TaxTMI 
TaxTMI 
2017 (7) TMI 1436
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....was registered against Shri H.S. Ranka and Shri Sachin Ranka, Chairman and Managing Director of M/s. Modern Denim Ltd. for commission of the offences punishable Under Sections 120B, 420, 467, 468, 471 of the Indian Penal Code. After the investigation, charge-sheet was filed against the Respondents, in all 13 Accused persons. The Respondents-accused persons filed applications Under Section 239 of the Code of Criminal Procedure, 1973 (in short 'the Code of Criminal Procedure') seeking discharge, mainly on the ground that M/s. Modern Denim Ltd.-Accused No. 13 had since entered into One Time Settlement (in short 'the OTS') with the bank and the allegation of forgery and use of forged documents as genuine were not raised by the bank in the proceedings before the Debt Recovery Tribunal, as such no case was made out against them. It would be futile to proceed in the matter for the other offences Under Section 468, 471 & 201 Indian Penal Code. An offence Under Section 420 Indian Penal Code is compoundable. Other offences hinge around that. 5. The allegation levelled by CBI was that Accused entered into a criminal conspiracy during the period between 1994 to 2000 between ....
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....Jhunjhunwala (A5), is a Chartered Accountant by Profession. He was one of the Directors of M/s. Intelligent Management Services P. Ltd. engaged in Finance Consultancy. In due course with the connivance of Sh. Ranglal Nahar (A3), he became the common authorised signatory for several LC beneficiary companies and Drawee companies of Bills discounted by M/s. Modern Denim Ltd. and he made some more persons as second authorised signatories for namesake. He was the nodal person for creating false documents in the form of Bills, invoices, Bills of Exchange on behalf of the fictitious companies to be used by M/s. Modern Denim Ltd. for obtaining facilities from Bank of Baroda, Bhadra Branch, Ahmedabad. (iv) Sh. Ram Ratan Maheshwari (A6) is a Director of M/s. Modern Denim Ltd. at Mumbai and he is one of the authorised signatories of M/s. Modern Denim Ltd. account opened at Oman International Bank, Nariman Point, Mumbai, and vide Resolution dated 16.10.1996 Sh. Hari Singh Ranka (A1) had authorised him to operate the account. Further vide resolution dated 29.05.1999 of M/s. Modern Woollens Sh. Hari Singh Ranka (A1) had authorised Sh. R.R. Maheshwari (A6) and Ors. to operate the account....
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.... (A1) and Sh. Sachin Ranka (A2) who had given him the authority by way of Resolution passed by the Board of Directors of the company. (ix) Sh. Hansmukh Das Sethi (A11) is the Manager looking after accounts dept. Of M/s. Modern Denim ltd., Ahmedabad. He has signed the LC applications for issue of Inland LCs in favour of beneficiaries which were all propped up companies by Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2), Sh. Ranlal Nahar (A3) and Sh. S.K. Jhunjhunwala (A5) and also request letters for grant of packing credit advances as authorised signatories on behalf of M/s. Modern Denim Ltd. At the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2) by way of Resolution passed by the Board of Directors of the company. (x) Sh. R.J. Rathi (A12) was one of the authorised signatories of M/s. Modern Woollens Ltd., which is the sister concern of Modern Denim Ltd., Ahmedabad. He had introduced an account by name M/s. Nadi Trading Pvt. Ltd. at Oman International Bank Nariman Point, Mumbai. M/s. Modern Woollens Ltd. in turn introduced several other accounts of propped up companies viz. M/s. Paridhan Commercial & Credit Pvt. Ltd., M/s. Manhattan Traders Pvt....
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....FBD) and vice versa for a maximum period up to 90 days. M/s. Modern Denim Ltd. Was already sanctioned Rs. 500 lacs under FBP/FBD limit with the result the company could enjoy combined Packing Credit Advances and FBP/FBD limit to the tune of Rs. 1000 lacs. It was also allowed Rs. 100 lacs interchangeability from FBP/FBD limit to PC limit and Rs. 200 lacs was earmarked in Bill Discounting limit against corresponding amount in the sanctioned FBP/FBD limit of Rs. 500 lacs. Accordingly the operative limit in PC and FBP/FBD was Rs. 800 lacs keeping Rs. 200 lacs under Inland Bills Discounting. The above said Accused persons through their company M/s. Modern Denim Ltd. (A13) availed 33 Packing Credit Advances for exporting denim fabric to 10 Foreign Buyers by submitting orders in the form of sale contracts of M/s. Modern Denim Ltd. itself instead of a firm order of the company. The sale contracts are not of Foreign Buyers and they are in the letter head of Modern Denim Ltd. Itself. The identity of authorised signatory on the sale contract of the letterhead of Modern Denim Ltd. is not known and so also the authorised signatory who has signed on behalf of the Foreign buyer. The document is a....
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....tion of the Accused persons to cheat the Bank by producing alleged forged documents. There is no sufficient material to proceed further with the case. Prima facie it appears that the dispute is of civil nature and the Bank has already exhausted the civil remedy for recovery of the amount. The material placed on record falls short for constituting the offense Under Sections 420, 467 and 468 of the Indian Penal Code. The prosecution has quoted in all 33 instances of LPCL advances showing mis-utilization of the sum of monies by the Accused persons. The Bank, however, did not say that there is non-compliance with the documents required to be furnished for the purpose of the release of the amount. The basic offence is that of cheating and other offences are ancillary to it. Hence the trial court has discharged the Accused persons vide order dated 6.2.2008. 7. The CBI filed a Criminal Revision Application bearing No. 500 of 2008 in the Court of Principal Session Judge, City Civil Court, Mumbai against the aforesaid order. The Revision had been dismissed vide order dated 9th January 2009. The OTS has been relied upon by the Revisional Court. 8. The CBI had filed Criminal Writ Petiti....
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....al placed on record along with charge sheet which indicates that a large number of documents had been forged in the instant case and Accused persons thereby have induced the Bank for disbursing the working capital limits to M/s. Modern Denim Ltd. The Accused persons had availed credit facility from the Bank in 33 specific instances during the period 19th June 1998 to June 1999 by submitting forged purchase orders purportedly placed on M/s. Modern Denim Ltd. by the foreign buyers. 13. There is also the allegation supported by documents that sales contract (purchase order) were prepared on the letter head of M/s. Modern Denim Ltd. It is further the case of the prosecution that the advances obtained by the Accused persons were never utilized for the purchase of the material thereto to execute the aforesaid purchase orders, but were diverted by the Accused persons to liquidate the outstanding dues of M/s. Modern Denim Ltd. against the LCs which has devolved. The banks had suffered the loss of Rs. 599.08 lakhs in the aforesaid 33 instances where packing credit was availed on the basis of false and forged purchase orders. 14. It was further alleged by the CBI that in the case of FB....
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....a clean chit that offence falls short of constituting the conspiracy Under Section 120B Indian Penal Code. The trial court has not cared to refer to the aforesaid various materials which have been alleged to be fabricated/forged and as to how the misuse of bank funds was made. In our considered opinion, in the facts of the instant case, the manner in which the trial court has discharged the Accused persons, in spite of the overwhelming materials on record, could not be said to be legally justified order at all. The OTS merely deals with the civil liability that too by making of payment of Rs. 25 crores whereas outstanding liability was Rs. 44 crores though it was submitted loss caused was approx. 13 crores. Be that as it may, we are not on the civil liability. Ultimately, the amount which has been settled in OTS Scheme cannot be legally sufficient to wipe out the criminal liability of the Accused persons. The OTS could wipe off only the civil liability, of the Accused not the criminal one. However, this may not be taken to be the ultimate conclusion on merits of the case, it would be open to the trial court to record any finding after the trial of the case. 18. In Rumi Dhar'....
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....s committed by Public Servants while working in that capacity are not to be quashed merely on the basis of compromise between the victim and the offender. 29.4(IV) On the other, those criminal cases having overwhelmingly and pre-dominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves. 29.5 (V) While exercising its powers, the High Court is to examine as to whether the possibility of conviction is remote and bleak and continuation of criminal cases would put the Accused to great oppression and prejudice and extreme injustice would be caused to him by not quashing the criminal cases. 24. In the case at hand, as per the charge sheet, the Respondents had got LCs issued from the bank in favour of fictitious companies propped up by them and the fictitious beneficiary companies had got letters of credits discounted by attaching their bogus bills. The names of 10 fictitious companies have been mentioned in the charge sheet. Thus, allegation of forgery is very much there. As is manifest ....
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....he 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 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. 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 for 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 the 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 scrutinize 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 doe....
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....ies is put to an end and peace is restored; securing the ends of justice being the ultimate guiding factor. No doubt, crimes are acts which have harmful effect on the public and consist in wrong doing that seriously endangers and threatens the well-being of society and it is not safe to leave the crime-doer only because he and the victim have settled the dispute amicably or that the victim has been paid compensation, yet certain crimes have been made compoundable in law, with or without permission of the Court. In respect of serious offences like murder, rape, dacoity, etc., or other offences of mental depravity under Indian Penal Code or offences of moral turpitude under special statutes, like Prevention of Corruption Act or the offences committed by public servants while working in that capacity, the settlement between the offender and victim can have no legal sanction at all. However, certain offences which overwhelmingly and predominantly bear civil flavour having arisen out of civil, mercantile, commercial, financial, partnership or such like transactions or the offences arising out of matrimony, particularly relating to dowry, etc. or the family dispute, where the wrong is ba....
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....press bar in Section 320 that no offence shall be compounded if it is not compoundable under the Code. In Rumi Dhar although the Accused had paid the entire due amount as per the settlement with the bank in the matter of recovery before the Debts Recovery Tribunal, the Accused was being proceeded with for the commission of the offences Under Sections 120-B/420/467/468/471 Indian Penal Code along with the bank officers who were being prosecuted Under Section 13(2) read with 13(1)(d) of Prevention of Corruption Act. The Court refused to quash the charge against the Accused by holding that the Court would not quash a case involving a crime against the society when a prima facie case has been made out against the Accused for framing the charge. Ashok Sadarangani was again a case where the Accused persons were charged of having committed offences Under Sections 120-B, 465, 467, 468 and 471 Indian Penal Code and the allegations were that the Accused secured the credit facilities by submitting forged property documents as collaterals and utilized such facilities in a dishonest and fraudulent manner by opening letters of credit in respect of foreign supplies of goods, without actually brin....
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....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, High Court may quash criminal proceedings if in its view, because of the compromise between the offender and 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. In other words, the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and wrongdoer and whether to secure the ends of justice, it is appropriate that criminal case is put to an end and if the answer to the above question(s) is in affirmative, the Hig....
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.... of the Bank have been cleared and the Bank does not appear to have any further claim against the Company. What, however, remains is the fact that certain documents were alleged to have been created by the Appellant herein in order to avail of credit facilities beyond the limit to which the Company was entitled. The dispute involved herein has overtones of a civil dispute with certain criminal facets. The question which is required to be answered in this case is whether the power which independently lies with this Court to quash the criminal proceedings pursuant to the compromise arrived at, should at all be exercised? 31. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S. Joshi's case (supra) and the compromise arrived at between the Company and the Bank as also Clause 11 of the consent terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not be allowed to stand in the way in the quashing of the criminal proceedings, since, in our view, the continuance of the same after the compromise arrived at between the parties would be a futile exercise. ....
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....(PSB) and obtained pecuniary advantage for themselves. Precise details of all the fictitious accounts as also the further flow of money realised on encashment of demand drafts/pay orders have been incorporated in the Charge-sheet. Additionally, by allegedly claiming depreciation on the new machinery, which was never purchased, on the basis of forged invoices, etc. the Accused cheated the public exchequer as well. This Court considered the modus operandi noted in afore-extracted para 23. Considering the allegations that Accused had obtained pecuniary benefit by producing forged documents. The case was dismissed and the trial court was directed to decide the case expeditiously. The facts of the instant case are more or less similar. 27. Learned senior Counsel appearing on behalf of the Respondents has relied upon the decision of this Court in Sadhu Ram Singh's case (supra), OTS was arrived at between the parties in the wake of that High Court had exercised the power of quashing, which order has been upheld by this Court. The case was registered Under Sections 120-B/420/467/468/471 of the Indian Penal Code read with Section 469 Indian Penal Code. It was a case in wh....