November 26 & Ors. v. Central Bureau of Investigation & Ors.

companies/firms. They have cheated the OBC, Mandi Gobindgarh to the tune of Rs. 11,64,75,053-53 in connivance with the Branch Managers of the relevant time who have misused their official position and released limits without security and issued discounting cheques which were later on returned unpaid. It has been further alleged in the FIR that M/s Jain Steel Industries was sanctioned CC Hypothecation limits of Rs.90 lacs and guarantee limit of Rs.250 lacs by the HO of the bank. Subsequently, at the request of party CC Hypothecation limits were raised from Rs.90 lacs to Rs.120 lacs and guarantee limits from 250 lakhs to 300 lakhs. However, the then Branch Manager, Gobindergarh Branch of Oriental Bank of Commerce, Mr. Baldev Maudgill, unauthorisedly permitted over-drawings in CC Hypothecation upto Rs.212.89 lacs against sanctioned limit of Rs.120 lacs to M/s Jain Steel limits even though the drawing power was nil.

It is further alleged in the FIR that regarding guarantees worth Rs.1.85 crores favouring MSIC Ludhiana, party has availed bill discounting facility in which alleged bogus bills have been suspected to be involved. I have heard learned counsel for the parties. CRM M-3626 of 2009 3 Learned counsel for the petitioners states that the matter has been settled and the entire payment has been made to the bank and “No Dues Certificates” have been issued by the concerned Bank, which are annexed with the petition as Annexures P/4 to P/11. Learned counsel for the petitioners further states that nothing is due towards the petitioners and contends that the FIR is liable to be quahsed. To substantiate his contention, learned counsel for the petitioners has relied upon judgment of this Court in CRM M-2829 of 2011 – Sadhu Ram Singla and others vs. Central Bureau of Investigation and another, decided on 02.06.2011 and judgments of the Hon'ble Supreme Court in C.B.I. New Delhi vs.

Duncans Agro Industries Ltd., Calcutta, 1996(3) R.C.R. (Criminal) 60 and Nikhil Merchant vs. Central Bureau of Investigation and another, (2008) 9 SCC 677. Learned counsel for the CBI vehemently opposed the contention of the learned counsel for the petitioners. Learned counsel for the CBI contended that merely making payment of the amount does not dilute the offence against the petitioners and others. The petitioners in connivance with the Branch Managers of the OBC of the relevant time have misused the funds without any authority. The Branch Managers of the relevant period being officials of the Bank have misused and abused their official position and sanctioned the limits without any security. The Branch Managers allowed withdrawals much more than the sanctioned limits resulting into loss to the Bank. During the investigation, it has been discovered that petitioners actually did not pay the amount at the initial CRM M-3626 of 2009 4 stage but had started making payments after the registration of the FIR. The contention of the counsel for the petitioners cannot be sustained merely on the ground that loan has been repaid.

In support of his contentions, learned counsel for the CBI relied upon judgment of the Hon'ble Supreme Court in Sushil Suri versus C.B.I. and another, [2011] 8 S.C.R. 1 and contended that identical facts were involved in the said judgment. The Court did not accept the contention of the appellant in that case. The said judgment is squarely applicable to the present case. The criminal case against the petitioners and others will survive irrespective of the discharge of the debts of the OBC by the petitioners and other co- accused. Learned counsel for the CBI submitted that petition may be dismissed. Before considering the contentions of the learned counsel for the parties, it would be appropriate to notice the scope and inherent powers of this Court under Section 482 Cr.P.C., which has been considered by the Hon'ble Supreme Court in Sushil Suri's case (supra), which reads as under:- “11. Section 482 of the Cr.P.C. itself envisages three circumstances under which the inherent jurisdiction may be exercised by the High Court, namely: (i) to give effect to an order under the Cr.P.C.; (ii) to prevent an abuse of the process of Court; and (iii) to otherwise secure the ends of justice.

It is trite that although the power possessed by the High Court under the said provision is very wide but it is not unbridled. It has to be exercised sparingly, carefully and cautiously, ex debito justitiae to CRM M-3626 of 2009 5 do real and substantial justice for which alone the Court exists. Nevertheless, it is neither feasible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction of the Court. Yet, in numerous cases, this Court has laid down certain broad principles which may be borne in mind while exercising jurisdiction under Section 482 of the Cr.P.C. Though it is emphasised that exercise of inherent powers would depend on the facts and circumstances of each case, but, the common thread which runs through all the decisions on the subject is that the Court would be justified in invoking its inherent jurisdiction where the allegations made in the Complaint or Charge-sheet, as the case may be, taken at their face value and accepted in their entirety do not constitute the offence alleged.

In one of the earlier cases in R.P. Kapur Vs. State of Punjab, AIR 1960 SC 866, this Court had culled out some of the categories of cases where the inherent powers under Section 482 of the Cr.P.C. could be exercised by the High Court to quash criminal proceedings against the accused. These are:

(i) where it manifestly appears that there is a legal bar against the institution or continuance of the proceedings e.g. want of sanction; (ii) where the allegations in the first information report or the complaint taken at their face value and accepted in their entirety do not constitute the offence alleged; (iii) where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge.

CRM M-3626 of 2009 6

In Dinesh Dutt Joshi Vs. State of Rajasthan & Anr, (2011) 8 SCC 570, while explaining the object and purpose of Section 482 of the Cr.P.C., this Court had observed thus:

6…….The principle embodied in the section is based upon the maxim: quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest i.e. when the law gives anything to anyone, it gives also all those things without which the thing itself would be unavailable. The section does not confer any new power, but only declares that the High Court possesses inherent powers for the purposes specified in the section. As lacunae are sometimes found in procedural law, the section has been embodied to cover such lacunae wherever they are discovered. The use of extraordinary powers conferred upon the High Court under this section are however required to be reserved, as far as possible, for extraordinary cases.

Recently, this Court in A. Ravishankar Prasad & Ors. (supra), relied upon by learned counsel for the CBI, referring to several earlier decisions on the point, including R.P. Kapur (supra); State of Haryana & Ors. Vs. Bhajan Lal & Ors., 1992 Supp. (1) SCC 335; Janata Dal Vs. H.S. Chowdhary & Ors., (1992) 4 SCC 305; B.S. Joshi & Ors. (supra); Nikhil Merchant (supra) etc. has reiterated that the exercise of inherent powers would entirely depend on the facts and circumstances of each case. It has been further observed that the inherent powers should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain CRM M-3626 of 2009 7 from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material.

Bearing in mind the object, scope and width of power of the High Court under Section 482 of the Cr.P.C., enunciated above, the question for consideration is whether on facts in hand, the High Court was correct in law in declining to exercise its jurisdiction under the said Section?

Having examined the case in light of the allegations in the Charge-sheet, we are of the opinion that the view taken by the High Court in the matter cannot be flawed and deserves to be affirmed. It is manifest from a bare reading of the Charge-sheet, placed on record, that the gravamen of the allegations against the appellant as also the co-accused is that the Company, acting through its directors in concert with the Chartered Accountants and some other persons: (i) conceived a criminal conspiracy and executed it by forging and fabricating a number of documents, like photographs of old machines, purchase orders and invoices showing purchase of machinery in order to support their claim to avail hire purchase loan from PSB; (ii) on the strength of these false documents, PSB parted with the money by issuing pay orders & demand drafts in favour of the Company and (iii) the accused opened six fictitious accounts in the banks (four accounts in Bank of Rajasthan and two in Bank of Madura) to encash the pay orders/bank drafts issued by PSB in CRM M-3626 of 2009 8 favour of the suppliers of machines, thereby directly rotating back the loan amount to the borrower from these fictitious accounts, and in the process committed a systematic fraud on the Bank (PSB) and obtained pecuniary advantage for themselves.

In the present case, having regard to the modus operandi adopted by the accused, as projected in the Charge-sheet and briefly referred to in para 17 (supra), CRM M-3626 of 2009 11 we have no hesitation in holding that it is not a fit case for exercise of jurisdiction by the High Court under Section 482 of the Cr.P.C. as also by this Court under Article 142 of the Constitution of India. As noted above, the accused had not only duped PSB, they had also availed of depreciation on the machinery, which was never purchased and used by them, causing loss to the exchequer, a serious economic offence against the society.

The view we have taken above, gets fortified by a recent decision of this Court in Rumi Dhar (supra), wherein while dealing with a fact situation, akin to the present case, referring to the decision in Nikhil Merchant (supra), the Court declined to quash criminal proceedings in that case, observing thus:

24. The jurisdiction of the Court under Article 142 of the Constitution of India is not in dispute. Exercise of such power would, however, depend on the facts and circumstances of each case. The High Court, in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure, and this Court, in terms of Article 142 of the Constitution of India, would not direct quashing of a case involving crime against the society particularly when both the learned Special Judge as also the High Court have found that a prima facie case has been made out against the appellant herein for framing the charge.

Keeping in view the modus operandi adopted by the petitioners and other co-accused as projected in the FIR and the charge- sheet, I have no hesitation in holding that it is not a fit case for exercise of CRM M-3626 of 2009 12 jurisdiction by this Court under Section 482 Cr.P.C. Merely because the dues of the Bank have been paid up by the petitioners, they cannot be exonerated of the criminal liability, therefore, present FIR and subsequent proceedings arising therefrom cannot be quashed. In view of the foregoing discussion, I do not find any merit in the petition and the same is accordingly dismissed. November 26, 2012 [Paramjeet Singh] Judge