TaxTMI 
TaxTMI 
2015 (6) TMI 1134
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....Delhi on the allegation that Vijaya Bank, R.K Puram Branch, New Delhi was defrauded to the tune of about Rs. 46.99 lac approximately during 1987 to 1990 by the Director of M/s RKB Herbals Pvt. Ltd. in connivance with officers of Vijaya Bank in the matter of obtaining credit facilities to the tune of Rs. 1 crore. PROSECUTION CASE 3. The prosecution's case is that in the revised application, the accused company (A-5) did not disclose that its other unit i.e. Homeopathy unit at New Delhi was availing credit facility with another bank, namely, Indian Overseas Bank, Daryaganj Branch,New Delhi. Both the complainant bank and its officers were fully aware of such credit facilities. 3.1 Prosecution also alleges that co-accused Sh. N. Bhojraj Shetty (A-1), Branch Manager of the complainant bank colluded with (A-5) and released the credit limits without due approvals of the higher authorities of the bank. 3.2 The original application dated 2nd February, 1987 of M/s. RKB Herbals Private Limited was not processed further because of Non Obtention of the opinion of the previous lender i.e. the Indian Overseas Bank and also the fact that its Executive Director Shri Deepak Bhandari ....
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...., it was also alleged that the bank and Directors of the company committed certain forgeries for the purpose of cheating and used forged documents as genuine but after investigation, charge sheet dated 19th December, 1996 was filed by C.B.I, in the Court of Special Judge, Delhi, alleging therein that the bank has been cheated to the tune of Rs. 86 Lac by the company due to non- repayment of its loan. On 4th December, 1996, the company and its directors on appearing before the Court denied the charges but without prejudice to the allegations of cheating etc. promised to repay the said loan amount i.e. the so-called cheated amount of Rs. 86 Lac in installments and in fact paid/deposited its first installment of Rs. 15 Lac with the complainant bank in Court on 20th January, 1997. 5. During the pendency of the aforesaid criminal case and before framing of charge on 12th February, 2004 a settlement/compromise was arrived at between the bank and the company, whereby a remaining sum of Rs. 1.30 crores was paid to the complainant bank in full and final settlement of their claims, which was over and above a sum of Rs. 15 lac paid to the bank in the criminal court on 20th January, 1997. ....
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....The order on charge dated 23rd November, 2006 of the trial court was challenged by the petitioner No.1 and 2 before this Court by way of Crl. Rev. Nos.856-57/2006. While filing the Revision Petition before this Court, in one of the grounds, it was contended that they had repaid all the outstanding dues of the bank therefore, the proceedings before the trial court be quashed on this ground also. 13. This Court did not find any merit in the said submission and Criminal Revision of the petitioners was dismissed by order dated 6th August, 2007 which was filed mainly against the framing of charge. The said order was challenged by the petitioner before the Supreme Court by filing a Special Leave Petition. However, after hearing the said SLP, the Supreme Court affirmed the order dated 6th August, 2007 of this Court and was pleased to dismiss the petition by order dated 28th September, 2007 the same being devoid of any merit. 14. The trial in the case is in progress before the trial court. IO in the matter is yet to be examined. In the meanwhile present petition was filed which was first time listed before another Bench of this Court who pleased to issue notice on 19th December, 2014....
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.... of N.L. Jain (supra), offences under Sections 120-B/420IPC and Sections 5(2) read with Section 5(l)(d) of the Prevention of Corruption Act, 1947 corresponding to Sections 13(2) read with Section 13(l)(d) of the Prevention of Corruption Act, 1988 were alleged against the accused persons. Despite of the same, Supreme Court quashed the proceedings. 18. Mr.Tulsi further submits in the case of Nikhil Merchant (supra), accused persons were charged under Section 120-B IPC read with Sections 420, 467, 468, 471 IPC read with Sections 5(2), 5(1)(d) of PC Act, 1947 and Sections 13 (2) read with 13 (1) (d) of the PC Act, 1988. Charges are similar to the present case as the substratum of charges against the private individuals in all the three aforementioned Apex Court judgments appear to be of criminal conspiracy to cheat the complainant bank. Charges of forgery are also made out to achieve the said purpose. Substantive offences under PC Act are principally made out against the public servants, who were necessarily bank employees of public sector banks in all the three said cases. Same is in the case of the present petition where substantive charges are of criminal conspiracy, cheating ....
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....14) decided by the Supreme Court of India on 19th September, 2014, wherein all the judgements are discussed and ultimately set aside the order of High Court who quashed the proceedings on the basis of settlement. He referred the requisite para of the said decision which reads as under: "It is not such a case where one can pay the amount and obtain a No Dues Certificate and enjoy the benefit of the quashing of the criminal proceedings hypostasis that nothing remains to be done. The collective interest of which the Court is guardian cannot be a 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 u/s 482of the Code and quash the proceedings. It is not legally permissible". 23. It is argued that in view of the latest decision of the Supreme Court as mentioned above, the contention of the petitioners does not have any substance. 24. Mr.Mann submits that in the decree passed by the Debt Recovery Tribunal in OA No.200/95 on 12th February, 2004 and "No Dues Certificate" issued by Vijaya Bank on 6th February, 2004, the....
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....acity, etc.; cannot provide for any basis for quashing criminal proceedings involving such offences. But the criminal cases having overwhelmingly and predominatingly civil flavour stand on a different footing for the purposes of quashing, particularly the offences arising from commercial, financial, mercantile, civil, partnership or such like transactions or the offences arising out of matrimony relating to dowry, etc. or the family disputes where the wrong is basically private or personal in nature and the parties have resolved their entire dispute. In this category of cases, the High Court may quash the criminal proceedings if in its view, because of the compromise between the offender and the victim, the possibility of conviction is remote and bleak and continuation of the criminal case would put the accused to great oppression and prejudice and extreme injustice would be caused to him by not quashing the criminal case despite full and complete settlement and compromise with the victim." 26. In the case of Narinder Singh & Ors.vs. State of Punjab & Anr., (2014) 6 SCC 466 a two-Judge Bench placed reliance on Gian Singh's case (supra) and Dimpey Gujral v. Union Territory th....
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.... for recovery of the amount claimed to be due from the respondents and the said suits were disposed of in terms of the consent decrees. On the basis of the said consent decrees an application for discharge was filed which was rejected by the trial court but eventually was allowed by the High Court. The charges in the matter were framed under Section 120-B/420 IPC by the learned trial Judge against the private parties. As far as bank officials are concerned, charges were framed under different provisions of the Prevention of Corruption of Act, 1988. Being dissatisfied with the said order, the CBI had preferred an appeal by obtaining special leave and in that context the court observed that the accused respondent had been charged under Section 120-B/420 IPC and the civil liability of the respondent to pay the amount had already been settled and further there was no grievance on the part of the bank. Taking note of the fact that offence under Section 420 of IPC is compoundable and Section 120-B is not compoundable, the Court eventually opined thus:- "11. In the present case, having regard to the fact that the liability to make good the monetary loss suffered by the bank had b....
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....nner, 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 kinds of benefits it cannot be regarded as a case having overwhelmingly and predominantingly of civil character. 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 far 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 amo....
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....re Directors for some period of time. These two companies were maintaining their accounts at United Western Bank. Sh. Vikaram Doshi (A-1) was also having his personal account in the same bank. From these two Accounts Sh. Vikram Doshi had received a sum of Rs. 1,48,50,000/-. This amount was utilized by him towards purchase of residential flat. Thus it is clear that the accused persons under the garb of business requirements had obtained credit facilities from the bank but had utilized the funds for acquiring immovable property for personal use. In order to clear the liability generated because of such illegal acts, they had induced the Bank of Baroda to sanction the credit facilities, which facility was dishonestly used by them. The entire amount sanctioned and released by the Bank of Baroda is outstanding and nothing has been repaid. Because of the acts of the accused, the facilities sanctioned by the Bank of Baroda are rendered without any securities and the bank has thus suffered wrongful loss." It was observed by the Court that from the charge-sheet that though the accused A-1 and A-3 knew that the said Working Capital was sanctioned only for the purpose of taking over the li....
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....the bank for their approval. 34. It is the case of the petitioners that sometime during the subsistence of the credit facilities, the Herbal Unit of the accused company suffered some losses due to operational difficulties namely, the technical failure of the spray system, due to which some of the Unit's produces were rejected by its buyers. This technical fault had a cascading effect on the overall Unit. As per the admitted documents of the complainant bank, the Unit mainly suffered because of the overambitious approach of the promoters, cost-overrun, inadequate investment, and diversion of funds for product promotions, advertisements etc. These problems eventually led the Herbal Unit to be shut down, and the accused company (A-5) became sick. 35. The petitioners have placed on record the following relevant dates and events for the convenience of this Court. The same are given as under : i) 13.03.1982 Current account No.622 was opened by accused company with the complainant Bank, wherein, it was clearly mentioned that the company, which at that time had only Homeopathic Division at Okhla Industrial Area at New Delhi was already enjoying credit facilities from M/s In....
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.... the ad-hoc credit limit of Rs. 65 lacs was released. ix) 24.05.1988 The credit facility to the company was enhanced from Rs. 65 Lacs to One Crore. x) 01.03.1989 The said enhanced credit limit of Rs. 1 Crore was further enhanced to Rs. 1.45 Crores. xi) 20.10.1989 Divisional manager of the bank put up a note dated 20.10.1989 before the chairman and managing director of the bank, in which it is mentioned that the credit limit of the company was enhanced from Rs. 1.45 crores to 1.93 crores, and thereafter, it was further enhanced to more than 2 crores and therefore, the proposal to enhance the credit limit was referred to the Board of Directors of the bank for their approval. In this note dated 20.10.1989, the Div. Manager has clearly stated that the project has failed, mainly on account of cost overrun, lack of experience on part of promoters, over ambitious approach inadequate investment and diversion of finance for product promotion expenses etc. and recommended further funding of Rs. 110 Lacs, reinstatement of OLCC limit of Rs. 70 Lacs, reinstatement of the DBD limit of Rs. 25 Lacs and temporary loan of Rs. 30 Lacs and referred the proposal for approval of the bo....
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.... the accused company, even after the order of attachment of assets of the company, the bank lodged the present R.C. No.4A/1994 on 03.05.1994 i.e. after about a year of the filing of the recovery suit and after about 7 years of the grant of loan, alleging therein that the company and its directors have cheated the bank by not repaying its loan, thereby caused wrongful loss to the bank to the tune of Rs. 86 Lacs. In the FIR it was also alleged that the bank and its directors committed certain forgeries for the purpose of cheating and used forged documents as genuine but after investigation, CBI in para 25 of its charge sheet found that the said charge of forgery of the purpose of cheating and use of forged documents etc. was not substantiated. The said para 25 of the charge sheet is reproduced here below:- "25. The allegation regarding forgery for the purpose of cheating and use of forged documents as genuine as contained in the FIR could not be substantiated on account of the non-availability of the documents pertaining to the transportation of goods (Lorry Receipts)" In the entire FIR there is absolutely no mention of floating of any company by the n....
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.... complainant bank first filed a suit for recovery against the accused company (A-5) and its directors in May, 1993 as the complainant bank failed to fully recover the suit amount, the bank, as arm twist to recover the suit amount lodged a complaint with the CBI on 23rd May, 1994 i.e. after about eleven months of filing of the aforesaid recovery suit and on the basis of the said complaint, case R.C. No.4A/1994/SIU (X)was registered and after investigation, charge sheet was filed in Court on 19th December, 1996. 38. In the present case, on the application of parties dated 11th February, 2004 under Order 23 Rules 1, 3 and 3A read with Section 151 CPC, the judicial forum has already passed a decree of settlement between the parties, no dispute between the parties shall remain; in three documents, namely; a) the aforementioned joint application for settlement filed with the DRT; b) the No-Due Certificate dated 6th February, 2004 issued by the complainant bank, and filed with the DRT; and c) the decree of the DRT dated 12th February, 2004. 39. The settlement arrived at between the parties was a part of the decree of the Civil Court (it being the Debt Recovery Tribunal) who is the F....
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.... of the OTS. By executing the settlement application within the OTS Scheme, the complainant bank has not only intended to compound the alleged offences, but also given up its criminal complaint, which was initiated by the CBI on the behest of the complainant bank. The observation in Gopakumar Nair's case, such compounding and giving up on criminal complaint on part of the complainant is relevant when examining an application under Section 482 Cr.P.C. to quash proceedings. The relevant observation of the Supreme Court in Gopakumar Nair (supra) is reproduced herein below for emphasis: "Though the amounts due have been paid the same is under a private settlement between the parties unlike in Nikhil Merchant and Narendra Lai Jain where the compromise was a part of the decree of the Court. There is no acknowledgement on part of the bank of the exoneration of the criminal liability of the accused - appellant unlike the terms of compromise decree in the aforesaid two cases." 44. Para. 6 of the Joint Application is reproduced below: "6. That with the said payment, all disputes, differences, claims, suits, complaints etc. of the applicant bank stands fully settled, ....
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....appears to us that even if Senior Manager (Legal) or am other officer of the Bank had not acted properly, in view of the fact that the ultimate decision as taken by the Board of Directors, it cannot be reasonably held that some of the officers of the bank connived and misled the Board. It may be noted that no allegation has been made against the members of the Board." [Emphasis Supplied] 47. Mr.Tulsi submitted on behalf of the petitioners that in the examination-in-chief stage itself, the stand of the petitioners was vindicated as the prosecution was unable to find, and lead any evidence in respect of payment of illegal gratification, whether directly or indirectly, that was offered by the petitioners to A-l and the prosecution is unable to lead any evidence to indicate that the employee of the complainant bank obtained any valuable thing or pecuniary advantage by illegal or corrupt means or by abusing his position as a public servant. The prosecution has failed to have the case pass the most basic condition for charge under Section 13 (1) (d) of PC Act to sustain. There is no credible evidence to prove such pecuniary advantage. 48. The petitioners state that they are private....
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....by the name of M/s Indian Herbs by the petitioner. It was not the case of the bank in its FIR that the petitioner started a fictitious business concern styled of M/s Indian Herbs for realising payments from Vijaya Bank against bogus hundies (drawee bills) drawn on M/s R.K.B Herbals Pvt. Ltd. Inspite of the fact that the FIR is completely silent yet Smt. Sonia Bhandari was charge sheeted as one of the accused. 53. With regard to submission of learned counsel for the respondent that the present petition is not maintainable being non- compoundable offence, the same has no force as the inherent power falls within the parameters of Section 482 Cr.P.C., it shall have an overriding effect over any of the provisions of the Code. In exercise of its inherent powers under Section 482Cr.P.C., the High Court may permit compounding of a non- compoundable offence provided that in doing so it satisfies the conditions mentioned therein. This principle of law has been discussed in many cases decided by the Supreme Court including in the recent case of Gian Singh (supra). Therefore as per the mandate of Supreme Court, the non-compoundable offence can be compounded by the High Court while exercisin....
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.... lame prosecution warrants this Court's interference to rescind such abuse. 58. Pending a departmental enquiry against bank employee, the complainant bank had withheld the said A-1's retirement benefits. The same was challenged by the said Al in this Court by way of a civil Writ Petition bearing WP (C) No.1235/2003. Adjudicating upon theapplication, this Court in its judgment dated 6th October, 2004, opined: "The main plank of the petitioner's submission is that the bank had reached a settlement with the Party and a no- due certificate has been annexed as Annexure A-1 and the amount of settlement has been duly paid by the said party. In view of the forgoing discussion, I am of the view that prima facie no case is made out in favor of the respondents which would enable them at this stage to withhold the retiral benefits namely contribution to provident fund and gratuity. The enquiry itself based on the charge sheet has been stayed by this Court which is another factor showing that prima facie, the petitioner has made out a good case for interference. In view of the forgoing discussion, the application is allowed and the retiral benefits of t....
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....dispute would squarely fall within the realms of Debt Recovery Tribunal, and would have been dealt with under the provisions of SARFESI Act. 62. In the present case both parties voluntarily subjected themselves to a written agreement to regulate their conduct. Bank also secured itself by way of charge against the business as well as the private assets of the petitioners. However, the petitioners came to be unable to repay the loan due to the genuine failure of their project due to commercial reasons (such as lack of demand, technical problems in plant etc.), and not because of the offences that the respondent alleges. These two critical aspects are both the admitted position of the complainant bank and the documents to that effect are on record. The dispute between the parties was predominantly civil - commercial in nature. In light of which, the Petitioners are invoking the principles of law laid down in Gian Singh (supra) judgment whereby it is clarified that in such cases, where the dispute is predominantly of civil nature, with some criminal facets, the High Court would well be within its powers to quash the proceeding on the basis of a settlement/compromise between parties.....
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....C - attempt to commit murder. However, with the intervention of the panchayat, the matter came to be settled and peace was restored between the parties. The Supreme Court accepted such a compromise and quashed the proceedings pending against the accused - petitioners. 67. The petitioners have referred judgments which are by a bench of three-judges. They are namely, N.L. Jain and Nikhil Merchant (originally of a two-judge bench, but confirmed by the three-judges bench in Gian Singh) and Gopakumar B. Nair vs. CBI & Anr. The ratio of pronouncements in the case of Nikhil Merchant (as confirmed by the Gian Singh), N.L. Jain and Gopakumar Nair are the authoritative law in respect of the questions that arise in the present petition, and that ratio is that in cases where the compromise has been arrived at between the parties, even if the substantive charges against the private persons are more grave than offence under Section 420 and S 120-B IPC, and include substantive offences under Sections 467, 468, 471 read with offences under PC Act, yet the High Court is fully empowered to quash the said proceedings depending upon the facts of the case. 68. The Supreme Court, answering the ....
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....that the complainant bank has exonerated the petitioners from all claims, grievance or complaint of any nature whatsoever. By consent the parties have settled all disputes in the recovery suit, the consent decree of DRT stood to be disposed off as duly satisfied. There is hence no force in the submission of respondents that the complainant bank has not exonerated the petitioners, first being the Civil Procedure Code, and the second being the OTS Scheme of the Reserve Bank of India, which the petitioners have extensively referred to in the original petition. The provisions of OTS Scheme prevent the complainant bank from entering into any compromise or settlement under the said OTS Scheme in the cases of willful default, fraud and malfeasance. The complainant bank in choosing to enter into such consent terms under the provisions of OTS Scheme has not only exonerated the petitioners, but for all intents and purposes given up the perusal of the complaint and having no grievance against them in any other proceeding whether civil or criminal on the same set of issues. 70. There is no doubt that the trial has been proceeding for offences for the last about 20 years ago. The dispute bet....