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2015 DIGILAW 3016 (ALL)

ARVIND v. STATE OF U. P.

2015-09-22

ARVIND KUMAR MISHRA I, V.K.SHUKLA

body2015
JUDGMENT : (Delivered by Hon'ble V.K. Shukla,J.) Petitioners who are two in number are before this Court with a request to quash the FIR dated 16.07.2015, registered as Case Crime No. 362 of 2015, under Sections 420, 467 ,468, 471, 406 IPC, Police Station Partapur, District Meerut and for sommanding the Respondents not to harass the petitioners. Petitioners before this Court are stating that they are partners of M/s A.M. Associates, a partnership firm that functions in the name and style of M/s O.S.G. Exim Services Private Limited. Said firm is engaged in providing and uploading all the required documents and information of the export and bank realization details on the DGFT website and generate an application for obtaining the Licenses and acting as a liaison agent. Petitioners submit that Sharda Exports executed power of attorney in the name of its employees namely Prabhash Chandra Sharma, the Manager as well as Gurnam Singh, Senior Executive to be the authorised signatory for signing of application, Bank Realisation Certificates, shipping bills and other documents required for issuance and obtaining of the Focus Product Licenses and to make and to make necessary amendments and changes in the document. Petitioners are stating that whatever activity has been carried out by them, same has been at the instruction and directives of Prabash Chandra Sharma, Manager and Gurnam Singh, Senior Executive and Sharda Export has proceeded to lodge FIR by mentioning that petitioner nos. 1 and 2 who are allegedly operating a firm in the name and style of A.M. Associates in connivance with Gurnam Singh, sold 56 licences within a period of 5 years i.e. from 2009-2014 and by such activity Rs.4.50 Crores has been swindled as said amount has been distributed amongst the relative of Gurnam either incash or in their accounts, whereas said amount was liable to be deposited in the account of Sharda Exports, but the same was misappropriated. In the FIR it has been mentioned that sum of Rs. 60.35 lacs has been paid back to the informant by the petitioners. In the FIR it has been mentioned that sum of Rs. 60.35 lacs has been paid back to the informant by the petitioners. Petitioners' submission is that whatever transaction has been undertaken, same are valid transaction and in case first informant has any grievance, his grievance should be with Gurnam Singh and as far as petitioners are concern, unnecessarily in designed manner they have been arrayed as an accused in the present case and under threat they have been forced to make payment of Rs. 60.35 lacs. Supplementary affidavit has been filed on 14.08.2015 and therein once again same set of facts have been repeated that petitioners have nothing to do with the affair of Gurnam Singh, who is actually employee of respondent no.4. In the said affidavit in question, statement of account have been appended to show that regularly Sharda Exports made payments to the petitioners firm and amount was debited that was paid on behalf of Sharda Exports relating to fee and miscellaneous charges etc. It has been further mentioned therein that Sharda Exports is partnership firm, changes its character every five years by just changing sequences of partners/directors or by adding some new names by deleting previous names. Petitioners have proceeded to mention that no amount had been transferred un-authorizedly, but on the directive of authorised representative said exercise has been undertaken. Supplementary affidavit has been filed on 25.08.2015 appending therein copy of the account of A.M. Associates and copy of the account of Kotak Mahindra Bank Pvt. Ltd. and in the said supplementary affidavit, it has been submitted that there has been various cash transaction and on the asking for amount has been deposited. Another supplementary affidavit has been filed on 28.08.2015 mentioning therein that 40 licenses have been sold by the petitioners and details of transaction has also been sought to be provided for giving therein net payable amount by the petitioner is sum of Rs. 3.5 Crores, whereas amount that has been paid is over and excess to the same. Counter affidavit has been filed on 07.09.2015 and therein it has been mentioned that under the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), the Central Government periodically notifies the Foreign Trade Policy, for a period of 5 years. The Foreign Trade Policy for 2009-2014 (hereafter as ("FTP") came into effect on 27.08.2009. The Foreign Trade Policy for 2009-2014 (hereafter as ("FTP") came into effect on 27.08.2009. The Director General of Foreign Authority is an authority established under the Ministry of Commerce & Industry, created under the above mentioned Act. It has been further mentioned that in order to promote export and boost the Indian industry, the Central Government runs various promotional schemes. Sharda Exports is eligible for incentive, called the Duty Credit Slip, under two such schemes, namely , Vikas Krishi and Gram Udyog Yojna and Focus Product scheme. The said Duty Credit Slip, also called Focus Product License, is issued by the Director General of Foreign Trade (hereinafter ("DGFT"), after submission of documents and verification. The license is issued on the basis of the goods exported and the value of such exports. The benefit or advantage which accrues to the License holder under the Vikas Krishi and Gram Udyog Yojna and Focus Product Scheme is that the value/amount mentioned in the License can be utilized for payment of import duty, as provided in paragraph 3.17.5 of the FTP. Further, the said licences can also be utilised to pay additional Customs Duty, as provided in paragraph 3.17.6 of the FTP. The said Licenses are freely transferable, according to the provisions of FTP in paragraph 3.17.4. It has been further mentioned that there are two modes in which the Focus Produce License can be obtained from the office of DGFT, as prescribed in the Handbook of Procedures, Vol. 1(a part of FTP)- first, a self addressed envelope with affixed stamps to be provided by the Applicant and second, an identity card is issued to proprietor/partner/director/authorised employee of the exporter. The complete process for issuance and obtaining said License from the office of DGFT is as follows: On export, a Commercial Invoice is generated by Sharda Exports, on the basis of which the Custom House Agent (authorised by Central Board of Excise & Customs) is required to furnished and upload details on the website of Central Board of Excise and Customs, after which a Shipping Bill is generated, in triplicate. After the produce is exported, a Export Promotion copy of Shipping Bill is issued to the exporter by the Department of Customs. A Bank Realisation Certificate is sussed by the banker once export remittances are received in foreign currency. After the produce is exported, a Export Promotion copy of Shipping Bill is issued to the exporter by the Department of Customs. A Bank Realisation Certificate is sussed by the banker once export remittances are received in foreign currency. Thereafter, an application for obtaining the said License is generated on-line through the DGFT website, after filing required details of the export and bank realization, and uploading of necessary documents. The said application is required to be signed by the authorised signatory after which a copy of all the above mentioned documents along with the duly signed application form and a covering letter, is required to be submitted in the DGFT office. Subsequent to verification of documents and issuance of the License by the DGFT, only the authorised personnel in whose favour an identity card is issued by the DGFT )as mentioned above) can collect license from the office of the DGFT after presenting his identity card. It has been further mentioned that the license issued by the DGFT contains the value of the license and the name in whose favour the said license is issued. It has also mentioned that A.M Associates was a liaison agent and its role was to provide and upload all the required documents and information of the export and bank realization details on the DGFT website and generate an application for obtaining the Licenses. Sharda Exports executed a power of Attorney (annexed as Annexure No. 2 of the writ petition) in favour of Gurnam Singh, Senior Executive and Mr. Prabhash Chandra, Manager to be the authorised signatory for signing of Applications, Bank Realisation Certificates, Shipping Bills and other documents required for issuance and obtaining of the Focus Produce Licenses, and to make necessary amendments and changes in the said document. The exporter in whose name the said Focus Produce License is issued can transfer the license to any person. The following documents are required to transfer the said license. 1. Physical/printed Focus Produce License. 2. An invoice, wherein the percentage of face value at which the license is being sold at , is mentioned by the transferor, and 3. A Transfer Letter duly signed by the Director/Partner/Proprietor of the exporter, in whose favour the license was issued. The following documents are required to transfer the said license. 1. Physical/printed Focus Produce License. 2. An invoice, wherein the percentage of face value at which the license is being sold at , is mentioned by the transferor, and 3. A Transfer Letter duly signed by the Director/Partner/Proprietor of the exporter, in whose favour the license was issued. ( The signature of such person on the transfer letter is to be duly attested by the banker of the transferor) It has been mentioned that in the present case, after obtaining the Focus Produce Licenses, Gurnam Singh fraudulently obtained signature of the partner of Sharda Exports on blank transfer letters, which he alongwith the petitioners, used to commit cheating and other illegal activities. Further in the normal course of effecting transfer of licenses, the License number of the Focus Produce License being transferred is typed in the Transfer letter, after which the said Transfer Letter is printed and thereafter signed by the Partner. However, with respect to the 56 illegally sold licenses, as has been found in the illegally sold licenses arranged from third parties that the License number is manually written by hand, in the transfer letters, which clearly shows foul play and unfair dealing. It has been mentioned that after fraudulently obtaining signatures on the blank transfer letters, Gurnam Singh forwarded the same to A.M. Associates. Thereafter, A.M. Associates created a false invoice (third document required for transferring Licenses) showing A.M. Associates as the seller of the License, thereby fraudulently and illegally having all the documents required for selling of the Licenses. It is pertinent to mention that the wrongful consideration received by selling of licenses in illegal and fraudulent manner, was received in the accounts of A.M. Associates, even though Sharda Exports were the rightful owners of the Licenses. After receiving the illegal consideration, petitioners distributed the money amongst themselves, by giving Gurnam Singh's share to him in cash also via bank transfer to Gurnam Singh account and in the accounts of Gurnam Singh's relatives. The details of such distribution and bank transfer are stated in detail in the FIR. It is important to mention that it is an admitted fact that the petitioners have paid Rs. 60,35.000 (Rupees Sixty Lakhs Thirty Five Thousand) to Sharda Exports. It is submitted that this act of returning the said amount by the petitioners is an admission of guilt. It is important to mention that it is an admitted fact that the petitioners have paid Rs. 60,35.000 (Rupees Sixty Lakhs Thirty Five Thousand) to Sharda Exports. It is submitted that this act of returning the said amount by the petitioners is an admission of guilt. There is absolutely no reason for the petitioners to give such a big amount of money to Sharda Exports, other than return the money which they have illegally and fraudulently taken from Sharda Exports. On the contrary, in normal course of business, it is the firm which has to pay A.M. Associates for its services. This, it is abundantly certain that petitioners have engaged in illegal activities, have returned Rs. 60,35,00/- out of guilt and for no other reason. Para wise reply has also been given therein same set of fact has been repeated, and the averments mentioned in the writ petition has been disputed. After pleadings mentioned above, have been exchanged, thereafter, present writ petition has been taken up for final hearing/disposal with the consent of the parties. Sri Madhu Mukul Tripathi, learned counsel for the petitioners contended with vehemence that in the present case as far as petitioners are concern, they have not committed any offence worth name and unnecessarily petitioners' names have been dragged in the FIR and based on the same petitioners have been forced to pay sum of Rs. 60,35,00/- and in case grievance of the first informant that any amount is due to be paid to him, then there is alternative remedy of filing Suit, and lodging of FIR is misuser of criminal forum and as such this Court should come to the rescue of petitioners by protecting their personal interest. Averments made on behalf of the petitioners, has been resisted by learned A.G.A. by contending that FIR does discloses cognizable offence, as such there is no occasion for this Court to entertain the request of petitioners. Sri Anurag Khanna, Senior Advocate, assisted by Sri Sumit Daga, Advocate on the other hand contended that this is glaring case of fraud and manipulation made by the petitioners' firm in active collusion with the employee of the first informant company, and once clear cut offence is made out from the reading of the FIR, no interference should be made. Sri Anurag Khanna, Senior Advocate, assisted by Sri Sumit Daga, Advocate on the other hand contended that this is glaring case of fraud and manipulation made by the petitioners' firm in active collusion with the employee of the first informant company, and once clear cut offence is made out from the reading of the FIR, no interference should be made. We have proceeded to examine the pleadings in question along with contents of FIR and as far as FIR goes it clearly contains categorical statement of fact that first informant firm has been engaged in the business of Carpet Exports, in the name and style of Sharda Exports. In the said firm Gurnam Singh had been performing and discharging his duty as Senior Executive and said Gurnam Singh in active collusion with the petitioners, who are running the firm in the name and style of A.M. Associates have illegally proceeded to sell 56 licenses and has swindled Rs. 4,50,00,000 Lacs based on the fictitious document and said amount has been transferred in the account of A.M. Associates. Thereafter, entire amount has been transferred in the name of Gurnam Singh and his relative, whereas Gurnam Singh has no authority. Once such fact has been mentioned in the FIR then the FIR on its face value does disclose prima facie cognizable offence. The other side of the story narrated by petitioners is that Sharda Exports had proceeded to issue "Transfer of Debiting Credit Entitlement Certificate" and Focus Product License, authorising the petitioners. In the said certificate in question clear cut mention was made that said certificate has not been transferred to anybody else and same will be property of said transferee and Sharda Exports will have no right whatsoever on the above, it is irrevocable confirmation certifications is also there, that full and final compensation has been received and Sharda Export will have no lien over the same. Submission of the petitioners is that once said documents has been issued and said documents have been acted upon, then to say that any offence is committed, is too for fetched. Submission of the petitioners is that once said documents has been issued and said documents have been acted upon, then to say that any offence is committed, is too for fetched. From the side of first informant, it has been sought to be contended that after such Transfer of Debiting Credit Entitlement Certificate and Focus Product License is prepared, and in case it is to be transferred, then it has to be preceded by invoice certificate, wherein full details would be given such as License number, value of licence and part of registration etc. and thereafter, consignee is entitled to get the same en-cashed. Here in the present case no invoice certificate has been issued in favour of any consignee to get aforementioned 56 licences, rather it is reflected from the record in question that A.M. Associates proceeded to prepare debit note and based on the same transfer in question have been acted upon. As far as appending of signature on documents namely Transfer of Debiting Credit Entitlement Certificate and Focus Product License are concern, same has been accepted, but an attempt has been made to dis-own the same by contending that Gurnam Singh has fraudulently obtained transfer letter of 56 licences. Thus, this much fact is admitted that on 56 licenses that has been so issued, there is signature of partner that has been got obtained by Gurnam Singh and as to whether said Gurnam Singh has practised fraud, certainly same has to be subject matter of investigation. Once such is the factual situation that is so emerging from the reading of FIR that transfer letter bears signature of partner of Sharda Exports, and it has also been stated that blank transfer letters were got signed, and they have been misused by Gurnam Singh in active collusion of petitioners, as the name of parties in whose favour transfer has been effected upon has been filled subsequently, by hand, and said transfer letter could have gone out of Sharda Export alongwith invoice, and here admittedly no invoice note had been issued, rather said certificate in question along with debit note of A.M. Associates has been transferred in favour of other company. Consequently, once the first informant is accepting this fact that said transfer certificate bears signature of member of partner of Sharda Exports, but as it has been alleged that Gurnam Singh has succeeded in getting signature on blank transfer letter and said document has been passed on by Gurnam Singh to the petitioners and thereafter under covering debt note, same has been transferred. In view of this, once element of cheating, misappropriation and diversion of fund has been attributed to Gurnam Singh then the matter has to be investigated and what has been the actual role played by the petitioners would also be reflected once free/fair/transparent investigation is carried out. Once such is the factual situation i.e. so emerging from the reading of FIR that 56 licenses have been sold and this much is also clear that said amount has not reached in the account of company and defence of petitioners is that said amount has been transferred in the account as has been asked for by Gurnam Singh, who has been dealing with the petitioners, then as to whether there has been any dis-honesty and petitioners have been acting bonafide or not, certainly has to be matter of investigation. The case in hand has prima facie criminal taint, and does not fall in any of the category enumerated in the case of State of Haryana Vs. Bhajan Lal 1992 (1) SCC 1 , for exercising authority to quash the FIR in quesdtion For recovery of the amount Suit can always be filed, and case in hand cannot be said to be dealing with pure civil wrong, as has been in the case of Joseph Salvaraj A Vs. State of Gujrat 2011(7) SCC 59 , wherein appellant failed to pay sum of Rs. 10 Lacs as promised and suit for recovery of money had already been filed. Here monetary loss has been allegedly caused to the firm, for recovering the said amount suit is the remedy. The difference between civil wrong and criminal wrong turns on two different objects, for civil wrong, the wrong doer is not punished rather contrarily the suffers gets a definite benefit from the law, whereas for criminal wrong the main object of law is to punish the wrong doer. In the present case, there is prima facie amalgam of both, that the firm in question has been put to loss and has been cheated. In the present case, there is prima facie amalgam of both, that the firm in question has been put to loss and has been cheated. Apex Court in the case of CBI Vs. Duncans Agro Industries Ltd. (1996) 5 SCC 591 and Nikhil Merchant Vs. CBI 2008(9) SCC 677 came to hold "that in a given case, a civil proceeding and a criminal proceeding can proceed simultaneously. Bank is entitled to recover the amount of loan given to the debtor. If in connection with obtaining the said loan, criminal offences have been committed by the person accused thereof including the officials of the Bank, criminal proceedings indisputably be maintainable". Once such is the factual situation i.e. so emerging from the reading of FIR, then to say that no offence is made out, cannot be accepted, in view of this, request made for quashing of FIR is turned down and certainly matter has to be investigated. Petitioners' counsel has also expressed apprehension, that local police has not been acting fairly, as they have been illegally detained w.e.f. 11.11.2014 to 14.11.2014 and were forced to pay Rs. 60.35 lacs. Petitioners have stated that they have already requested for free/fair/transparent investigation. Accordingly, in the facts of the case, we proceed to ask Senior Superintendent of Police, District Meerut, for ensuring free/fair/impartial investigation, to nominate a officer of the rank of Dy. S.P. to supervise the on going investigation, so that truth comes on surface and the role played by petitioners in the transaction in questioned is also clear. Learned counsel for the petitioners next contended that in the facts of the case as criminal forum is being misused the arrest of petitioners be stayed by this Court. Apex Court in the case of Hema Mishra Vs. State of U.P. and others [ 2014 (4) SCC 453 ] has considered the matter and has clearly ruled therein that once request for quashing of the FIR is turned down then second prayer for according interim order of staying arrest should not be accorded. In view of this, request that has been so made on behalf of petitioners to stay the arrest cannot be accepted by this Court. Petitioners' counsel next contended that petitioners would be mechanically arrested in the present case even without there being any credible evidence, connecting them with the crime in question. Apex Court in the case of Joginder Kumar Vs. Petitioners' counsel next contended that petitioners would be mechanically arrested in the present case even without there being any credible evidence, connecting them with the crime in question. Apex Court in the case of Joginder Kumar Vs. State of U.P. [ 1994 (4) SCC 260 ] has mentioned that law of arrest is one of balancing individual rights, liberties and individual rights on one hand and individual duties, obligations and responsibilities on other hand. The existence of power is one thing and justification for exercise thereof is another. Arrest cannot be made in routine manner. Para 20 of the aforesaid judgment is quoted below: "No arrest can be made because it is lawful for the police officer to do so. The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The police officer must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for a police officer in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. The recommendations of the Police Commission merely reflect the constitutional concomitants of the fundamental right to personal liberty and freedom. A person is not liable to arrest merely on the suspicion of complicity in an offence. There must be some reasonable justification in the opinion of the officer effecting the arrest that such arrest is necessary and justified. Except in heinous offences, an arrest must be avoided if a police officer issues notice to person to attend the Station House and not to leave the Station without permission would do." Registration of FIR under Section 154 Cr.P.C. and arrest of accused person under Section 41 are two entirely different concepts. Except in heinous offences, an arrest must be avoided if a police officer issues notice to person to attend the Station House and not to leave the Station without permission would do." Registration of FIR under Section 154 Cr.P.C. and arrest of accused person under Section 41 are two entirely different concepts. Apex Court in Criminal Writ Petition No. 68 of 2008 Lalita Kumar vs. Government of U.P. decided on 12.11.2013 has clearly ruled that it is not correct to say that just because FIR is registered, the accused person can be arrested immediately. In the said judgment itself, as to why legislature has consciously used the expression information in Section 154(1) of the Code as against the expression used in Section 41(1)(a) and (g) where the expression used for arresting person without warrant is "reasonable complaint" or "credible information" has been dealt with as the expression under Section 154(1) of Code is not qualified by the prefix "reasonable" or "credible". In the matter of arrest various safeguards have been provided and once again Joginder Kumar (Supra) has been reiterated in paragraph 99. Authority to arrest without warrant has been conferred with the police officer under Chapter V Section 41 of the Code of Criminal Procedure, and it is for the police officer to decide as to what action is required to be taken while effectuating arrest and certainly this decision has to be taken on the basis of material/information. In cognizable offences where maximum sentence is 7 years, arrest is not to be made in routine manner, and provisions of Section 41 (1) (b) and 41-A has to be complied with, and in cases when there is credible information of committing cognizable offence punishment with imprisonment of term for more than 7 years whether or without fine or with death sentence and the police officer has reason to believe that such person has committed the said offence arrest can be effectuated straightway. In reference of the offence committed, information received, it is the police officer, who has to decide as to what offence has been committed by the accused and as to whether arrest is warranted in the facts of the case, and as to what criteria is to be adhered to. In reference of the offence committed, information received, it is the police officer, who has to decide as to what offence has been committed by the accused and as to whether arrest is warranted in the facts of the case, and as to what criteria is to be adhered to. In case any infringement of law is there in effectuating arrest, the Magistrate concerned, before whom accused is produced for remand, can remedy the grievance, so raised by the arrested person, at the point of time of according remand under Section 167 Cr.P.C. Consequently, keeping in view the peculiar facts and circumstances of the case and the factum alleged that no credible evidence worth name is available against petitioners, we proceed to pass an order that investigation may go on and petitioners shall extend full cooperation in the investigation and shall not hamper with the investigation, but pursuant to impugned FIR dated 16.07.2015, registered as Case Crime No. 362 of 2015, under Sections 420, 467, 468, 471, 406 IPC, Police Station Partapur, District Meerut, petitioners may not be arrested till credible evidence is collected or till submission of police report under Section 173 (2) Cr.P.C., whichever is earlier. With these observations, writ petition is disposed of. . ———————