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2017 DIGILAW 449 (JHR)

Brindawan Singh v. State of Jharkhand

2017-03-02

RONGON MUKHOPADHYAY

body2017
ORDER : Heard Mr. Sanjeev Thakur, learned counsel for the petition and Mr. Shekhar Sinha, learned A.P.P. for the State. 2. In his application the petitioner has prayed for quashing the entire criminal proceeding in connection with B.S. City P.S. Case No. 208 of 2004 corresponding to G.R. No. 853 of 2004 including the order dated 6.5.2005 passed by the learned Judicial Magistrate, 1st Class, Bokaro, whereby and whereunder cognizance has been taken for the offence punishable under Sections 406, 420, 120-B of the I.P.C. 3. It has been stated by the learned counsel for the petitioner that no offence with respect to cheating and criminal breach of trust is made out in the present case as the same related to the bank transaction. It has been stated that the petitioner was merely a guarantor to the loan taken by the accused Ajit Kumar Singh to the tune of Rs. 10 lacs. It has been stated that the bank had proceeded against the Ajit Kumar Singh before the DRT for recovery of his dues. Learned counsel further submits that the criminal case instituted against the Ajit Kumar Singh has already been quashed by this Court on 19.1.2017 in Cr. M.P. No. 89 of 2005 and that the case of the petitioner stands on a better footing to that of the borrower. In support of the contention that no case is made out under Section 406, 420 & 120-B of the I.P.C., learned counsel has referred to the case of “Jai Kumar & Anr. Vs. State of Jharkhand & Anr.” reported in 2010 (4) ECC 308 (Jhr.) : 2010 (4) JLJR 346 . 4. Mr. Shekhar Sinha, learned A.P.P. has opposed the prayer made by the petitioner and has stated that the petitioner in connivance with Ajit Kumar Singh has duped the bank and the petitioner as a guarantor cannot be absolved from facing the criminal prosecution. 5. It appears that a case was instituted on the written report of the opposite party no. 2in which it was alleged that the petitioner was the proprietor of M/s. A.B. Steel having its godown at Bye-pass Road, Chas, Bokaro. 5. It appears that a case was instituted on the written report of the opposite party no. 2in which it was alleged that the petitioner was the proprietor of M/s. A.B. Steel having its godown at Bye-pass Road, Chas, Bokaro. It was alleged that the petitioner is the guarntor to the borrowed of the bank whose cash credit limit was enhanced from 10 lacs to 20 lacs against the hypothecation of iron and steel and the same was insured against the joint name of borrowed an bank. It has been alleged that the borrower has submitted his last stock statement upto 31.7.2003 and the outstanding dues was to the tune of Rs. 21,02,704.51 on 28.7.2004. In spite of repeated communications, the borrower had filed to repay the loan and ultimately when the bank officials had visited the godown of the borrower, it was found that the stock in the godown was nil. It has been alleged that the borrower in connivance with the guarantor has sold the stocks hypothecated with the bank and, therefore, the petitioner being the guarantor as well as the borrower has committed criminal breach of trust by dishonestly misappropriating property by entering into a criminal conspiracy. Based on the aforesaid allegations, B.S. City P.S. Case No. 208 of 2004 was instituted which culminated in the submission of chargesheet. The learned court below vide order dated 25.10.2004 was pleased to take cognizance for the offences punishable under Section 406, 420 & 120-B of I.P.C. 6. The dispute which emanates from the FIR is with respect to the lone which was taken by the borrower and the hypothecated goods were subsequently on verification found to have been missing from the godown. However, the role of the petitioner is that he stood as a guarantor for the loan taken for an amount of Rs. 10 lacs. The allegation itself therefore does not constitute an offence of criminal breach of trust or for that matter a case of cheating. In the case of “Jai Kumar & Anr. Vs. State of Jharkhand & Anr.” (Supra), it was held as follows : “8. It is well settled that when a property is hypothecated to the creditor, the ownership and possession of the property hypothecated, remains with the debtor only, the creditor having neither ownership nor beneficial interestin the property. In the case of “Jai Kumar & Anr. Vs. State of Jharkhand & Anr.” (Supra), it was held as follows : “8. It is well settled that when a property is hypothecated to the creditor, the ownership and possession of the property hypothecated, remains with the debtor only, the creditor having neither ownership nor beneficial interestin the property. The hypothecation creates only a charge over the property and a right in favour of the creditor to take possession in the event of default on the part of the debtor and hypothecator. This is the view expressed by the Supreme Court in the case of Indian Oil Corporation (Supra). The claim of the informant that the petitioners/borrowers could not have sold the stock on account of the charge being created in favour of the Bank, appears to be misconceived and misleading. Admittedly, the ownership and dominion over the stock continued to remain with the petitioners. 9. From the facts admitted, the essential ingredients of dishonest misappropriation of movable property as defined under Section 403 as also under Section 405, IPC, are conspicuously lacking. 10. No doubt, a commercial transaction or dispute may also involve criminal offence but only if the essential ingredients of the criminal offences are made out. Where allegations in the FIR/Complaint me taken at their face value, disclose exclusively a civil dispute for which the civil remedy is available or has been availed, the initiation of criminal proceeding on the same facts, would amount to abuse of the process of the Court and in such cases, as declared by the Supreme Court in the case of Indian Oil Corporation (supra), the person who had initiated the criminal proceeding frivolously with ulterior motive, should be penalised. The test is whether the allegations in the complaint disclose a criminal offence or not." 7. In the present case, even going by the entire allegations in the FIR, none of the offences for which the Court below has taken cognizance, is made out. The creditor Bank being aggrieved with the fact that the borrower has defaulted in repaying loan, may have a legal remedy by way of filing a civil suit for recovery of the loan amount but cannot be allowed to abuse the process of Court in order to create a pressure upon the borrower and guarantor to repay the amount. 8. The creditor Bank being aggrieved with the fact that the borrower has defaulted in repaying loan, may have a legal remedy by way of filing a civil suit for recovery of the loan amount but cannot be allowed to abuse the process of Court in order to create a pressure upon the borrower and guarantor to repay the amount. 8. Considering the fact that no case under Sections 406 and 420 of I.P.C. is made out against the petitioner, this court in Cr. M.P. No. 89 of 2005 has quashed the entire criminal proceeding so far as the petitioner is concerned in the following terms: "5. It would thus appear that the ingredients of dishonest misappropriation of immovable properly as defined under Sections 403 and 405 of I.P.C. are apparently lacking in the prosecution case. The dispute as has been indicated above is purely civil in nature of which the bank had already availed of its remedy as it has already instituted a case for recovery before the Debt Recovery Tribunal, Ranchi. Since the allegations made in the FIR do not constitute a criminal offence as at best the same would invite civil consequences for which the bank had taken appropriate remedy before the forum concerned, it would be an abuse of the process of court if criminal proceeding against the petitioner is allowed to continue." 9. In view of the quashment of the proceeding as against the borrower, the petitioner who was a nominal player in the entire transaction between the borrower and the bank, no criminal prosecution could lie against him as the allegation so far as the petitioner is concerned at best invites civil consequences. 10. In consequence to what has been stated above, this application is allowed and the entire criminal proceeding in connection with B.S. City P.S. Case No. 208 of 2004 corresponding to G.R. No. 853 of 2004 including the order dated 6.5.2005 passed by the learned Judicial Magistrate, 1st Class, Bokaro is quashed, so far as the petitioner is concerned.