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2014 DIGILAW 926 (CAL)

Nabarun Bhattacharjee v. S. P. CBI, EOW, Kolkata

2014-09-24

SUBRATA TALUKDAR

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Judgment Subrata Talukdar, J. In this application under Article 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure (for short CrPC) the petitioners pray for quashing of the impugned proceeding including the Order No. 63 dated 5th October, 2013 passed by the Ld. 3rd Special Court, CBI in Special Case No. 06 of 2004 arising out of RC Case No. 03/E/2002 dated 28th June, 2002 under Sections 120B read with 406/420/468/471 of the Indian Penal Code (for short IPC) read with Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988 (for short the 1988 Act). By the said impugned Order No. 63 dated 5th October, 2013 the Ld. Special CBI Court was pleased to dismiss the application for discharge filed by the present petitioner under Section 239 CrPC in connection with the said pending proceeding. Taking this Court to the contents of the said application under Section 239 CrPC which is annexed to the present CRR, Shri Pratik Kumar Bhattacharya, Ld. Counsel for the petitioners has argued as follows:- i) That on the basis of a complaint dated 27th June, 2002 lodged by one Shri N. Zeevagan, Deputy General Manager, Canara Bank, Circle Office, Kolkata an FIR was started and RC Case No. 3/E/2002 was registered by the CBI against the present petitioner. Thereafter charge sheet was filed in connection with the said case being charge sheet no. 10 dated 19th April, 2004 recording the above noted offences. ii) It has been alleged against the petitioner no. 1, the proprietor of one M/s Machinery and Allied Products that credit facilities were being enjoyed by the firm of the petitioner no. 1 from the UCO Bank Branch, Sadananda Road, Kolkata. Such facilities were being enjoyed during the incumbency of one Shri Manash Basu, the then Branch Manager of UCO Bank. Thereafter the said firm was converted into a Pvt. Ltd. Company on the 8th of October, 1997 with the petitioner no.1 and the petitioner nos. 2 & 3 as the three directors of the said company being M/s. Machinery and Allied Products Pvt. Ltd. The company then applied for credit facilities at Canara Bank Lower Circle Road Branch, Kolkata. Such credit facilities were sanctioned by the Kolkata Circle Office of Canara Bank. iii) One of the accused in the criminal proceedings, being the accused no. 2 & 3 as the three directors of the said company being M/s. Machinery and Allied Products Pvt. Ltd. The company then applied for credit facilities at Canara Bank Lower Circle Road Branch, Kolkata. Such credit facilities were sanctioned by the Kolkata Circle Office of Canara Bank. iii) One of the accused in the criminal proceedings, being the accused no. 4, Shri K. Unikrishnan, Branch Manager, Canara Bank vide his letter dated 10th February, 1988 while communicating the sanction of loan by the Canara Bank requested the said company to apprise the Canara Bank on the extent of the total liability of the company with UCO Bank. It was also requested that title deeds of the company be handed over to Canara Bank for creating equitable mortgage. The letter dated 10th February, 1988 was replied to by the said Manash Basu of UCO Bank on 13th February, 1988 intimating that the property documents/title deed of the company will be released in favour of Canara Bank subject to the clearance by the company of their liability to UCO Bank under cash credit account to the extent of Rs. 91.91 lacs. Responding to such request the Canara Bank forwarded a demand draft of the said amount and on the basis of such demand draft dated 14th February, 1998 the title deed of the said company were released in favour of Canara Bank and subsequently mortgage was created on 6th May, 1988. Shri Bhattacharya points out that it has been alleged in the criminal proceeding that the said Shri K. Unikrishnan did not take steps to inspect the stock/audit of the company nor created equitable mortgage of the properties within the given period, thereby allowing the company to overdraw cash credit to the extent of Rs. 80 lacs. Neither the said Shri K. Unikrishnan ensure closure of the account of the company maintained with UCO Bank by obtaining ‘No dues Certificate’ after payment of Rs. 91.91 lacs was received by UCO Bank. Thus it has been alleged that the petitioners were facilitated with dual finance from both the Banks. iv) It has been also alleged that stock inspection of the factory premises of the company by Canara Bank revealed a physical stock of Rs. 4-5 lacs against that declared stock of Rs. 162.52 lacs. Subsequently the petitioners/accused deposited a sum of Rs. 15.92 lacs. iv) It has been also alleged that stock inspection of the factory premises of the company by Canara Bank revealed a physical stock of Rs. 4-5 lacs against that declared stock of Rs. 162.52 lacs. Subsequently the petitioners/accused deposited a sum of Rs. 15.92 lacs. to the cash credit of the company and thereby allegedly misappropriated the stock of Rs. 1, 52, 36, 071/- which was hypothecated for availing credit facilities. It is also alleged that due to connivance of both the Brach Managers of Canara and UCO Bank respectively, wrongful loss was caused to Canara Bank to the tune of Rs. 200.47 lacs. v) The Canara Bank thereafter filed recovery proceedings before the Ld. Debts Recovery Tribunal-2 (for short DRT-2) against the present petitioners and the company being OA 26 of 2001. The said case has been settled by the petitioners in terms of one time settlement payment against the dues of the said company with Canara Bank. The Canara Bank has also issued a ‘No dues Certificate’ in favour of the company. vi) Shri Bhattacharya therefore submits that the matter is purely civil in nature and for this reason the Canara Bank filed recovery proceedings before the ld. DRT-2. The outstandings of the company have been settled in the civil proceedings and the petitioners have paid the entire compromise amount with interest of Rs. 29.95 lacs to the Bank. Shri Bhattacharya asserts that the petitioners at no point of time committed any fraud or misrepresentation with either UCO or Canara Bank and did not commit any forgery for the purpose of cheating. On the contrary, according to the Shri Bhattacharya, the company suffered huge losses by parking its deposits with other companies and thereby suffered loss. Placing reliance on the judgment of the Hon’ble Apex Court in Nikhil Merchant’s Case reported in 2008 Volume 3 SCC (Cri) Page 858 and in Duncans Agro Industries Case reported in 1996 Volume 5 Supreme Page 462, Shri Bhattacharya submits that taking note of the compromise arrived at between the petitioners and the Bank and also taking note of the purely civil nature of the proceedings, this Court in exercise of its present jurisdiction is competent to quash the proceedings. vii) Distinguishing the judgment of the Hon’ble Apex Court in the matter of CBI Vs. vii) Distinguishing the judgment of the Hon’ble Apex Court in the matter of CBI Vs. Jagjit Singh reported in 2014 Volume 1 SCC (Cri) Page 29 and referring to the judgment in Gian Singh Vs. State of Punjab and anr. reported in 2013 Volume 1 CLR (SC) Page 356, Shri Bhattacharya has argued that the Hon’ble Apex Court has made a distinction between offences of a public character and offences which are purely bilateral in nature. In the present case the transaction between the parties was purely bilateral in nature and, once the entire outstandings have been paid, the further continuance of the criminal proceedings would amount to an abuse of the process of law. He submits that this Court in exercise of its inherent and plenary jurisdiction can take note of the purely civil and bilateral nature of the transaction between the parties and, in the absence of any mens rea quash the same. Shri Bhattacharya also draws the attention of this Court to the reasoning applied by the Ld. Special Court and submits that the Ld. Special Court merely recognized the limitation of its own jurisdiction under Section 239 CrPC compared to the jurisdiction of the superior courts and therefore restrained itself from discharging the petitioners. He submits that the Ld. Special Court ought to have considered that the loan document or the book debt statement prepared for the purpose of obtaining loan cannot be considered to be on the same footing as a KVP/NSC certificates. In CBI Vs. Jagjit Singh (supra) the Hon’ble Apex Court was of the opinion that forgery of KVP/NSC certificates is a serious public offence. However, the documents in the present case do not warrant that they should be placed on the same pedestal and Mr. Bhattacharya submits that the Ld. Trial Court committed an error by not appreciating the same. He argues that the facts of the present case are placed on a better footing than in Nikhil Merchant’s Case (supra) and the Ld. Trial Court ought to have given due importance to the fact that the entire outstanding has been repaid by the petitioners. Per contra Shri Himangshu De, Ld. Senior Counsel appearing for the CBI has argued as follows:- a) That the probative value of the evidence produced before the Ld. Trial Court must be assessed at the trial. Trial Court ought to have given due importance to the fact that the entire outstanding has been repaid by the petitioners. Per contra Shri Himangshu De, Ld. Senior Counsel appearing for the CBI has argued as follows:- a) That the probative value of the evidence produced before the Ld. Trial Court must be assessed at the trial. Shri De submits that complex questions of fact have emerged in the present case which must be weighed at the trial. b) Shri De emphatically relies upon the judgment of the Hon’ble Apex Court in CBI Vs. Jagjit Singh. He also relies upon an unreported decision of this Hon’ble Court in CRR 2688 of 2013 decided on 2nd December, 2013 in the matter of A. Bhaskaran Vs. CBI. c) Relying on all the above decisions Shri De submits that in the facts of the present case the transactions were entered into with Nationalised Banks holding public money. Merely because the outstandings have been settled pursuant to recovery proceedings launched by the Bank, the criminal aspects of the present proceedings cannot be ignored qua the petitioners. He therefore submits that the present criminal proceedings cannot be quashed and CRR 277 of 2014 should be dismissed. By the order impugned no. 63 dated 5th October, 2013 this Court notices that the Ld. Special Court considered the following:- 1. The Ld. Special Court found in respect of both the Branch Managers of Canara and UCO Banks, being the accused nos. 4 & 5 respectively, prima facie existence of criminal conspiracy. The Ld. Special Court applied its mind fully to the acts of commission and omission on the part of the said accused nos. 4 & 5 and arrived at the conclusion that both the Branch Managers cannot be discharged under Section 239 CrPC and, having regard to the complex nature of the facts the same deserve to be sifted in a fullfledged trail. 2. With regard to the present petitioners being the accused nos. 1, 2 & 3 the Ld. Special Court found that the materials on record indicate that the petitioners have fraudulently used certain documents showing them to be genuine while fully knowing that the said documents are false. According to the Ld. Special Court the said documents are the letter dated 24th August, 1998, statement of sundry debtors dated 30th September, 1999, 31st October, 1999, 31st November, 1999 and lastly 31st December, 1999. According to the Ld. Special Court the said documents are the letter dated 24th August, 1998, statement of sundry debtors dated 30th September, 1999, 31st October, 1999, 31st November, 1999 and lastly 31st December, 1999. 3. The Ld. Special Court found that charge sheet was filed by the CBI on 20th April, 2004. After filing of charge sheet cognizance was taken by the Ld. Special Court and, the present petitioners/accused only to get rid of their criminal liability compromised the matter with the Bank on 26th August, 2009. The Ld. Special Court therefore found evidence of mens rea against the present petitioners and refused to discharge them under Section 239 CrPC. Heard the parties. Considered the material on record. This Court notices the judgment in Gian Singh’ Case (supra). Para 61 of Gian Singh reads as follows:- “The position that emerges from the above discussion can be summarised thus: the power of the High Court in quashing a criminal proceeding of FIR or complaint in exercise of its inherent jurisdiction is distinct and different from the power given to a criminal court for compounding the offences under Section 320 of the Code. 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 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 much offences. 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 much 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. In other words, the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and the wrongdoer and whether to secure the ends of justice, it is appropriate that the criminal case is put to an end and if the answer to the above question(s) is in affirmative, the High Court shall be well with its jurisdiction to quash the criminal proceeding.” This Court also notices the judgment in CBI Vs. Jagjit Singh (supra). The relevant paragraphs read as follows:- “9. From the impugned order, it would be evident that in view of such amicable settlement made between the respondent and the bank officials, the learned Judge of the High Court by the impugned order set aside the criminal proceedings with following observation: “Be that as it may, there cannot be any rigid formula in regard to permitting the parties to effect a compromise. The offences alleged are undoubtedly non-compoundable and certainly, of serious nature. The offences alleged are undoubtedly non-compoundable and certainly, of serious nature. The question that arises is whether in view of such amiable settlement between the parties, any fruitful purpose is likely to be served by allowing the criminal proceedings to proceed further. In the present case, as indicated earlier and that too, being rightly shown by the learned Senior Counsel, Mr. De, for reasons not known, the principal accused, Sanjib Kumar Chatterjee, had been left out. In the aforesaid facts and circumstances, I am inclined to hold that further proceedings of the case before the learned trail court is not likely to serve any fruitful purpose and, as such, in exercise of this Court’s inherent jurisdiction, the same be quashed bond at one. This disposes of CRR No. 719 of 2010.” 14. In the present case, the specific allegation made against the respondent-accused is that he obtained the loan on the basis of forged document with the aid of officers of the Bank. On investigation, having found the ingredients of cheating and dishonestly inducing delivery of property of the Bank (Section 420 IPC) and dishonestly using as genuine a forged document (Section 471 IPC), charge-sheet was submitted under Section 420/471 IPC against the accused persons. 15. The debt which was due to the Bank was recovered by the Bank pursuant to an order passed by the Debts Recovery Tribunal. Therefore, it cannot be said that there is a compromise between the offender and the victim. 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 wellbeing 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. 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 was neither an allegation regarding any abuse of process of any court nor anything on record to suggest that the offenders were entitled to secure the order in the ends of justice.” In the considered view of this Court the observations in Gian Singh’ Case (supra) to the effect that criminal cases having overwhelmingly and predominantly (emphasis supplied) civil flavor stand on a different footing for the purposes of quashing need to be kept in mind. From the facts of the present case the Ld. Special Court has found prima facie complicity by of the accused nos. 4 & 5, i.e. the respective Bank Managers. The Ld. Trial Court has also found prima facie evidence of mens rea on the part of the petitioners dishonestly inducing the Banks to grant them credit accommodation. The Ld. Trial Court correctly noticed that after investigation was completed, charge sheet filed and cognizance taken, the petitioners compromised the matter with the Bank to get rid of their criminal liability. Therefore, in the further considered view of this Court the present case cannot qualify to be one having an overwhelming and predominantly civil flavour. Furthermore the ratio laid down in Jagjit Singh’ Case (supra) to the effect that criminal trial should be allowed to continue in respect of offences committed in relation to banking activities bears its imprint on the facts of this case. On the touchstone of the of the above reasoning this Court is not inclined to accept the rather forceful submission of Shri Bhattacharya that the documents discussed by the Ld. Special Court being the letter dated 24th August, 2008 and the list of Sundry Debtors do not fall within the same class of public documents such as KVPs/NSCs in Jagjit Singh’ Case (supra) and therefore the instant proceeding deserves to be quashed. Prima facie satisfaction of connivance with bank officials and obtaining credit accommodation on doubtful documents coupled with allegation of wilful misrepresentation do point in the direction of a full-fledged trial. Prima facie satisfaction of connivance with bank officials and obtaining credit accommodation on doubtful documents coupled with allegation of wilful misrepresentation do point in the direction of a full-fledged trial. Merely because the onetime settlement amount was paid during pendency of proceedings before the DRT, albeit long after charge sheet was filed and cognizance taken does not vitiate the criminal flavour of the transaction. In the backdrop of the above discussion the prayer for quashing of the impugned proceeding in Special Case No. 06 of 2004 arising out of RC Case No. 03/E/2002 dated 28th June, 2002 including the order no. 63 dated 05th October, 2013 and charge sheet no. 10 dated 19thApril, 2004 pending before the Ld. 3rd Special CBI Court is refused. CRR 277 of 2014 is accordingly dismissed. There will be, however, no order as to costs. Registry is directed to communicate this order to the Ld. 3rdSpecial CBI Court.