High Court
Legal Reasoning
838_Cri.Appln_4531_2023Court would take note of under which Section the offence has been made outand charges required to be framed, which cannot be gone into, at this stage.But, certainly, even on the basis of charge sheet which is filed against co-accused there appears to be prima facie evidence or there is a possibility ofevidence that would be revealed in the further investigation and, therefore,we do not find this to be a fit case to exercise our powers under Section 482of the Code of Criminal Procedure. 9Even we want to rely on the observations in the decisions reliedby learned Advocate for the applicant. In M. Devendrappa (supra) followingare the observations - “While exercising powers under the Section 482 of the Code ofCriminal Procedure, the Court does not function as a Court of appealor revision. Inherent jurisdiction under the section though wide hasto be exercised sparingly, carefully and with caution and only whensuch exercise is justified by the tests specifically laid down in theSection itself. It is to be exercised ex debito justitiae to do real andsubstantial justice for the administration of which alone Courts exist.Authority of the Court exists for advancement of justice and if anyattempt is made to abuse that authority so as to produce injustice, theCourt has power to prevent abuse. It would be an abuse of process of Court to allow any action whichwould result in injustice and prevent promotion of justice. In exerciseof the powers Court would be justified to quash any proceeding if itfinds that initiation/continuance of it amounts to abuse of process ofCourt or quashing of these proceedings would otherwise serve theends of justice. When no offence is disclosed by the complaint, theCourt may examine the question of fact. When a complaint is sought 938_Cri.Appln_4531_2023to be quashed, it is permissible to look into the materials to assesswhat the complainant has alleged and whether any offence is madeout even if the allegations are accepted in toto. It is important to bear in mind the distinction between a case wherethere is no legal evidence or where there is evidence which is clearlyinconsistent with the accusations made, and a case where there islegal evidence which, on appreciation, may or may not support theaccusations. When exercising jurisdiction under Section 482 of theCode, the High Court would not ordinarily embark upon an enquirywhether the evidence in question is reliable or not or whether on areasonable appreciation of it accusation would not be sustained. Thatis function of the trial Judge. Judicial process should not be aninstrument of oppression, or, needless harassment. Court should becircumspect and judicious in exercising discretion and should take allrelevant facts and circumstances into consideration before issuingprocess, lest it be an instrument in the hands of private complainantas unleash vendetta to harass any person needlessly. At the same timethe section is not an instrument handed over to an accused to short-circuit a prosecution and bring about its sudden death. The inherentpower should not be exercised to stifle a legitimate prosecution.” It is further observed that -“High Court being the highest Court of a State should normallyrefrain from giving a prima facie decision in a case where the entirefacts are incomplete and hazy, more so when the evidence has notbeen collected and produced before the Court and the issues involved,whether factual or legal, are of magnitude and cannot be seen in theirtrue perspective without sufficient material.”Here also the facts are not complete and those are hazy at thisstage. 9.1In Vineet Kumar (supra) it has been observed that - 1038_Cri.Appln_4531_2023“Inherent power given to the High Court under Section 482 of theCode of Criminal Procedure is with the purpose and object ofadvancement of justice. In case solemn process of Court is sought tobe abused by a person with some oblique motive, the Court has tothwart the attempt at the very threshold. Judicial process is a solemnproceeding which cannot be allowed to be converted into aninstrument of oppression or harassment. When there are materials toindicate that a criminal proceeding is manifestly attended with malafide and proceeding is maliciously instituted with an ulterior motive,the High Court will not hesitate in exercise of its jurisdiction underSection 482 of the Code of Criminal Procedure to quash theproceeding. The present is a fit case where the High Court ought tohave exercised its jurisdiction under Section 482 of the Code ofCriminal Procedure and quashed the criminal proceedings.”In Vineet Kumar (supra) reliance was placed on Bhajan Lal(supra). 9.2In Rajiv Thapar (supra) it has been observed that -“The discretion vested in the High Court under Section 482 Cr.P.C. canbe exercised suo motu to prevent the abuse of process of court,and/or to secure the ends of justice. The High Court, in exercise of itsjurisdiction under Section 482 of the Cr.P.C., must make a just andrightful choice. This is not a stage of evaluating the truthfulness orotherwise of the allegations levelled by the prosecution/complainantagainst the accused. Likewise, it is not a stage for determining howweighty the defences raised on behalf of the accused are. Even if theaccused is successful in showing some suspicion or doubt, in theallegations levelled by the prosecution/complainant, it would beimpermissible to discharge the accused before trial. This is so,because it would result in giving finality to the accusations levelled bythe prosecution/complainant, without allowing the prosecution or thecomplainant to adduce evidence to substantiate the same. Theconverse is, however, not true, because even if trial is proceeded with,the accused is not subjected to any irreparable consequences. The 1138_Cri.Appln_4531_2023accused would still be in a position to succeed, by establishing hisdefences by producing evidence in accordance with law. Where theprosecution/complainant has levelled allegations bringing out allingredients of the charge(s) levelled, and have placed material beforethe Court, prima facie evidencing the truthfulness of the allegationslevelled, trial must be held.”10Therefore, taking into consideration the above decisions itselfand for the reasons stated above, we take this to be not a fit case where weshould exercise our powers under Section 482 of the Code of CriminalProcedure. Application, therefore, stands rejected. ( SANJAY A. DESHMUKH, J. ) ( SMT. VIBHA KANKANWADI, J. ) agd
Arguments
IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD38 CRIMINAL APPLICATION NO.4531 OF 2023Mr. Arun K. Burad,Age 66 yrs., Occ. Chartered Accountant,R/o C – 201, Nayantara City 1, Behind Durvankur Lawns, Bajirao Nagar, Nashik – 422 002.… Applicant… Versus …1The State of Maharashtra Through City Police Station,Sangamner, Tq. Sangamner,Dist. Ahmednagar. 2Mr. Rajendra Fakira Nikam,Age 55 yrs., Occ. District Special AuditorClass – I, Co-operative Society,Ahmednagar. R/o Office at 3rd Floor, Building ofZilla Parishad Karmachari SevakCo-operative Society, Tilak Road,Ahmednagar. … Respondents...Mr. Saurabh Raut, Advocate h/f Mr. A.A. Fulfagar, Advocate for applicantMr. R.P. Gour, APP for respondent Nos.1 and 2...CORAM :SMT. VIBHA KANKANWADI & SANJAY A. DESHMUKH, JJ. DATE :07th APRIL, 2025 238_Cri.Appln_4531_2023ORDER : ( PER : SMT. VIBHA KANKANWADI, J. )1Present application has been filed for quashment of FirstInformation Report vide Crime No.740/2023 dated 19.08.2023 registeredwith City Police Station, Sangamner, Tq. Sangamner, Dist. Ahmednagar, forthe offence punishable under Sections 408, 409, 420, 465, 467, 471, 477-Aread with Section 34 of the Indian Penal Code, 1860 and Section 3 of theMaharashtra Protection of Interest of Depositors (In FinancialEstablishments) Act, 1999. 2Heard learned Advocate Mr. Saurabh Raut holding for learnedAdvocate Mr. A.A. Fulfagar for applicant and learned APP Mrs. R.P. Gour forrespondent Nos.1 and 2. Perused First Information Report and charge sheet.3Learned Advocate appearing for applicant vehemently submitsthat charge sheet has been filed on 08.11.2023 against these accusedpersons, however, in the same it is stated that against 15 accused includingthe applicant charge sheet is not filed. However, applicant’s name has beencertainly stated as an accused and, therefore, present application has beenfiled. 4The allegations in First Information Report which is lodged by 338_Cri.Appln_4531_2023District Special Auditor would show that when the re-audit has been madefor the period 01.04.2016 to 31.03.2021 on the orders issued by District SubRegistrar, Co-operatives, Ahmednagar, it was found that there ismisappropriation of Rs.80,89,41,981/- in Dudhganga Nagari SahakariPatsanstha Marhyadit, Sangamner, Dist. Ahmednagar. Present applicant is aChartered Accountant by profession. His role was limited to audit theaccounts. Mainly he has relied on the documents supplied by the institute.There is no question of any conspiration or common intention as alleged.The yearly audit that was conducted was never objected by anybody,especially the members who were having financial interest. The auditclassification of the institute was in ‘A’ category. In fact, there was a post ofChief Accountant. There used to be even internal audit. As per theprovisions of Co-operative Credit Society, there used to be periodicalstatutory audit and it was also never objected or any otherwise situation wasnot noted. Present applicant’s role was never in the internal functioning ofthe society and, therefore, when there is no role which would attract anypenal consequences can be attributed to the applicant he cannot be allowedto face the trial. 5Learned Advocate for applicant has also submitted that DistrictDeputy Registrar exercising his authority under Section 81(6) of the 438_Cri.Appln_4531_2023Maharashtra Co-operative Societies Act, 1960 had directed the informant tore-audit the book of accounts of Society. In fact, the District Deputy Registrar,Sangamner had conducted an inspection in pursuance of Section 89-A of theMaharashtra Co-operative Societies Act and had submitted a statutoryinspection report for the year 2020-2021. Said report had alsounambiguously stated that there is no misappropriation or embezzlement ofthe funds. The applicant being an external auditor was required to rely uponthe data provided by the Co-operative Society along with sampling processadopted by the Auditor. At the most, as against the applicant there can be anegligence, but not a criminal negligence. Learned Advocate for applicantalso points out that offence under Maharashtra Protection of Interest ofDepositors (In Financial Establishments) Act will not be applicable againstthe present applicant. The applicant has adopted the proper procedure or astandard procedure as per the procedure established by law as well as theInstitute of Chartered Accountants of India. If such steps are then taken i.e.involving even the Chartered Accountant in such way, then professionalswould be hesitant to accept the responsibilities of auditing such kind ofaccounts. 6Learned Advocate for the applicant relies on the decisions inState of Karnataka vs. M. Devendrappa and another [(2002) 3 SCC 89], 538_Cri.Appln_4531_2023Vineet Kumar and others vs. State of Uttar Pradesh and others [(2017) 13SCC 369], State of Haryana and others vs. Bhajan Lal and others [1992 Supp.(1) SCC 335] and Rajiv Thapar and others vs. Madan Lal Kapoor [(2013) 3SCC 330]. He submits that in these decisions Hon’ble Supreme Court haslaid the principles on which this Court can exercise its powers under Section482 of the Code of Criminal Procedure. We would like to refer these citationsat a later point of time. 7Learned APP strongly opposes the application and submits thatthe investigation is not yet complete and the charge sheet itself states thatcharge sheet is yet to be filed as against present applicant. However, fromwhatever the investigation has been carried up till now, it can be stated thatpresent applicant’s role as a Chartered Accountant has been considered. Hehas audited the accounts of Society for the year 2016-2017, 2017-2018,2019-2020 and 2020-2021. Substantial amount has been charged as fee forcarrying out the audit. For the re-audit carried out by the informant all thedocuments and record has been considered. The said audit is part of thecharge sheet. The misappropriated amount during the audited period hasalso been bifurcated and it shows that in 2016-2017 the amount that wasmisappropriated is 25,58,37,708/-, in 2017-2018 it was Rs.1,50,88,440/-, in2019-2020 it was Rs.2,17,77,274/- and in 2020-2021 it was 638_Cri.Appln_4531_2023Rs.28,41,68,581/-. These amounts are then attributable to the period inwhich the present applicant had audited the accounts. It cannot be limited tothe professional conduct. There are statements of witnesses of variouscategories. The members who had kept the deposit have stated that theirdeposits were not returned after the due date or after they were asked to bereturned by the depositors. The members had made agitations when theiramount was not returned. The directors had distributed the loan in crores ofrupees to their own family members and this could have been definitely seenby the Chartered Accountant. Taking into consideration the allegations andthe scope of inquiry and public money involved, this is not a fit case wherethe powers under Section 482 of the Code of Criminal Procedure should beexercised. 8At the outset, we would like to say that in the charge sheet,which is filed on 08.11.2023, copy of which is made available, it is clearlystated that as against present applicant the charge sheet is not filed. Hisname is in the list of those accused persons against whom charge sheet is notfiled. That means, the investigation is still in progress as against theapplicant. Only on the basis of charge sheet, which is now against the otheraccused persons, we will have to consider as to what is the role that is triedto be attributed to the applicant. As per First Information Report, 738_Cri.Appln_4531_2023misappropriation by accused persons (other than Cashiers and Auditors) is tothe tune of Rs.80,89,41,981/-. It is stated that present applicant and otherfive persons i.e. Cashiers and another Chartered Accountant have helpedmain accused. Now, this help is stated to be in the nature of not disclosingthe misappropriation which could have been noticed during the period ofaudit they had respectively carried. If we consider the report regarding re-audit, after the District Sub Registrar had given directions, it is specificallymentioned, as aforesaid, for which period the present applicant had carriedout the audit and which amounts he ought to have noticed, but has notnoticed during each year. Certainly, public money is involved in the matter.There are statements of members/depositors which would show that theyhad deposited their hard earned money just to get some benefit in the formof interest, but in spite of maturity the amount was not returned to them andit is stated that by forging their signatures the re-investment has been shownin their name and a huge amount of loan has been shown to be distributed tothe relatives of Directors. Definitely, the provisions under the MPID Act arestated to be applicable as against them and it cannot be against the presentapplicant. Not disclosing the true state of affair of the financial institution bythe Auditor to the members or by way of report has been stated to becheating as against them. Non disclosure is then also required to be takennote of. Certainly, at the time of framing of charge the Special Designated