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THE HON'BLE DR. JUSTICE G. RADHA RANI
CRIMINAL REVISION CASE No. 611 of 2019
This Criminal Revision Case is filed by the Petitioner-Accused No.3
aggrieved by the order dated 21.02.2019 in Cri.M.P.No.324 of 2018 in
C.C.No.20 of 2016 on the file of the III Additional Special Judge for CBI Cases
at Hyderabad in dismissing the discharge petition filed by him.
2. The case of the revision petitioner was that he obtained housing loan of
Rs.20,00,000/- from Syndicate Bank, JSN Colony Branch, Hyderabad. He paid
more than Rs.6,00,000/- as Equitable Monthly Installments (EMIs) towards his
loan for few years and due to some unforeseen and unavoidable circumstances,
he was not able to pay the monthly installments at a later stage, due to which,
the loan account turned into a Non-Performing Asset (NPA). With due efforts
with an intention to repay the loan amount to the bank, the revision petitioner
collected funds and sent a proposal for One Time Settlement (OTS) of dues to
Syndicate Bank, the same was accepted by the said bank and received payment
of Rs.16,00,000/- from the revision petitioner. The said bank issued a 'No Due
Certificate' (NDC) dated 06.04.2016 stating that "Sri B.Anil Kumar (revision
petitioner herein) had settled his dues with the bank under OTS on 22.02.2016
and they did not have any interest in the property". After clearing the dues in
respect of the housing loan and obtaining NDC from the bank in April,2016, the
revision petitioner received summons dated 05.12.2016 in C.C.No.20 of 2016
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issued by the III Additional Special Judge for CBI Cases at Hyderabad for the
offences punishable under Sections 120-B, 420 and 471 of IPC and Section
13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988.
3. The contention of the revision petitioner was that even after repaying the
dues to the bank and discharging his liability, the bank was still continuing to
prosecute the case against him which was an abuse of process of law. After
receipt of summons, the revision petitioner appeared before the III Additional
Special Judge for CBI Cases at Hyderabad. On receiving the charge-sheet along
with other documents from the court, the revision petitioner filed a petition
under Section 239 of Cr.P.C. to discharge him from the said case, as the dispute
between the parties was already settled and continuance of prosecution against
the petitioner would be unjust and unlawful. After hearing both sides, the III
Additional Special Judge for CBI Cases at Hyderabad dismissed the discharge
petition.
4. Aggrieved by the said order, the Petitioner-Accused No.3 preferred this
revision contending that the learned Judge mechanically passed the order
without appreciating that the dispute was of civil in nature with criminal facets
and the offences alleged against the revision petitioner becomes compoundable
on compromise between the accused the de-facto complainant. The Judge erred
in not considering the law laid down in a similar case by the Hon'ble Apex
Court in the case of Nikhil Merchant v. Central Bureau of Investigation and
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others 1 . The Judge ought to have appreciated that the dispute between the
revision petitioner and the Bank was set at rest on the basis of compromise
arrived by them under OTS, whereunder the dues of the Bank had been cleared
and the Bank did not have any further claim against the revision petitioner.
Hence the revision petitioner was entitled to be discharged from the criminal
case. The Judge ought to have appreciated that in the charge-sheet at page 15 in
point No.3, which described the role of borrowers in the offences as per
investigation, the name of the petitioner-accused No.3 was not stated. Hence, it
was admitted by the investigating officer that the petitioner-accused No.3 had
not submitted fraudulent false Income Tax Returns, false final statements of
account of his business, less value collateral securities or had shown high value
construction rates in conspiracy with A1. The continuance of the case against
the revision petitioner and asking him to face the lengthy and protracted trial
would be miscarriage of justice leading to harassment and torture to the
petitioner without any iota of proof against him in the said case. The Judge
ought to have appreciated that there was no prima-facie evidence nor any
incriminating material against the revision petitioner found in the FIR and
charge-sheet with respect to the offences charged and hence the revision
petitioner ought to have been discharged from the offences alleged against him
in the charge-sheet. The Judge erred in not considering that in the absence of
any evidence to show that there had been any common intention or to commit
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AIR 2009 SC 428
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criminal conspiracy or dishonest intention to cheat and cause wrongful
economic gain or forgery by the revision petitioner, the said offences against the
revision petitioner were mis-conceived and were not maintainable either in law
or on facts and as such were liable to be rejected and the revision petitioner was
liable to be discharged from the said offences and prayed to allow the criminal
revision case by setting aside the order of the III Additional Special Judge for
CBI Cases, Hyderabad in Cri.M.P.No.324 of 2018 in C.C.No.20 of 2016 dated
21.02.2019.
5. Heard the learned counsel for the revision petitioner and Sri.N.Nagendran,
learned Special Public Prosecutor for CBI Cases representing the respondent-
complainant.
6. As seen from the record, Mr.M.Mohan Reddy, the Deputy General Manager of Syndicate Bank, Hyderabad lodged a complaint against one Goli Sridhar, a realtor of Hyderabad, V.Jagan Mohan Rao, the then Senior Manager, Hanumantha Rao, the then Chief Manager, T.Guruva Reddy, Senior Manager, K.Rambabu, Civil Engineer, S.Chandrasekharan, Panel Valuer of Syndicate Bank, JSN Colony Branch, Habsiguda, Hyderabad and against unknown public and private persons alleging that the accused persons in conspiracy with other borrowers had cheated Syndicate Bank through forgery, criminal breach of trust, use of false documents as genuine and availed seventeen (17) housing loans, seven (07) personal loans and twenty five (25) housing loans causing loss of Rs.10.98 Crores to Syndicate Bank.
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7. The SP, CBI, Hyderabad registered FIR bearing No.RC2(A)/2014 under Sections 120-B, 409, 420, 465, 468, 471 of IPC and under Section 13(2) read with 13(1)(c)&(d) of Prevention of Corruption Act, 1988 and after investigation, filed charge-sheet.
8. In the charge-sheet it was alleged that the borrowers A3 to A8 entered into criminal conspiracy with Sri. V.Jagan Mohan Rao (A1) through S.Chandrasekharan (A2) and M/S.Sunny Enclave Builders and Developers (A9) to cheat Syndicate Bank and submitted housing loan applications to A1, enclosing false Income Tax returns for the assessment years i.e., 2005-06, 2006- 07, 2007-08 and 2008-09. The borrowers had filed IT Returns on self-declared inflated gross income, less net income in order to become eligible to the housing loan, because as per the loan policy of the bank, the borrowers are eligible to the loan amount at six (06) times of gross income declared in the Income Tax Returns. The borrowers A3 to A8 submitted false construction estimates at a very high rate than the prevalent market rate. The borrowers submitted construction agreement with M/S.Sunny Enclave Builders and Developers (A9). The borrowers also offered short value securities as collateral security to secure the said housing loans and submitted false asset and liability statement and false final accounts of their business to Sri.V.Jagan Mohan Rao (A1) for processing the said loan proposals. In pursuance of the said criminal conspiracy, Sri.S.Chandrasekharan (A2) submitted false valuation reports inflating the values of the securities of five (05) Synd Housing Applicants. Sri.V.Jagan 6 Dr.GRR, J crlrc_611_2019 Mohan Rao (A1), the then Senior Manager (Syndicate Bank), JSN Colony Branch, Habsiguda, Hyderabad, in pursuance of the said conspiracy, did not verify asset liability statements of the borrowers, false final accounts of their business, accepted fake Income Tax Returns and inflated valuation report submitted by A2. A1 also inspected the properties and falsely submitted inspection report quoting inflated value of the collateral securities. Thus, Sri.V.Jagan Mohan Rao (A1) dishonestly got the loan proposal processed and by abusing his official position as Public Servant sanctioned five (05) housing loans during the year 2008 and disbursed Rs.92,00,000/- to the borrowers. The borrowers could not pay the Equitable Monthly Installments (EMIs) to the bank as they had no business and no source of income. The Bank conducted departmental enquiry and got the collateral securities revalued through another Panel Valuer. The Bank found that the value of the properties was very less and was not matching with the outstanding loan amounts. The houses of A3 and A4 were 100% complete but their values were less than the outstanding amount in the account. Thus, the Bank suffered a net loss of Rs.47.5 lakhs as on 30.06.2013.
9. Basing on the charge-sheet, the Special Judge for CBI Cases, Hyderabad had taken cognizance of the case for the offences punishable under Sections 13(2) read with 13(1)(d) of Prevention of Corruption Act and Sections 120-B, 420 and 471 of IPC and issued summons to the accused. 7
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10. On appearance and on receipt of the charge-sheet and the documents filed along with the charge-sheet, the petitioner-accused No.3 filed this petition contending that the charge-sheet or the documents would not show any material or evidence that he was involved in conspiracy with the bank officials and the valuer. The allegations in FIR and charge-sheet were vague and the same were not supported by any evidence. There was no prima-facie evidence nor any incriminating material against him to attract the offences alleged and relied upon the judgments of the High Court of Madras in The Additional Superintendent of Police, CBI v. G.B.Anbalgan2 and of the Hon'ble Apex Court in Nikhil Merchant v. Central Bureau of Investigation and Others (1 supra).
11. The trial court i.e., the III Additional Special Judge for CBI Cases, on hearing both the learned counsel for the petitioner and the learned Special Public Prosecutor for CBI observed that:
"the allegations against the petitioner are that he submitted false Income Tax Returns, inflated valuation report and also submitted false construction estimates at very high rates than the market value in order to get the loan sanctioned in conspiracy with A1, A2 and A9 and the same has to be determined during the course of trial of main case regarding genuineness of the documents submitted by the petitioner to the bank at the time of availing loan and repayment of loan made by him in One Time Settlement as alleged by him will not absolve him from his liability as the allegation constitute the criminal offence and the same has 2 2014 (4) MLJ (Crl.) 279 8 Dr.GRR, J crlrc_611_2019 to be determined during the course of trial of the case."
and dismissed the petition.
12. The learned counsel for the revision petitioner relied upon the judgment of the Hon'ble Apex Court in Nikhil Merchant v. Central Bureau of Investigation and Others (1 supra) case. In the said case also, the CBI filed charge-sheet against five (05) accused persons under Section 120-B read with Sections 420, 468 and 471 of IPC read with Sections 5(2) and 5(1)(d) of the Prevention of Corruption Act, 1947 and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988.
13. A civil suit was also filed by the Bank for recovery of the amount and in the civil suit, the Company and the Bank entered into compromise as the Company agreed to pay the amounts due as per the schedule mentioned in the concerned terms and the bank agreed to withdraw all the allegations made against the company. Consequent upon the compromise of the suit, A3 filed an application for discharge from the criminal complaint in respect of which charge-sheet was filed by the CBI. The said application was rejected by the Special Judge (CBI), Greater Bombay. The same was challenged by the appellant before the Bombay High Court. The Bombay High Court observing that the charge-sheet was filed not only under Section 420 of IPC which was compoundable but was also filed under Sections 467, 468 and 471 of IPC along with the provisions of Prevention of Corruption Act which were non- 9
Dr.GRR, J crlrc_611_2019 compoundable, rejected the appellant's prayer for discharge from the criminal cases.
14. In the appeal, the Hon'ble Apex Court observed that:
"In the instant case, the disputes between the Company and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues 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?"
"On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S.Joshi's 3 case 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."
15. The facts of the said case are squarely applicable to the facts of the present case.
16. But the learned Special Pubic Prosecutor for CBI contended that the judgment in Nikhil Merchant v. Central Bureau of Investigation and 3 2003 (2) RCR (Crl.) 888 10 Dr.GRR, J crlrc_611_2019 Another (1 supra) was referred to a larger bench by the Hon'ble Apex Court in Gian Singh v. State of Punjab and Others4 along with two other cases in B.S.Joshi and Others v. State of Haryana (3 supra) and Manoj Sharma v. State and Others5 opining that the said three (03) decisions are required to be re-considered, as in their opinion, something which could not be done directly also could not be done indirectly. In their prima-facie opinion, the non- compoundable offences cannot be permitted to be compounded by the court whether directly or indirectly and the said three (03) decisions didn't appear to be correctly decided.
17. The learned counsel for the petitioner filed a judgment in Gyan Singh v. State of Punjab and Others6 decided by the larger bench of three judges on 24.09.2012 wherein it was held that:
"54. Where High Court quashes a criminal proceeding having regard to the fact that dispute between the offender and victim has been settled although offences are not compoundable, it does so as in its opinion, continuation of criminal proceedings will be an exercise in futility and justice in the case demands that the dispute between the parties 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 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 4 2010 (13) SCR 1034 5 2008 (4) RCR (Crl.) 827 6 2012 10 SCC 303 11 Dr.GRR, J crlrc_611_2019 without permission of the Court. In respect of serious offences like murder, rape, dacoity, etc; or other offences of mental depravity under IPC 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 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 victim and the offender and 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 power, quash the criminal proceeding or criminal complaint or F.I.R if it is satisfied that on the face of such settlement, there is hardly any likelihood of offender being convicted and by not quashing the criminal proceedings, justice shall be casualty and ends of justice shall be defeated. The above list is illustrative and not exhaustive. Each case will depend on its own facts and no hard and fast category can be prescribed.
18. The learned Special Public Prosecutor for CBI on the other hand relied upon the judgment of the Hon'ble Apex Court in State of Maharashtra through Central Bureau of Investigation v. Vikram Anantrai Doshi and Others 7 wherein by considering the judgment in Gyan Singh v. State of Punjab and Others (6 supra) held that:
"availing of money from a nationalized bank in the manner, 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 7 (2014) 15 SCC 29 12 Dr.GRR, J crlrc_611_2019 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 kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly 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 amount and obtain a "no due certificate" and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the 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 that 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 13 Dr.GRR, J crlrc_611_2019 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 difficult to record. Be that as it may, the fact remains that the social interest would be on peril and the prosecuting agency, in these circumstances, cannot be treated as an alien to the whole case. Ergo, we have no other option but to hold that the order of the High Court is wholly indefensible."
19. In the light of the principles stated in the above cases, on considering the facts of this case as laid in the charge-sheet, A3 had conspired with late Sri.Goli Sridhar, Partner in M/S.Sunny Enclave Builders and Developers represented by the other partner, Smt. Goli.Sampurna, W/o. late Sri.Goli Sridhar (A9), and in pursuance of said conspiracy purchased a housing plot from A9 and entered into an agreement with A9 for construction of house on the said housing plot and furnished guarantee of A6 who was not at all related to A3 to secure the housing loan and A6 had submitted false Income Tax Returns and A3 obtained inflated valuation report from A2, Panel Valuer of Syndicate Bank and in conspiracy with A1, A2 and A9 availed housing loan of Rs.20,00,000/- against the mortgaged property and put the bank into financial risk by not paying the EMIs and not contributing margin money and when the bank got the property revalued found that the value of the property was less than the outstanding balance and cheated the Bank by use of false documents as genuine. On considering these facts, the trial court rightly dismissed the petition filed by the petitioner observing that there was prima-facie material available to frame 14 Dr.GRR, J crlrc_611_2019 charges against the petitioner-accused No.3 for the alleged offences under Sections 120-B, 420 and 471 of IPC.
20. This Court does not find any illegality or impropriety in the observations of the trial court in dismissing the petition filed by the revision petitioner for his discharge under Section 239 Cr.P.C.
21. In the result, the Criminal Revision Case is dismissed confirming the Order dated 21.02.2019 in Crl.M.P.No.324 of 2018 in C.C.No.20 of 2016 on the file of the III Additional Special Judge for CBI Cases, Hyderabad.
Miscellaneous applications pending, if any, shall stand closed.
______________________________ Dr. G.RADHA RANI, J 21st November, 2022 nsk.