O.P. Bhatia vs The State Of Nct & Ors.
2009 Latest Caselaw 2970 Del

        IN THE HIGH COURT OF DELHI

Crl.M.C. No.348/2009 & Crl.M.A. No.1317/2009

              Date of decision:     3rd August, 2009

   O.P. Bhatia                    ... Petitioner
                   through: Mr.Ashok Bhalla, Advocate

                     VERSUS

   The State of NCT & Ors.         ....Respondents

through: Mr. Anindya Malhotra, Adv. & Mr. Harish Gulati, Adv. for the CBI.

Mr. Rajat Sharma, Adv.

for the respondent/Bank.

Mr. N.A. Khan, Adv. for Respondent No.3.

WITH

Crl.M.C. No.501/2009 & Crl.M.A.1887/2009

O.P. Bhatia ... Petitioner through: Mr.Ashok Bhalla, Advocate

VERSUS

C.B.I. & Ors.

....Respondents through: Mr. Anindya Malhotra, Adv. & Mr. Harish Gulati, Adv. for the CBI.

Mr. Rajat Sharma, Adv.

for the respondent/Bank.

Mr. N.A. Khan, Adv. for Respondent No.3.

AND

Crl.M.C. No.559/2009 & Crl.M.A.2105/2009

O.P. Bhatia ... Petitioner through: Mr.Ashok Bhalla, Advocate

VERSUS

C.B.I. & Ors.

....Respondents through: Mr. Anindya Malhotra, Adv. & Mr. Harish Gulati, Adv. for the CBI.

Mr. Rajat Sharma, Adv.

for the respondent/Bank.

Mr. N.A. Khan, Adv. for Respondent No.3.

CORAM:

HON'BLE MS. JUSTICE GITA MITTAL

1. Whether reporters of local papers may be allowed to see the Judgment? Yes

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes

GITA MITTAL, J

1. By these petitions under Section 482 of the Code of

Criminal procedure, the petitioner prays for quashing of

three charge sheets filed by the Central Bureau of

Investigation pursuant to cases registered alleging

commission of various offences under the Indian Penal Code

and the Prevention of Corruption Act, 1988.

2. The petitioner herein at the relevant time in 1990, was

working as a manager in the New Bank of India and was

posted in its East of Kailash branch. This bank was

amalgamated with the Punjab National Bank in terms of the

Government of India notification dated 4th September, 1993.

3. On 6th April, 1990, the petitioner is alleged to have

sanctioned the following three loans

(i) loan for the amount of Rs.1,00,000/- to respondent no.3

in Crl.M.C. No.348/2009;

(ii) loan for the amount of Rs.1,75,000/- to Shri G.K. Kandil,

respondent no.3 in Crl.M.C. No.501/2009; and

(iii) between 2nd April, 1990 & 23rd April, 1990 sanctioned

loan amount totaling Rs.8,47,675/- in favour of Shri

Ramesh Kumar Arora, respondent no.3 in Crl.M.C.

No.559/2009.

4. It is the case of the prosecution that so far as loan at

serial nos.1 & 2 are concerned, it is further alleged that Shri

O.P. Bhatia, petitioner herein placed carbon copy of notices

under Section 38 of the Insurance Act, 1938 and the

forwarding letters addressed to unit no.11-D of the Life

Insurance Corporation on record creating false evidence of

dispatch of the notices and the said letters even though they

were never sent. The allegation is that thereby the record of

the bank was falsified.

5. So far as the loan at serial no.3 is concerned, it is

further alleged that a loan of Rs.50,000/- was sanctioned on

2nd April, 1990 against security of six LIC policies having the

surrender value of Rs.65,000/-; loan of Rs.1.60 lakhs was

sanctioned on 4th April, 1990 by the petitioner against

security of ten LIC policies having surrender value of Rs.1.78

lakhs and Rs.3,40,000/- of Rs.85,000/- each were sanctioned

on 16th April, 1990 by petitioner against security of four

policies having the surrender value of Rs.94,500/-;

Rs.94,700/-; Rs.95,000/- and Rs.95,100/- respectively. A

loan of Rs.2,00,000- was sanctioned on 8th April, 1990

without mentioning any LIC policy while a loan of Rs.97,600/-

was sanctioned on 23rd April, 1990 without mentioning any

LIC policy.

However, not a single LIC policy was taken by the

petitioner from the respondent no.3 nor were any of the

policies assigned in favour of the bank as security. Not a

single policy was sent to the LIC for registration of

assignment and false documents were placed on record.

Earlier, Indira Vikas Patras were mentioned on the ledger

sheet which were later altered to read as LIC policy for the

purposes of sanction of loan.

6. In this background, the following cases were registered

by the Central Bureau of Investigation:-

(a) In respect of transactions at serial no.(i) in para 3, an

FIR being RC No.2(S)/92-DLI was registered by the Central

Bureau of Investigation on 1st January, 1992 and a charge-

sheet was filed by the investigating agency in the year 1993.

(b) So far as the transactions at serial no.(ii) in para 3 are

concerned, the Central Bureau of Investigation registered

FIR being RC No.2(S)/92-DLI on 1st January, 1992.

Chargesheet was filed in 1993 and upon hearing counsel for

the parties and charges stand framed on 7th September,

1999.

(c) So far as the transactions at serial no.(iii) in para 3 are

concerned, an FIR being RC No.2(S)/92-DLI was registered by

the Central Bureau of Investigation being RC No.2(S)/92-DLI

again on 1st January, 1992. Chargesheet was filed in the

case in 1993 and charges were framed by the court on 9th

February, 2000.

7. In this background, the petitioner filed three petitions

assailing the filing of the three chargesheets dated 1st

January, 1992 by three separate petitions. So far as the

transactions noted at serial no.(i) are concerned, the

petitioner filed Crl.M.C. No.348/2009 under Section 482 of

the Code of Criminal Procedure making a prayer for quashing

of the charge-sheet no.16/1993 in RC No.2(S)/92-DLI dated

1st January, 1992 primarily on the ground that the same

stood compounded.

On the same grounds, the petitioner filed Crl.M.C.

No.501/2009 in respect of the transactions at serial no.2

above being a petition under Section 482 of the Cr.P.C. inter

alia making a prayer for quashing of the charge-sheet

no.15/1993 in RC No.2(S)/92-DLI dated 1st January, 1992

primarily on the ground that the same stood compounded on

the same grounds.

A third petition being Crl.M.C. No.559/2009 was filed

under Section 482 of the Code of Criminal Procedure praying

for quashing of the charge-sheet no.12/1993 in RC

No.2(S)/92-DLI dated 1st January, 1992 again mainly on the

ground that the same stood compounded on the same

grounds.

8. As per the chargesheets which have been filed on

record, it is stated that the investigation has revealed that

the discretionary powers for sanction of advance against

security of life insurance policies which were to the extent of

Rs.50,000/- which had earlier been conferred on the branch

manager of Scale II, stood withdrawn vide letter dated 1st

January, 1989 from the regional office and the head office

circular no.LD/116/89 dated 27th November, 1989. The

submission is that as on the date of the sanction of the

above loans by the petitioner, he had no power or authority

to do so. The chargesheet further states that no loan

application or loan was obtained in the cases and the

documents taken in the cases were not complete. The

petitioner is also alleged to have destroyed the register

where details of the loan documents including the LIC

policies are maintained to avoid detection to his fraudulent

acts. Other illegal acts including making of the endorsement

of false statements on the bank records as well as

manipulation of ledger sheets of the loan etc., are attributed

to the petitioner. In this background, in all three cases it was

held that the petitioner had entered into criminal

conspiracies with the respondent no.3 in each of the case in

the year 1990 and committed offences punishable under

Section 120-B read with Sections 420, 467, 468, 471 and

477-A of IPC and Section 13(2) read with Section 13(I)(D) of

the Prevention of Corruption Act, 1988 and substantive

offences thereunder. For the reason that the petitioner stood

dismissed from bank service, it was observed that he was no

more a public servant and hence sanction for his prosecution

was not required from his department.

9. In each of the cases, it is urged on behalf of the

petitioner that the private respondent no.3 entered into a

settlement with the Punjab National Bank. So far as Shri O.P.

Kedia, respondent no.3 in Crl.M.C. No.348/2009 is

concerned, it is alleged that he has repaid the entire loan

amount with interest by the 28th March, 1994 by depositing a

total amount of Rs.2,03,000/- whereupon the Punjab National

Bank issued him a certificate with regard to adjustment of

his account. It was urged on behalf of the petitioner that in

view of the payment of the loan amount by and respondent

no.3, both the petitioner and the respondent no. 3 would

stand absolved of the alleged offences committed by them.

10. This contention on behalf of the petitioner was rejected

by the learned Special Judge by the order dated 11th August,

1999 while directing framing of charges against the

petitioner and the respondent no.3. As a result, on 7th

September, 1999, the learned Special Judge framed charges

against the petitioner under Section 120-B read with Section

477-A of Indian Penal Code and Section 13(2) read with

Section 13(1)(a) of the Prevention of Corruption Act against

the petitioner and the respondent no.3. It was in this

background that the case seeking quashing of the

proceedings has been filed.

11. So far as the transaction with Shri G.K. Kandil

respondent no. 3 in Crl.M.C. No. 501/2009 is concerned, he is

alleged to have repaid the entire loan amount of Rs.1.75

lakhs with interest by depositing an amount of Rs.3,28,815/-

with the Punjab National Bank between 12th May, 1998 and

12th November, 1998 whereupon the Punjab National Bank

issued a certificate dated 12th November, 1998 to the effect

that the term loan account of the respondent no.3 Shri G.K.

Kandil against security of life insurance also had been fully

paid and adjusted and that bank had no lien on this account.

In this case also, the learned Special Judge by an order dated

11th August, 1999 rejected the contentions of the bank to the

effect that the mere payment by the respondent no.3 would

not absolve the petitioner and the respondent no.3 of the

alleged offence committed by them. Consequently, on 11th

August, 1999, an order was passed directing framing of

charges against the petitioner as well as respondent no.3.

As a result, the learned Special Judge on 7th September,

1999 framed charges under Section 120-B read with Section

477-A and Section 13(2) read with Section 13(1)(a) of the

Prevention of Corruption Act against the petitioner and

respondent no.3 in these facts.

Crl.M.Case No.501/2009 has been filed thereafter

assailing the criminal proceedings and framing of charges.

12. So far as the transactions with Shri Ramesh Kumar

Arora, respondent no.3 in Crl.M.C. No.559/2009 are

concerned, the petitioner has urged that he entered into a

settlement with the respondent no.3 and paid an amount of

Rs.9,00,000/- on different dates pursuant to his compromise

with the bank resulting in issuance of a certificate dated 4th

February, 2008 by the Punjab National Bank to the effect

that the respondent no.3 had paid the said amount towards

settlement of his account in full and final and that nothing

was due from the party.

It deserves to be noticed that the Punjab National Bank

had noted that it had adjusted this account sacrificing a sum

of Rs.6,84,466/-.

13. Mr. Ashok Bhalla, learned counsel for the petitioner has

urged that the case against the petitioner at its worst is that

he had sanctioned a loan without obtaining collateral

security/life insurance policy. The submission is that

however, the respondent no.3 in each of the cases had paid

the entire compromise amount on the afore-noticed dates

which stood duly certified by the bank. It is urged by learned

counsel that in view of the settlement with the bank and the

verification of the payments, continuation of the criminal

prosecution is an exercise in futility.

14. My attention is also drawn by learned counsel for the

petitioner to the pronouncements of the Apex Court reported

at JT 2008 (9) SC 252 Mohd. Abdul Sufan Laskar & Ors.

Vs. State of Assam; JT 2008 (10) SC 506 Manoj &

Anr.Vs. State of Madhya Pradesh & JT 1996 (6) SC 227

Central Bureau of Investigation SPE, SIU (X), New

Delhi Vs. Duncans Agro Industries Limited, Calcutta.

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Reliance is also placed on the pronouncement of this court

reported at 132 (2006) DLT 85 Alpana Das Vs. CBI.

15. Learned counsel for the petitioner urges in the

judgment dated 5th July, 1999 passed in Civil Writ

No.2895/1997 entitled R.B. Singh Vs. Punjab National

Bank & Ors. in departmental proceedings, this court has

taken a lenient view. So far as this pronouncement is

concerned, in this case the charge against the petitioner in

the disciplinary proceedings is similar to the charge against

the present petitioner in the criminal prosecution. The

finding of the culpability of the writ petitioner by the

disciplinary authority was sustained and only the

punishment of removal from service was modified to

compulsory retirement. This pronouncement was rendered

in the facts and circumstances of the case and cannot guide

adjudication in the present case. The case, therefore does

not constitute a judicial precedent in support of the

proposition that in the event of a settlement, in a case

involving non-compoundable offences, quashing of the

criminal prosecution has to automatically follow. It may also

be noted that there is no support to the petitioner's prayer of

quashing of the prosecutions by either to Punjab National

Bank or the Central Bureau of Investigation and the petition

is being opposed by both.

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16. The petitioner places reliance on the pronouncement of

Puttaswamy Vs. State of Karnataka & Anr. wherein in

the facts and circumstances, the appellant was convicted by

the trial court for an offence punishable under Section 279 &

304 A of the Indian Penal Code for causing death of a seven

years old girl on account of rash and negligent driving. The

sentence so far as the conviction under Section 279 of the

Indian Penal Code was concerned, was set aside by the High

Court in view of the compromise arrived at between the

parties. The court was concerned with the conviction under

Section 304-A for which the appellant was sentenced to

undergo six months simple imprisonment along with fine of

Rs.2,000/-. Having regard to the facts of the case, the court

was of the view that this case was one of those cases where

instead of confining the appellant in jail, interest of justice

would be better served if he is made to compensate the

family of the deceased on account of the loss by them.

Accordingly, while maintaining the appellant's conviction

under Sections 279 and 304A of the IPC, notwithstanding

the agreement arrived at between the parties, the court

increased the amount of fine from Rs.2,000/- to Rs.20,000/-

to be paid by the appellant to the parents of the deceased

and reduced the sentence of imprisonment to the period

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already undergone subject to payment of fine. I fail to see

as to how this judgment assists the petitioner in the present

case in any manner.

17. So far as the pronouncement in JT 2008 (9) SC 192

Nikhil Merchant Vs. CBI & Anr. is concerned, the

challenge was laid to the criminal prosecution by a private

party who has stood as guarantee to the loan transaction. In

this case, the disputes between the Company and the Bank

were set at rest on the basis of the compromise arrived at by

them whereunder the dues of the bank were cleared. In this

case, clause 11 of the consent terms stated that since the

subject matter of the dispute had been settled neither party

has any claim against the other and the parties had

withdrawn all allegations and counter allegations made

against each other. No bank official was before the court

against whom charges had been laid under the Prevention of

Corruption Act. The court held that the facts of the case

warranted interference in the proceedings. The Apex Court

recorded satisfaction that the case before it was a fit case

where technicalities should not be allowed to stand in the

way in quashing criminal proceedings since continuance of

the same after settlement would be futile exercise. Perusal

of the pronouncement in 2008 (14) SCALE 44 Manoj

Sharma Vs. State & Ors reflects the same position.

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18. In JT 2008 (9) SC 252 Mohd. Abdul Sufan Laskar &

Ors. Vs. State of Assam, it was observed that the offences

punishable under Section 324 IPC were compoundable with

the leave of the court as per the statutory provision which

existed prior to the Criminal Procedure (Amendment) Act,

2005. Inasmuch as the offence before the court under

Section 324 of the IPC related to a period before the Criminal

Procedure (Amendment) Act, 2005 came into force, the court

permitted compounding of the offence.

19. So far as the pronouncement in JT 2008 (10) SC 506

Manoj & Anr.Vs. State of Madhya Pradesh is concerned,

the court observed that the complainant and the accused

persons were resident of the same village and voluntarily

desired to compound the offence. The parties had

compromised the matter with the intervention of the village

Panchayat and the complainant had no grievance against

the accused persons. Both parties filed affidavits before the

Supreme Court after the incident. They had developed

family relations and wished to reside peacefully in the village

in future without their any kind of disruption in their lives.

The court was satisfied that the complainant had voluntarily

desired to compound the offence with the appellant for

sufficient and genuine reasons stated in the affidavit and it

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was therefore held that the compounding was legal and

valid.

20. Before this court, so far as the facts of the present case

are concerned, the petitioner is not a party to any settlement

entered into between the bank and the beneficiary of the

financial transaction. The bank has not filed or joined in

filing a petition seeking quashing of the criminal

prosecutions. Furthermore, the allegations against the

petitioner and the respondent no. 3 are not the same. There

are allegations of creation of fabricated records to hoodwink

the bank in these three cases. For all these reasons, no

parity can be drawn between the case in hand and the

pronouncement in Manoj & Anr. Vs. State of Madhya

Pradesh (Supra).

21. Mr. Bhalla, learned counsel has placed strong reliance

on yet another judicial pronouncement of the Apex Court

which is reported at JT 1996 (6) SC 227 Central Bureau

of Investigation SPE, SIU (X), New Delhi Vs. Duncans

Agro Industries Limited, Calcutta. Perusal of the

pronouncement would show that in para 26, the court has

observed that for the purposes of quashing the complaint, it

is necessary for the court only to consider whether the

allegations in the complaint prima facie make out an offence

or not; that it was not necessary to scrutinise the allegations

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for the purposes of testing whether such allegations are

likely to be upheld in the trial; any action by way of quashing

the complaint is an action to be taken at the threshold

before evidence is laid in support of the complaint. It was on

a consideration of the facts of the case the Apex Court

arrived at a conclusion that there was enough justification

for the court to hold that the case was basically a matter of

civil dispute. Again, the challenge was made by the private

party arrayed before the court and not persons against

whom there were serious allegations making out offences

under Prevention of Corruption Act.

22. Again in 132 (2006) DLT 85, Alpana Das Vs. CBI,

the court has observed that at the stage of framing of

charges, the court is not required to martial evidence and it

is only on the basis of grave suspicion alone that charges

could be framed.

23. Mr. Anindya Malhotra, learned counsel representing the

respondent has drawn my attention to cases wherein similar

allegations against the accused persons and identical

submissions have been considered by the Apex Court. In a

judgment dated 2009 (5) SCALE 471 Smt. Rumi Dhar Vs.

State of West Bengal and Anr., the Apex Court held that

it would not direct quashing of a case involving crime against

society. The court observed that the Special Judge as well as

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the High Court had found that a prima facie case was made

out against the appellant for framing of charge. The court

has considered at length the observations of the learned

Special Judge in its order noted that merely because

payment had been made to the bank, the accused would not

stand exonerated. The court was of the view that it would

be a question of trial whether there was any criminal

intention on the part of the person accused in the crime

which was to be inferred from the evidence to be adduced

by the prosecution.

24. An argument similar to the argument laid by Mr. Bhalla,

before this court was placed before and considered by the

Apex Court in the pronouncement reported at JT 2009 (5)

SC 171 State of Madhya Pradesh Vs. Rameshwar &

Ors. It was urged that members of a loan committee had

limited role to play in sanction of loan since the ground work

is prepared by other officers who recommend the grant of

loans. On behalf of the accused persons, it was also urged

that the dispute was mainly of a civil nature and therefore

commencement of the criminal prosecution is unwarranted.

In one of the cases considered by the court, it was also

urged that the loan which had been advanced had been

repaid with interest and consequently the very foundation of

the charges was nonest and the prosecution untenable. The

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court did not accept these submissions for the reason that a

conspiracy to cheat the bank had been alleged.

25. My attention has been drawn to a pronouncement of

this court dated 21st May, 2009 in Crl.M.C. No.3842/2008 Mr.

Sushil Suri Vs. CBI & Anr. wherein also a similar

submission based on repayment of a loan taken from the

bank was placed before this court and it was urged that the

criminal prosecution was required to be quashed.

The court considered several other pronouncements

[Ref: (1983) 1 SCC 215 Vishwa Nath Vs. State of J & K &

2005 VII AD (Delhi) 119 Rashmi Agarwal & Ors. Vs. Central

Bureau of Investigation] wherein the courts had observed

that refund of the amount after detection of the offence does

not absolve a person of the offence with which he was

charged.

26. It would be useful to advert to certain recent

pronouncements of the Apex Court where the Court had

occasion to consider allegations of serious offences including

forgery, fabrication of documents using the same as genuine

by private respondents in conspiracy with officials of the

banks with the object of cheating the bank in the matter of

recommending the sanctioning/disbursing huge credit and

other financial facilities. A pronouncement dated 15th May,

2009 of the Apex Court in Crl.Appeal Nos.1080-

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1085/2009 Central Bureau of Investigation Vs. A.

Ravishankar Prasad & Ors., the Apex Court has

considered and held thus:-

"42. 42. When we apply the settled legal position to the facts of this case it is not possible to conclude that the complaint and charge-sheet prima facie do not constitute any offence against the respondents. It is also not possible to conclude that material on record taken on face value make out no case under Section 120B read with Section 420 IPC against the respondents. Prima facie, we are of the opinion that this is one case where adequate material is available on record to proceed against the respondents.

43. In our considered view it was extremely unfortunate that the High Court in the impugned judgment has erroneously invoked inherent power of the court under Section 482 of the Code of Criminal Procedure. The High Court ought to have considered the entire material available to establish a case against the respondents under Section 120B read with Section 420 IPC. It is significant that the respondents and the other bank officials share the charges under Section 120B read with Section 420 IPC. Quashing the charges against the respondents would also have very serious repercussions on the pending cases against the other bank officials.

44. In four cases, 92 witnesses have already been examined. The trial of the case was at the advanced stage. At this stage, the High Court has seriously erred in quashing the charges against respondent nos.1 & 2.

45. Quashing the proceedings at that stage was clearly an abuse of the process of the court. The court neither considered the entire material nor appreciated the legal position in

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proper prospective. The impugned judgment is wholly unsustainable in law and is accordingly set aside. Unfortunately, because of unnecessary interference by the High Court under Section 484 Cr.P.C., the trial of this case could not be completed and concluded.

46. Before parting with the case we would like to observe that mere re-payment of loan under a settlement cannot exempt the accused from the criminal proceeding in the facts of this case."

27. A similar argument was rejected by this court in the

order dated 1st May, 2009 passed in Crl.M.C. No.588/2009

Rajiv Khanna Vs. State and judgment reported at

MANU/DE/0848/2008 Devender Singh Vs. State & Anr.

and rejected the plea for quashing the criminal prosecution

based on a settlement.

28. The judgments relied upon by the petitioner therefore

would not constitute the judicial precedent in support of the

absolute proposition that in the event of a settlement in a

case involving non-compoundable offences quashing of the

criminal prosecution has to automatically follow.

29. The allegations against the present petitioner are of

serious nature. He was in a position of authority in the bank

and it is alleged that this position has been utilized by him to

facilitate sanction of loan for which he had no authority to do

so. Not only this, serious allegations of fabrication and

tampering of records have been revealed. Important

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documentary evidence is alleged to have been removed and

destroyed to prevent detection of the offence. Undoubtedly,

all these allegations are to be tested by the trial court which

has recorded the evidence. It may also be noted that there

is no support to the prayer of quashing by either to Punjab

National Bank or the Central Bureau of Investigation and the

petition is being opposed by both.

There can be no manner of doubt that the present

cases allege serious offences against the society. There is

therefore no justification for holding that the criminal

prosecution is liable to be quashed. These cases do not call

any interference by the court at this stage.

As a result of the above discussion, these petitions are

dismissed.

It may be clarified that the trial court shall proceed in

the matters uninfluenced from any observation made in the

present order inasmuch as there is no expression of opinion

on the merits of the allegations against the petitioner.

     August 03, 2009                           Gita Mittal, J.
     aa




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