officers for
availing huge credit facilities. In course of the pendency of the
criminal proceedings, the accused persons had settled the
outstanding dues by paying a sum of rupees 157 crores and
on that basis preferred an application under Section 482 of
the Code for quashing of the criminal proceeding and the High
Court quashed the proceedings on the basis of the settlement.
Be it stated, the trial had progressed in the said case and 92
witnesses had already been examined.
The question that
arose before this Court was whether such a proceeding should
have been quashed. The Court distinguished the decision in
Duncans Agro Industries Ltd.‘s case and opined that the
tenor of the language implied therein indicates that quashing
5
(2009) 6 SCC 351
15
of the complaint depends on the facts of each case. The Court
also distinguished the decision in Nikhil Merchant’s case.
16. A three-Judge Bench in the case of Gian Singh v. State
of Punjab and Another6 while answering the reference
whether the High Court has the jurisdiction under Section
482 of the Code to quash a proceeding in respect of
non-compoundable offences, after referring to number of
authorities, ruled that Section 482 of the Code, as its very
language suggests, saves the inherent power of the High Court
which it has by virtue of it being a superior court to prevent
abuse of the process of court or otherwise to secure the ends
of justice.
The words, “nothing in this Code” which means
that the provision is an overriding provision and the said
words leave no manner of doubt that none of the provisions of
the Code limits or restricts the inherent power. The Bench
proceeded to state that the guideline for exercise of such
power is provided in Section 482 itself i.e. to prevent abuse of
the process of any court or otherwise to secure the ends of
justice and in different situations, the inherent power may be
exercised in different ways to achieve its ultimate objective.
6
(2012) 10 SCC 303
16
Formation of opinion by the High Court before it exercises
inherent power under Section 482 on either of the twin
objectives, (i) to prevent abuse of the process of any court, or
(ii) to secure the ends of justice, is a sine qua non. The Court
further added that it is the judicial obligation of the High
Court to undo a wrong in course of administration of justice
or to prevent continuation of unnecessary judicial process and
the maxim ex debito justitiae is inbuilt in such exercise for the
whole idea is to do real, complete and substantial justice for
which it exists.
After so stating, the three-Judge Bench addressed to the
issue pertaining to the quashing of a criminal proceeding on the
ground of settlement between an offender and the victim and in
this context, it ruled thus:-
“61. Inherent power is of wide plenitude with no
statutory limitation but it has to be exercised in
accord with the guideline engrafted in such
power viz.: (i) to secure the ends of justice, or (ii)
to prevent abuse of the process of any court. In
what cases power to quash the criminal
proceeding or complaint or FIR may be exercised
where the offender and the victim have settled
their dispute would depend on the facts and
circumstances of each case and no category can
17
be prescribed. However, before exercise of such
power, the High Court must have due regard to
the nature and gravity of the crime. Heinous
and serious offences of mental depravity or
offences like murder, rape, dacoity, etc. cannot
be fittingly quashed even though the victim or
victim’s family and the offender have settled the
dispute. Such offences are not private in nature
and have a serious impact on society. Similarly,
any compromise between the victim and the
offender in relation to the offences under special
statutes like the Prevention of Corruption Act or
the offences committed by public servants while
working in that capacity, etc.; cannot provide for
any basis for quashing criminal proceedings
involving such offences. But the criminal cases
having overwhelmingly and predominatingly civil
flavour stand on a different footing for the
purposes of quashing, particularly the offences
arising from commercial, financial, mercantile,
civil, partnership or such like transactions or
the offences arising out of matrimony relating to
dowry, etc. or the family disputes where the
wrong is basically private or personal in nature
and the parties have resolved their entire
dispute. In this category of cases, the High
Court may quash the criminal proceedings if in
its view, because of the compromise between the
offender and the victim, the possibility of
conviction is remote and bleak and continuation
of the criminal case would put the accused to
great oppression and prejudice and extreme
injustice would be caused to him by not
quashing the criminal case despite full and
complete settlement and compromise with the
victim.”
18
17.Recently, in Narinder Singh & Ors. v. State of Punjab
& Anr.7, a two-Judge Bench placed reliance on Gian Singh’s
case (supra) and Dimpy Gujral v. Union Territory through
Administrator8 and distinguished the decision in State of
Rajasthan v. Sambhu Kevat9, and came to hold that in the
facts of the said case the proceedings under Section 307
deserved to be quashed.
The two-Judge Bench laid down
certain guidelines by which the High Courts would be guided
in giving adequate treatment to the settlement between the
parties and exercising its power under Section 482 of the Code
while accepting the settlement and quashing the proceedings
or refusing to accept the settlement. Some of the guidelines
which are relevant for the present purpose are reproduced
below :-
“(II) When the parties have reached the
settlement and on that basis petition for
quashing the criminal proceedings is filed, the
guiding factor in such cases would be to secure:
(i) ends of justice, or
(ii) to prevent abuse of the process of any
Court.
7
8
9
2014(4) SCALE 195
AIR 2012 SCW 5333
2013(14) SCALE 235
19
While exercising the power the High Court is to
form an opinion on either of the aforesaid two
objectives.
(III) Such a power is not be exercised in those
prosecutions which involve heinous and serious
offences of mental depravity or offences like
murder, rape, dacoity, etc. Such offences are not
private in nature and have a serious impact on
society. Similarly, for offences alleged to have
been committed under special statute like the
Prevention of Corruption Act or the offences
committed by Public Servants while working in
that capacity are not to be quashed merely on
the basis of compromise between the victim and
the offender.
(IV) On the other, those criminal cases having
overwhelmingly
and
pre-dominantly
civil
character, particularly those arising out of
commercial transactions or arising out of
matrimonial relationship or family disputes
should be quashed when the parties have
resolved their entire disputes among themselves.
(V) While exercising its powers, the High Court is
to examine as to whether the possibility of
conviction is remote and bleak and continuation
of criminal cases would put the accused to great
oppression and prejudice and extreme injustice
would be caused to him by not quashing the
criminal cases.”
18.At this stage it is apt to notice a three-Judge Bench
decision in CBI, ACB, Mumbai v. Narendra Lal Jain &
20
Ors.10 In the said case during the investigation pertaining to
the culpability of the accused in the crime, the concerned
bank had instituted suits for recovery of the amount claimed
to be due from the respondents and said suits were disposed
in terms of the consent decrees.
On the basis of the said
consent decrees an application for discharge was filed which
was rejected by the trial court but eventually was allowed by
the High Court. Be it stated, charges were framed under
Section 120-B/420 IPC by the learned trial Judge against the
private parties.
As far as bank officials are concerned,
charges were framed under different provisions of the
Prevention of Corruption of Act, 1988. Being dissatisfied with
the said order, the CBI had preferred an appeal by obtaining
special leave and in that context the court observed that the
accused
respondent
had
been
charged
under
Section
120-B/420 IPC and the civil liability of the respondent to pay
the amount had already been settled and further there was no
grievance on the part of the bank. Taking note of the fact that
offence under Section 420 of IPC is compoundable and
10
2014 3 SCALE 137
21
Section 120-B is not compoundable, the Court eventually
opined thus:-
“11. In the present case, having regard to the fact
that the liability to make good the monetary loss
suffered by the bank had been mutually settled
between the parties and the accused had accepted
the liability in this regard, the High Court had
thought it fit to invoke its power under Section 482
Cr.P.C. We do not see how such exercise of power
can be faulted or held to be erroneous. Section 482
of the Code inheres in the High Court the power to
make such order as may be considered necessary to,
inter alia, prevent the abuse of the process of law or
to serve the ends of justice. While it will be wholly
unnecessary to revert or refer to the settled position
in law with regard to the contours of the power
available under Section 482 CR.P.C. it must be
remembered that continuance of a criminal
proceeding which is likely to become oppressive or
may partake the character of a lame prosecution
would be good ground to invoke the extraordinary
power under Section 482 Cr.P.C.”
19. Slightly more recently in Gopakumar B. Nair v. CBI and
Anr.11 the Court referred to the paragraph 61 of Gian Singh’s
Case, distinguished the decision in Narendra Lal Jain
(supra) regard being had to the fact that the accused persons
were facing charges under Section 120-B r/w Section 13(2)
r/w 13 (1) (d) of the 1988 Act and Section 420/471 of IPC and
11
2014 4 SCALE 659
22
came to hold that substratum of the charges against the
accused-appellant were not similar to those in Narendra Lal
Jain (supra) wherein the accused was charged under Section
120-B read with Section 420 IPC only.
After so stating the
Court observed as follows:-
“The offences are certainly more serious; they
are not private in nature. The charge of
conspiracy is to commit offences under the
Prevention of Corruption Act. The accused
has also been charged for commission of the
substantive offence under Section 471 IPC.
Though the amount due have been paid the
same is under a private settlement between
the parties unlike in Nikhil Merchant (supra)
and Narendra Lal Jain (supra) where the
compromise was a part of the decree of the
Court. There is no acknowledgement on the
part of the bank of the exoneration of the
criminal liability of the accused-appellant
unlike the terms of compromise decree in the
aforesaid two cases. In the totality of the
facts stated above, if the High Court has
taken the view that the exclusion spelt out in
Gian Singh (supra) (para61) applies to the
present case and on that basis had come to
the conclusion that the power under Section
482 CrPC should not be exercised to quash
the criminal case against the accused, we
cannot find any justification to interfere with
the said decision.”
23
20. The present obtaining factual score has to be appreciated
on the anvil of aforesaid authorities. On a studied scrutiny of
the principles stated in Gain Singh (supra) it is limpid that
the three-Judge Bench has ruled that proceeding in respect of
heinous
and
serious
offences
and
the
offences
under
prevention of corruption Act and all other offences committed
by public servants while working in that capacity are not to be
quashed.
That apart, the court has also emphasized on
offences having a serious impact on society.
It has been
further laid down that criminal cases having overwhelmingly
and predominantingly civil flavour stand on a different footing
for the purposes of quashing, particularly the offences arising
from commercial, financial, mercantile, civil partnership or
such
like
transactions
or
the
offences
arising
out
of
matrimony relating to dowry, etc. or the family disputes where
the wrong is basically private or personal in nature.
In
Narendra Lal Jain (supra) the three-Judge Bench quashed
the proceeding as the charges were famed under Section
120/420 IPC in respect of the private respondents.
In
Gopakumar B. Nair’s case the court distinguished the
24
decision in Narendra Lal Jain (supra) and opined that the
accused had also been charged for the commission of offence
under Section 471 of IPC and on that basis declined to
interfere with the order passed by the High Court which had
refused to quash the criminal proceeding.
21. In the case at hand, as per the chargesheet the
respondents had got LCs issued from the bank in favour of
fictitious companies propped up by them and the fictitious
beneficiary companies had got letters of credits discounted by
attaching their bogus bills.
The names of 10 fictitious
companies have been mentioned in the chargesheet.
Thus,
allegation of forgery is very much there. As is manifest from
the impugned order, the learned Single Judge has not
adverted to the same.
It is not a simple case where an
accused has borrowed money from the bank and diverted it
somewhere else and, thereafter, paid the amount. It does not
fresco a situation where there is dealing between a private
financial institution and an accused, and after initiation of the
criminal
proceedings
he
pays
the
sum
and
gets
the
controversy settled. The expose’ of facts tells a different story.
25
As submitted by the learned Counsel for CBI the manner in
which the letters of credits were issued and the funds were
siphoned has a foundation in criminal law. Learned counsel
would submit that it does not depict a case which has
overwhelmingly and predominatingly civil flavour.
intrinsic character is different.
The
Emphasis is laid on the
creation of fictitious companies.
22.
In this context, we may usefully refer to a two-Judge
Bench decision in Central Bureau of Investigation v. Jagjit
Singh12 wherein the court being moved by the CBI had
overturned the order of the High Court quashing the criminal
proceeding and in that backdrop had taken note of the fact
that accused persons had dishonestly induced delivery of the
property of the bank and had used forged documents as
genuine. Proceeding further the Court opined as follows:-
“The offences when committed in relation with
banking activities including offences under Sections
420/471 IPC have harmful effect on the public and
threaten the well-being of the society.
These
offences fall under the category of offences involving
moral turpitude committed by public servants while
working in that capacity. Prima facie, one may state
that the bank is the victim in such cases but, in
fact, the society in general, including customers of
the bank is the sufferer. In the present case, there
12
(2013) 10 SCC 686
26
was neither an allegation regarding any abuse of
process of any court not anything on record to
suggest that the offenders were entitled to secure
the order in the ends of justice.”
23.
We are in respectful agreement with the aforesaid view.
Be it stated, that availing of money from a nationalized bank
in the manner, as alleged by the investigating agency, vividly
exposits fiscal impurity and, in a way, financial fraud.
The
modus operandi as narrated in the chargesheet cannot be put
in the compartment of an individual or personal wrong. It is a
social wrong and it has immense societal impact.
It is an
accepted principle of handling of finance that whenever there
is manipulation and cleverly conceived contrivance to avail of
these kind of benefits it cannot be regarded as a case having
overwhelmingly and predominantingly of civil character. The
ultimate victim is the collective. It creates a hazard in the
financial interest of the society. The gravity of the offence
creates a dent in the economic spine of the nation. The
cleverness the
which
has
been
skillfully
contrived,
if
allegations are true, has a serious consequence. A crime of
this nature, in our view, would definitely fall in the category of
27
offences which travel far ahead of personal or private wrong.
It has the potentiality to usher in economic crisis.
Its
implications have its own seriousness, for it creates a
concavity in the solemnity that is expected in financial
transactions.
It is not such a case where one can pay the
amount and obtain a “no due certificate” and enjoy the benefit
of quashing of the criminal proceeding on the hypostasis that
nothing more remains to be done. The collective interest of
which the Court is the guardian cannot be a silent or a mute
spectator to allow the proceedings to be withdrawn, or for that
matter yield to the ingenuous dexterity of the accused persons
to invoke the jurisdiction under Article 226 of the Constitution
or under Section 482 of the Code and quash the proceeding.
It is not legally permissible. The Court is expected to be on
guard to these kinds of adroit moves.
The High Court, we
humbly remind, should have dealt with the matter keeping in
mind that in these kind of litigations the accused when
perceives a tiny gleam of success, readily invokes the inherent
jurisdiction for quashing of the criminal proceeding.
The
court’s principal duty, at that juncture, should be to scan the
28
entire facts to find out the thrust of allegations and the crux of
the settlement. It is the experience of the Judge comes to his
aid and the said experience should be used with care, caution,
circumspection and courageous prudence. As we find in the
case at hand the learned Single Judge has not taken pains to
scrutinize the entire conspectus of facts in proper perspective
and quashed the criminal proceeding.
The said quashment
neither helps to secure the ends of justice nor does it prevent
the abuse of the process of the Court nor can it be also said
that as there is a settlement no evidence will come on record
and there will be remote chance of conviction. Such a finding
in our view would be difficult to record. Be that as it may, the
fact remains that the social interest would be on peril and the
prosecuting agency, in these circumstances, cannot be treated
as an alien to the whole case. Ergo, we have no other option
but to hold that the order of the High Court is wholly
indefensible.
24. Ex consequenti, the appeal is allowed, and the order
passed by the High Court is set aside and it is directed that
the trial shall proceed in accordance with law. We may hasten
to add that our observations in the present appeal are solely
in the context of adjudicating the justifiability of order of
quashing of the criminal proceeding and it would not have any
bearing at the time of trial. And we so clarify.
....................................J.
[Dipak Misra]
....................................J.
[Vikramajit Sen]
New Delhi;
September 19, 2014.
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