TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1436
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.... 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 themselves to cheat the bank of Baroda, Bhadra Br....
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.... 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 accounts and this account in turn introduced the LC beneficiaries and Inland Bills D....
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....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. Ltd., M/s. Hobart Trading Pvt. Ltd., M/s, Samray Silk Mills Pvt. Ltd., M/s. Abhyudaya Garments Pvt. Ltd. Etc. But Sh.....
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....t 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 as such a fake export order. In 5 instances even the purported sale contracts are only photocopies and the original were not submitted....
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.... 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 Petition bearing No. 1309 of 2009 in the High Court Under Section 482 Code of Criminal Procedure The High court had affirmed the orders by impugn....
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....s 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 FBP/FBD facility the Accused persons discounted 12 bills during the period March, 1997 to July, 1998 which were returned unpaid by the foreign banks and ....
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....esaid 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's case (supra), this Court has observed that when settlement is arrived at between the creditors and the debtor, the offence, if committed, as such does not co....
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....ases 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 from the impugned order, the learned Single Judge has not adverted to the same. It is not a simple case where an Accused has borrowed money from the bank and diverted it somewhere else and, thereafter, paid the amount....
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....titution 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 does it prevent the abuse of the process of the Court nor can it be also said that as there is a settlement no evidence will come on record and there will be remote chance of conviction. Such a finding in our view would be diff....
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....tens 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 basically to the victim and the offender and the victim have settled all disputes between them amicably, irrespective of the fact that such offences have not been made compoundable, the High Court may within the framework of its inherent....
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....covery 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 bringing any goods but inducing the bank to negotiate the letters of credit in favour of foreign suppliers and also by misusing the cash-credit facility. The Court was alive to the reference made in one of the present matters and also the decisions in B....
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....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 High Court shall be well within its jurisdiction to quash the criminal proceeding. 22. The principles laid down by this Court in Gian Singh decision (supra) indicate that while exercising the power of quashing, when the offences are not compoundable, the fac....
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.... 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. 32. We, therefore, set aside the order passed by the High Court dismissing the Petitioner's revision application No. 49 of 2003 in Special Case No. 80 of 1998 and quash the proceedings against the Appellant. The appeal is accordingly allowed. 24. In Ashok Sadarangani's case (supra) off....
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....rchased, 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 which it could not be corroborated by the evidence that the company had been using credit facility against the hypothecation of the stock, which stock was lying at the port. It was found that the Respondent company had fraudulently obtained higher limits which appear to be forged and false. The facts of Sadhu Ram Singh's case (su....