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2016 DIGILAW 1301 (ALL)

P. K. Agarwal v. B. R. R. Rao

2016-04-07

RAMESH SINHA, VINOD KUMAR SRIVASTAVA-III

body2016
JUDGMENT Ramesh Sinha, J. – The present application u/s 482 Cr.P.C. has been filed with the prayer to quash the entire proceedings of Special Case No. 29 of 2014 (C.B.I. v. A.V. Hanumanthappa and other), arising out of Case Crime No. R.C. SIA 1998E 0001, under Section 120-B, 420, 467, 468, 471 I.P.C. and Section 13(2) read with 13(1)(D) Prevention of Corruption Act 1988, Police Station C.B.I., S.I.U.-XI New Delhi, District Firozabad pending in the Court of Special Judge C.B.I. Court No. 3, District Ghaziabad. Further prayer has been made to stay further proceedings of the aforesaid case. 2. Heard Sri O.P. Rai, learned counsel for the applicants, learned A.G.A, Sri Manoj Kumar Singh, Advocate holding brief of Sri Siddharth, learned counsel appearing on behalf of the respondent no.1 and Sri Gyan Prakash, learned counsel appearing on behalf of the C.B.I. 3. Brief facts of the case are that the first information report was registered on 21.05.1998 on the complaint of Sri B.R.R. Rao, General Manager and Chief Vigilance Officer, Canara Bank, Head Office, Bangalore with the allegation that Sri A.V. Hanumanthappa while functioning as Manager Canara Bank Sadar Bazar, Firozabad during 1994-97 entered into a criminal conspiracy with the Director of M/s Comet Glass Limited (hereinafter referred to as "CGL") to cheat Canara Bank in the matter of sanction of release of various facilities against norms of bank by abusing his official position, he released open cash credit (OCC) loans against non-existing stocks, discounted bogus bills of exchange presented by CGL and allowed some of the Directors of the company to avail over draft facilities without securities and thereby caused wrongful gain to CGL and corresponding loss to the bank to the extent of Rs. 530 lacs. Sri A.V. Hanumanthappa has functioned as Manager, Canara Bank Sadar Bazar Branch, Firozabad since 27.03.1993 to 30.08.1997 as such he was responsible for release of the sanctioned loans to the borrowers as per guidelines and bank norms. Applicant no.2, Sri A. Vasudevan Nayar, Vice Chairman is one of the promoter Directors of CGL. Sri Pramod Kumar Agarwal, applicant no.3 was the Managing Director of CGL. He was also a promoter director of the Company and Chartered Accountant by profession. Applicant no.2, Sri A. Vasudevan Nayar, Vice Chairman is one of the promoter Directors of CGL. Sri Pramod Kumar Agarwal, applicant no.3 was the Managing Director of CGL. He was also a promoter director of the Company and Chartered Accountant by profession. After lodging of the first information report, director of the Company and other persons including the applicants, the matter was placed before Superintendent of Police, Central Bureau of Investigation New Delhi who ordered for registration of a case and investigation of the same. The Investigating Officer investigated the case and after concluding the same has submitted the charge sheet against the applicants and co-accused for offence under Sections 120-B, 420, 467, 468, 471 I.P.C. & Section 13(2) read with Section 13 (1) (D) Prevention of Corruption Act, 1988, police station C.B.I., S.I.U.-XI, New Delhi on 28.02.2011. 4. Learned counsel for the applicants submitted that the respondent Bank has compromise the dispute with the applicants and the Company has also paid off the entire amount to the respondent bank and submitted that the said criminal proceedings initiated against the applicants be quashed. 5. In support of his contention, he place reliance on the judgment of the Apex Court in the case of Central Bureau of Investigation, ACB, Mumbai v. Narendra Lala Jain and others, reported in 2014 SCC 364 and in the case of Nikhil Merchand v. Central Bureau of Investigation, reported in 2008 (9) SCC 677 . 6. Learned counsel appearing on behalf of the respondent Bank admitted the fact of compromise entered into between the applicants and the Bank. 7. Learned counsel appearing on behalf of the C.B.I. opposed the prayer for quashing of the proceedings against the applicants on the ground that the compromise entered into between the parties and submitted that even if the due amount has been paid off by the applicants to the respondent Bank but taking into account that the public money was misused by the applicants in a fraudulent manner, they cannot escape of the liability of criminal proceedings as the respondent Bank was duped of the public money running in crores in a fraudulent manner by the applicants in collusion with A.V. Hanumanthappa, the then Branch Manager, who is still facing criminal prosecution in the present case. 8. Having heard learned counsel for the parties and perused the record. 9. 8. Having heard learned counsel for the parties and perused the record. 9. The contention of learned counsel for the applicants that the proceedings be quashed on the ground that the matter has been compromised with the respondent Bank and they have deposited the entire outstanding amount with the Bank, has no substance as there is serious allegations of huge financial loss suffered by the respondent Bank in collusion with A.V. Hanumanthappa, the then Branch Manager and the applicants. The borrower Company had submitted false and inflated stock statements to the Bank for the period from September, 1995 to June, 1997, which were countersigned by A.V. Hanumanthappa, the then Branch Manager without verification, in order to facilitate the release of enhanced limits. Documentary evidence in the form of returns submitted to Central Excise and stock statements submitted to the Bank, for the relevant period is available in the case to prove this fact. The applicants availed finance against bills of exchange accompanied by fake/forged lorry receipts and the borrower Company in conspiracy with A.V. Hanumanthappa, the then Branch Manager got discounted bills raised without any genuine trade transactions and thereby induced the bank to part with the funds. To avail facility of bill discounting, in conspiracy with the accused applicants, firms in different names were got opened through the employees of the borrower Company, showing them as proprietors and current accounts in the names of the said firms were opened with different banks. The said firms issued fake bills of exchange, without any underlying business, the said bills were supported with fake and fictitious lorry receipts, which were prepared by Govind Ram. The said bills were dishonestly or fraudulently discounted by Sri A.V. Hanumanthappa, the then Branch Manager. 10. The Apex Court in the case of State of Tamil Nadu, represented by Inspector of Police, Central Crime Branch v. R. Vasanthi Stanley and another, reported in (2016) 1 SCC, 376 has held that the criminal proceedings cannot be quashed on the ground that the repayment of loans have been made to the multiple banks by accused persons under settlement, with issuance of "No Dues certificate". 11. The Apex Court further in the case of State of Maharashtra through CBI v. Vikram Anantrai Doshi and others, reported in 2008 (4) SCC, 582 held as follows: "We are in respectful agreement with the aforesaid view. 11. The Apex Court further in the case of State of Maharashtra through CBI v. Vikram Anantrai Doshi and others, reported in 2008 (4) SCC, 582 held as follows: "We are in respectful agreement with the aforesaid view. Be it stated, that availing of money from a nationalised bank in the manner, as alleged by the investigating agency, vividly exposits fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge-sheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that whenever there is manipulation and cleverly conceived contrivance to avail of these kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly of civil character. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the nation. The cleverness which has been skillfully contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of offences which travel for ahead of personal or private wrong. It has the potentiality to usher in economic crisis. Its implications have its own seriousness, for it creates a concavity in the solemnity that is expected in financial transactions. It is not such a case where one can pay the amount and obtain a "no due certificate" and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Article 226 of the Constitution or under Section 482 of the Code and quash the proceeding. It is not legally permissible. The Court is expected to be on guard to these kinds of adroit moves. It is not legally permissible. The Court is expected to be on guard to these kinds of adroit moves. The High Court, we humbly remind, should have dealt with the matter keeping in mind that in these kind of litigations the accused when perceives a tiny gleam of success, readily invokes the inherent jurisdiction of quashing of the criminal proceeding. The court's principal duty, at that juncture, should be to scan the entire facts to find out the thrust of allegations and the crux of the settlement. It is experience of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinise the entire conspectus of facts in proper perspective and quashed the criminal proceeding. The said quashment neither helps to secure the ends of justice nor does it prevent the abuse of the process of the Court nor can it be also said that as there is a settlement no evidence will come on record and there will be remote chance of conviction. Such a finding in our view would be difficult to record. Be that as it may, the fact remains that the social interest would be on peril and the prosecuting agency, in these circumstances, cannot be treated as an alien to the whole case. Ergo, we have no other option but to hold that the order of the High Court is wholly indefensible." 12. The cases relied up by learned counsel for the appellants has been considered by the Apex Court in a recent judgment in the case of State of Tamil Nadu, represented by Inspector of Police, Central Crime Branch v. R. Vasanthi Stanley and another (Supra), in which it has been held that the High Court should refrain in the matter under Section 482 Cr.P.C., from quashing of the proceedings on the basis of the compromise entered into between the bank and the accused persons. 13. This, in view of the foregoing discussions, we do not find any ground for quashing of the proceedings of Special Case No.29 of 2014 (C.B.I,. 13. This, in view of the foregoing discussions, we do not find any ground for quashing of the proceedings of Special Case No.29 of 2014 (C.B.I,. v. A.V. Hanumanthappa and others), arising out of case crime no.RS SIA 1998E 0001, under Sections 120-B, 420, 467, 468, 471 I.P.C. And Sections 13 (2) read with 13 (1) (D) Prevention of Corruption act, 1988, police station CBI, SIU-XI, New Delhi, district Firozabad against the applicants. 14. Therefore, the application under Section 482 Cr.P.C. is, accordingly, rejected. Application Rejected.