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2019 DIGILAW 363 (GUJ)

VIRAL CHANDRAKANT SHAH v. STATE OF GUJARAT

2019-04-10

A.P.THAKER

body2019
ORDER : 1. Rule. Ms.Moxa Thakkar, learned APP waives service of rule for respondent no.1, learned counsel, Mr.R.C.Kodekar waives service on behalf of respondent no.2-CBI. 2. By filing this application under Section 482 of the Code of Criminal Procedure, 1973, the applicant-original accused no.2 has prayed to quash and set aside the FIR being RC No.0292017A0007 registered with CBI/ACB/Gandhinagar for the offences under Sections 120-B, 417 and 420 of IPC and also offence under Sections 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act. 3. It is the case of the informant that a secret information was received that Shri Bhaskar R. Soni while working as Manager (Second-in-command) and Assistant Branch Head of UCO Bank, St.Xavier’s Branch, in conspiracy with the applicant herein and other persons deposited huge Specified Bank Notes (SBNs) in Current Account No.0838021000632 of UCO Bank during demonetization period from 10.11.2016 to 30.12.2016. It is also alleged that Shri Bhaskar R. Soni made the status of aforesaid current account operative/active on 22.11.2016 without obtaining required documents as per KYC guidelines for dormant category accounts. Last entry was carried out in this account on 18.3.2013. The maximum amount deposited in the above account was Rs.3.50 Lacs on 23.2.2013. It is also alleged that while accepting huge SBNs, Shri Bhaskar R. Soni did not inquire about the proof of source of funds of Rs.32 Lacs and when it was deposited on 22.11.2016, Shri Bhaskar R. Soni also did not obtain any mandatory documents for justification of deposit of such huge amount after a period of three and a half years. It is alleged that Shri Bhaskar R. Soni did not carry out proper diligence as stipulated in RBI circulars and accepted the amount from the applicant herein and transferred the same through RTGS during demonetization period. Accordingly, it is alleged that Shri Bhaskar R. Soni in connivance with the applicant herein and others deposited SBNs to the tune of Rs.1,49,00,000/- on different dates in a dormant account and converted the unaccounted money by bringing the same in banking channel, which was further transferred to other accounts by way of RTGS/NEFT. With these allegations, the complaint came to be lodged on 7.4.2017. 4. With these allegations, the complaint came to be lodged on 7.4.2017. 4. Mr.Chetan Pandya, learned advocate for the applicant submitted that on plain reading of the FIR it is manifest that none of the ingredients of offence under Sections 120-B, 417 and 420 of IPC and offence under Sections 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act are made out so far as present applicant is concerned. He further submitted that by Circular dated 8.11.2016, Annexure-B to present application, Reserve Bank of India informed all the banks for withdrawal of Legal Tender Character of existing Rs.500/- and Rs.1000/- Bank Notes with the required guidelines. He also submitted that as per paragraph 3 (c) (ii) thereof, no limits was prescribed to deposit High Denomination Notes and by condition No.3(c)(vi) no restriction on the use of any non-cash method for operating the account. He also submitted that by clarification dated 10.11.2016, Reserve Bank of India enhanced the limit of cash withdrawn but did not restrict any non-cash method for withdrawal of amount from the account. He also submitted that even if the applicant is allowed to deposit the amount in his dormant account by any bank official without obtaining required documents as per KYC guidelines, no offence of cheating can be said to have been made out. He also submitted that an offence of cheating under section 420 of IPC also cannot be said to have been made out against the present applicant. In support of his submissions, learned advocate has relied upon the following decisions:- (i) S.V.L.Murthy v. State, represented by CBI, Hyderabad, (2009) 6 SCC 77 ; (ii) Harmanpreet Singh Ahluwalia and Others v. State of Punjab and Others, (2009) 7 SCC 712 ; (iii) Mohammed Ibrahim and Others v. State of Bihar and Another, (2009) 8 SCC 751 ; (iv) Parminder Kaur v. State of Uttar Pradesh and Another, (2010) 1 SCC 322 ; (v) International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and Others v. Nimra Cerglass Technics Private Limited and Another, (2016) 1 SCC 348 ; (vi) Samir Sahay @ Samir Sahay v. State of Uttar Pradesh and Another, (2018) 14 SCC 233 . 4.1 In view of above submissions and the decisions relied upon by him, he prayed to allow present application by quashing and setting aside the impugned complaint. 5. 4.1 In view of above submissions and the decisions relied upon by him, he prayed to allow present application by quashing and setting aside the impugned complaint. 5. On the other hand, Mr.R.C.Kodekar, learned counsel appearing for CBI submitted that in pursuance of criminal conspiracy Shri Bhaskar R. Soni, Manager and Assistant Branch Head made the status of the current account operative on 22.11.2016 without obtaining required documents as per KYC guidelines. Last entry in the said account was of 18.3.2013 and the maximum amount deposited in the account was Rs.3.50 Lacs only during its tenure till it became dormant. He further submitted that during demonetization period, Shri Bhaskar R. Soni accepted total amount of Rs.1.49 Crore from the applicant and transferred the same through RTGS. He has relied upon Sub-clause (ii) of Clause 3-c of Circular dated 8.11.2016, wherein it is provided that where compliance with extant KYC norms is not complete in an account, the maximum value of specified notes as may be deposited shall be Rs.50,000/-, while in the present case, an amount of Rs.1.49 Crore was deposited in the dormant account of the applicant herein in connivance of Manager of the bank. He submitted that M/s. Parshwanath Motors was maintaining another account with Bank of Baroda and Rs.2.73 Crores of cash was deposited in this account also during demonetization period and it was transferred also after deposit. Accordingly, total amount of Rs.4.20 Crores was deposited in both these accounts and maximum amount was transferred to gold merchants. He further submitted that there was no business as the applicant was running the firm M/s.Parshwanath Motors from a rented place and the said shop was rented place and was vacated in October/November 2015. He submitted that accordingly the applicant has cheated the Government of India of the revenue, as the unaccounted money was liable to be taxed at higher rates and penalized. He also submitted that the applicant was evading investigation and hiding himself inspite of knowledge of registration of the case against him. He further submitted that investigation is going on and at this stage, this Court may not entertain present application and since the offence is very serious in nature, it may be permitted to be investigated thoroughly. He also submitted that the applicant was evading investigation and hiding himself inspite of knowledge of registration of the case against him. He further submitted that investigation is going on and at this stage, this Court may not entertain present application and since the offence is very serious in nature, it may be permitted to be investigated thoroughly. He has relied upon the decision of the Supreme Court in the case of Dineshbhai Chandubhai Patel v. State of Gujarat and Others reported in (2018) 3 SCC 104 to submit that once the Court finds that FIR does disclose prima facie commission of any cognizable offence, it should stay its hand and allow investigating machinery to step in to initiate the probe to unearth crime in accordance with the procedure prescribed under the Code of Criminal Procedure. He submitted that in view of the allegations made in the complaint, the offence needs to be investigated and this Court may not grant the prayer made in this application and he prayed to dismiss present application. 6. Learned APP, Ms.Moxa Thakkar, appearing for the State has adopted the arguments advanced by learned counsel appearing for CBI. 7. In response, Mr.Chetan Pandya appearing for the applicant submitted that even if the amount is said to be unaccounted money, it was deposited by the applicant in the bank and since demonetization was done for exchange of old notes, it cannot be said that the applicant has committed any offence under any of the provisions of the IPC or the Prevention of Corruption Act and, therefore, present application may be allowed by quashing the impugned complaint. 8. Heard learned advocates for the parties and perused the material available on record. 9. 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 scrutinize 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. 10. 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. 11. 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. 12. In the present case, charge against the accused is for the offence under Section 120 (B) read with Sections 417 and 420 of IPC. It is alleged that in pursuance of criminal conspiracy Shri Bhaskar R. Soni, Manager and Assistant Branch Head made the status of the current account of the applicant operative on 22.11.2016 without obtaining required documents as per KYC guidelines. Last entry in the said account was of 18.3.2013 and the maximum amount deposited in the account was Rs.3.50 Lacs only during its tenure till it became dormant. It is also alleged that during demonetization period, Shri Bhaskar R. Soni, accused no.1, accepted total amount of Rs.1.49 Crore from the applicant herein and transferred the same through RTGS. Last entry in the said account was of 18.3.2013 and the maximum amount deposited in the account was Rs.3.50 Lacs only during its tenure till it became dormant. It is also alleged that during demonetization period, Shri Bhaskar R. Soni, accused no.1, accepted total amount of Rs.1.49 Crore from the applicant herein and transferred the same through RTGS. Now, it is required to be examined whether such transaction make out the ingredients of the offence alleged against the present applicant. For this purpose, this Court is required to consider the relevant provisions 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”. 12.1 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. 13. 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. 13. 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.” 13.1 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. 14. In the present case, Reserve Bank of India by Circular dated 8.11.2016 informed all the banks for withdrawal of Legal Tender Character of existing Rs.500/- and Rs.1000/- Bank Notes and it is provided that such Bank Notes shall cease to be legal tender with effect from 9.11.2016 and new series of Bank Notes will be issued. It is also provided that the Bank branches will be the primary agencies through which the members of public and other entities will be exchanging the Specified Bank Notes for Bank Notes in other valid denominations or depositing the same for crediting to their account. The applicant has claimed to acquire huge cash after selling his balance stock prior to demonetization and deposited this cash in the bank accounts. The applicant was used to purchase gold bars, which were sold to various people accepting cash in old currency notes, which were declared to be no more legal tender and such notes are deposited by the applicant in his account. The applicant was used to purchase gold bars, which were sold to various people accepting cash in old currency notes, which were declared to be no more legal tender and such notes are deposited by the applicant in his account. Cheating is an essential ingredient for an act to constitute an offence under Section 420 and for “cheating” as defined in Section 415 there should be fraudulent or dishonest inducement of a person by deceiving him. In the present case, there cannot be said to be any fraudulent or dishonest inducement. Even if the case of the prosecution is believed, the applicant has deposited the cash for the purpose of exchanging it as the old notes have been withdrawn by the Reserve Bank of India. By depositing huge amount in his Bank Account, the applicant has expose himself as to his income and if it is found that no income tax or other taxes are paid by him on such disclosed income, then, necessary legal action / proceedings can be initiated against him under the relevant statute. Further necessary taxes in such income including penalty and interest could also be recovered from him under the relevant statute. On such exercise being carried out, there will be no case of loss to the exchequer as has been canvassed on behalf of the prosecution. However, by mere deposit of huge amount in his dormant account cannot be termed as cheating or any offence under the Indian Penal Code or under the Prevention of Corruption Act. 15. In view of above discussion, present application is allowed. The impugned FIR being RC No.0292017A0007 registered with CBI/ACB/Gandhinagar and all other consequential proceedings arising out of the same for the offences under Sections 120-B, 417 and 420 of IPC and for offences under Sections 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act are quashed and set aside so far as present applicant-original accused no.2 is concerned. The criminal proceedings may be continued against other accused. Rule is made absolute to the above extent.