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Patna High Court · body

2014 DIGILAW 66 (PAT)

Mumtaz Alam v. State of Bihar

2014-01-16

RAKESH KUMAR

body2014
ORDER Since in both the petitions, filed under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “the Cr.P.C.”), petitioners have prayed for quashing of order dated 25.7.2006 passed by Sri A.K. Singh, Judicial Magistrate Ist Class, Patna in Complaint Case No. 1317(C) of 2006, whereby, the learned Magistrate has taken cognizance of offence under Sections 406, 420, 468 & 499 of the Indian Penal Code and also for quashing of entire criminal proceeding in the said complaint case, both petitions were heard together and are being disposed of by this common order. 2. Short fact of the case is that opposite party no. 2 namely, Sri Arun Kumar Govil, Managing Director of M/s S.M. International Ltd. had filed a complaint petition in the court of Chief Judicial Magistrate, Patna, disclosing therein, that he had approached the Managing Director of Bihar State Credit & Investment Corporation (hereinafter referred to as “BICICO”) for sanction of loan for establishment of an industry, and accordingly, a term loan of Rs. 50 Lakhs was sanctioned on certain terms and conditions, which was to be re-paid in installment with interest as per repayment schedule. The BICICO in joint financing with BSFC had sanctioned a term loan of Rs. 50 Lakhs, subject to approval of re-finance of Industrial Development Bank of India (hereinafter referred to as “I.D.B.I.”). Subsequently, the BICICO informed the complainant /opposite party no. 2 that I.D.B.I. had sanctioned seed capital assistance and after disbursement of Rs. 12.35 Lakhs. It was alleged by the complainant that the Managing Director, BICICO, fraudulently cancelled the seed capital assistance after disbursement of Rs. 8.40 Lakhs and adjusted the same against the term loan of BICICO. According to the complainant, the said cancellation was an act of criminal breach of trust putting him to huge financial loss. Subsequently, after examination of complainant on oath, the learned Judicial Magistrate Ist Class, Patna, took cognizance of offences under Sections 406, 420, 468 & 499 of the Indian Penal Code and directed for issuance of processes. In 1st case i.e. Cr. Misc. No. 43329 of 2010, as alleged, the petitioner no. 1 was the In-charge Recovery (Jharkhand) BICICO and petitioner no. 2 was Assistant Manager, OTS, BICICO. Cr. Misc. No. 29248 of 2008 has been filed by Sri Prem Singh Meena, who was at the relevant time was Managing Director of the BICICO. 3. In 1st case i.e. Cr. Misc. No. 43329 of 2010, as alleged, the petitioner no. 1 was the In-charge Recovery (Jharkhand) BICICO and petitioner no. 2 was Assistant Manager, OTS, BICICO. Cr. Misc. No. 29248 of 2008 has been filed by Sri Prem Singh Meena, who was at the relevant time was Managing Director of the BICICO. 3. Learned counsel for petitioners in both the cases, at the very outset, has argued that on perusal of the contents of the complaint petition itself, no criminal offence is made out. However, the learned Judicial Magistrate, in a cryptic manner, has passed order of cognizance, which is not sustainable in the eye of law. Learned counsel for the petitioners further submits that primarily the complaint petition was filed with a purpose to put pressure on the officials of the BICICO, so that, they may not take any sincere effort in recovery of the loan amount from the complainant / opposite party no. 2. It has been argued that since the loan amount was not paid, after all formalities even steps were taken for initiating certificate proceeding against the complainant under the provisions of Public Demand Recovery Act and only thereafter, the present complaint petition was filed, that too, without mentioning as to what action was taken by which of the petitioners showing commission of any criminal offence. It has been emphatically argued that in entire complaint petition there is no whisper regarding omission or commission, directly or indirectly, by any of the petitioners of both the cases. In sum and substance, it has been argued that the complaint petition was filed maliciously and with oblique motive to pressurize the officials of the BICICO not to take steps in the light of recovery of loan amount from the complainant. 4. Sri Amit Srivastava, learned counsel for the petitioners in Cr. Misc. No. 43329 of 2010, while referring to statement made in paragraph no. 13 of the petition submits that I.D.B.I. had sanctioned seed capital assistance of Rs. 12.35 Lakhs to the complainant / opposite party no. 2, which was communicated by the BICICO on 16.11.1983. The documents relating to seed capital assistance were executed by opposite party no. 2 on 7.4.1986. No. 43329 of 2010, while referring to statement made in paragraph no. 13 of the petition submits that I.D.B.I. had sanctioned seed capital assistance of Rs. 12.35 Lakhs to the complainant / opposite party no. 2, which was communicated by the BICICO on 16.11.1983. The documents relating to seed capital assistance were executed by opposite party no. 2 on 7.4.1986. The I.D.B.I. later on cancelled the seed capital assistance due to the reason that the company of the complainant after changing its name as S.M. International Ltd. had gone in public issue of Rs. 66 Lakhs. Thereafter, BICICO also cancelled the seed capital assistance of Rs. 12.35 Lakhs as per instruction of I.D.B.I. and the amount of seed capital assistance disbursed to the complainant / opposite party no. 2 was converted into term loan. The said decision of the Board of Directors of BICICO was duly communicated to opposite party no. 2 on 21.10.1986. Sri Srivastava, further submits that despite several notices, loan amount was not cleared by the opposite party no. 2, and finally, due to outstanding dues of Rs. 554.84 Lakhs as on 30.9.2001, BICICO was constrained to put the unit of opposite party no. 2 on sale. Since the complainant / opposite party no. 2 had intentionally withheld public money and put the BICICO to huge loss, BICICO took action on agreed terms and conditions. Subsequently, a certificate case was also filed against complainant /opposite party no. 2 to recover the said dues. Sri Srivastava, further by referring to averment made in the petition submits that in the year 2004 BICICO came out with a one time settlement scheme, known as OTS, 2004, offering benefits to defaulter units falling under various categories and to avail the benefit of the said scheme, the complainant / opposite party no. 2 falsely informed the BICICO that they are sick unit and hence an offer to settle the dues of Rs. 83.97 Lakhs was communicated on 24.11.2004 subject to submitting proof of sick unit by BIFR / APEX Body as per OTS, 2004. The complainant /opposite party no. 2 had no proof of being a sick unit. Thereafter, the opposite party no. 2 changed his stand and informed the BICICO that they fall under non -commission category of OTS, 2004, and accordingly, a revised settlement amount of Rs. 54.61 Lakhs was worked out and communicated to opposite party no. The complainant /opposite party no. 2 had no proof of being a sick unit. Thereafter, the opposite party no. 2 changed his stand and informed the BICICO that they fall under non -commission category of OTS, 2004, and accordingly, a revised settlement amount of Rs. 54.61 Lakhs was worked out and communicated to opposite party no. 2 vide letter dated 29.12.2004. The said offer was subject to furnishing proof that the unit is a non-commission unit as per OTS, 2004, and payment of settlement amount within the validity period of OTS, 2004. Thereafter, the complainant / opposite party no. 2 submitted a demand draft and post dated cheques for getting substantial benefit of OTS, 2004 under non- commission category and later on number of cheques submitted by complainant / opposite party no. 2 were dishonored by his Bank. Thereafter, opposite party no. 2 was given notices by the BICICO to replace the dishonored cheques and due to non- compliance, cases under Negotiable Instrument Act were filed by the BICICO against complainant/ opposite party no. 2. The opposite party no. 2 had not paid the balance OTS amount to BICICO. Even after adjustment of some of the amount paid by the complainant / opposite party no. 2, total dues amount as on 31.3.2008 comes to Rs. 1664.78 Lakhs, which was also communicated to the complainant. It has been clarified that petitioner no. 1 in Cr. Misc. No. 43329 of 2010, at the relevant time, was posted as Deputy Manager, whereas, petitioner no. 2 was on deputation of BICICO and was posted as Assistant Manager. It has been reiterated that the present complaint petition was filed in a calculative way by the complainant only and only with a view to pressurize the officials of the BICICO not to take any action for recovery of the dues amount from the complainant, and accordingly, the order of cognizance as well as entire criminal proceeding in Complaint Case No. 1317(C) of 2006 pending before the Judicial Magistrate Ist Class, Patna, is liable to be set aside. 5. Mr. S.M. Shabbir Alam, learned counsel, has appeared on behalf of the petitioner in 2nd case i.e. Cr. Misc. No. 29248 of 2008. He adopts the argument advanced by Sri Amit Srivastava, learned counsel for petitioners in 1st case and in furtherance Mr. 5. Mr. S.M. Shabbir Alam, learned counsel, has appeared on behalf of the petitioner in 2nd case i.e. Cr. Misc. No. 29248 of 2008. He adopts the argument advanced by Sri Amit Srivastava, learned counsel for petitioners in 1st case and in furtherance Mr. Alam has argued that the petitioner, being Managing Director of BICICO, was since a public servant, he could have been removed from the services only with the approval of the Central Government, whereas, in the present case, learned Magistrate has miserably failed to appreciate that in absence of prosecution sanction, he was not at all authorized to take cognizance of offences. 6. Learned counsel for complainant /opposite party no. 2 has tried to justify the order of cognizance and initiation of proceeding against the petitioners, but, he was not in a position to point out as to whether in the complaint petition there was any material to show directly or indirectly commission of any offences by either of the petitioners. Learned counsel for opposite party no. 2 has mainly tried to persuade the court that the learned Magistrate has not taken cognizance of offence in respect of petitioner - Prem Singh Meena in Cr. Misc. No. 29248 of 2008, rather cognizance order was passed in relation to two petitioners in Cr. Misc. No. 43329 of 2010 and the Bihar State Credit & Investment Corporation, not against Sri Prem Singh Meena. 7. Besides hearing learned counsel for the parties, I have also perused the materials available on record. Since repeatedly it was argued by learned counsel for petitioners that on perusal of the complaint petition itself, it is evident that nothing has been alleged against either of the petitioners, nor the complaint petition discloses any offence, it would be appropriate to incorporate the complaint petition in verbatim, which is as follows:- “1. That the Complainant, the Managing Director of M/S S.M. International Ltd. set up the Company in Industrial Area at Bokaro Steel City in the year 1972 for manufacturing certain engineering products. The Company was initially known as Structurals and Machineries Bokaro Pvt. Ltd. The company over a period of time flourished and became well known for its quality products. In 1982 the Company entered in technical collaboration with a Japenese Company to manufacture process pumps. 2. The Company was initially known as Structurals and Machineries Bokaro Pvt. Ltd. The company over a period of time flourished and became well known for its quality products. In 1982 the Company entered in technical collaboration with a Japenese Company to manufacture process pumps. 2. That at the request of complainant company dated 26.11.1982 Bihar State Credit and Investment Corporation (referred as BICICO) in joint financing with Bihar State Financial Corporation (B.S.F.C.) had sanctioned a loan of Rs. 50.00 lacs vide letter of intent of sanction no. MB/SMPL/4271 dated 6.5.1983 subject to approval of re-finance of Industrial Development Bank of India (I.D.B.I.). Vide letter no. IDBI/BRO/7598/RF / 30(95) 83-84 dated 29.10.1983 Industrial Development Bank of India, Calcutta (Kolkata) gave their consents to refinance the BICICO for the term loan of Rs. 50.00 lacs to the extent of 80% of the term loan sanctioned by BICICO to the Complainant. 3. That the Complainant was also communicated by BICICO vide letter no. APP/DP/SMBP/82-83/2186 dated 16.11.1983 that IDBI had sanctioned seed capital Assistance amounting to Rs. 12.35 lacs vide their sanction letter No. 7737/SC/2/26/83-84 dated 25.10.1983. As per sanction letter the period of repayment of the seed capital was not to exceed 10 years including moratorium period of 2 years from the date of first disbursal of loan. The seed capital amount bore only a nominal interest. 4. That the loan amount of Rs. 40.67 lacs out of sanctioned loan of Rs. 50.00 lacs was disbursed to the complainant over a period of 17 months from the submission of complainant’s first disbursement request in February, 1985. 5. That the accused persons did sudden fraudulent cancellation of seed capital Assistance after disbursement of Rs. 8.40 lacs and adjustment the same against the term loan by BICICO in spite of complainant’s representation. This cancellation was an act of criminal breach of trust putting the complainant to huge financial loss. This occurrence took place at Patna within the jurisdiction of ShastriNagar Police Station. The premises of office of BICICO. 6. That ultimately due to the above arbitrary action of the accused persons the complainant suffered various kind of losses in their business. 7. This cancellation was an act of criminal breach of trust putting the complainant to huge financial loss. This occurrence took place at Patna within the jurisdiction of ShastriNagar Police Station. The premises of office of BICICO. 6. That ultimately due to the above arbitrary action of the accused persons the complainant suffered various kind of losses in their business. 7. That again the accused persons with an intent to defame the complainant issued an advertisement for sale of company’s assets unit at Bokaro and they published it in all leading newspapers of country including Hindustan Times on 30.7.1989 and after the intentional and fraudulent publication of the notice the company suffered serious setback. The accused persons succeeded in their bid to put the complainant’s company to a loss to the tune of about 40-45 lacs. Their (complainant’s company) valuable staffs resigned and left and suppliers stopped supplying material and the clients of the complainant’s company also cancelled their orders and all these things happened while the complainant’s company’s application for rehabilitation was pending before BICICO (Them). The only motive of the accused persons was to commit fraud and to put the complainant serious loss. 8. That it is also relevant to state that even against various kinds of sanctioned rehabilitation proposal of BICICO, no amount was disbursed to the complainant for the reasons best known to them (accused persons). 9. That the accused persons did not stop their hands there, but they again committed an act of fraud upon the complainant. In the month of April, 2002 the complainant receives a notice purported to be under section 7 of Public Demand Recovery Act from a proceeding certificate case no. BICICO PDR / 129/2002 vide notice reference no. PDR/126/dt. 15.4.2002 and after receipt of the said notice, the complainant filed an objection u/S 9 of the Public Demand Recovery Act requesting / praying for dropping the proceeding on the ground mentioned therein. The ill motive of accused persons is revealed from the notice of section 7 of the Public Demand Recovery Act. They demanded a sum of Rs. 5,54,86,000/- without any rhyme or reason. It was an act to put the complainant to hurt and mental agony. 10. That during pendency of purported certificate proceeding under one time settlement (OTS) Scheme 2004 the BICICO wrote a letter to the complainant vide Ref. no.OTS/OPS/Rec-2-1/68/93-94/2445 dt. 29.12.2004 asking for repayment of Rs. They demanded a sum of Rs. 5,54,86,000/- without any rhyme or reason. It was an act to put the complainant to hurt and mental agony. 10. That during pendency of purported certificate proceeding under one time settlement (OTS) Scheme 2004 the BICICO wrote a letter to the complainant vide Ref. no.OTS/OPS/Rec-2-1/68/93-94/2445 dt. 29.12.2004 asking for repayment of Rs. 54,61,000 towards the clearance of the complainant’s total due when he had visited Patna on 28th Dec. 2004 to seek clarification on the scheme announced by the accused persons for BICICO, asking for repayment of total amount of Rs. 54.61 lac to clear entire due and just thereafter the complainant on the same day gave his written proposal to the accused persons expressing his eagerness to pay the total amount of Rs. 33.43 lacs only being the amount felt due after deducting already paid amount from amount dispensed by BICICO enclosing the draft and cheques which are as follows:- Sl. No. Name and Ref. of Instrument Date Amount (Rs. In lacs) 1 Demand draft of corporation 27.12.2004 1.00 Bank payable at Patna 2 Cheque on Corporation Bank 31.3.2005 5.0 No. 932606 3 Cheque on Corporation Bank 31.06.05 5.0 No. 932607 4 Cheque on Corporation Bank 31.09.2005 5.0 lacs No. 932608 5 Cheque on Corporation Bank 31.12.05 5.0 No. 932609 6 Cheque on Corporation Bank 31.3.2006 12.43 No. 932610 Total (Rs.) 33.43 lac It is relevant to note here that in the said letter the complainant had clearly stated that the encashment of payments offered will free the complainant’s company of their outstanding. 11. That various correspondences were done in between the complainant and accused including a letter dt. 14.2.2006/28.2.2006 in which the complainant stated that as per agreement (Proposal which was accepted by the accused persons) dt. 29.12.2004, a sum of Rs. 21 lacs had been encashed by accused had been encashed by the accused persons. So far the balance amount of Rs. 12.43 lacs, the complainant requested for 6 months more time for repayment. In reply to the said letters again the accused persons issued a letter vide Ref. No. R/T-A 3263 dt. 7.3.2006 threatening that the complainant’s proposal for extension of time for payment of balance amount of Rs. So far the balance amount of Rs. 12.43 lacs, the complainant requested for 6 months more time for repayment. In reply to the said letters again the accused persons issued a letter vide Ref. No. R/T-A 3263 dt. 7.3.2006 threatening that the complainant’s proposal for extension of time for payment of balance amount of Rs. 12.43 lacs in suitable installment over six months period after 31st March 2006 is not acceptable to them and further in the said letter they requested for payment of the balance amount at the earliest to avoid any coercive action. 12. That thereafter on 21st March 2006 the complainant wrote a letter to the accused no. 2 requesting to keep encashment of cheque no. 932610 dt. 31.3.2006 to 12.43 lacs sent with letter dt. 29.12.2004 in abeyance and allow the complainant to pay the same in three months (Latest by 31st June 2006). 13. That meanwhile the certificate officer BICICO at the instance of accused persons has illegally and without any authority has issued a warrant of arrest from Patna against the complainant for realization of Rs. 5,54,86,000/- on 2.2.2006 deliberately with a view to harass the complainant they send to the Superintendent of Police, Gurgaon to arrest the complainant’s. This act of accused persons clearly indicates that they have fraudulently and dishonestly concealed the important developments in the letter and they have concealed the factum of payment by the complainant. All these facts have not been disclosed deliberately in the certificate proceeding no. PNR/129/-2002 and the said warrant has been made to be issued only to lay undue mental torture and harassment and damage to the complainant and thus the accused persons have committed the offence of criminal breach of trust as they have not informed the factum of repayment of due by the complainant in the certificate proceeding due to which the warrant of arrest has been issued. 14. That in spite of the complainant’s request for keeping the encashment of cheque of Rs. 12.43 lacs in abeyance, the accused persons deliberately presented the cheque on 31.3.2006 for encashment in Bank at Patna (within the jurisdiction of Shastri Nagar P.S.) and the said cheque was returned unpaid and then the accused persons have issued a letter in a pre-planned manner with conspiracy to put the complainant in loss and mental agony. The said letter is under the provision of Negotiable Instruments Act. The said letter is under the provision of Negotiable Instruments Act. The complainant has been asked to pay Rs. 12.43 lacs within a period of 15 days from the date of issue of the said notice and in reply to the said demand notice the complainant again gave reply on 24.4.2006. 15. That under the aforesaid facts and circumstances stated above the accused persons have committed the offences of criminal breach of trust, fraud, cheating and by not informing the court of the Certificate Officer BICICO Patna in Certificate Case No. PDR/129/2002 with regard to the settlement of due encashment of amount of Rs. 11 lacs by them from the complainant under the complainant’s proposal dt. 29.12.2004 in OTS Scheme , 2004 and due to which warrant of arrest was issued on 2.2.2006 against the complainant’s hence the accused persons have also cheated the complainant. 16. That the accused persons committed a cheating the complainant by not intimating the facture to repayment made by him under proposal sent on 29.12.2004 in C.C.no. PDR/129/2002 and also by producing the cheque dt. 31.3.2006 for encashment in bank in spite of complainant’s request for keeping the encashment in abeyance at least for two months latest by June 2006 and as such to file criminal case under the provisions of Negotiable Instrument Act. 17. That the acts of the accused persons harmed the reputation of the complainant and hence they are also guilty for the offence of defamation. 18. That the accused persons always used to give threatening the complainant by issuing the letters and letters including the notice for demand of Rs. 12.43 lacs under the provision of Negotiable Instrument Act. 19. That the acts of the accused persons are also against the interest of the corporation namely BICICO as they used to give threatening the complainant in various methods who wants to clear the dues in spite the fact the company are not in position to pay the due. 20. That the other and further facts will be urged at the time of hearing.” 8. On perusal of the complaint petition, the court is of the opinion that it was hardly a case of showing commission of any offences by either of the petitioners. Even in the complaint petition the complainant has admitted, that for recovery a certificate proceeding was also initiated against him. On perusal of the complaint petition, the court is of the opinion that it was hardly a case of showing commission of any offences by either of the petitioners. Even in the complaint petition the complainant has admitted, that for recovery a certificate proceeding was also initiated against him. Of-course, a plea has been taken that before certificate officer incorrect information or false information was placed by the officials of BICICO, but, in any event, such allegation was not required to be incorporated in the complaint petition nor the learned Magistrate was required to take any notice of such fact, even then, learned Magistrate has proceeded on complaint filed by the complainant and taken cognizance of offences. In view of the admitted fact that certificate proceeding was initiated against the complainant for recovery of loan amount, the court is satisfied that the present complaint petition was maliciously filed with a view to put pressure on the officials of BICICO, so that, recovery process may be kept in abeyance, rather the filing of the complaint petition is a malafide action of the complainant, that too, without disclosing sufficient fact constituting committing any of the offences by the officials of BICICO. Similarly, the learned Judicial Magistrate Ist Class, Patna, has committed serious error in passing order of cognizance in absence of any material to show commission of any of the alleged offences. 9. In view of the facts and circumstances as noticed above, this court is left with no option but to interfere with the order of cognizance as well as the entire proceeding. Accordingly, the order of cognizance dated 25.7.2006 passed in Complaint Case No. 1317(C) of 2006 by learned Judicial Magistrate Ist Class, Patna, as well as entire proceeding are hereby set aside and both the petitions stand allowed.