Dr. Farrukh Khan, Ms. Ridhima Goyal and Ms. Aditi Tayal, Advocates v. CENTRAL BUREAU OF INVESTIGATION THROUGH ITS PRINCIPLE OFFICER

Judgment

1. The instant petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter “CrPC”) [now Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (hereinafter “BNSS”)] seeking quashing of the Chargesheet bearing No. 33/2022 dated 31st December, 2022, against the petitioner originating from FIR/RC No. 219/2020(E) 0009 dated 26th August, 2020, registered under Section 120B read with Sections 406, 411, 420 and 421 of the Indian Penal Code, 1860 (hereinafter “IPC”) at CBI, EO-I, New Delhi and the consequential Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 proceedings emanating therefrom titled as „CBI v. M/s ERA Housing And Developers (India) Limited‟ pending before the Court of the learned Chief Metropolitan Magistrate, Rouse Avenue Courts, Delhi (hereinafter “CMM”). FACTUAL MATRIX a) M/s Era Housing & Developers India Ltd. (hereinafter “EHDL”), through its Director, Mr. Hem Singh Bharana, approached Industrial Finance Corporation of India Ltd. (hereinafter “IFCI”)/complainant to avail Rupee Term Loan of Rs. 80 crores with the purpose of repayment of an existing loan from Infrastructure Leasing & Financial Services (hereinafter “IL&FS”). b) IFCI sanctioned a Rupee Term Loan of Rs. 80 crores (hereinafter “Loan 1”) and Rs. 100 crores (hereinafter “Loan 2”) to EHDL on two different occasions in the year 2009 and 2010 respectively, and a further amount of Rs.100 crores (hereinafter “Loan 3”) was sanctioned to M/s Hi Point Investment & Finance Private Ltd. (hereinafter “HPIFPL”) in the year 2010. c) Loan 1 was sanctioned for the purpose of repayment of an existing loan to IL&FS as represented to IFCI by EHDL and it was disbursed in the account of EHDL which was maintained with the Union Bank of India, Asaf Ali Road branch, Delhi. The loans were initially secured against shares and subsequently against mortgage of certain Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 properties situated at Palwal and Bahadurgarh. Post creation of the said mortgage with IFCI, both EHDL and HPIFPL allegedly created third party interest in the mortgaged property without seeking IFCI‟s permission. d) It is stated in the impugned chargesheet that out of the loan amount of Rs.80 crores sanctioned by IFCI as Loan 1, on 23rd October, 2009, EHDL transferred an amount of Rs.

19.125 crores each to Account Nos. 413701010140848 and 413701010140849 belonging to M/s XEMA Infrastructure Private Limited (hereinafter “XIPL”) and M/s Goglet Infotech Private Limited (hereinafter “GIPL”) respectively, which were allegedly the sister concerns of EHDL. It is also stated that on 24th October, 2009, both XIPL and GIPL further transferred the amounts received from EHDL to M/s Era Infra Engineering Limited (hereinafter “EIEL”), which was allegedly the flagship company of the Era Group. e) A complaint dated 24th August, 2020, was filed by

IFCI pursuant to which the instant FIR was registered in the present petitioner was not named. Upon investigation, it was discovered that the petitioner was the Director and authorized signatory of XIPL and GIPL at the time when the above-mentioned transactions took place. f) The impugned chargesheet dated 31st December, 2022, was filed wherein the petitioner was named as an accused for the commission of offence under Section 120B read with Sections 406, 411, 420 and 421 of the IPC. Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 g) The proceedings arising out of the instant FIR is pending before the learned CMM, Rouse Avenue Courts, Delhi. As per the order dated 24th June, 2023, the learned CMM issued summons to the petitioner in the present case. h) Aggrieved by the proceedings in the present case, the instant petition has been filed before this Court seeking quashing of the impugned chargesheet and the proceedings emanating therefrom. During the pendency of the instant petition, investigating agency-CBI has also filed a supplementary chargesheet dated 8th October, 2024 on record. PLEADINGS BEFORE THIS COURT

2. The instant petition has been filed by the petitioner on the following grounds: “A. BECAUSE Respondent/Investigating agency exercised its power in untrammelled manner, while overlooking the fact that Petitioner has resigned from the concerned companies' past a decade in the year 2010 and has no role to play during the period of offence. B. BECAUSE Petitioner was neither a Director nor a key managerial personnel in EHDL and HPIFPL, the prime companies to which loan were sanctioned by IFCI. C. BECAUSE allegations made in the impugned charge sheet are patently absurd and inherently improbable as no specific role has been alleged upon the Petitioner and no principle allegations has been levelled against thePetitioner in the impugned charge sheet. D. BECAUSE Petitioner has unimpeachable and clean antecedents and has never been involved in any offence. E. BECAUSE Petitioner was deployed as Director at the Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 that petitioner was instance of Mr. H S Bharana and was never a signatory in the concerned loan transactions. F. BECAUSE no offence of cheating under Sec 415 IPC is made out against the Petitioner and hence the offence under Sec 420, Sec 421 is not made out. G. BECAUSE Petitioner has been charge sheeted merely because he was Director in few of the Companies, without in charge of and any evidence responsible to the affairs of the Company at the time of commission of alleged offence. H. BECAUSE the allegations made in the Chargesheet, even if they are taken at their face value and accepted in their entirety do not prima-facie constitute any offence or makeout a case against the Petitioner. I. BECAUSE the uncontroverted allegations made in the RC and the evidence collected in support of the same do not disclose the commission of any offence against thePetitioner. J. BECAUSE continuance of trial qua the Petitioner would cause irreparable loss to the Petitioner. It is submitted that the Petitioner, at present, is Director and Key Managerial Person of SEBI CAT-II AIF and as per Rule 3(b)(ii) of Securities India (Intermediaries)(Third Amendment) Regulations, 2021, any person, who has been chargesheeted by any Court would not be considered as fit person and shall be the subject to disqualification within six months of such impediment. K. BECAUSE trial in the said case would turn to be a punishment for the Petitioner, as with disqualification as mentioned above, the Petitioner will not be allowed to continue working as Director and Key Managerial Person in the said company, thereby leading a catastrophic situation for the Petitioner. L. BECAUSE every accused is presumed innocent until proven guilty and Petitioner will be made to suffer at the cost of his livelihood for no fault of his own. M. BECAUSE in the entire impugned charge sheet alleged role of Petitioner is limited and confined only to the fact that he was Director of M/s Xema Infrastructure PrivateLimited Exchange Board Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 (XIPL) and M/s Goglet Infotech Pvt Ltd., (GIPL)the sister concern of M/s EHDL (Accused No. 1), the companies to which part of term loan fund (Loan 1) was diverted, instead of prepayment of loan to IL&FS, as more particularly ascribed in Para 16.10 of impugned chargesheet. It is further alleged that from aforesaid Companies in addition to M/s XEBEC Hospitality Pvt. Ltd. amount was further transferred to other flagship companies of Era Group, to which Petitioner has no association or any link, the same stand corroborated by a bare perusal of the impugned chargesheet. It is pertinent to mention hereinthat Mr. HS Bharana was figure head, on instruction of whom Petitioner was working, as further affirmed by investigating agency in Para 16.13 of impugned chargesheet. It is submitted that in the investigation it was categorically revealed that Petitioner did not have the cheque books of these companies and also never went tothe Bank to get these accounts opened or to obtain cheque books. N. BECAUSE Petitioner had no de-facto power or authority insofar as the said companies are concerned and was merely working under instructions of the head of Era Group, namely Mr. HS Bharana. That a bare perusal of Para 16.13 of the impugned chargesheet as submitted before the Ld. Trial Court by the Respondent, would substantiate the case of the Petitioner, that there is no justifiable reason to drag and implicate the Petitioner as an accused therein. O. BECAUSE dilution of i.e. mortgaged property(situated in Palwal Haryana) was transferred and third party interest was created in the year 2013-2015, as the period revealed Petitioner resigned from the Era Group and its sister concern's. Further the second charge over the said Palwal property was created in 2013 in favour of ECL Finance Ltd i.e. much after the period Petitioner resigned from ERA Group or its sister concern. P. BECAUSE no allegations or accusation has been leveled against the Petitioner re the Loan 2 and Loan 3 [100 crore to M/s Era Housing and Developers (India) Ltd & 100 crore investigation, much after security Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 to M/S Hi Point Investment & Finance Private Ltd.(HPIFPL)]. It is submitted that alleged round tripping and alleged siphoning off has taken place much after the period, Petitioner resigned from ERA Group or its sister concern. That Petitioner resigned from the concerned companies' past a decade in the year 2010 and has no role to play during the period of alleged offence. Q. BECAUSE no specific role, accusation or allegation has been levelled against the Petitioner except from the fact that he was Director/Authorized signatory of XIPL and GIPL. The mere fact person is Director of Company cannot fasten liability upon him, until and unless specific role of concerned Director is shown and proved. It is submitted for fastening criminal liability there is no presumption that every Director knows the transaction.”

3. In response to the instant petition filed by the petitioner, the respondent has filed its reply, the relevant portion of which is as under: “Role of Accused Yogesh Gupta (A-10) 12. That Investigation revealed that Sh.Yogesh Gupta joined M/s Era Construction (India) Ltd now M/S Era Infra Engineering Ltd. on 25.04.2005 on the post of executive finance. It is relevant to mention here that investigation revealed that M/s XEMA Infrastructure Pvt. Ltd got registered in ROC on 06.04.2009 and M/S Goglet Infotech Pvt. Ltd at 153, Okhla Industrial Estate, Phase-III, New Delhi- 110020 got registered in ROC on 08.04.2009. Sh. Yogesh Gupta was the director in the above mentioned companies from 06.04.2009 to 10.04.2010. 13. That investigation revealed that on 24.10.2009 M/s XEMA Infrastructure Pvt. Ltd transferred an amount of Rs.19,12,50,000 and M/S Goglet Infotech Pvt. Ltd transferred an amount of Rs.19,12,50,000 in the a/c no. 413701010140787 of M/s Era Infra Engg. Ltd. the flagship company of Era Group. All the above mentioned accounts are maintained at Union Bank of India, Asaf Ali road branch, New Delhi. Investigation revealed that at the Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 relevant time Sh. Yogesh Gupta was authorized signatory of above -mentioned two accounts. Investigation revealed that Sh.Yogesh Gupta, Director and authorized signatory of M/s XEMA Infrastructure Pvt. Ltd and M/S Goglet Infotech Pvt. Ltd was having the knowledge of the aforesaid transaction. REPLY TO GROUNDS A-Q The averments made in para A-Q of the petition are vehemently denied being devoid of merit. It is submitted that investigation revealed that IFCI Ltd. sanctioned a Rupee Term Loan of Rs.80 crore to M/s Era Housing & Developers India Ltd. (EHDL) for the purpose of prepayment of loan of IL & FS. The captioned loan was disbursed in the no lien account of M/s EHDL maintained with Union Bank of India, Asaf Ali Road Delhi Branch. Thereafter M/s EHDL diverted the loan funds of Rs.19.125 Crores in the a/c no: 413701010140848 of M/s. XEMA Infrastructure Pvt. Ltd and an amount of Rs. 19.125 Crores the a/c no: 413701010140849 of M/s Goglet Infotech Pvt. Ltd. on 23.10.2009 instead of prepayment of the loan of IL&FS. Further M/s XEMA Infrastructure Pvt. Ltd transferred an amount of Rs.19,12,50,000 and M/S Goglet Infotech Pvt. Ltd. transferred an amount of Rs. 19,12,50,000 in the a/c no.413701010140787 of M/s Era Infra Engg. Ltd. on flagship company of Era Group. 24.10.2009 Investigation further revealed that at that time authorized signatory of both of above mentioned account was Sh. Yogesh Gupta. Investigation further revealed that Sh. Yogesh Gupta, Director and authorized signatory of M/s XEMA Infrastructure Pvt. Ltd and M/S Goglet Infotech Pvt. Ltd. was having the knowledge of the aforesaid transaction. The aforesaid facts and circumstances disclosed commission of offences U/s 120-B r/w Sec. 420, 406, 411, and 421 of IPC and substantive offences thereof against accused Sh. Yogesh Gupta, Director and authorized signatory of M/s XEMA Infrastructure Pvt. Ltd and M/S Goglet Infotech Pvt. Ltd.” Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 SUBMISSIONS (on behalf of the petitioner) 4. Learned counsel appearing on behalf of the petitioner submitted that the respondent overlooked the fact that the petitioner had resigned from the concerned companies in the year 2010 and played no role in the said companies during the period of offence. It is further submitted that the petitioner was neither a Director nor a key managerial personnel in EDHL. 5. It is submitted that the allegations made in the impugned chargesheet are patently absurd and inherently improbable as no specific role has been assigned to the petitioner for the commission of the said offence and no principal allegations have been levelled against the petitioner in the impugned chargesheet. It is further submitted that the petitioner was never a signatory in the concerned transactions and hence, no offence is made out against him. 6. It is submitted that the petitioner was chargesheeted merely because he was Director in the concerned Companies and that there is no material evidence which suggests that the petitioner was responsible and in charge of the affairs of the Company at the time of the commission of the alleged offences. It is further submitted that there can be no presumption that the Director knows about and is involved in every transaction that the concerned company undertakes. 7. It is submitted that the role of petitioner is merely limited to the fact that he was Director of XIPL and GIPL, the companies that were the Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 sister concerns of EHDL and to which the term loan fund was diverted instead of prepayment of loan to IL&FS which was shown as the purpose of securing the said term loan from IFCI. It is further submitted that the amount transferred to the said companies were transferred to other flagship companies of ERA Group, to which the petitioner has no association or link with and the same can be established upon a bare perusal of the impugned chargesheet. 8. It is submitted that the petitioner was functioning on the instructions of one Mr. HS Bharana/accused No.2, who is the Chairman of the Era Group, and the same has been affirmed in paragraph no. 16.13 of the impugned chargesheet. It is further submitted that it is specifically averred in the impugned chargesheet that the petitioner did not have the cheque books of the accounts of the said companies of which he was the Director and the petitioner also never went to the Bank to get these accounts opened or obtain cheque books. 9. It is submitted that the petitioner had no de-facto power or authority in the decision-making of the said companies as he was merely functioning based on the instructions of Mr. HS Bharana, who was the head of the Era Group and therefore, there is no reason for implicating the petitioner as one of the accused in the impugned chargesheet. 10. It is submitted that third party interest in the mortgaged party situated in Palwal, Haryana was created much after the resignation of the petitioner from the Era Group and its sister concerns. It is further submitted that the second charge over the said Palwal property was created in the year 2013 in favour of ECL Finance Ltd., which was also much after the resignation of the petitioner from the ERA Group or its Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 sister concern. 11. It is submitted that the allegations made in the impugned chargesheet, even when considered to be uncontroverted and taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the petitioner. It is further submitted that the evidence collected in support of the allegations made in the impugned chargesheet do not disclose the commission of any offence against the petitioner and the mere fact that the petitioner was the Director of the said companies cannot fasten criminal liability upon him unless his specific role in the commission of any offence is proved on the basis of any material evidence. 12. It is submitted that the petitioner has deep roots in the society and has unimpeachable and clean antecedents. It is further submitted that if the present petition is not allowed, it will do irreparable harm to the petitioner. 13. Therefore, in view of the foregoing submissions, it is prayed that the reliefs sought by the petitioner may be granted. (on behalf of the respondent) 14. Per Contra, learned SPP appearing for the respondent CBI vehemently opposed the instant petition submitting to the effect that the same is liable to be dismissed for being devoid of any merit. 15. It is submitted that upon investigation, it was revealed that EHDL did not utilize the amount of Rs.80 crores secured as Rupee Term Loan from IFCI for repayment of existing loan to IL&FS and instead, the said loan amount was transferred to four sister concerns of EHDL, including Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 XIPL and GIPL to whom an amount of Rs. 19.125 crores each was transferred by EHDL. 16. It is submitted that all the transfer entries made by the Director of EHDL, Mr. HS Bharana, were in contravention of the terms and conditions of the sanction of the said loan as it was utilized for purposes other than what it was granted for by IFCI to EHDL. 17. It is submitted that upon investigation, it was revealed that the petitioner joined M/s Era Construction (India) Limited (now EIEL) in the year 2005 as a finance executive. It is further submitted that the petitioner was later appointed as the Director of XIPL and GIPL and he held the said post in both the companies till 10th April, 2010. 18. It is submitted that upon investigation, it was revealed that XIPL and GIPL transferred an amount of Rs.19.125 crores each to EIEL, which was the flagship company of the Era Group. It is further submitted that the accounts of both XIPL and GIPL are maintained at Union Bank of India, Asaf Ali Road branch, Delhi. 19. It is further submitted that at the time of the relevant transactions which led to the commission of the offence in the present case, the petitioner was the Director of XIPL and GIPL in addition to being the authorized signatory of their accounts from which the amount of Rs.19.125 crores each was transferred to EIEL. It is further submitted that the petitioner had the knowledge of the aforesaid transactions and was involved in the commission of the said offence in question. 20. It is submitted that this Court, while exercising their inherent powers under Section 482 of the CrPC, cannot act as if it were a trial court and venture into evaluation of evidence. Placing reliance on the Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 Hon‟ble Supreme Court‟s judgment in Chilakamarthi Venkateswarlu v. State of A.P.,1 it is further submitted that at this stage, only a prima facie case is to be made out and the standard of proving the case beyond reasonable doubt is not applicable. 21. Therefore, in view of the foregoing submissions, it is prayed that the instant petition may be dismissed. ANALYSIS AND FINDINGS 22. Heard the learned counsel for the parties and perused the material placed on record including the complaint, FIR, the impugned chargesheet, etc. This Court has also perused the judgments relied upon by the parties and the written submissions placed on record. 23. At this stage, upon perusal of the impugned chargesheet, this Court finds it imperative to discuss the allegations made against the petitioner. 24. In the present matter, it is stated in the chargesheet that upon investigation, it was revealed that EHDL secured a Rupee Term Loan of Rs. 80 crores from IFCI for the purpose of repayment of an existing loan to IL&FS. However, out of the said loan amount, Rs. 19.125 crores each were separately transferred to XIPL and GIPL, and the same was further diverted to EIEL, which was the flagship company of the Era Group. Therefore, it is stated in the chargesheet that all the accused including the petitioner, i.e., accused no. 10, in pursuance of a criminal conspiracy, cheated IFCI and hence, the offence under Section 120B read with Sections 406, 411, 420 and 421 of the IPC is made out in the present case. 25. Adverting to the said charges against the petitioner specifically, the respondent‟s case relies heavily on the fact that the petitioner was the 1(2020) 17 SCC 595 Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 Director of XIPL and GIPL and the authorized signatory of the accounts of the said companies at the time when the relevant transactions were undertaken by them. It is also the respondent‟s case that upon investigation, it was revealed that the petitioner had the knowledge of the relevant transactions. The relevant portion of the chargesheet is reproduced below: “ Accuse d No. A-5 A-6 Companies Name M/s XEMA Infrastructur e Pvt. Ltd. M/S Goglet Infotech Pvt. Ltd. Name directors

1.Yogesh Gupta 2.I.S.Gulia Name of the authorized signatories Yogesh Gupta

1.Yogesh Gupta 2.Bijender Singh @ Bijender Singh Chaprana Yogesh Gupta revealed Investigation that Bijender

16.13 Singh Chaprana(A-9) and Yogesh Gupta (A-10) were employees in Era Construction (India) Ltd @ Era Infra Engineering Ltd (A-6) and they did not have the cheque books of these companies and also they never went to the Bank to get these accounts opened or to obtain cheque books. They were made directors on the instance of Hem Singh Bharana (A-2) and used to follow his instructions. They signed the account opening forms and cheques on time to time on the directions of Hem Singh Bharana (A-2).” Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52

26. From the above quoted portion of the chargesheet, it is clear that the investigations against the petitioner revealed that he was the Director and authorized signatory of XIPL and GIPL at the time of the relevant transactions, which form the subject matter of the instant criminal proceedings against the petitioner, and he worked on the instructions of Mr. HS Bharana, on whose instance he was made the Director. 27. It is also important to note that as per the findings of the investigation as recorded in the above quoted portion of the chargesheet, the investigating agency reached the conclusion that the petitioner did not have the cheque books or went to the Bank to get the said accounts opened but he only signed the account opening forms and cheques on the directions of Mr. HS Bharana. 28. At this stage, it is important to look into the settled position of law on the issue of the criminal liability of a Director of a company. In the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla,2 the Hon‟ble Supreme Court considered the definition of „director‟ as defined under Section 2(13) of the Companies Act, 1956. The relevant portion of the judgment is reproduced below: “8. ……. There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint 2(2005) 8 SCC 89 Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 sub-committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. These are matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the officers in a company. …..”

29. A Director of a company cannot be said to be necessarily aware of the day-to-day functioning of such company merely because he holds the post of a Director. There is no presumption that the Director of a company will definitely be in-charge of the conduct or affairs of the company. Therefore, it becomes imperative to aver and establish that the Director concerned was in charge of the day-to-day affairs of the company in order to implicate the said person in criminal proceedings. 30. It is not in doubt that a corporate entity is an artificial person that acts through its officers, directors, etc. If such an entity commits an offence, it would be through the acts and intent of the individuals who are involved in the functioning of the entity and would also be the same in case of a criminal conspiracy. 31. Hence, it is safe to say that any individual who has perpetrated the commission of an offence on a corporate entity‟s behalf can be made an accused, along with such corporate entity, if there exists sufficient Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 evidence that shows active role played by him coupled with the requisite criminal intent for the commission of the said offence in question. 32. Before adverting to the merits of this case, it is important at this stage to discuss the settled law on the issue of quashing of criminal proceedings. In the case of State of Haryana v. Bhajan Lal,3 the Hon‟ble Supreme Court had set out the broad categories of cases in which the inherent powers of the Court could be exercised for quashing criminal proceedings. The relevant portion of the judgment is reproduced as under: “102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not 31992 Supp (1) SCC 335 Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 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 Act concerned (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 Act concerned, providing efficacious redress grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala maliciously wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” fide and/or where the proceeding instituted with an ulterior motive

33. Upon perusal of the above, it is observed that the inherent powers of the Courts must be exercised sparingly and with great caution. From Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 the above said judgment, it is clear that the Court may quash a complaint under Section 482 of the CrPC if it is satisfied that the allegations made against the accused, even when they are taken at face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused. Further, the Court may also invoke its extraordinary powers to quash a complaint if the allegations made in the complaint are so absurd and improbable that no prudent person may reach a conclusion that there is sufficient ground for proceeding against the accused. 34. Therefore, it is clear that the question of exercise of the Court‟s inherent powers under Section 482 of the CrPC to quash criminal proceedings would depend on the facts and circumstances of each case, and there can be no one-size-fits-all approach that the Court can adopt while deciding the same. However, while deciding this question, it should be kept into keen consideration that the Court does not need to determine the genuineness of the allegations and the evidence placed before it. The Court‟s exercise is merely limited to a determination as to whether the uncontroverted allegations when taken at their face value, disclose the commission of the offence in question by the accused. 35. In the present case, the accused is charged under Section 120B read with Sections 406, 411, 420 and 421 of the IPC. Section 120B of the IPC provides for punishment for the commission of the offence of criminal conspiracy. Section 120B of the IPC reads as under: “120B. Punishment of criminal conspiracy. — (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, Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 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.]” The offence of criminal conspiracy is defined under Section 120A of the IPC, which reads as under: “120A. Definition of criminal conspiracy. — 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 agreement 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. Explanation. —It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object.”

36. The essential ingredients of the offence of criminal conspiracy are firstly, an agreement between two or more persons; and secondly, the agreement must relate to doing or causing to be done either an illegal act or an act which is not illegal in itself but is done by illegal means. 37. It is clear that there should be meeting of minds of at least two or more persons for doing or causing to be done an illegal act or an act by illegal means. Therefore, there should be criminal intent on the part of the persons entering into such agreements for the commission of the offence of criminal conspiracy. As a corollary, it follows that in order to establish Signature Not Verified CRL.M.C. 5480/2023 Digitally Signed By:PRAVEEN KUMAR BABBAR Signing Date:24.01.2025 10:20:52 a charge of criminal conspiracy, knowledge of indulgence in either an illegal act or a legal act by illegal means is sine qua non. 38. The learned counsel for the respondent has placed reliance on the judgments of the Hon‟ble Supreme Court in Kehar Singh v. State (Delhi Admn.)4 and R. Venkatkrishnan v. CBI5 to submit that the offence of criminal conspiracy can be established by adducing circumstantial evidence and that the conduct of the accused and their level of involvement would be a relevant factor for determining the commission of the said offence. 39. In the present case, the petitioner was not named in the instant FIR. Upon investigation, the petitioner was arraigned in the impugned chargesheet on the charges of indulging in a criminal conspiracy to dishonestly induce IFCI to disburse the said term loan by providing misleading information and thereafter diverting the said term loan funds for the purpose other than what it was sanctioned for, thereby, cheating IFCI and causing it wrongful loss. 40. Record reveals that the petitioner was the Director of XIPL and GIPL till 10th April, 2010. Accordingly, it is argued by the learned counsel for the respondent that when the amount of Rs. 19.125 crores each was transferred from the accounts of the said companies to EIEL on 24th October, 2009, the petitioner was not only the Director of the said companies but also their authorized signatory and had knowledge of the aforesaid transaction. 41. The impugned chargesheet acknowledges the petitioner as the