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Gujarat High Court · body

2019 DIGILAW 277 (GUJ)

Tirthwshwar Plywood Pvt. Ltd. v. State of Gujarat

2019-03-28

A.P.THAKER

body2019
JUDGMENT : A. P. Thaker, J. Rule. Ms. Moxa Thakkar, learned APP waives service of rule for respondent no.1, learned counsel, Mr.B.M.Thakkar waives service of rule for respondent no.2 and learned counsel Mr.R.C.Kodekar waives service on behalf of CBI. 2. By filing this writ application under Section 482 of the Code of Criminal Procedure, 1973, the applicants have prayed to quash and set aside the FIR being R.C.No.16(A) 2002-GNR registered on 11th July 2002 for the offences punishable under Sections 120 (B) read with Section 420 of IPC and Section 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act filed by CBI/SRE, Gandhinagar Police Station. 3. The short facts of the case are that M/s.Tirtheshwara Plywood Private Limited-accused no.5 having Bharat Dahyabhai Bhavsar-Accused no.6, Sudhaben Bharatbhai Bhavsar-accused no.7, Dineshbhai Dahiyabhai Patel-accused no.8, Bharatbhai Nathabhai Patel-accused no.9, Vikrambhai Shankarbhai Patel-accused no.10 as Managing Director and Directors, submitted an application on 25.8.1994 to avail raw material assistance scheme (RMA) in National Small Industries Corporation Limited (NSIC) and, thus, availed this facility under RMA scheme during 15.9.1994 to 21.5.1997. 3.1 It is alleged that M/s.Tirtheshwara Plywood Private Limited had asked for financial assistance of Rs.29.75 Lacs under Raw Material Assistance Scheme (RMA), and the applicant had submitted incomplete documents. This application was processed on 5.9.1994 and 13.9.1994 by V.K.Sawhney -accused no.3, P.K.Haldar-accused no.2 recommended unit for a limit of Rs.8 Lacs under RMA Scheme. Rajesh Arora-accused no.4, after doing the financial appraisal of the proposal along with accused no.2 recommended the proposal to R.A.Agrawal-accused no.1, Regional General Manager, who approved this proposal of RMA assistance of Rs.7.50 Lacs without asking for fulfillment of required documents by the party, without going into the details of the documents submitted by the parties and without following the instructions/ guidelines/circulars of the NSIC Limited issued from time to time. These officers of NSIC Limited did not comply with the condition imposed while sanctioning Raw Material Assistance (RMA) Facility of Rs.7.50 Lacs to this company and disbursed the amount from time to time in excess of the sanctioned limit and in excess of their delegated financial powers. These officers of NSIC Limited did not comply with the condition imposed while sanctioning Raw Material Assistance (RMA) Facility of Rs.7.50 Lacs to this company and disbursed the amount from time to time in excess of the sanctioned limit and in excess of their delegated financial powers. 3.2 It is contended that during the period from 15.9.1994 to 21.5.1997, NSIC Limited, Ahmedabad, paid total amount of Rs.7,68,000/- against RMA scheme and the company has made payment of dues of Rs.2,27,000/- and failed to make payment of remaining amount of Rs.11,68,021/- including interest and said NSIC Limited officials failed to recover this dues from the company. Due to this, NSIC Limited, Ahmedabad, suffered a wrongful monetary loss of Rs.11,68,021/- as on 31.3.2000 and the accused gained wrongfully. The above incident was reported to CBI and came to be registered as crime No.RC 16 (A) 2002-GNR. The offence was investigated and the investigating officer submitted a charge sheet and it was registered as CBI Special Case No.14 of 2004 and the charge has been framed by Special Judge, CBI, Mirzapur, Ahmedabad on 13.1.2015. 4. Mr.Yatin Soni, learned advocate for the applicants submitted that the only case against the applicants is failure to repay the amount of loan availed from NICS Limited, which was paid off by the applicants pursuant to a settlement arrived at M/s.Tirtheshwara Plywood Limited and NSIC Limited-original complainant. It is also submitted that only allegation of non-payment of amount of loan availed do not survive in view of settlement arrived at and No Due Certificate issued by NSIC Limited. Therefore, nothing remains against the accused and if the proceedings of Special Case No.14 of 2004 are not quashed qua the applicants then it would be the abuse of process of law. It is also submitted that this Court vide decision dated 27.10.2015 delivered in Criminal Misc. Application No.14324 of 2015, in case of a similar complaint, quashed the complaint and further proceedings. In the said case also, NSIC Limited was the original complainant. On this ground also, it is prayed by the applicants to quash and set aside the impugned FIR and further proceedings being Special Case No.14 of 2004 pending in the Court of Special Judge, CBI Court, Mirzapur, Ahmedabad, qua present applicants. In support of his submissions, Mr.Soni has relied upon following decisions. (i) Prof. On this ground also, it is prayed by the applicants to quash and set aside the impugned FIR and further proceedings being Special Case No.14 of 2004 pending in the Court of Special Judge, CBI Court, Mirzapur, Ahmedabad, qua present applicants. In support of his submissions, Mr.Soni has relied upon following decisions. (i) Prof. R.K.Viajayasarathy and Another v. Sudha Seetharam and Another, 2019 SC eJ 307; (ii) G. Sagar Suri and Another v. State of U.P. And Others, (2000) 2 GLH 191 ; (iii) Vijay J. Shah v. State of Gujarat, 2013 (0) GLHEL(HC) 229669; (iv) Ketanbhai Popatlal Patel v. State of Gujarat, (2015) CriLJ 2626; (v) Patel Vishnubhai Somabhai v. State of Gujarat, 2016 (0) GIJEL(HC) 235044. 5. On the other hand, Mr.R.C.Kodekar, learned counsel appearing for CBI submitted that the unit had taken term loan from GSFC and was outstanding against the unit but no attempt was made to verify the repayment performance of the unit by the officials of NSIC. He submitted that during the course of investigation, several procedural deviations are noticed while processing the loan of the applicant-unit. The unit had never offered their building at Plot No.30, GIDC, Hansalpur, Viramgam, as collateral security. Similarly, papers of another property being Flat at Sabarmati, Ahmedabad were also not obtained. The proposal was sanctioned by the competent authority without submission of income tax clearance certificate of the directors by the unit. No inspection of the factory was done by the officials of NSIC Limited. He further submitted that the officials of NSIC Limited have not taken the minimum required care in performing their duties. He also submitted that so far as earlier decision of this Court rendered in Criminal Misc. Application No.14324 of 2015 is concerned, CBI was not a party to that proceeding and CBI has filed a Special Leave Petition against the aforesaid decision, therefore, the said decision cannot be said to be final. Insofar as settlement part is concerned, he has relied upon the affidavit filed by the authorized person of NSIC Limited, wherein it is stated as under:- "4. ......I state that the petitioners have misrepresented the facts in as much as the petitioners have not stated that the petitioners had made a proposal to the respondent corporation inter alia stating that they are ready and willing to pay up the outstanding dues mentioned in the recovery certificate dated 31.12.1998 issued against them. ......I state that the petitioners have misrepresented the facts in as much as the petitioners have not stated that the petitioners had made a proposal to the respondent corporation inter alia stating that they are ready and willing to pay up the outstanding dues mentioned in the recovery certificate dated 31.12.1998 issued against them. I state that the said proposal was considered by the respondent corporation by settling the dues without prejudice to the rights of the corporation for pursuing the CBI Special Case No.14 of 2004 pending before the CBI Court, Ahmedabad. .... " 6. Mr.B.M.Thakkar, learned advocate appearing for Thakkar and Pahwa Advocates for respondent no.2 has accepted the submissions made by learned counsel, Mr.R.C.Kodekar. He has relied upon letter dated 4.7.2014 issued by Zonal General Manager of NSIC to submit that settlement is entered into without prejudice to the rights of the Corporation for pursuing the CBI Special Case No.14 of 2004 and the matter is settled only qua Recovery Certificate. He further submitted that financial assistance was given in 1995, which is repaid in 2014, while the case was filed in the year 2004. In the said case, charge sheet is already filed by CBI and charge has been framed against the persons. He further submitted that even witness summons have also been issued in the said case, therefore, at this stage, this Court may not interfere with the said proceedings. He submitted that after such a long and inordinate delay the matter is settled. He also submitted that without connivance with the officials of the respondent no.2, this could not have happened. In view of above, he prayed to reject the present application. 7. Heard learned advocates for the parties and perused the material available on record. 8. It is settled law that for considering the petition under Section 482 of the Code, it is necessary to consider as to whether the allegations in the complaint prima facie make out a case or not and the Court is not to scrutinies the allegations for the purpose of deciding whether such allegations are likely to be upheld in trial. It is also well settled that though the High Court possesses inherent powers under Section 482 of the Code, these powers are meant to do real and substantial justice, for the administration of which alone it exists or to prevent abuse of the process of the court. It is also well settled that though the High Court possesses inherent powers under Section 482 of the Code, these powers are meant to do real and substantial justice, for the administration of which alone it exists or to prevent abuse of the process of the court. The Supreme Court, time and again, has observed that extraordinary power should be exercised sparingly and with great care and caution. The High Court would be justified in exercising the said power when it is imperative to exercise the same in order to prevent injustice. 9. The High Court, in the exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure, is required to examine whether the averments in the complaint constitute the ingredients necessary for an offence alleged under the Penal Code. If the averments taken on their face do not constitute the ingredients necessary for the offence, the criminal proceedings may be quashed under Section 482. A criminal proceeding can be quashed where the allegations made in the complaint do not disclose the commission of an offence under the Penal Code. The complaint must be examined as a whole, without evaluating the merits of the allegations. Though the law does not require that the complaint reproduce the legal ingredients of the offence verbatim, the complaint must contain the basic facts necessary for making out an offence under the Penal Code. 10. A court exercising its inherent jurisdiction must examine if on their face, the averments made in the complaint constitute the ingredients necessary for the offence. 11. During investigation, the investigating authority found following procedural deviation in the processing of Raw Material Assistance (RMA) Facility. (i) The unit had never offered their building at plot No.30, GIDC, Hansalpur, Viramgaon, District-Ahmedabad, as collateral security but the same was taken into consideration by the processing officers. (ii) The proposal was okayed by the competent authority without even submission of income tax clearance certificate of the directors by the unit. (iii) Original documents relating to collateral security at Flat No.K/3 and K/4, Gujarat Steel Tubes Cooperative Housing Society, Opp. IOC, Sabarmati, Ahmedabad, were never obtained before approving the proposal for raw material assistance. (iv) The unit had taken financial assistance of Rs.7,89,700/- from GSFC, when it applied for assistance from NSIC Limited, no attempt was made to verify the repayment performance of this unit with reference to GSFC loan. IOC, Sabarmati, Ahmedabad, were never obtained before approving the proposal for raw material assistance. (iv) The unit had taken financial assistance of Rs.7,89,700/- from GSFC, when it applied for assistance from NSIC Limited, no attempt was made to verify the repayment performance of this unit with reference to GSFC loan. (v) The Board resolutions dated 12.8.1994 does not specify as to how much assistance is to be taken from NSIC Limited. (vi) No inspection of the factory was ever conducted either by processing officer viz. Shri V.K.Sawhney, Shri P.K.Haldar or by the sanctioning authority viz Dr.R.A.Agrawal. (vii) No legal vetting has been done with regard to the agreement bond, personal agreement bond has been accepted by Dr.R.A.Agarwal on behalf of NSIC Limited without affixing any date. 12. Considering the prosecution case, it appears that M/s.Tirtheshwara Plywood Private Limited had asked for financial assistance of Rs.29.75 Lacs under Raw Material Assistance Scheme (RMA), and the applicant had submitted incomplete documents. This application was processed on 5.9.1994 and 13.9.1994 by V.K.Sawhney -accused no.3, P.K.Haldar-accused no.2 recommended unit for a limit of Rs.8 Lacs under RMA Scheme. Rajesh Arora-accused no.4, after doing the financial appraisal of the proposal along with accused no.2 recommended the proposal to R.A.Agrawal-accused no.1, Regional General Manager, who approved this proposal of RMA assistance of Rs.7.50 Lacs without asking for fulfillment of required documents by the party, without going into the details of the documents submitted by the parties and without following the instructions/ guidelines/circulars of the NSIC Limited issued from time to time. It is also alleged that these officers of NSIC Limited did not comply with the condition imposed while sanctioning Raw Material Assistance (RMA) Facility of Rs.7.50 Lacs to this company and disbursed the amount from time to time in excess of the sanctioned limit and in excess of their delegated financial powers. 13. During the period from 15.9.1994 to 21.5.1997, NSIC Limited, Ahmedabad, paid total amount of Rs.7,68,000/- against RMA scheme and the company has made payment of dues of Rs.2,27,000/- and failed to make payment of remaining amount of Rs.11,68,021/- including interest and said NSIC Limited officials failed to recover this dues from the company. Due to this, NSIC Limited, Ahmedabad, suffered a wrongful monetary loss of Rs.11,68,021/- as on 31.3.2000 and the accused gained wrongfully. 14. Due to this, NSIC Limited, Ahmedabad, suffered a wrongful monetary loss of Rs.11,68,021/- as on 31.3.2000 and the accused gained wrongfully. 14. In the present case, charge framed against the accused is for the offence under Section 120 (B) read with Section 420 of IPC. Section 415 of the Indian Penal Code defines "cheating", which reads thus: "Section 415. Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". 14.1 The ingredients to constitute an offence of cheating are as follows:- i) there should be fraudulent or dishonest inducement of a person by deceiving him; ii) (a) the person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or (b) the person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and iii) in cases covered by (ii) (b) above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating. 15. Section 420 of the Penal Code reads thus: "Section 420. A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating. 15. Section 420 of the Penal Code reads thus: "Section 420. Cheating and dishonestly inducing deliver of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and 7 which is capable to being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine." 15.1 The ingredients to constitute an offence under Section 420 are as follows: (i) A person must commit the offence of cheating under Section 415; and (ii) The person cheated must be dishonestly induced to (a) deliver property to any person; or (b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. Cheating is an essential ingredient for an act to constitute an offence under Section 420. 16. Admittedly, in the present case, the entire exercise was regarding sanctioning of loan. It is also admitted fact that certain amount of loan was repaid by the accused at the relevant time also and the remaining amount was not paid. Therefore, for recovery of the amount, proper course was to file necessary civil litigation before appropriate Court, however, instead of doing so, present criminal proceedings have been initiated. Moreover, as per the facts available on record, remaining amount has also been paid by the applicant-company and "No Due Certificate" has been issued by NSIC Limited. Of course, heavy reliance has been placed on letter dated 4.7.2014 written by the complainant to the Superintendent of Police stating that the Corporation has settled the account only regarding Recovery Certificate dues and not against the CBI case. This is an internal correspondence between CBI and the complainant and even if it is considered that the right to pursue CBI case is kept open, then also basic ingredients of the offence under Section 420 of IPC are required to be made out, which are not made out in the present case. 17. This is an internal correspondence between CBI and the complainant and even if it is considered that the right to pursue CBI case is kept open, then also basic ingredients of the offence under Section 420 of IPC are required to be made out, which are not made out in the present case. 17. Therefore, the only case against the applicants is failure to repay the amount of loan availed from NICS Limited. However, it has come on record that a settlement is arrived at M/s.Tirtheshwara Plywood Limited and NSIC Limited-original complainant. As per this settlement, M/s.Tirtheshwara Plywood Private Limited has paid an amount of Rs.12 Lacs to the original complainant-NSIC. Not only that the complainant-NSIC has also issued a "No Due Certificate" in this regard, specifically stating that the account of the unit is closed as per the record of the Corporation. Therefore, the allegation of non-payment of amount of loan availed do not survive in view of settlement arrived at and No Due Certificate issued by NSIC Limited. 18. Assuming for the moment that the applicants have failed to repay the amount borrowed by them from the respondent No.2, even then the same would not even constitute an offence of cheating. In order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the process, to say that he committed an act of cheating. It may be pertinent to mention here that the amount in dispute is already paid back by the accused, therefore, there is no loss or damage caused to the complainant also. Considering the totality of the circumstances, this appears to be a fit case in which this Court can exercise its inherent powers under Section 482 of the Code for quashing the proceedings. 19. It is also pertinent to note that the charge sheet has been filed for the offences punishable under the Prevention of Corruption Act, but there is no prima facie material to substantiate the charge against the present applicants. It is not the case of the prosecution that the present accused have indulged in the act of either taking or giving bribe. Therefore, the charges under the Prevention of Corruption Act are also not sustainable against the present accused. 20. It is not the case of the prosecution that the present accused have indulged in the act of either taking or giving bribe. Therefore, the charges under the Prevention of Corruption Act are also not sustainable against the present accused. 20. In view of above discussion, present application is allowed. The impugned FIR being R.C.No.16(A)/2002-GNR registered on 11th July 2002 for the offences punishable under Sections 120 (B) read with Section 420 of IPC and Section 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act filed by CBI-SRC, Gandhinagar Police Station, and further proceedings being Special Case No.14 of 2004 pending in the Court of Special Judge, CBI Court, Mirzapur, Ahmedabad as well as any other proceedings consequent thereto are hereby quashed and set aside so far as present applicants are concerned. However, it is clarified that such proceedings may continue so far as other accused are concerned. Rule is made absolute accordingly.