Delhi High Court

Kamal Khanna & Anr. vs State & Anr. on 23 December, 2009

Author: V.K.Shali

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   BAIL APPLICATION NO.2339/2007

                                                   Reserved on : 20.08.2009
                                               Date of Decision : 23.12.2009

KAMAL KHANNA & ANR.                                       ......Petitioners
                                       Through:     Mr.D.K.Rustagi,
                                                    Advocate.

                                       Versus

STATE & ANR.                                          ...... Respondents
                                       Through:     Mr.T.K.Ganju,     Sr.Adv.
                                                    with Mr.A.K.Thakur, Adv.
                                                    for           respondent
                                                    no.1/NAFED.
                                                    Mr.Pawan Bahl, APP for
                                                    the State.

CORAM :
HON'BLE MR. JUSTICE V.K. SHALI

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

V.K. SHALI, J.

1. This is an anticipatory bail application filed by the

petitioners Kamal Khanna and his son Sandeep Khanna in

respect of FIR No.474/2006 for an offence under Section

406/420/120B IPC registered at P.S. Srinivaspuri.

2. Briefly stated the facts of the prosecution case against the

accused persons are that on 26.8.2006, a complaint was

made by the National Agricultural Co-operative Marketing

Federation of India Ltd. (hereinafter referred to as

complainant) having its head office at NAFED Building,

Sidharth Enclave, Ashram Chowk, Ring Road, New Delhi to

the effect that they were introduced by one Sh. Adarsh

Bhushan Mitra, Director of M/s Pylon Traders Pvt. Ltd. to

one M/s Kripa Overseas, a proprietor concern of Sandeep

Khanna-petitioner no. 2 herein doing business in khari

Baoli. It was represented that they are carrying business

of trading in agricultural and non-agricultural items like

food grains, edible oils, dry fruits, spices, metal ore, metal

scrap, chemicals, petroleum products etc. and that they

have a licence to import Asafoetida (Heeng) and Pistachio

(Kaju) and they expressed their desire to become business

associate of the complainant for import of these items from

CIS countries. For this purpose, they invited financial

support from the complainant. On the basis of this

representation, the complainant is purported to have

entered into a Memorandum of Understanding on

20.9.2004 with M/s Kripa Overseas for the purpose of

import of Asafoetida (Heeng) and dry fruits from CIS

countries and accordingly, gave an advance of Rs.10 crores

to M/s Kripa Overseas Company. This advance was to

carry an interest @7% per annum upto four months, 7+1%

for next four months and 7+2% for more than eight

months. The said rates of interest were to be enforced till

the revision was made by the complainant. There were

various other clauses in the agreement but one notable

clause was that M/s Kripa Overseas was to give a bank

guarantee/cash deposit of 10% amounting to Rs.1 crore for

the release of the advance money of Rs.10 crores. It is

alleged that after obtaining the amount of Rs.10 crores, the

said advance was utilized by the accused persons for their

own private and personal benefit and it was not put to any

use for business dealings. Out of the said advance, a

cheque for a sum of Rs.1 crore was also given by way of

deposit to the complainant but the said cheque got

dishonoured. It is alleged that since there was no licence in

favour of the accused M/s Kripa Overseas or its proprietor

Sandeep Khanna, therefore, they had dishonest intentions

of cheating the complainant company right from inception.

It is also alleged that the amount of advance was also

diverted to various private and personal accounts including

one company named M/s Pylon Traders and its Director

Sh.Adarsh Bhushan Mitra therefore, an offence under

Section 406 IPC of breach of trust apart from cheating was

committed. This is in sum and substance of the allegation

of the prosecution against the petitioners and against M/s

Pylon Traders & its Director, Adarsh Bhushan Mitra.

3. The petitioner Sandeep Khanna‟s anticipatory bail

application was rejected by the Court of Sessions on

17.10.2007, on which the present petition was filed.

4. On the very first date i.e. 25.10.2007, the learned counsel

for the petitioner had expressed his willingness to pay a

sum of Rs.50 lacs by way of bank draft to the respondent

no.1 and further a sum of Rs.1 crore after Diwali in order to

show his bonafides to settle the dispute. The learned

counsel for the complainant had made a statement that as

on that particular date, a sum of Rs.60 crores was due and

payable and one of the properties at Noida in Special

Economic Zone which was furnished as the security has

been sold by the petitioners surreptitiously and all proceeds

have been appropriated by them without payment of single

penny to the complainant.

5. My learned predecessor, keeping in view the facts and

circumstances, directed the petitioners to pay a sum of

Rs.50 lacs by way of draft drawn on 25.10.2007 and

another 50% within one week and thereafter Rs.2 crores by

30.11.2007 and subject to these conditions, the petitioners

were granted interim protection that in the event of his

arrest till the next date, he shall be released on bail on

personal bond for a sum of Rs.1 lakh each with one surety

for the like amount to the satisfaction of IO/Arresting

Officer. Thereafter, orders have been passed from time to

time indicating that the petitioners have signed a

settlement deed with the complainant on 3.5.2007 in

pursuance to which various properties, the list of which

was attached, were to be made available to the complainant

for the purpose of disposal, so as to adjust the sale

proceeds of the said properties towards total amount of

money due and payable by the petitioners to the

complainant. It may be pertinent here to mention that by

this time the complainant was claiming an amount of Rs.61

crores.

6. It has been contended by the learned counsel for the

petitioner that in pursuance to the said settlement, the

petitioners have already paid a sum of Rs.8.85 crores and

have further co-operated with the complainant in disposal

of all the properties as far as possible so as to enable them

to realize the sale proceeds so that the same could be

adjusted towards outstanding amount due and payable to

the complainant. It has also been contended that the

petitioners have also joined the investigation from time to

time and therefore, there is no pressing reasons as to why

they should be denied the benefit of anticipatory bail at

this stage when they are prepared to comply with all the

terms and conditions which this Court may like to impose

while enlarging them on anticipatory bail. It was also

contended by the learned counsel for the petitioner that

almost for two years the complainant and the prosecution

requested for custodial interrogation of the petitioners and

accordingly this plea raised by them is only an

afterthought.

7. It was contended by the learned counsel for the petitioner

that the entire dispute between the petitioners and the

complainant essentially was a dispute of a civil nature

where the aforesaid amount of Rs.10 crores was given by

way of loan as it was to carry an interest @7%. It is further

contended that disputes having arisen between the parties

the said disputes are already pending adjudication between

the parties in Civil Court or Arbitrator in terms of the

agreement, therefore, this FIR essentially is a method of

pressurizing the petitioners by the complainant to subject

them to their dictates. It is further contended that the

respondent/complainant has arrived at a settlement and

therefore there is no reason to deny them.

8. It was contended by the learned counsel for the petitioner

that the demand for custodial interrogation has been made

by the respondent/complainant and the APP for the first

time only on 20th August, 2009. This is only an

afterthought on account of the fact that although interim

protection was given to the petitioner on 25th October,

2007, but no demand was made since then, nor was any

application filed for variation of the said order. It is also

contended that the reason for demand of custodial

interrogation is raised to trace the trail of diverted funds of

M/s Kripa Overseas while as the investigations are already

complete and the diversion is attributed not to the

petitioner No.1 but to Rital Impex and the petitioner No.1 is

only one of the Directors of the said company. It is

contended that the petitioner is still prepared to cooperate

with the investigating agency in whatever manner the said

agency requires the petitioner to assist them, but his liberty

may not be taken by denying the anticipatory bail.

9. Lastly, it was contended that the ground for availing of

anticipatory bail is urged on the ground that the petitioner

has created obstructions in the sale of the property and

therefore he tried to hamper the investigation and also tried

to back out from the settlement signed by him on 3rd May,

2007. It was contended by the learned counsel that the

word which has been used by the learned Sole Arbitrator,

Justice Sharda Aggarwal (Retd.) is merely a resistance

which cannot be taken to be as an obstruction or creation

of a hurdle. It was also contended that the petitioner‟s

filing applications seeking judicial recourse cannot be

construed as creating hurdles.

10. The learned Senior Counsel for the complainant

Mr.T.K.Gaju, as well as learned APP for the State have

contested the prayer of the petitioners for grant of

anticipatory bail. It has been contended by the learned

Senior Counsel for the complainant that in the first

instance the petitioners not only persuaded the

complainant with a dishonest intention to part with a huge

amount of Rs.10 crores for the purpose of importing

Asafoetida (Heeng) and Pistachio (Kaju) from CIS countries

even when it did not have the requisite licence but the said

amount was also diverted by the petitioners for their own

private and personal use. It is contended that the

dishonest intention can be seen from the fact that a cheque

for a sum of Rs.1 crore which was issued by the petitioners

apart from the said amount in cash which was to be

deposited equivalent to 10% of the advance, even that was

dishonoured.

11. So far as the factum of settlement having been entered by

the complainant with the petitioner is concerned, the said

fact is not denied but it is denied that in terms of the said

settlement, the petitioners have co-operated with the

complainant in realization of the sale proceeds from the

sale of the said properties. On the contrary, it has been

urged that the entire ploy of the petitioners after entering

into the settlement with the complainant is to get

anticipatory bail. It is alleged by the complainant that the

accused persons tried their level best to create hurdle in

the sale of the property itself by raising false and frivolous

objections from time to time to the sale of the properties by

the Court observer as well as by filing applications in the

OMPs which were filed between the parties before the

Court for appointment of the Arbitrator.

12. The learned counsel has specifically drawn the attention of

this Court to the orders dated 16.5.2007 passed in OMP

No.291/2006 and the averments made in IAs

No.11592/2007 & 5743/2007in the same OMP as well as

to show that after having signed a settlement with the

complainant, they would cooperate with the complainant in

the sale of the properties but the entire exercise of the

petitioners was to create hurdles in disposal of the property

by raising objections at various stages.

13. The learned counsel has drawn this Court‟s attention to the

fact that Justice Sharda Aggarwal (Retd.) who was

appointed as a Court Observer for sale of properties of the

petitioner has also recorded in her report dated 03.05.2007

that the petitioners were creating hurdles in the disposal of

the property on the basis of the same, it was urged by the

learned Senior counsel that the conduct of the petitioners

was not only dishonest right from the beginning but it was

also non-cooperative which was actuated with a view to

delay the disposal of the properties in order to deprive the

complainant of its rightful claim. It may be pertinent here

to mention that the learned counsel for the petitioner in the

written submissions has denied this allegation that there

was any hurdle or objection created but it is stated that

observation is only about resistance having been offered by

the petitioners and secondly it was contended that availing

of judicial remedies of filing application could not be said to

be creating hurdles or resistance.

14. It has also been pointed out by the learned Senior Counsel

for the complainant that in terms of the settlement dated

03.5.2007, the petitioner no.2, the sole proprietor along

with his father petitioner no.1 who was the sole proprietor

of Rital Impex have confirmed that the balance outstanding

as on that date was Rs.8.47 crores apart from interest of

Rs.2.6 crores as on 30.4.2007. Apart from that Sandeep

Khanna petitioner no.2 along with Rajesh Khanna

confirmed the outstanding balance of Rs.34.74 crores as on

30.4.2007 and an interest of Rs.15.85 crores in respect of

M/s Rital Impex and thus the total outstanding amount

due and payable from the accused persons was to the tune

of Rs.61.67 crores out of which the petitioners were still

required to make payment of approximately Rs.43 crores

till October, 2007 which obviously as on date has further

enhanced on account of accrual of interest in terms of

Memorandum of Understanding.

15. All these facts clearly shows that not only the ramification

of the non-payment of the amount by the petitioners were

very serious and grave as it constitutes essentially offence

of cheating but the petitioners do not have the intention to

pay the amount and by one reason or the other they only

want to insulate their liberty. It was contended by the

learned Senior Counsel for the complainant as well as the

learned APP that in a case of this nature, the custodial

interrogation is very essentially in order to recover the

documents and the remaining money from the petitioners

and therefore, their conduct & the facts do not warrant the

exercise of discretion by the Court in their favour.

16. I have carefully considered the submissions made by the

learned counsel for the petitioner and gone through the

record.

17. No doubt, there is a growing tendency on the part of the

complainant to give a colour of a criminal offence to a civil

transaction emanating from breach of contract or sale of

goods or sale of property, but every breach of contract or

sale of property may not necessarily result in commission

of a criminal offence. To that extent, the submission of the

learned counsel for the petitioner is correct. The reference

of the learned counsel for the petitioner in this regard to

the judgment of the Apex Court in Anil Mahajan Vs. Bhor

Industries Ltd. & Anr. (2005) 10 SCC 228 is correct, but

the question which arises for consideration is that as to

whether in the instant case there is a dishonest intention

on the part of the petitioners at the beginning of the

transaction or not because it is this dishonest intention

which if found in existence at the time of threshold itself

then it will amount to a criminal offence or breach of trust

or a cheating provided other conditions are satisfied. The

word „dishonestly‟ has been defined in Section 24 of the

Indian Penal Code as whoever does anything with intention

of causing wrongful gain to one person and wrongful loss to

other person is to do that thing dishonestly. Therefore, the

essential element of dishonest intention is the intention of a

person to cause wrongful gain to himself or wrongful loss to

the other person. This dishonest intention can further be

gathered only from the circumstances of the each case. So

far as K. Jayaram's case 134 (2006) DLT 390 is concerned,

the grant of anticipatory bail could not be treated as

precedent for grant of bail in the present case. Each case

has to be decided on its own facts.

18. Coming back to the facts of the present case, prima facie

there was a dishonest intention on the part of the present

petitioners for committing the offence of cheating or breach

of trust as the case may be in the present case. This is on

account of the following three reasons :

i) The petitioners represented themselves that they had a

licence to import Heeng and Kaju from CIS country

while as they had none.

ii) The petitioners on the basis of this representation

obtained an advance of Rs.10 crores and they were

under an obligation to furnish a bank guarantee or a

cash security of an advance equivalent to 10% of the

advance taken by them which comes to Rs.1 crore. The

petitioners issued a cheque for a sum of Rs.1 crore in

favour of the complainant and the said cheque was

dishonoured.

iii) The funds which were given to the petitioners for the

purpose of import of Kaju and Heeng were diverted

either by the petitioners or by Rital Impex or Adarsh

Bhushan Mitra, co-accused. The aforesaid facts clearly

showed that the petitioner had dishonest intention at

the threshold itself to cheat the complainant which is a

cooperative society and thus dealing with the public

money. The observations of the Apex Court with regard

to conversion of civil transaction into criminal with a

view to pressurize the opposite side would not be

applicable to the present case because it was not a

dealing between two private parties but one of the

parties who was subjected to pecuniary loss was a body

dealing with public funds and secondly there was

existence of dishonest intention at threshold. Thus the

judgments which have been relied upon by the learned

counsel for the petitioners, namely Anil Mahajan and

K. Jayaram's (supra) are not applicable to the facts of

the present case.

19. The second submission of the learned counsel for the

petitioner that he cannot be denied the benefit of

anticipatory bail as he has complied with the terms and

conditions of giving a sum of Rs.8.5 crore or so or that the

request for custodial interrogation at this belated stage is

an afterthought also does not impress the Court. The

entire facts of the case not only shows dishonest intention

at the threshold of commission but even after registration

of the FIR and during the pendency of the cases, the effort

of the petitioners seem to be actuated by dishonest

intention. This is on account of the fact that firstly the

petitioner allured not only the complainant but also gained

the sympathy of the Court by offering to settle the matter

by offering to liquidate the amount and made payments

allegedly to the tune of Rs.8 crore approximately or so, but

after having made the part payment, the petitioner created

all kinds of hurdles which one may call obstruction or

resistance in order to implement the settlement dated 3rd

May, 2007 entered into with the complainant to have the

entire outstanding amount liquidated. It may be pertinent

here to mention that there is no dispute about the fact that

at the time of arguments the petitioners had to liquidate

approximately Rs.70 to Rs.75 crores while as only a part of

the said payment was made by them. The resistance which

was created was by way of filing objections not only to the

advertisements floated by the Court Commissioner but also

by filing repeatedly applications to stall the auction of the

properties. The High Court has been converted by the

petitioner into an office of an accountant as to what

payment has been received or not, whether obstruction is

caused or not. This is not the purport of the application of

within the scope of the powers of the Court to supervise the

settlement between them. Therefore, irrespective of the

terminology which the petitioner may chose to use, the fact

of the matter remains that the petitioners after having

signed the agreement did not seem to be bona fide in their

intention to get it implemented and were only trying to gain

time or avoid their obligation which does not entitle them to

any discretionary relief for extending or confirming of

anticipatory bail on them.

20. The last point which has been raised by the petitioners is

regarding the custodial interrogation. Their contention that

custodial interrogation is not required or that this is only

an afterthought, cannot be accepted. The Supreme Court

in Anil Sharma's case 1997 (7) SCC 187categorically

approved the efficacy of custodial interrogation by

observing that it makes lot of difference when a person who

is interrogated has the protection of his liberty and in such

a situation he is insulated by pre-arrest bail order, his

interrogation becomes more of a ritual than an effective tool

to lead to the trail of crime as compared to an interrogation

which is done in custody where there is nobody around the

accused where effective results are yielded. The relevant

observations of Anil Sharma‟s case are reproduced as

under :

"6. We find force in the submission of the CBI that custodial interrogation is qualitatively more elicitation-oriented than questioning a suspect who is well ensconced with a favourable order under Section 438 of the Code. In a case like this effective interrogation of a suspected person is if a tremendous advantage in disinterring many useful informations and also materials which would have been concealed. Success in such interrogation would elude if the suspected person knows that he is well protected and insulated by a pre-arrest bail order during the time he is interrogated. Very often interrogation in such a condition would

reduce to a mere ritual. The argument that the custodial interrogation is fraught with the danger of the person being subjected to third- degree methods need not be countenanced, for, such an argument can be advanced by all accused in all criminal cases. The Court has to presume that responsible police officers would conduct themselves in a responsible manner and that those entrusted with the task of disinterring offences would not conduct themselves as offenders."

21. For the reasons mentioned above, I am of the considered

opinion that merely because the petitioners have paid a

part of the loan amount does not entitle them to

anticipatory bail as a matter of right. This was a matter of

discretion for the Court to grant them anticipatory bail,

however I find it difficult to exercise the said discretion in

their favour on account of the reason that after having

obtained the interim bail, the petitioners have neither

cooperated with the investigating agency, nor have they

tried to sincerely liquidate the entire outstanding amount

which is to the tune of Rs.75 crores approximately despite

having entered into an agreement to do so. I accordingly