C.N. Velankar & Others vs State Of U.P.Through Secy,Home ...
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HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

AFR
 
Reserved
 
Case :- U/S 482/378/407 No. - 679 of 2001
 
Applicant :- C.N. Velankar & Others
 
Opposite Party :- State Of U.P.Through Secy,Home Affairs,Vidhan Bhawan,Lko.
 
Counsel for Applicant :- T.C. Gupta,Ajai Singh,Arun Sinha,Dr. Ashok Nigam,Manindra Singh,Nagendra Mohan
 
Counsel for Opposite Party :- Govt.Advocate,Dr. L.P.Misra,Manish Bajpai,Manish Singh,P.L.Misra
 
Hon'ble Dinesh Kumar Singh,J.

1. The present petition under Section 482 Cr.P.C. has been filed by the petitioners for quashing of proceedings of Criminal Case No.238 of 2000/ Criminal Case No.377 of 2001, Police Station Sandila, District Hardoi pending in the Court of Judicial Magistrate, Hardoi and order of cognizance dated 05.03.2001 passed by II-Additional Chief Judicial Magistrate, Hardoi and all other consequential proceedings of the aforesaid case.

2. The petitioners are former employees of Credit Agricole Corporate and Investment Bank (CA-CIB) earlier known as Credit Agricole Indosuez/Calyon Bank (hereinafter referred to as 'the Bank') having its head office at Paris, France. The Bank has its operations in India. It possesses the status of a Scheduled Bank in India having its main Branch Office at Mumbai. It has also branches at Pune, Bombay, Delhi and Chennai. The petitioners were posted at Mumbai Branch of the Bank at the relevant point of time.

3. Opposite party No.2-SAF Yeast Co. Ltd. (hereinafter referred to as 'the Company') is a company incorporated under the Companies Act having its registered office at Mumbai. The company had opened a current account with Mumbai Branch of the Bank in relation to its business dealing from its registered office at Mumbai. The company has two units in India, one at Chiplun in Maharashtra and the other is at Sandila, U.P.

4. Necessary facts in brief, for disposal of the present petition are that on a request made by the company on 06.02.1997, the Bank agreed to act as advising Bank and Notified Sight of Letter of Credit No.11R1708411 dated 04.02.1997 for an amount of USD 7,02,000/- issued by Meespierson N.V. Amsterdam in Netherlands on behalf of the importer- M/s Schurmanns En Van Ginekin B.V.

5. On 20.02.1997, the company forwarded the original Letter of Credit along with their invoices dated 15.02.1997 in the sum of USD 5,59,621.92 with all relevant original documents. A checking brief was prepared by the Bank. Mr. Nene, an employee of the company, confirmed that there was no deduction on the invoice value. Thereafter, the Bank issued the Credit Advice crediting the Current Account of the Company with a total amount of Rs.1.98 crores (USD 559,621.92) after deducting the Bank's negotiated interest, commission and courier charges, with the advice "under reserve for any discrepancies that may be pointed out by the issuing bank". The aforesaid amount of Rs.1.98 crores (USD 559,621.92) was withdrawn by the Company on 28.02.1997. On 28.02.1997 invoice was raised by SVG stating that an amount of USD 101,535.25 had been debited on account of demurrage.

6. On 03.03.1997 on submission of documents under LC by the Bank to the issuing Bank at Amsterdam, the issuing Bank sent a telex to the Bank informing it that USD 101,535.25 was to be paid to the said Bank.

7. The Bank on 04.03.1997 informing the Company, forwarded the Telex message dated 03.03.1997 received from Amsterdam that an amount of USD 1,01,531.25 had been deducted by the issuing Bank on account of demurrage. The Bank, thereafter, on 08.03.1997 sent another letter and telex to the Company calling upon the Company to fund its account to meet the deficit amount of USD 1,01,531.25.

8. On 11.03.1997, the Company wrote to the Bank stating that another company by name NCS Estate had to pay demurrage charges and they had been called upon to reimburse the amount in question to the Bank.

9. On 14.03.1997, the Company wrote another letter to the Bank forwarding a cheque issued by NCS Estate for an amount of Rs.36.60 Lakhs to meet the amount deducted on account of demurrage charges.

10. On 17.03.1997, the Bank informed the Company that short fall in receipt of export proceeds was reported to RBI. The Company was required to sign Form A-2 as prescribed under the applicable norms. It was also informed that a debit entry for an amount of approximately Rs.36 Lakhs (USD 1,01,531.25) had been made. A cheque of Rs.36 Lakhs issued by NCS Estate was presented but it was returned unpaid.

11. After the cheque issued by NCS was returned unpaid with the remark "payment stopped by drawer" bank wrote to the Company on 02.04.1997 informing that the cheque of NCS had been returned unpaid and the Bank was not concerned with any third party and it called upon the Company to provide funds to adjust the debit balance in its current account which was around 38 Lakhs by that time on account of accruing interest. Thereafter, several communications were exchanged between the parties and the Bank. The Bank had been insisting the Company to make good the debit entry in its current account.

12. During the period from April, 1997 to July, 1998, some export proceeds approximately Rs.12.86 Lakhs had been received in Company's account with the Bank. The Bank had claimed that the export proceeds of Rs.12.86 Lakhs had been adjusted against the outstanding debit entry in the Company's account which was in accordance with the terms and conditions of the Bank account operation as well as letter dated 29.11.1995 to adjust the balance fund amount in Company's account against all or any indebtedness of the Company towards the Bank.

13. The Bank, thereafter, filed a summary suit for recovery of Rs.45,76,832/- which included Rs.36,42,703.34/- Principal amount and interest thereon @ 13% per annum. This suit was later on transferred to DRT, Mumbai. It is clear that the Bank did not give adjustment of the amount of Rs.12,86,115.80/- + Rs.98,681.34/- i.e. total sum of Rs.13,84,797.14/- which was received in the account of the Company with the Bank and the suit was filed for the entire amount.

14. The Company wrote to the Bank on 20.11.1999 that it would be presenting a cheque for Rs.13,79,710.42 at the SBI, Sandila Branch. The Company said that since the Bank had claimed the entire amount of Rs.36 Lakhs in the summary suit, the assumption would be that the funds would be available in Company's account with the Bank and, the said amount had not been adjusted by the Bank. The Company threatened the Bank to initiate criminal proceedings if its cheque for amount of Rs.13.79 Lakhs was not honoured by the Bank. Another similar letter was written on 22.11.1999 by the Company to the Bank.

15. On receipt of the aforesaid letters, the Bank's Advocates addressed communication dated 24.11.1999 to the Company stating that export proceeds received in the account of the Company had been adjusted against its outstanding debit balance from time to time, and due to over sight the amount adjusted towards the outstanding debit balance had also been claimed in the recovery suit. The Bank would be taking necessary steps for amending the plaint so as to rectify the said error and the amount adjusted towards the outstanding debit balance would be deducted from the claim in the suit.

16. The Company responded to the said communication of the Bank vide letter dated 26.11.1999 and once again threatened the Bank to initiate legal proceedings, if the cheque was not honoured by the Bank. Similar threatening letters were written on 03.12.1999 and 04.12.1999. Cheque for Rs.13.79 Lakhs presented by the Company was returned unpaid by the Bank for reason ''not arranged for''.

17. After the cheque got dishonored on 24.07.2000, the Company filed complaint under Section 156(3) Cr.P.C. before the learned C.J.M., Hardoi. Vide order of the same day i.e. 24.07.2000, learned C.J.M., Hardoi directed the S.H.O., Sandila to register and investigate the offence. Thus, an FIR at Case Crime No.238 of 2000 at Police Station, Sandila came to be registered on 08.08.2000 against the Bank and five other persons, employees of the Bank, who are the petitioners in the present petition. The allegations in the FIR were that the Company had deposited a cheque equivalent to the export proceeds received for valuable consideration on 22.11.1999 for Rs.13,79,710.42/- with notice to the Bank that the cheque would be presented to State Bank of India, Sandila Branch on 22.11.1999. Till date of notice there was no intimation from the Bank that any fund from the account of the Company had been appropriated towards Bank's claim. The claim of the Bank was subjudice before the Bombay High Court. The Bank had filed a suit on 20.03.1999 which did not indicate that any money from the account of the Company had been appropriated towards the claim in question, lest the amount claimed would have been substantially less. As the Bank had not adjusted the amount lying in the Bank account of the Company, the Company had right to withdraw the same.

18. The cheque deposited at SBI, Sandila Branch on 22.11.1999 for Rs.13,79,710.42 by the Company got dishonored with remark "insufficient fund". It was further alleged that the Bank had intimated to the Company that the amount lying in the Bank account of the Company had been appropriated towards its claim against the Company but the same had not been disclosed in the suit filed by the Bank regarding its alleged claim against the Company. It was alleged that the acts of the Bank and the other accused constitute criminal offence punishable under Section 409 IPC. It was further said that when the Bank had filed the claim for entire amount along with interest, the amount lying in the Bank account ought to have been allowed to be withdrawn but the Bank had illegally misappropriated the said amount of the Company. An FIR under Sections 409, 420, 477-A, 467, 471/34 IPC got registered as mentioned for these allegations.

19. On 21.08.2000, the investigating officer obtained non-bailable warrants and orders under Section 82 Cr.P.C. against the accused persons from the presiding officer. It is alleged that non-bailable warrants and orders under Section 82 Cr.P.C. had been obtained by the investigating officer in absence of any application. Non bailable warrant had been issued against one, Ms. Poonam Sandhu as well though she was not named as accused in the FIR and there was no allegation against her.

20. On 13.10.2000, officers of the Bank namely, Mr. Williams Roberts, Ms. Rita Kothare, Mr. Poonam Sandhu were arrested by the investigating officer. The petitioners came to know for the first time when the arrest was affected that some criminal case had been lodged by the Company at Sandila, Hardoi. Upon arrest, officers were released on bail on the application for remand moved by the investigating officer before the learned Metropolitan Magistrate, Mumbai.

21. Thereafter, on 21.10.2000 the Company wrote to the Bank, inter alia, stating that they could consider putting the matter to rest if corrective action was taken by the Bank and that the Bank should restore the amount adjusted by it. If that was done, the Company would make an application to the appropriate Court and authorities to close the ongoing criminal proceedings. It was also stated that the Company was willing to have a meeting with the Bank but not with their lawyers.

22. The Bank filed Writ Petition No.5238 (MB) of 2000 before this Court praying for quashing of the FIR. On 20.11.2000 the Bank filed an application before D.R.T. for amendment of the claim against the Company which was originally filed before the Bombay High Court for reducing its claim by the amount for which adjustments were made in the account of the Company during the period from April 1997 to July 1998.

23. A Division Bench of this Court on 22.11.2000 passed a detailed order in the Writ Petition No.5238(MB) of 2000 taking note of the fact that the day when the application under Section 156(3) Cr.P.C. was moved before the C.J.M., Hardoi, on the same day he passed an order directing the police to register the case and investigate the same. The investigating officer obtained warrants of arrest as well as warrants under Section 82/83 Cr.P.C. showing petitioner Nos. 2 to 6 as absconders and avoiding arrest. On warrants, there were no signatures or seal of the learned Magistrate and Smt. Poonam Sandhu was not named in the FIR but the warrant was also issued against her. The investigating officer had also sent a notice to the petitioners in which he directed the petitioners to appear before him along with the record and also produce Rs.13,79,710.40 in cash at Sandila on 25.11.2000. Learned Government Advocate was directed to ensure presence of the investigating officer along with the record. Registrar of this Court was directed to send a massage to District Judge, Hardoi immediately directing him to seal the file in respect of Crime No.238 of 2000, Police Station Sandila, District Hardoi pending in the Court of 1st A.C.J.M., Hardoi. District Judge was also directed to send file as well as order of C.J.M., Hardoi alleged to have been passed on application under Section 156(3) Cr.P.C. on 27.07.2000.

24. On 14.12.2000, Division Bench dealing with writ petition after looking at the record of the case which was called for noted that there was no application moved by the Investigating Officer for issuance of non-bailable warrants under Sections 82/83 Cr.P.C. against the petitioners. Application moved under Section 156(3) Cr.P.C. had no entry to show as to whether the same was moved in the Court or somewhere else. Division Bench opined that it appeard that the application was handed over to the 1st A.C.J.M. and A.C.J.M. passed order on the application directing the police to register the case.

25. A letter which was alleged to have been sent to the Commissioner of Police, Mumbai was allegedly written by C.J.M. but the seal was of A.C.J.M.-I. The Court was surprised to find out that there was nothing on record to show that on what ground non bailable warrants were issued directly in the case and how under Section 82/83 Cr.P.C. proceedings were initiated without any application or request by the Investigating Officer. Division Bench also noted that the jurisdiction of Sandila Police Station was with A.C.J.M.-I, then how C.J.M. passed order on 24.07.2000 and A.C.J.M.-I issued non-bailable warrant directly against the petitioners. The manner in which the proceedings took place created doubts, therefore, the Division Bench directed the District Judge, Hardoi to look into the matter and submit a report to this Court within two weeks. District Judge, Hardoi submitted inquiry report dated 15.01.2001 as directed by Division Bench in Writ Petition No.5238(MB) of 2000.

26. District Judge in his report had said that the jurisdiction for entertaining the application under Section 156 (3) Cr.P.C. was with A.C.J.M.-I and not with C.J.M. On 24.07.2000, when C.J.M. passed order on the application under Section 156(3) Cr.P.C. relating to Police Station Sandila, A.C.J.M.-I was present in the court on that day and was working and discharging his judicial duties. The offence mentioned in the application did not fall within the exclusive jurisdiction of C.J.M. as per distribution of work amongst the Magistrates and offences allegedly were related to the jurisdiction of A.C.J.M.-I who was only competent officer to pass any order on the application under Section 156(3) Cr.P.C. The C.J.M. was devoid of the jurisdiction to entertain application under Section 156(3) Cr.P.C. filed by the Company. The order dated 24.07.2000 was without jurisdiction. In respect of the matter that how the non bailable warrants and process under Section 82 Cr.P.C. were issued against the accused persons on 21.08.2000, the District Judge in his enquiry report submitted that till 21.08.2000, the investigating officer did not make any effort to arrest the accused and the issuance of non bailable warrants and process under Section 82 Cr.P.C. could not be justified just because the accused belonged to different State. Further, learned Magistrate ignoring the provisions of Section 82 Cr.P.C. head simultaneously issued non bailable warrants, and process under Section 82 Cr.P.C. without satisfying himself that whether the accused were absconding and hiding and warrants could not be executed. Learned District Judge was further of the opinion that the explanation of the learned Magistrate who issued warrants and process under Section 82 Cr.P.C. against Poonam Sandhu that in the statements recorded under Section 161 Cr.P.C. by the investigating officer, her name appeared and, therefore, the warrant was issued against her was not justifiable.

27. Regarding letter which had been sent to the Commissioner of Police, Mumbai, no comment was offered by the C.J.M. or by learned Magistrate who issued warrant and process under Section 82 Cr.P.C. These officers had tendered an apology and said that any order passed by them if it was in violation of their jurisdiction, the same had been passed in good faith and had prayed to be excused by this Court. Learned District Judge said that the apology tendered by them in their comments was for this Court to look into and consider.

28. On 07.02.2001 after the Bank submitted all the documents which were desired by the investigating officer, the investigating officer submitted charge sheet. The investigating officer did not take into consideration the documents submitted by the petitioners. The petitioners were named as accused in the charge-sheet. On 05.03.2001, ACJM-II took cognizance of the charges.

29. The Division Bench of this Court while dealing with Writ Petition on 16.03.2001 after considering the report submitted by the District Judge was of the opinion that a full fledge enquiry was needed in the matter for taking action, if necessary, against the persons concerned. The Division Bench also directed the Registrar of this Court to send a copy of the orders and report submitted by District Judge, Hardoi along with copy of orders passed by Division Bench on 22.11.2000 and 14.12.2000 to the Hon'ble The Chief Justice for information and necessary action. Copies of these orders were directed to be sent to Director General of Police to look into the matter including the conduct of the investigating officer who had issued notice directing the petitioners to deposit Rs.13 lacs and odd and thereafter, if necessary, take suitable action against the guilty persons.

30. On 17.04.2001, another Division Bench dealing with Writ Petition No.5238 (MB) 2000 took note of the fact that charge-sheet had been filed in the Court and cognizance had been taken on 05.03.2001, giving liberty to the petitioners to file a petition under Section 482 Cr.P.C., disposed of the writ petition as after filing of charge-sheet, the court was not inclined to interfere in the matter any further. Thereafter, the present petition was filed.

31. On 13.03.2003 the amendment application filed by the bank before the D.R.T. was allowed and the claim was reduced by a sum of Rs.12,86,115.80/-.

32. The Company filed an appeal against the order of allowing the amendment application. The appeal was dismissed. However, the relevant observation of learned D.R.A.T. is reproduced hereunder:-

"However, the bank's conduct certainly cannot be said to be that of accountability and responsibility. The bank has admitted that 'inadvertently', the bank has lodged claim for a much higher amount though its claim was certainly for a much lesser amount. This admission also has come much belatedly when the defendants lodged criminal prosecution against it. The conduct of the bank is blameworthy. I am therefore inclined to saddle the bank with the costs to be paid to the defendants, though I am dismissing the appeal..."

33. On 30.09.2003, the bank filed a review application against order dated 14.07.2003. However, the review application was dismissed.

34. The Bank filed Writ Petition No.2502 of 2003 against the order of the D.R.A.T. which was disposed of on 21.12.2003 with an observation that the Magistrate trying the criminal case at Hardoi should not get influenced by the observation made by the D.R.A.T.

35. D.R.T., Mumbai passed the final judgment on 01.04.2004 on the claim of the Bank against the Company. The D.R.T. allowed the claim of the Bank. However, D.R.T. held that credit for a sum of Rs.98,681.34/- was to be given to the Company.

36. Heard Mr. Maninder Singh, Dr. Ashok Nigam, Mr. Arvind Verma, learned Senior Advocates assisted by Sri Nagendra Mohan, Sri Aarohi Bhalla, Sri Prabhas Bajaj, Sri Ajai Singh, learned counsels appearing on behalf of the petitioners and Mr. Sanjay R. Hegde, Mr. Jyotindra Mishra, learned Senior Advocates and Mr. Manish Singh and Pranjal Kishore, learned counsels appearing on behalf of the respondents.

37. Mr. Maninder Singh, learned Senior Advocate appearing for the petitioners has submitted that the entire dispute between the parties was of a civil in nature. It was the company who had become liable to return the excess amount credited to its account on the basis of false representation made by its representative to the bank. Civil suit was filed by the bank on 10.03.1999 and when the civil proceedings were pending between the parties, there was no occasion for the company to file a criminal complaint invoking provisions of Section 156 (3) Cr.P.C. on 24.07.2000.

38. It is further submitted that from the date of opening of the current account of the Company in the year 1983 till the dispute in question arose in the year 1997, all transactions/correspondence/exchange of documents between the parties had taken place at Mumbai, which is the place of operation of Company's Bank as well. The Company is registered in Mumbai. Address of the Company in its account opening form is mentioned that of Mumbai. Subsequent communication had also been from its Mumbai office. The first ever communication from Sandila, Hardoi, U.P. was addressed by the Company on 25.01.2000 with malafide intention to create a non existent cause of action at Hardoi. He, therefore, submits that no cause of action had arisen at Sandila and the proceedings filed in court at Hardoi are nothing but an abuse of process of the Court and law actuated with malice.

39. He has further submitted that due to oversight and by an inadvertent mistake, the amount of export proceeds received in the current account of the Company from April 1997 to 1998 was not mentioned in the recovery suit filed by the Bank before the Bombay High Court. However, it was informed to the company by the bank that the amendment application would be filed for reducing the said amount from total claimed amount in the suit. Despite receipt of the letters dated 24.11.1999 and 22.2.2000 from the Advocates of the Bank in this regard, the Company had filed malafide complaint under Section 156 (3) Cr.P.C. on 24.07.2000. An amendment application for reducing the amount of Rs.12,86,115/- adjusted by the Bank towards its claim against the Company was filed in the D.R.T. which was allowed by the D.R.T. in terms of the prayer in the amendment application. Thus, no amount ever credited in the account of the Company with the Bank was misappropriated. In the decree passed by D.R.T. in favour of the Bank, the amount of Rs.12,86,115/- received in the account of the Company alongwith interest had been adjusted. He, therefore, submits that there was never any entrustment by the Company in favour of the Bank and no offence either by the Bank or by the petitioners had been committed either under Section 409 IPC or 420 IPC. Pending proceedings are in gross abuse of the process of the Court.

40. The complaint did not disclose true and correct facts in relation to letter of credit in question and the documents/ correspondence exchanged between the parties including the admission by the company. The correspondence from Sandila was engineered by the company as a part of malafide design to create a cause of action at Hardoi and it presented a cheque for Rs.13,79,710.42/- at State Bank of India, Sandila Branch at Hardoi knowing fully well that the funds were not in their account for the purpose of issuing notice under the Negotiable Instrument Act to the bank and then to justify the filing of the complaint at Hardoi. The Bank vide two letters dated 24.11.1999 and 20.2.2000, had specifically informed the Company regarding adjustment made from its account from time to time and that the bank was taking steps to correct/amend the claim for which the adjustment was inadvertently left out because of oversight. The complaint was filed in suppression of the material facts by making false assertions. The learned Magistrate did not apply judicious mind before issuing directions for registration of the FIR. The Magistrate did not consider facts and circumstances while entertaining application under Section 156(3) Cr.P.C. Further, under Section 156 (3) Cr.P.C., proceedings should not be encouraged for unscrupulous and unprincipled litigants.

41. To buttress the aforesaid submissions, learned Senior Advocate had relied on the judgment of the Supreme Court in the case of Priyanka Srivastava v. State of U.P. : (2015) 6 SCC 287. Paragraphs 27 and 28 of the aforesaid judgment are reproduced hereinbelow:-

"27. Regard being had to the aforesaid enunciation of law, it needs to be reiterated that the learned Magistrate has to remain vigilant with regard to the allegations made and the nature of allegations and not to issue directions without proper application of mind. He has also to bear in mind that sending the matter would be conducive to justice and then he may pass the requisite order. The present is a case where the accused persons are serving in high positions in the Bank. We are absolutely conscious that the position does not matter, for nobody is above the law. But, the learned Magistrate should take note of the allegations in entirety, the date of incident and whether any cognizable case is remotely made out. It is also to be noted that when a borrower of the financial institution covered under the Sarfaesi Act, invokes the jurisdiction under Section 156(3) CrPC and also there is a separate procedure under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, an attitude of more care, caution and circumspection has to be adhered to.

28. Issuing a direction stating "as per the application" to lodge an FIR creates a very unhealthy situation in society and also reflects the erroneous approach of the learned Magistrate. It also encourages unscrupulous and unprincipled litigants, like Respondent 3, namely, Prakash Kumar Bajaj, to take adventurous steps with courts to bring the financial institutions on their knees. As the factual exposition would reveal, Respondent 3 had prosecuted the earlier authorities and after the matter is dealt with by the High Court in a writ petition recording a settlement, he does not withdraw the criminal case and waits for some kind of situation where he can take vengeance as if he is the emperor of all he surveys. It is interesting to note that during the tenure of Appellant 1, who is presently occupying the position of Vice-President, neither was the loan taken, nor was the default made, nor was any action under the Sarfaesi Act taken. However, the action under the Sarfaesi Act was taken on the second time at the instance of the present Appellant 1. We are only stating about the devilish design of Respondent 3 to harass the appellants with the sole intent to avoid the payment of loan. When a citizen avails a loan from a financial institution, it is his obligation to pay back and not play truant or for that matter play possum. As we have noticed, he has been able to do such adventurous acts as he has the embedded conviction that he will not be taken to task because an application under Section 156(3) CrPC is a simple application to the court for issue of a direction to the investigating agency. We have been apprised that a carbon copy of a document is filed to show the compliance with Section 154(3), indicating it has been sent to the Superintendent of Police concerned."

42. The manner in which the order was passed under Section 156(3) Cr.P.C., non bailable warrants were issued, order for issuing process under Sections 82 and 83 of the Cr.P.C. and issuing warrants, have been noticed and commented upon by this Court in orders dated 22.11.2000, 14.12.2000 and 16.03.2001 passed in Writ Petition No.5238 (MB) of 2000 filed by the Bank which are much less than desired.

43. He further submits that no evidence at all was collected before filing the charge-sheet. It was filed in hurried manner just for creating a situation so that Writ Petition No.5238(MB) of 2000 was disposed of as the High Court usually does not entertain writ petition after the charge-sheet is filed.

44. It has further been submitted that the Bank was arrayed as accused No.1 in the complaint filed on 24.07.2000, however, in the charge-sheet the Bank has been dropped from the array of the accused. He, therefore, submits that in absence of the bank having been chargesheeted and dropped as accused, criminal proceedings against the petitioners who are the employees of the bank cannot be continued and deserves to be quashed.

45. He further submits that there is no concept of vicarious liability in the Indian Penal Code. The concept of vicarious liability has been incorporated by the Legislature in special laws such as Company Laws, Negotiable Instrument Act etc. In absence of specific allegation against the petitioners, to constitute offences under Sections 409, 420 read with 120 IPC against them, and the Bank not being an accused, the present proceedings even otherwise cannot be continued and are liable to be quashed.

46. He, therefore, submits that the impugned proceedings are nothing but an abuse of process of the court and law and to secure the ends of justice, this Court in exercise of its power under Section 482 Cr.P.C. should quash the impugned proceedings.

47. On the other hand, Mr. Sanjay R. Hedge, learned Senior Advocate for the respondents has submitted that averments made in the complaint clearly disclose commission of offence committed by the accused under Sections 409, 420, 120B IPC. He further submits that export proceeds of the Company from its Sandila Factory were regularly collected and deposited in current account of the Company with the Bank from 1996 to 1998. The bank filed Summary Suit No.1758 of 1999 against the company for recovery of Rs.45,76,832/- (Rs.36,42,703.63/- being the principal amount and interest there on @ 13% per annum). Thus, it is evident that export proceeds from Sandila factory deposited in the current account of the Company with the Bank were not adjusted by the Bank and thus, the said amount must be presumed to have been lying in the current account of the Company. The Company wrote letters to the Bank intimating that a cheque (Check No.408468) equivalent to export proceed receipts would be presented to the State Bank of India, Sandila branch. The Bank and its Directors were trustees of the funds of its account holders. The said cheque got dishonoured before that the Company had not received any information regarding any of its fund being adjusted by the bank towards its claim. This fact was not mentioned in the suit filed by the Bank before the Bombay High Court against the company and if the money lying in the current account of the Company had been set off, the claim amount under suit would have got substantially reduced. He further submits that the question which is relevant to be considered by this Court is whether the averments in the complaint spell out ingredients of criminal offence or not.

48. Revisional powers or inherent powers for quashing criminal proceedings at initial stage should be exercised sparingly and only where the allegations made in the complaint or FIR even if taken at the face value are accepted in totality do not prima facie disclose commission of an offence. He, therefore, submits that the Bank and the petitioners dishonestly had misappropriated the amount of Rs.12,86,115/- which was lying in the account of the Company with the Bank in fraudulent manner and, therefore, they had committed offences under Sections 409, 420, 120B IPC. He further submits that filing of the recovery suit by the Bank is of no consequence for the allegations in the complaint disclose commission of the offence by the petitioners. It is well settled that a transaction may have civil as well as criminal contours and if the averments in the complaint make out commission of criminal offence, proceedings cannot be quashed merely on the ground of civil dispute or proceedings is/are pending before a Civil/competent Court. The power of quashing of criminal proceeding should be exercised sparingly in the exceptional cases. The court should not embark upon an enquiry as to reliability or genuineness or otherwise regarding allegations made in the FIR/complaint in exercise of the extraordinary or inherent powers under Article 226/227 of the Constitution of India and Section 482 Cr.P.C.

49. He further submits that the offices of both the Bank and Company were located in the Bombay since the cheque was dishonoured in the Sandila branch of the S.B.I., Courts at Hardoi have jurisdiction to try the case. He further submits that Chapter XIII of the Cr.P.C. provides for jurisdiction of criminal courts in inquiries and trials and Section 177 Cr.P.C. provides that every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. Under the provisions of Section 178 Cr.P.C., it is provided that when an offence constitutes of several acts done in different local areas, it may be inquired into or tried by the court having jurisdiction over any of such local area.

50. Further, Section 181(4) of the Cr.P.C. provides that an offence of criminal misappropriation, breach of trust will be enquired into or tried by the court within whose jurisdiction accused was bound by law or by contract to render accounts or return the entrusted property, but failed to discharge that obligation.

51. Police after investigating the offence and collecting the evidence against the accused has filed charge sheet and learned Magistrate after considering the police report and other documents and satisfying himself that there is sufficient ground for proceeding against the accused has issued summons. Therefore, this Court is not required to interfere with the ongoing criminal proceedings against the accused.

52. He further submits that dropping of the Bank in the charge-sheet does not render the proceedings against the petitioners non maintainable. The petitioners were office bearers of the bank and have been arraigned as accused in their capacity as employees of the bank. Criminal breach of Trust can be maintained against the office bearers of the bank even if the bank is not a party in the proceedings. Section 409 IPC envisages crime by a Banker and not by a Bank. An employee of the bank can be prosecuted under Section 409 IPC individually. For an offence under Section 409 IPC, it is the intent of an employee which is imputed and, therefore, the employees can be held independently liable for such offence, even if such intent cannot be imputed to the Company or the bank.

53. In support of the aforesaid submission, he has placed reliance on the judgment of the Supreme Court in the case of Iridium India Telecom Ltd. versus Motorola Inc., (2011)1 SCC 744. Para 63 of the aforesaid judgment reads as under: -

"63. From the above it becomes evident that a corporation is virtually in the same position as any individual and may be convicted of common law as well as statutory offences including those requiring mens rea. The criminal liability of a corporation would arise when an offence is committed in relation to the business of the corporation by a person or body of persons in control of its affairs. In such circumstances, it would be necessary to ascertain that the degree and control of the person or body of persons is so intense that a corporation may be said to think and act through the person or the body of persons. The position of law on this issue in Canada is almost the same. Mens rea is attributed to corporations on the principle of "alter ego" of the company."

54. He has further submitted that the factual dispute and defence of the accused cannot be considered while deciding a petition filed under Section 482 Cr.P.C. for quashing of the criminal proceedings. The documents placed on record by the petitioners are in respect of unrelated transaction and are not sufficient for quashing of the proceedings.

55. In support of the aforesaid submission he has placed reliance on the judgment of the Supreme Court in the case of State of Bihar versus P.P. Sharma 1992 Supp 1 SCC 222. Paras 16 and 68 of aforesaid judgment read as under:-

"16. It is thus obvious that ''the annexures' were neither part of the police reports nor were relied upon by the Investigating Officer. These documents were produced by the respondents before the High Court along with the writ petitions. By treating ''the annexures' and affidavits as evidence and by converting itself into a trial court the High Court pronounced the respondents to be innocent and quashed the proceedings. The least we can say is that this was not at all a case where High Court should have interfered in the exercise of its inherent jurisdiction. This Court has repeatedly held that the appreciation of evidence is the function of the criminal courts. The High Court, under the circumstances, could not have assumed jurisdiction and put an end to the process of investigation and trial provided under the law. Since the High Court strongly relied upon "the annexures" in support of its findings, we may briefly examine these documents.

*********

68. Another crucial question is whether the High Court, in exercise of its extraordinary jurisdiction under Article 226 of the Constitution, would interfere and quash the charge-sheet. The High Court found that the documents relied on by the respondents/accused were not denied by the State by filing the counter-affidavit. Therefore, they must be deemed to have been admitted. On that premise the High Court found that no prima facie case was made out on merits and chances of ultimate conviction is "bleak". The court is not passive spectator in the drama of illegalities and injustice. The inherent power of the court under Article 226 of the Constitution of India is permitted to be resorted to. When the documents relied on by the respondents "demonstrate that no prima facie offence is made out on the face value of those materials, then the criminal prosecution should not be allowed to continue and so it should be quashed", and "in such a situation and circumstances the petitioners who had got a right under the Constitution for the protection of their liberty have rightly approached this Court and this Court in these circumstances has no option but to grant the relief by quashing the FIR and both the charge-sheets". Accordingly it quashed them. If this decision is upheld, in my considered view startling and disastrous consequence would ensue. Quashing the charge-sheet even before cognizance is taken by a criminal court amounts to "killing a stillborn child". Till the criminal court takes cognizance of the offence there is no criminal proceedings pending. I am not allowing the appeals on the ground that alternative remedies provided by the Code as a bar. It may be relevant in an appropriate case. My view is that entertaining the writ petitions against charge-sheet and considering the matter on merit in the guise of prima facie evidence to stand an accused for trial amounts to pre-trial of a criminal trial under Article 226 or 227 even before the competent Magistrate or the Sessions Court takes cognizance of the offence. Once the proceedings are entertained the further proceedings get stayed. Expeditious trial of a criminal case is the cardinal rule. Delay feeds injustice to social order and entertaining writ petitions would encourage to delay the trial by diverse tricks. It is not to suggest that under no circumstances a writ petition should be entertained. As was rightly done by Rajasthan High Court in this case at the instance of the directors of the company, wisdom lies to keep the hands back and relegate the accused to pursue the remedy under the Code. In several cases this Court quashed the criminal proceedings on the sole ground of delay. In a case FIR filed in 1954 for violation of the provisions of the Customs Act and Foreign Exchange Regulation Act was challenged in the Allahabad High Court. It was deliberately kept pending in the High Court and in this Court till 1990. The accusation was violation of law by named persons in the name of non-existing firm. The FIR was quashed in the year 1990 by another Bench of which I was a member solely on the ground of delay. He achieved his object of avoiding punishment. This would show that an accused with a view to delay the trial, resorts to writ proceedings, raises several contentions including one on merit as vehemently persisted by Sri Jain to consider this case on merits and have the proceedings kept pending. The result would be that the people would lose faith in the efficacy of rule of law. Documents relied on by the respondents are subject to proof at the trial and relevancy. If proved to be true and relevant then they may serve as a defence for the respondents at the trial. The State quite legitimately and in my view rightly did not choose to file the counter-affidavit denying or contradicting the version of the respondents, in those documents. The commission of offence cannot be decided on affidavit evidence. The High Court has taken short course "in annihilating the still born prosecution" by going into the merits on the plea of proof of prima facie case and adverted to those facts and gave findings on merits. Grossest error of law has been committed by the High Court in making pre-trial of a criminal case in exercising its extraordinary jurisdiction under Article 226. After the charge-sheet was filed, the FIR no longer remains sheet-anchor. The charge-sheet and the evidence placed in support thereof form the base to take or refuse to take cognizance by the competent court. It is not the case that no offence has been made out in the charge-sheets and the first information report. It is, therefore, not necessary to consider all the decisions dealing with the scope of the power of the High Court either under Section 482 CrPC or Article 226 of the Constitution to quash the first information report."

56. He has placed reliance on the judgment of the Supreme Court in the case of Ravindra Madanlal Goenka versus Ram Raghav Spinners (P) Ltd., (2009) 11 SCC 529. Paras 18 and 19 of the aforesaid judgment read as under:-

"18. While entertaining a petition under Section 482 CrPC, the materials furnished by the defence cannot be looked into and the defence materials can be entertained only at the time of trial. It is a well-settled position of law that when there are prima facie materials available, a petition for quashing the criminal proceedings cannot be entertained. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases.

19. While considering the facts of the present case, we are of the considered opinion that the present case is not one of those extreme cases where criminal prosecution can be quashed by the Court at the very threshold. A defence case is pleaded but such defence is required to be considered at a later stage and not at this stage. The appellants would have ample opportunity to raise all the issues urged in this appeal at an appropriate later stage, where such pleas would be and could be properly analysed and scrutinised."

57. He has further placed reliance on the judgment of the Supreme Court in the case of Md. Allauddin Khan versus State of Bihar and Ors. : 2019 SCC Online SC 539. Para 17 of the aforesaid judgment is reproduced hereinbelow:-

"17. In our view, the High Court had no jurisdiction to appreciate the evidence of the proceedings under Section 482 of the Code Of Criminal Procedure, 1973 (for short "Cr.P.C.") because whether there are contradictions or/and inconsistencies in the statements of the witnesses is essentially an issue relating to appreciation of evidence and the same can be gone into by the Judicial Magistrate during trial when the entire evidence is adduced by the parties. That stage is yet to come in this case."

58. I have considered the submissions carefully and gone through the record.

59. The facts are not much in dispute. Sum and substance of allegations in the complaint is that the Bank filed recovery suit for its admitted claim against the Company without adjusting the amount of Rs.12,86,115/- which was received as export proceeds in the current account of the company during 1996 and 1998. The Company deposited a cheque drawn on its Current Account at the State Bank of India, Branch at Sandila, District Hardoi. The said cheque got dishonoured as the Bank had adjusted the amount lying in the current account of the Company. The stand of the Bank is that by an inadvertent mistake and oversight the said amount was not initially set off from its total claim against the company in the suit filed by the bank before the Bombay High Court but before filing the complaint, it was intimated in writing to the Company that by an oversight and inadvertent mistake the claim of the bank was not reduced by the amount adjusted and the Bank would be taking appropriate steps to amend its claim and the said claim got amended before the D.R.T.

60. The question for consideration is that whether the petitioners had mens rea for committing the alleged offences. Considering the facts set out in the preceding paragraphs whether the petitioners had committed the offence under Section 409 IPC or it can be said that they had dishonestly misappropriated the funds of export proceeds received in the current account of the Company with the Bank as the bank failed initially to adjust the said amount and reduced its claim against the Company in the suit filed before Bombay High Court and whether any offence had been committed within the territorial jurisdiction of the Courts at Hardoi. In view of the admitted fact that the export proceeds of the Company to the tune of Rs.12,86,115/- were deposited in the current account maintained with the Bank and the alleged misappropriation had taken place at Mumbai.

61. Section 409 IPC is reproduced hereinbelow:- Section 409 IPC deals with criminal breach of trust by a public servant, or by a banker, merchant or agent. In order to bring an application of the said provision

"409. Criminal breach of trust by public servant, or by banker, merchant or agent.--Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with 1[imprisonment for life], or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.

Section 409 IPC deals with criminal breach of trust by public servant, or by banker, merchant or agent. In order to bring an application of the said provision, entrustment has to be proved. In order to sustain conviction under Section 409 IPC, two ingredients are to be proved:- (a) the accused, a public servant, or banker or agent was entrusted with property of which he is duty bond to account for; and (b) the accused has committed criminal breach of trust.

62. The definition of 'criminal breach of trust' is provided under Section 405 IPC. Section 409 IPC is in essence criminal breach of trust by category of persons mentioned in Section 409 IPC itself. Ingredients of criminal breach of trust are:-

(i) entrusting any person with property, or with any dominion over property;

(ii) the person entrusted (a) dishonestly misappropriating or converting to his own use that property; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so as to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged; or (ii) of any legal contract made touching the discharge of trust.

Thus, to bring home the accusations under Section 405 IPC, it is required to prove conjointly; (i) entrustment and (ii) whether accused was actuated by dishonest intention or not, misappropriated it or converted it to his own use to the detriment of the persons who entrusted it.

63. Coming to the facts of the present case, it would be apt to note that the complaint filed by the Company does not disclose that in what manner the petitioners who are the employees of the Bank have misappropriated the proceeds deposited in its current account maintained with the Bank. Allegations are against the Bank and the bank has been dropped by the investigating officer while filing the charge sheet.

64. The Supreme Court in the case of Anand Kumar Mohatta versus State (Govt. of NCT of Delhi) : 2018 SCC OnLine SC 2447 in respect of criminal breach of trust in paras 23 to 28 has observed as under:-

23. The essence of the offence lies in the use of the property entrusted to a person by that person, in violation of any direction of law or any legal contract which he has made during the discharge of such trust. In the present case, the amount of Rs. One crore was paid by the complainant-Respondent to the Appellants as an interest free deposit on the signing of the agreement. It was liable to be refunded to the complainant simultaneously on handing over of possession of the area of the owner's share to the owner in the group housing complex vide Clause 30(b) of the agreement dated 03.06.1993.

24. Two things are significant in the transaction between the parties. Firstly, that the occasion for returning the amount i.e. the developer handing over the possession of the area of the owner's share to the owner in the group housing complex, has not occurred. According to the Appellants, the contract stands frustrated because no group housing can be legally built on 20 Feroz Shah Road, New Delhi since it falls in the Lutyens Bungalow Zone. Appellant No. 1 has therefore, terminated the contract. Further, the amount has been retained by him as a security because not only is there any handing over of constructed portion, the complainant has also got into part possession of the property and has not handed it back. Also, the complainant has failed to get the property vacated from the tenant's possession.

25. We, thus find that it is not possible to hold that the amount of Rs. One crore which was paid along with the development agreement as a deposit can be said to have been entrustment of property which has been dishonestly converted to his own use or disposed of in violation of any direction of law or contract by the Appellant. The Appellants have not used the amount nor misappropriated it contrary to any direction of law or contract which prescribes how the amount has to be dealt with.

26. Going by the agreement dated 03.06.1993, the amount has to be returned upon the handing over of the constructed area of the owner which admittedly has not been done. Most significantly the Respondent No. 2 has not demanded the return of the amount at any point of time. In fact, it is the specific contention of the Respondent No. 2 that he has not demanded the amount because the agreement is still in subsistence.

27. We do not see how it can be contended by any stretch of imagination that the Appellants have misappropriated the amount or dishonestly used the amount contrary to any law or contract. In any case, we find that the dispute has the contours of a dispute of civil nature and does not constitute a criminal offence.

28. Having given our anxious consideration, we are of the view that assuming that there is a security deposit of Rs. One Crore and that he has misappropriated the dispute between the two parties can only be a civil dispute.

65. Considering the allegations in the complaint, it would be difficult to conclude that the petitioners have misappropriated the amount deposited in the bank account of the Company as export proceeds or they had dishonestly used the amount contrary to any law or contract.

66. The Supreme Court in the case of Punjab National Bank versus Surendra Prasad Sinha : (1993) Suppl 1 SCC 499 in Paras 5 and 6 has held as under:-

"5. Admittedly, as the principal debtor did not repay the debt. The bank as creditor adjusted at maturity of the F.D.R., the outstanding debt due to the bank in terms of the contract and the balance sum was credited to the Savings Bank account of the respondent. The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act 36 of 1963, for short "the Act" only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation is that the right itself is destroyed. For example under Section 27 of the Act a suit for possession of any property becoming barred by limitation, the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. Though the right to enforce the debt by judicial process is barred under Section 3 read with the relevant article in the schedule, the right to debt remains. The time barred debt does not cease to exist by reason of Section 3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What Section 3 refers is only to the remedy but not to the right of the creditors. Such debt continues to subsist so long as it is not paid. It is not obligatory to file a suit to recover the debt. It is settled law that the creditor would be entitled to adjust, from the payment of a sum by a debtor, towards the time barred debt. It is also equally settled law that the creditor when he is in possession of an adequate security, the debt due could be adjusted from the security in his possession and custody. Undoubtedly the respondent and his wife stood guarantors to the principal debtor, jointly executed the security bond and entrusted the F.D.R. as security to adjust the outstanding debt from it at maturity. Therefore, though the remedy to recover the debt from the principal debtor is barred by limitation, the liability still subsists. In terms of the contract the bank is entitled to appropriate the debt due and credit the balance amount to the savings bank account of the respondent. Thereby the appellant did not act in violation of any law, nor converted the amount entrusted to them dishonestly for any purpose. Action in terms of the contract expressly or implied is a negation of criminal breach of trust defined in Section 405 and punishable under Section 409 IPC. It is neither dishonest, nor misappropriation. The bank had in its possession the fixed deposit receipt as guarantee for due payment of the debt and the bank appropriated the amount towards the debt due and payable by the principal debtor. Further, the F.D.R. was not entrusted during the course of the business of the first appellant as a Banker of the respondent but in the capacity as guarantor. The complaint does not make out any case much less prima facie case, a condition precedent to set criminal law in motion. The Magistrate without adverting whether the allegation in the complaint prima facie makes out an offence charged for, obviously, in a mechanical manner, issued process against all the appellants. The High Court committed grave error in declining to quash the complaint on the finding that the Bank acted prima facie high-handedly.

6. It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complaint as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta."

67. The Supreme Court in the paras 21 to 23 in the case of Asoke Basak v. State of Maharashtra, (2010) 10 SCC 660 has held as under:-

21. It is plain that for constituting an offence of criminal breach of trust, the following ingredients must be satisfied:

a) a person should have been entrusted with property, or entrusted with dominion over property;

(b) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or wilfully suffer any other person to do so;

(c) that such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.

(See Indian Oil Corpn. v. NEPC India Ltd. [(2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] , SCC p. 751, para 22, Onkar Nath Mishra v. State (NCT of Delhi) [(2008) 2 SCC 561 : (2008) 1 SCC (Cri) 507] , Pratibha Rani v. Suraj Kumar [(1985) 2 SCC 370 : 1985 SCC (Cri) 180] , Rashmi Kumar v. Mahesh Kumar Bhada [(1997) 2 SCC 397 : 1997 SCC (Cri) 415] and R. Venkatkrishnan v. CBI [(2009) 11 SCC 737 : (2010) 1 SCC (Cri) 164] .)

22. In the instant case, we are unable to gather from the complaint any averment which may suggest that Rs. 5 lakhs was entrusted to the appellant, either in his personal capacity or as the Chairman of MSEB and that he misappropriated it for his own use. The basis of the allegation is that the appellant had caused MSEB to refuse return of the money to the complainant in order to wilfully and dishonestly deprive the complainant of its use. In this regard, it would be useful to refer to the following observations in S.K. Alagh case [(2008) 5 SCC 662 : (2008) 2 SCC (Cri) 686] : (SCC p. 667, para 19)

"19. As, admittedly, drafts were drawn in the name of the Company, even if the appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself."

23. Admittedly, in the present case, the said amount was deposited by the complainant company with MSEB and there is nothing in the complaint which may even remotely suggest that the complainant had entrusted any property to the appellant or that the appellant had dominion over the said money of the complainant, which was dishonestly converted by him to his own use, so as to satisfy the ingredients of Section 405 IPC. In the absence of any such specific averment demonstrating the role of the accused in the commission of the offence, we find it difficult to hold that the complaint, even ex facie, discloses the commission of an offence by the appellant under Section 409 IPC, punishable under Section 406 IPC.

68. The Supreme Court in paras 15 and 16 in the case of GHCL Employees Stock Option Trust v. India Infoline Ltd., (2013) 4 SCC 505 following has held:-

15. In Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692 : 1988 SCC (Cri) 234] this Court held as under: (SCC p. 695, para 7)

"7. The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage."

16. In Punjab National Bank v. Surendra Prasad Sinha [1993 Supp (1) SCC 499 : 1993 SCC (Cri) 149 : AIR 1992 SC 1815] , a complaint was lodged by the complainant for prosecution under Sections 409, 109 and 114 IPC against the Chairman, the Managing Director of the Bank and a host of officers alleging, inter alia, that as against the loan granted to one Sriman Narain Dubey, the complainant and his wife stood as guarantors and executed security bond and handed over fixed deposit receipt. Since the principal debtor defaulted in payment of debt, the Branch Manager of the Bank on maturity of the said fixed deposit adjusted a part of the amount against the said loan. The complainant alleged that the debt became barred by limitation and, therefore, the liability of the guarantors also stood extinguished. It was, therefore, alleged that the officers of the Bank criminally embezzled the said amount with dishonest intention to save themselves from financial obligation. The Magistrate without adverting whether the allegations in the complaint prima facie make out an offence charged for, in a mechanical manner, issued the process against all the accused persons. The High Court refused to quash the complaint and the matter finally came to this Court. Allowing the appeal and quashing the complaint, this Court held as under: (Surendra Prasad Sinha case [1993 Supp (1) SCC 499 : 1993 SCC (Cri) 149 : AIR 1992 SC 1815] , SCC pp. 504-05, para 6)

"6. It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find out whether the accused concerned should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complaint as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta."

69. The Supreme Court in the case of Binod Kumar v. State of Bihar, (2014) 10 SCC 663 in paras 14 to 18 has held as under:-

14. At this stage, we are only concerned with the question whether the averments in the complaint taken at their face value make out the ingredients of criminal offence or not. Let us now examine whether the allegations made in the complaint when taken on their face value, are true and constitute the offence as defined under Section 406.

15. Section 405 IPC deals with criminal breach of trust. A careful reading of Section 405 IPC shows that a criminal breach of trust involves the following ingredients:

(a) a person should have been entrusted with property, or entrusted with dominion over property;

(b) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or wilfully suffer any other person to do so;

(c) that such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.

16. Section 406 IPC prescribes punishment for criminal breach of trust as defined in Section 405 IPC. For the offence punishable under Section 406 IPC, prosecution must prove:

(i) that the accused was entrusted with property or with dominion over it; and

(ii) that he (a) misappropriated it, or (b) converted it to his own use, or (c) used it, or (d) disposed of it.

The gist of the offence is misappropriation done in a dishonest manner. There are two distinct parts of the said offence. The first involves the fact of entrustment, wherein an obligation arises in relation to the property over which dominion or control is acquired. The second part deals with misappropriation which should be contrary to the terms of the obligation which is created.

17. Section 420 IPC deals with cheating. The essential ingredients of Section 420 IPC are:

(i) cheating;

(ii) dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security, and

(iii) mens rea of the accused at the time of making the inducement.

18. In the present case, looking at the allegations in the complaint on the face of it, we find that no allegations are made attracting the ingredients of Section 405 IPC. Likewise, there are no allegations as to cheating or the dishonest intention of the appellants in retaining the money in order to have wrongful gain to themselves or causing wrongful loss to the complainant. Excepting the bald allegations that the appellants did not make payment to the second respondent and that the appellants utilised the amounts either by themselves or for some other work, there is no iota of allegation as to the dishonest intention in misappropriating the property. To make out a case of criminal breach of trust, it is not sufficient to show that money has been retained by the appellants. It must also be shown that the appellants dishonestly disposed of the same in some way or dishonestly retained the same. The mere fact that the appellants did not pay the money to the complainant does not amount to criminal breach of trust.

70. The Supreme Court in the case of State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 while delineating the powers of High Court under Section 482 Cr.P.C. for quashing the criminal proceedings in para 102 has illustratively enumerated the circumstances where the High Court should exercise the power to quash the proceedings.

"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."

71. It would also be relevant to mention the judgment on the issue rendered by the Supreme Court of India in Rajiv Thappar and others vs. Madan Lal Kapoor (2013) 3 SCC 330. In Rajiv Thappar's case (supra), the following has been held:-

29. The issue being examined in the instant case is the jurisdiction of the High Court under Section 482 CrPC, if it chooses to quash the initiation of the prosecution against an accused at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charges. These are all stages before the commencement of the actual trial. The same parameters would naturally be available for later stages as well. The power vested in the High Court under Section 482 CrPC, at the stages referred to hereinabove, would have far-reaching consequences inasmuch as it would negate the prosecution's/complainant's case without allowing the prosecution/complainant to lead evidence. Such a determination must always be rendered with caution, care and circumspection. To invoke its inherent jurisdiction under Section 482 CrPC the High Court has to be fully satisfied that the material produced by the accused is such that would lead to the conclusion that his/their defence is based on sound, reasonable, and indubitable facts; the material produced is such as would rule out and displace the assertions contained in the charges levelled against the accused; and the material produced is such as would clearly reject and overrule the veracity of the allegations contained in the accusations levelled by the prosecution/complainant. It should be sufficient to rule out, reject and discard the accusations levelled by the prosecution/complainant, without the necessity of recording any evidence. For this the material relied upon by the defence should not have been refuted, or alternatively, cannot be justifiably refuted, being material of sterling and impeccable quality. The material relied upon by the accused should be such as would persuade a reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court would persuade it to exercise its power under Section 482 CrPC to quash such criminal proceedings, for that would prevent abuse of process of the court, and secure the ends of justice.

30. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 CrPC:

30.1.Step one: whether the material relied upon by the accused is sound, reasonable, and indubitable i.e. the material is of sterling and impeccable quality?

30.2.Step two: whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false?

30.3.Step three: whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant?

30.4.Step four: whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?

30.5. If the answer to all the steps is in the affirmative, the judicial conscience of the High Court should persuade it to quash such criminal proceedings in exercise of power vested in it under Section 482 CrPC. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as proceedings arising therefrom) specially when it is clear that the same would not conclude in the conviction of the accused.

72. Considering the averments of the complaint, I am of the view that the facts narrated in the preceding paragraphs do not disclose commission of offences by the petitioners under Sections 409, 420 read with 120-B IPC. Further, cause of action for filing the complaint at Hardoi also did not arise in view of the fact that the alleged misappropriation did not take place at Sandila, Hardoi but if at all it was in Mumbai and, therefore, learned Magistrate did not have jurisdiction to entertain the application filed under Section 156(3) Cr.P.C. and direct registration and investigation of the offence. Civil dispute was already pending when the current proceedings were initiated by filing complaint under Section 156(3) Cr.P.C. and the manner in which the proceedings were initiated have been commented upon by this Court in three orders dated 22.11.2000, 14.12.2000 and 16.03.2001 passed in the Writ Petition No.5238 (MB) of 2000 and, therefore, I do not want to say anything further on the issue.

73. Considering the entirety of the facts of the case and the law laid down by the the Supreme Court, continuance of the proceedings against the petitioner would be in abuse of process of the Court and in interest of justice, proceedings of Criminal Case No.238 of 2000/ Criminal Case No.377 of 2001, Police Station Sandila, District Hardoi pending in the Court of Judicial Magistrate, Hardoi and order of cognizance dated 05.03.2001 passed by II-Additional Chief Judicial Magistrate, Hardoi and all other consequential proceedings are hereby quashed.

74. Thus, the petition is allowed.

Order Date:-02.07.2019

prateek