Delhi High Court
Vk Maheshwari vs Central Bureau Of Investigation on 24 February, 2016
Author: Suresh Kait
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 24th February, 2016
+ CRL.M.C. 2339/2013
VK MAHESHWARI ..... Petitioner
Represented by: Mr. Anoop J Bhambhani,
Senior Advocate with Mr. Bhaskar Tiwari &
Mr. Rohit Tripathy, Advs. with petitioner.
Versus
CENTRAL BUREAU OF INVESTIGATION ..... Respondent
Represented by: Mr.Narender Mann, Spl.
Public Prosecutor with Mr.Manoj Pant, Adv.
CORAM:
HON'BLE MR. JUSTICE SURESH KAIT
SURESH KAIT, J.
+ CRL.M.C. 2339/2013
1. By way of the present petition filed under Section 482 read with
Section 397 of the Code of Criminal Procedure, 1973 (hereinafter to be
referred as 'Cr.P.C.'), petitioner seeks directions thereby setting aside the
order dated 29.11.2012 passed by the ld. Trial Court whereby charge under
Sections 120B/409 of the Indian Penal Code, 1860 (hereinafter to be
referred as 'IPC') read with Section 13 (1) (d) and 13 (2) of the Prevention
of Corruption Act, 1988 (hereinafter to be referred as 'PC Act') have been
framed against the petitioner. Consequently, Crl. Case No. 51/11 pending
before the Trial Court and RC. No. 5 (E)/01 titled as CBI v. V.K.
Maheshwari & Ors. also be quashed.
2. Mr.Anoop J. Bhambhahi, ld. Sr. Counsel appearing on behalf of the
petitioner submitted that the aforesaid FIR was registered on 24.08.2001
and charges were framed vide order dated 29.11.2012. There were total
six accused in the case, wherein petitioner is accused no.1. Accused no.2
Ratan Bagaria has been declared PO whereas proceedings against accused
no.3, i.e., Rajan Bagaria have already been quashed by this Court vide
order dated 29.04.2009 passed in Crl. M.C. No.3331/2007. Accused no. 4
is Ratan Exports and Industries Ltd. (hereinafter to be referred as
'Company'). Accused no.5 Mr. M.K. Basu, posted as General Manager
(Credit), United Bank of India at Head Quarter, Kolkata, had passed away
and proceedings against him was abated vide order dated 01.10.2011. The
FIR and proceedings thereto against accused no. 6, i.e., Kashibatla
Ramakrishna, posted as Regional Manager, United Bank of India, have
been quashed by this Court vide order dated 16.04.2012 passed in Crl.
M.C. No.160/2010.
3. Ld. Sr. Counsel further submitted that accused no. 6 Kashibatla
Ramakrishna had joined the United Bank of India Delhi Branch in May,
1992, whereas the petitioner had joined the aforesaid Bank as Branch
Manager on 12.08.1993. The case of prosecution as per the chargesheet
dated 26.03.2004 is that business of the aforesaid Company was mainly
export of Natural Bristles, Brushes and Canned Food Products to erstwhile
USSR and the Company was a 100% Export Oriented Unit. The said
Company was earlier granted overall credit limit of Rs.1250 Lacs on
14.07.1988 by the Bank, which was subsequently enhanced to the tune of
Rs.1,672 Lacs by the Board of Directors of the Bank in its meeting held on
19.11.1991.
4. Accused no. 2, Ratan Lal Bagaria being the Managing Director of
the Company submitted an application dated 28.05.1992 for further
enhancement of Working Capital Limits ('WCL') of the Company from
Rs.1672 Lacs to Rs.4442 Lacs for achieving the projected turnover of
Rs.200 Crores. The proposal submitted by the Branch was recommended
by accused no. 6 Kashibatla Ramakrishna, the then Deputy General
Manager at the Janpath Branch, New Delhi, vide his letter dated
27.06.1992 without keeping the interest of the Bank in mind. The present
net worth of the Directors of the Company was very low while collateral
security of Rs.57 Crores provided by the Company for covering the
recommended limits was inadequate. There was ongoing turmoil in USSR
starting from the year 1992, which had led to the trade squeeze by the
exporters.
5. Mr. M.K. Devraj (since deceased), the then Deputy General
Manager (Credit), Head Office, prepared a note for the Board of Directors,
United Bank of India for sanction of enhanced limit to the Company which
was approved by accused no.5, Mr. M.K. Basu, the then General Manager
(Credit). The packing credit cum FOBP sub-limit to be released for the
merchandise unit of the Company at New Delhi to the extent of Rs.1600
Lacs was only against the D.P. Bills, backed by confirmed orders, letters of
credit and details of the document as specified in the contract. However,
accused no. 6 Kashibatla Ramakrishna directed Mr. M.K. Basu (A-5) on
12.12.1992 to purchase and discount the Foreign Export Bills of the
Company on Documents Against Acceptance Basis (DA Basis) which was
contrary to the terms and conditions of the sanction of limits dated
07.11.1992. Accused no. 6 Kashibatla subsequently sent a fax message
dated 14.12.1992 to General Manager (Credit), Head Office, Kolkata, for
amendment of the terms and conditions of the sanction letter dated
07.11.1992 so as to include the discounting of Foreign Export Bills on DA
Basis also. Mr. Shantanu Guha, the then Chief Manager (Credit
Operation-H) in league with accused Kashibatla sought the approval of
accused M.K. Basu, the then General Manager (Credit & I.B.) vide his
note dated 28.12.1992, who approved the said note dishonestly. He further
failed to obtain the approval of the competent authority for such
amendment which, in this case, was the Board of Directors. Consequently,
Mr. Shantanu Guha sent a telex message dated 31.12.1992 to accused no.
6, Kashibatla thereby falsely intimating that in terms of his
recommendations, the competent authority had agreed to modify the FOBP
sub-limit of the Company by including purchase of bills of unexpired
usage or 60 days backed by confirmed orders / letter of credit and other
documents as specified in the contract on DA Basis knowing well that the
company was indulging in the "in House" business.
6. Learned Senior Counsel submitted that the petitioner remained
posted as Chief Manager, Janpath Branch, New Delhi, from 12.08.1993
onwards and then remained posted at the newly opened overseas branch
from 12.09.1995 till May, 1997, from where various credit facilities to the
Company were released.
7. Further submitted that accused no.2 Ratan Lal Bagaria further
obtained misleading certificate dated 26.11.1992 from the Chartered
Accountant of M/s.R. Niwas Aggarwal and Company to the effect that the
Company had already employed the funds to the extent of Rs.1450 Lacs
from its knowingly accrual towards its contribution / margin as on
30.09.1992 and submitted the same to the Bank for release of limits. The
said certificate did not confirm to the conditions stipulated by the
Company in its sanction letter dated 07.11.1992. However, the petitioner
willfully, knowingly and dishonestly accepted the said certificate while
releasing the credit facilities to the Company and thereby caused the undue
pecuniary benefits to the Company.
8. Ld. Sr. Counsel for the petitioner further submitted that as per the
charges in the chargesheet, accused no. 2 Ratan Lal Bagaria dishonestly
and deceitfully submitted Foreign Export Bills which were drawn by the
Company owned and controlled by his brother Rajan Bagaria (accused
no.3), who at one time was the Director of the Company. The petitioner in
conspiracy with Ratan Lal Bagaria (accused no.2) and in active connivance
with Kashibatla Ramakrishna, (accused no.6) allowed the purchase of
Foreign Bills on DA Basis which were earlier submitted by the Company
on Documents Against Purchase Basis (DP Basis) and made available the
advances/ finances against these foreign bills under the cover of the above-
said illegal and unauthorized amendment of sanction letter dated
07.11.1992. The total amount US$ 8,86,280.11 against such 44 foreign
bills purchased on different dates had remained an outstanding which is
equivalent to Rs.3,15,57,073.00. The petitioner had allowed the
discounting of these 44 bills when the Concurrent Auditor of the Bank had
already adversely commented in respect of discounting of bills in the
account of the Company. Despite, the petitioner had continued to purchase
the Foreign Export Bills of the Company when the amount against the
earlier discounted / purchased bills had remained outstanding for payment
of these facts were well within the knowledge of accused no. 6 Kashibatla
Ramakrishna. Further allegations are that the petitioner, accused M.K.
Basu and accused Kashibatla Ramakrishna had entered into a criminal
conspiracy with each other and with Ratan Lal Bagaria (accused no.2) and
Rajan Bagaria (accused no.3) of the Company in the matter of purchase of
discount of Foreign Exchange Bills on DA Basis contrary to the sanction
of the limits.
9. Ld. Sr. Counsel submitted that nowhere in the chargesheet it is
alleged that the petitioner has demanded money or bribe or was paid in any
manner. Despite, the ld. Trial Court vide order on charge dated 29.11.2012
framed charges under Section 120 B IPC read with Section 13 (1) (d) read
with Section 13 (2) PC Act and read with Section 409 IPC against the
petitioner. Whereas while framing the charge vide order dated 29.11.2012,
ld. Trial Judge has observed that the allegation is not that any of the
Officers of the Bank had been deceived either by the Company (accused
no. 4) or Ratan Lal Bagaria (accused no.2), Managing Director of the
Company. Here, the allegation is that being the Chief Manager of the
Bank and the custodian of the money of the Bank, petitioner had
dishonestly favoured the Company by causing pecuniary advantage to it
bypassing his position.
10. Ld. Sr. Counsel further submitted that accused no. 6 Kashibatla
Ramakrishna, the then Regional Manager of the Bank at New Delhi since
1992 has been discharged by this Court vide order dated 16.04.2012,
whereas the petitioner joined as a Branch Manager on 12.08.1993. As per
the hierarchy of the Bank Officers from Board of Directors downward, the
petitioner is at the bottom and below him is the Deputy Manager and an
Officer (Advance). The recommendation in question was sent by
Mr. M.P. Sharma, the then Branch Manager to the Regional Manager.
Thereafter forwarded by the Regional Manager to accused no. 6 Kashibatla
Ramakrishna who further forwarded the same to the Chief Manager
(Credit) at Head Office. Thereafter, forwarded to the Assistant General
Manager then to the Deputy Manager and again to General Manager
(Credit) then to the Executive Director, thereafter to Chairman-cum-
Managing Director and finally to the Board of Directors. Before the
petitioner, Mr. M.P. Sharma, was the then Branch Manager and thereafter
Mr. S. Bose Roy. However, the Director or CMD or the Executive
Director are not prosecuted and if that is so, then how the petitioner can be
dragged in criminal prosecution for a decision which was finally taken and
approved by the Board of Directors and which travelled through Senior
Officers of the Bank. Moreover, the control of the account was with the
Head Office. When all the conditions were fulfilled, only then the
petitioner had released the amount.
11. Ld. Sr. Counsel further submitted that from the charges as
mentioned in the chargesheet, the whole conspiracy moved around accused
no. 6 Kashibatla Ramakrishna, who challenged the chargesheet before
framing of the charge and his petition has been allowed by this Court vide
order dated 16.04.2012. If accused Kashibatla has been discharged, then
how the allegations are substantiated against the petitioner, who joined the
Bank as Branch Manager on 12.08.1993 and before him there had been
two Branch Managers, namely, M.P. Sharma and S. Basu Roy as
mentioned above. Moreover, the CBI has not challenged the discharge
order of accused Kashibatla passed by this Court.
12. The petitioner had served the Bank for 20 years with clean record.
Moreover, letters dated 07.12.1993 and 04.01.1994, shows that petitioner
had written to the Zonal Manager that he had not been discounting the bills
of the Company as the said bills were not in accordance with the mandate
of the Superior Officers. As specifically stated by accused no.6
Kashibatla, because of the efforts of petitioner the crystallized overdue
bills had been reduced from 15000 to Rs.780 Lacs by January, 1994. The
Company had made a complaint that the petitioner was not discounting the
bills not supported by a letter of credit.
13. To strengthen his arguments, ld. Counsel for the petitioner has relied
upon a judgment dated 22.11.2013 passed by this Court in Crl. M.C.
2384/2011 titled as A.K. Ganju v. CBI wherein this Court has observed as
under:-
"114. As regards the charge under Section 13(1)(d) of the PC
Act, the violator should have obtained a valuable thing or
pecuniary advantage for himself or for any other person. In the
present case, in chargesheet, there are no allegations of any
kind, whatsoever, of any demand, acceptance or giving of any
bribe by anybody to anyone. For such an offence, the
prosecution has to establish that the accused has obtained the
valuable thing or pecuniary advantage by corrupt or illegal
means or by otherwise abusing his position as a public servant
and that too without the aid of statutory presumption available
to him. In other words, in the absence of proof of demand or
request from the public servant for a valuable thing or
pecuniary advantage, the offence under Section 13(1) (d) of the
PC Act cannot be held to be established.
"115. In the case of Subhash Parbat Sonvane Vs. State of
Gujarat (2002) 5 SCC 86, it is held that in Sections 7 and 13(1)
(a) and (b) of the Act the Legislature has specifically used the
words 'accepts' or 'obtains'. As against this there is departure
in the language used in Clause (1) (d) of Section 13 and it has
omitted the word 'accepts' and has emphasized the word
'obtains'. The ingredient of Sub-clause (i) is that by corrupt or
illegal means, a public servant obtains any valuable thing or
pecuniary advantage; under Clause (ii) he obtains such thing
by abusing his position as public servant and Sub-clause (iii)
contemplates that while holding office as the public servant he
obtains for any person any valuable thing or pecuniary
advantage without any public interest. Therefore, for convicting
the person under Section 13(1)(d), there must be evidence on
record that accused obtained for himself or for any other
person any valuable thing or pecuniary advantage by either
corrupt or illegal means or by abusing his position as a public
servant or he obtained for any person any valuable thing of
pecuniary advantage without any public interest.
116. Case of the CBI is that there was conspiracy between the
Builder, Architect and the officers of the MCD. However, there
is no statement of any witness which refers to or which alleges
that there was active collusion and conspiracy between the
aforementioned persons. To constitute an offence of conspiracy,
meeting of two or more persons for doing an illegal act or an
act by illegal means is the first and primary condition that
existence of conspiracy is to be deduced from the circumstances
and each circumstance should be established by reliable
evidence and the circumstances must form a chain of events
from which the only irresistible conclusion would be against
those persons. The criminal conspiracy is an independent
offence in the Indian Penal Code. The unlawful agreement is a
sine-qua-non for constituting an offence under the Indian Penal
Code and not an accomplishment. In the case in hand, there is
nothing to connect the petitioners inter se and there are no
allegations which could form a chain of any conspiracy."
14. Also relied upon a case of Amit Kapoor Vs. Ramesh Chandra and
Anr. (2012) 9 SCC 460 wherein it is observed as under:
"27. Having discussed the scope of jurisdiction under these two
provisions, i.e., Section 397 and Section 482 of the Code and
the fine line of jurisdictional distinction, now it will be
appropriate for us to enlist the principles with reference to
which the courts should exercise such jurisdiction. However, it
is not only difficult but is inherently impossible to state with
precision such principles. At best and upon objective analysis
of various judgments of this Court, we are able to cull out some
of the principles to be considered for proper exercise of
jurisdiction, particularly, with regard to quashing of charge
either in exercise of jurisdiction under Section 397 or Section
482of the Code or together, as the case may be:
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27.2) The Court should apply the test as to whether
the uncontroverted allegations as made from the
record of the case and the documents submitted
therewith prima facie establish the offence or not. If
the allegations are so patently absurd and inherently
improbable that no prudent person can ever reach
such a conclusion and where the basic ingredients of
a criminal offence are not satisfied then the Court
may interfere.
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xxxxxxxxxxxxxxxxxxxxxxx
27.8) Where the allegations made and as they
appeared from the record and documents annexed
therewith to predominantly give rise and constitute a
'civil wrong' with no 'element of criminality' and does
not satisfy the basic ingredients of a criminal offence,
the Court may be justified in quashing the charge.
Even in such cases, the Court would not embark upon
the critical analysis of the evidence.
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27.15) Coupled with any or all of the above, where
the Court finds that it would amount to abuse of
process of the Code or that interest of justice favours,
otherwise it may quash the charge. The power is to be
exercised ex debito justitiae, i.e. to do real and
substantial justice for administration of which alone,
the courts exist."
15. While concluding his arguments, ld. Sr. Counsel submitted that if it
is believed that there was a conspiracy of the Bank Officers with the
Company and its Directors, but the proceedings against accused no. 3
Rajan Bagaria and accused no. 6, Kashibatla Ramakrishna have been
quashed by this Court vide orders dated 29.04.2009 and 16.04.2012. Thus,
the chain of the conspiracy has broken. Moreover, Mr. M.K. Basu, accused
no. 5 has passed away and the only accused remained from the Bank is the
petitioner. Thus, by any stretch of imagination, the petitioner cannot be
held guilty for the charges framed against him and on parity with accused
no. 3 Rajan Bagaria and Kashibatla Ramakrishna, accused no. 6 whose
discharges have been accepted by the CBI, therefore, the proceedings
against the petitioner may also be quashed.
16. On the other hand, learned counsel appearing on behalf of the
respondent/Central Bureau of Investigation ('CBI') submitted that charge
against the petitioner is that while working as Branch Manager from May,
1995 to December, 1995, being the public servant, he had abused
his position and obtained pecuniary advantage to the tune of
Rs. 3,15,57,073/- for co-accused Company and thereby committed an
offence punishable under Section 13(1)(d) read with Section 13(2) PC Act.
Consequently, he allowed the said Company to misappropriate the amount
mentioned above and thereby committed an offence punishable under
Section 409 IPC.
17. Learned counsel further submitted that for the offence punishable
under Sections 13(1) (d) and 13(2) PC Act, it is not necessary that
petitioner should obtain pecuniary advantage for himself, but if he has
obtained pecuniary advantage for the Company, even then the petitioner is
liable to be punished for the said offence.
18. Ld. Counsel for CBI submitted that on conspiracy, the learned Trial
Court has framed charge against the petitioner on the ground that the
petitioner in the year 1995 or any time before was the party to a criminal
conspiracy with Ratan Lal Bagaria (Proclaimed Offender), Managing
Director of the Company with the object to commit offence being public
servant, consequently, dishonestly and fraudulently allowed the Company
to misappropriate funds of the Bank which were under the control and
domain of Kashibatla Ramakrishna, (A-6). Accordingly, he committed the
offence punishable under Section 120-B IPC and Section 13(1) (d) read
with Section 13(2) PC Act.
19. Further allegations against the petitioner are that as per the statement
of Mr.R.K. Kaldhar, Officer Scale-II of the Bank, the petitioner had
prepared a chart in respect of 44 bills showing outstanding amount in
respect of the said bills. The said chart shows that petitioner had approved
purchase of these bills when payments of the previous export bills were
already due specifically in respect of the same Firms. The act of the
petitioner of continuing discounting the bills when the borrower's account
had already dues on account of non-receipt of payments from foreign
buyers through their Banks was highly irregular and prejudicial to the
interest of the Bank.
20. As per the statements of Mr. P.Basu, General Manager (Credit & IB)
and Mr. Gopinath Das Gupta, Chief Manager, Corporate Accounts, it is
established that as per the prevalent practice ECGC coverage for past
shipment bills used to be obtained by the borrower and that was required to
be ensured by the concerned Branch Manager. In this case, the Company
was required to obtain ECGC coverage and it was the responsibility of the
Branch Manager, i.e., petitioner to ensure that such coverage was available
before discounting of bills by the Branch Manager. As per the records,
ECGC coverage was not taken in respect of the bills of the Company.
21. Learned counsel further submitted that as per the statement of
Mr.G.N.Gupta, Chief Manager, Corporate Accounts, in a number of
instances it was found that the funds were released in packing credit
accounts only to adjust the packing credit account of the borrower, which
was highly irregular and meant only to favour the Company. ECGC cover
was an important consideration for the Bank to safeguard the interest of the
Bank. It was, therefore, important that before the bills were discounted, it
was required to be ensured that the shipments to be made had proper
ECGC cover and that the conditions thereof were complied with. The 44
shipments referred in this case related to three buyers, namely, M/s
Continental Trading Co., M/s Arvee International Pvt. Ltd. and M/s
Interlog Pvt. Ltd. The buyer-wise policy which was taken from ECGC
was only in respect of M/s Interlog Pvt. Ltd. As per the statement of Sh.
G.M.Ganpati, General Manager, ECGC, in respect of M/s Arvee
International Pvt. Ltd. ECGC cover was refused and also no ECGC cover
was granted in respect of M/s Continental Trading Co. Moreover, as per
the statement of Sh.H.C.Vaze, Branch Manager, ECGC as per the terms
and conditions of the ECGC policy, the policy would be effected only if
export had been made when no bill of the same buyer was pending for
payment within the stipulated time. Also the ECGC policy would be
effected in respect of any consignment within the insured amount.
According to him, in the instant case, as per chart, the Company (A-4)
made exports to M/s Interlog Pvt. Ltd. one after another even when a
number of payments from the same Firm were not received by the Bank
making the insurance policy ineffective. Further, as per the chart, exports
had been made one after another sometimes totalling more than Rs. 75
Lakhs and since the policy cover was only for Rs.75 Lakhs on DA Basis,
question of getting benefit, if any, from ECGC for the exports for more
than Rs.75 Lakhs does not arise.
22. However, the petitioner had accepted 44 bills mentioned above
when previous payments were there. In this manner, the petitioner had
extended pecuniary advantages to the Company (A-4). To strengthen his
arguments, learned counsel for the respondent has relied upon the case of
Subash Parbat Sonvane Vs. State of Gujarat (2002) 5 SCC 86, whereby
the Supreme Court held that in Sections 7 and 13(1)(a) and (b) PC Act, the
Legislature has specifically used the words 'accepts' or 'obtains'. As
against this, there is departure in the language used in clause (1)(d) of
Section 13 PC Act and it has omitted the word 'accepts' and has
emphasized the word 'obtains'. Further, the ingredient of sub-clause (i) is
that by corrupt or illegal means, a public servant obtains any valuable thing
or pecuniary advantage; under clause (ii) he obtains such thing by abusing
his position as public servant; and sub-clause (iii) contemplates that while
holding office as the public servant, he obtains for any person any valuable
thing or pecuniary advantage without any public interest. For convicting
the person under Section 13(1)(d) PC Act, there must be evidence on
record that accused 'obtained' for himself or for any other person any
valuable thing or pecuniary advantage by either corrupt or illegal means or
by abusing his position as a public servant or he obtained for any person
any valuable thing or pecuniary advantage without any public interest.
23. I have heard the learned counsel for the parties.
24. It is not in dispute that Kashibatla Ramakrishna (A-6) assumed
charge as Zonal Manager, New Delhi, in the mid of May, 1992. The
Company (A-4), which was maintaining its account for more than a
decade, vide its letter dated 01.06.1992 recommended sanction of
enhancement limit. The Head Office was already following up the matter,
as the account was 'Head Office Controlled Account' and process was
initiated by Head Office itself, vide letter dated 28.04.1992 addressed to
Janpath Branch, Delhi, and copies endorsed to the Regional Manager and
Zonal Manager.
25. Sh. Adesh Kumar (PW24) stated that he had seen the sanction loan
dated 10.09.1992, which was sanctioned by the Board of Directors on
07.11.1992. The sanction relates to sanction of limits of the Company (A-
4). In the said sanction note, limit for bill purchase was sanctioned by the
Board of Directors against DP facility, i.e., bills were to be purchased
against payment. This system was going on in the Branch when
Kashibatla Ramakrishna (A-6) joined the Bank. Accordingly, the said
accused also prepared vouchers after the purchase of bills were approved
by the petitioner against acceptance.
26. PW24 further stated that there were clear and repeated instructions
of the petitioner, Branch Manager and Kashibatla Ramakrishna (A-6),
DGM, UBI, New Delhi, that under no circumstances the bills of the
Company (A-4) should be delayed for discounting and for this account
routing procedure need not be followed strictly.
27. Mr. G.S. Trikha (PW41) stated that account of the Company (A-4)
was used to be treated by their Bank as an important and VIP account and
corroborated the version stated by PW24 that routing procedure was not
required to be followed strictly in the case of Company. Admittedly,
during the pendency of the proceedings, the Company (A-4) settled all its
accounts with the Bank by way of compromise/settlement duly approved
by the Managing Committee of the Board of Directors on 24.08.2007 by
paying Rs.865.04 Lakhs and thereby the account was closed w.e.f.
24.08.2007. Thereafter, the Bank issued "No Due Certificate" as well
besides realizing all collateral securities held by it as security for advance.
Vide order dated 18.10.2007, the Debt Recovery Tribunal ('DRT'), Delhi,
had also confirmed the withdrawal of Suit filed by the Bank consequent
upon the settlement including all dues of the borrower Company.
28. It is important to note that vide judgment dated 29.04.2009, this
Court quashed the criminal proceedings against Sh. Ratan Bagaria
observing therein that it has not been disputed that the amount had already
been paid to the Bank and the settlement includes all dues of the borrowers
Company.
29. From the record, it is revealed that vide letter dated 28.04.1992,
Head Office had advised the Branch Manager (petitioner herein) to obtain
requisite documents from the Company for forwarding enhancement
proposal of the Company. The petitioner assumed office on 12.08.1993,
whereas all the sanctions were taken place before his joining. Moreover,
Kashibatla Ramakrisha (A-6), who joined the Bank in May, 1992, has been
discharged by this Court vide order dated 16.04.2012 and said order has
attained finality.
30. I note, the Head Office was already following up the matter as the
account was 'Head Office Controlled Account' and the process was
initiated by the Head Office itself, vide letter dated 28.04.1992.
Thereafter, the Head Office by way of detailed "Draft Board Note" signed
by the General Manager and Deputy Manager (Credit) recommended for
enhancement of Overall Credit Limits on 09.10.1992, which was approved
by the Chairman and Managing Director. It is further noted that the Board
of Directors in Addendum Note dated 23.10.1992 sought approval from
Reserve Bank of India ('RBI') in respect of aforesaid facility.
31. I further note that the Board of Directors principally agreed for
increasing the Overall Credit Limit of the Company from Rs.1672.00
Lakhs to Rs.4442.00 Lakhs. Accordingly, RBI, per Telex No. 5709 dated
16.10.1992 advised the Board of Directors to dispose of the case in the
light of their instructions conveyed to their Bank per Telex No. 5520 dated
09.10.1992. Thereafter on 07.11.1992, the said approval Board Note was
then placed before the Board of Directors, consisting of six Directors from
various walks of life, who finally approved the proposal for sanction of
enhancement credit to the tune of Rs.4442.00 Lakhs in its meeting dated
07.11.1992. Accordingly, the Head Office conveyed enhanced sanction to
the Zonal Manager with intimation to the Branch Manager, i.e., the
petitioner and the Regional Manager (A-6).
32. It is apparently clear that the problem had started from August, 1993
to April, 1994 on account of large scale crystallization of bills amounting
to Rs.15.43 Crores and their subsequent realization to the full extent on
account of relentless follow up by the Bank supported by the cooperation
extended by the parties. The manner in which advances made under
packing credit was treated as fully secured both by primary and collateral,
also explained by Head Office to RBI vide communication dated
01.06.1994, wherein it was clearly mentioned as to how consequent upon
the disintegration of Soviet Union, in the absence of mutually agreed trade
terms between India and CIS Countries, realization of export bills were
getting abnormally delayed. Thereafter, the account of the accused
company became NPA as on 31.03.1996. Accordingly, the account was
seriously followed up by Kashibatla Ramakrishna (A-6) consequent upon
the abolition of Zonal System of administration, arising out of the
organization restricting w.e.f. March, 1994, as well as the Branch and
Head Office. As a result, payments of worth more than Rs.11 Crores by
way of bill realization and otherwise were received during 1996 to 1997.
33. In the case of Central Bureau of Investigation, SPE SIU (X), New
Delhi Vs. Duncans Agro Industries Ltd., Calcutta, (1996) 5 SCC 591, the
Supreme Court observed that if the officer of the Bank has not acted
properly because of the fact that ultimate decision was taken by the Board
of Directors, it cannot reasonably be held that some of the Officers of the
Bank connived and misled the Board, more precisely, then there is no
allegation against the members of the Board.
34. Undisputedly, the accused Company was a very valued client of the
Bank and had immensely satisfactory transactions with the Bank for more
than two decades. The Managing Director of the Company used to directly
correspond with the CMD of the Bank and its file was directly controlled
by the Head office. Even the enhancement proposal was initiated and
forwarded by the Head Office to the Branch Manager to be processed.
35. The law is well settled that the standard of proof required to
establish the guilt in a criminal case, is far higher than the standard of
proof required to establish the guilt in the departmental proceedings. But
the evidence in the criminal proceedings is one and the same. I am
conscious of the fact that power of quashing the criminal proceedings
should be exercised very sparingly and with utmost circumspection and
that too in the rarest of rare cases. The Court will not be justified in
embarking upon an enquiry as to the reliability or genuineness or otherwise
of the allegations made in the FIR or the complaint or in the charge-sheet
and that the extraordinary or inherent powers do not confer an arbitrary
jurisdiction on the Court to act according to its whim or caprice.
36. Law has been settled in the case of R.P. Kapur Vs. State of Punjab
AIR 1960 SC 866, where the allegations in the First Information Report or
complaint taken at their face value and accepted in their entirety do not
constitute the offence, the High Court in its inherent power can and should
exercise to quash the proceedings.
37. In the case of State of Karnataka Vs. L. Muniswamy and Ors.
(1977) 2 SCC 699, the Supreme Court held that to quash the proceedings
under Section 482 Cr.P.C. when it comes to the conclusion that allowing
the proceedings to continue would be an abuse of process of Court or that
the ends of justice require that the proceedings ought to be quashed. It is
also for the court to take into consideration any special features which
appears in a particular case to consider whether it is expedient and in the
interest of justice to permit a prosecution to continue.
38. It is not out of place to mention here that Mr. V.N. Bhattacharya
(PW21) stated that most of the Irregularity Reports submitted by the
petitioner were seen by Kashibatla Ramakrishna (A-6) as those contain his
signatures and instructions to regularize the account. The above facts
imply that position of the account of the accused Company (A-4) was
brought to the notice of DGM by the petitioner in the Irregularity Reports.
39. The petitioner has already suffered for 14 years and till date, the trial
is not concluded. The facts and circumstances of the case in hand is
squarely covered by the decision rendered by the Supreme Court in the
case of State of Haryana and Ors. Vs. Bhajan Lal & Ors. (1992) Supp (1)
SCC 335. Additionally, the present case is also covered by the judgments
in the cases of Duncan's Agro, R.P.Kapur and L.Muni Swamy (supra),
as discussed above.
40. In the case of M. Mohan Vs. State (2011) 3 SCC 626, the Supreme
Court observed and held as under:-
"53. This Court had an occasion to examine the legal
position in a large number of cases. In R.P. Kapur v. State of
Punjab AIR 1960 SC 866, this Court summarized some
categories of cases where the High Court in its inherent power
can and should exercise to quash the proceedings:
(i) where it manifestly appears that there is a legal bar
against the institution or continuance of the proceedings;
(ii) where the allegations in the first information report or
complaint taken at their face value and accepted in their
entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence, but there
is no legal evidence adduced or the evidence adduced
clearly or manifestly fails to prove the charge."
xxxx xxxx xxxx
55. This Court in State of Karnataka v. L. Muniswamy and
Ors. (1977) 2 SCC 699, observed that the wholesome power
under Section 482 Code of Criminal Procedure entitles the
High Court to quash a proceeding when it comes to the
conclusion that allowing the proceedings to continue would be
an abuse of the process of the court or that the ends of justice
requires that the proceedings ought to be quashed. The High
Courts have been invested with inherent powers, both in civil
and criminal matters, to achieve a salutary public purpose. A
Court proceeding ought not to be permitted to degenerate into
a weapon of harassment or persecution. In this case, the court
observed that ends of justice are higher than the ends of mere
law though justice must be administered according to laws
made by the Legislature. This case has been followed in a
large number of subsequent cases of this Court and other
courts.
xxxx xxxx xxxx
57. This Court in Madhavrao Jiwajirao Scindia and Ors. v.
Sambhajirao Chandrojirao Angre and Ors. (1988) 1 SCC
692, observed in para 7 as under:
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 utilized for any oblique purpose
and where in the opinion of the court chances of an
ultimate conviction is 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.
xxxx xxxx xxxx
62. In Connelly v. Director of Public Prosecutions 1964 AC
1254, Lord Ried at page 1296 expressed his view "there must
always be a residual discretion to prevent anything which
savours of abuse of process" with which view all the members
of the House of Lords agreed but differed as to whether this
entitled a Court to stay a lawful prosecution.
xxxx xxxx xxxx
67. In State of A.P. v. Golconda Linga Swamy and Anr.
(2004) 6 SCC 522, this Court observed as under:
Exercise of power under Section 482 of the Code in a case
of this nature is the exception and not the rule. The
section does not confer any new powers on the High
Court. It only saves the inherent power which the Court
possessed before the enactment of the Code. It envisages
three circumstances under which the inherent jurisdiction
may be exercised, namely: (i) to give effect to an order
under the Code, (ii) to prevent abuse of the process of
court, and (iii) to otherwise secure the ends of justice. It is
neither possible nor desirable to lay down any inflexible
rule which would govern the exercise of inherent
jurisdiction. No legislative enactment dealing with
procedure can provide for all cases that may possibly
arise. Courts, therefore, have inherent powers apart from
express provisions of law which are necessary for proper
discharge of functions and duties imposed upon them by
law. That is the doctrine which finds expression in the
section which merely recognizes and preserves inherent
powers of the High Courts. All courts, whether civil or
criminal, possess in the absence of any express provision,
as inherent in their constitution, all such powers as are
necessary to do the right and to undo a wrong in course of
administration of justice on the principle quando lex
aliquid alique concedit, conceditur et id sine quo res ipsa
esse non potest (when the law gives a person anything, it
gives him that without which it cannot exist). While
exercising powers under the section, the Court does not
function as a court of appeal or revision. Inherent
jurisdiction under the section though wide has to be
exercised sparingly, carefully and with caution and only
when such exercise is justified by the tests specifically laid
down in the section itself. It is to be exercised ex debito
justitiae to do real and substantial justice for the
administration of which alone courts exist. Authority of
the court exists for advancement of justice and if any
attempt is made to abuse that authority so as to produce
injustice, the court has power to prevent such abuse. It
would be an abuse of the process of the court to allow any
action which would result in injustice and prevent
promotion of justice. In exercise of the powers court
would be justified to quash any proceeding if it finds that
initiation or continuance of it amounts to abuse of the
process of court or quashing of these proceedings would
otherwise serve the ends of justice. When no offence is
disclosed by the complaint, the court may examine the
question of fact. When a complaint is sought to be
quashed, it is permissible to look into the materials to
assess what the complainant has alleged and whether any
offence is made out even if the allegations are accepted in
toto.
68. This Court in Zandu Pharmaceutical Works Ltd. and Ors.
v. Mohd. Sharaful Haque and Anr. (2005) 1 SCC 122,
observed thus:
It would be an abuse of process of the court to allow any
action which would result in injustice and prevent
promotion of justice. In exercise of the powers, court
would be justified to quash any proceeding if it finds that
initiation/ continuance of it amounts to abuse of the
process of court or quashing of these proceedings would
otherwise serve the ends of justice. When no offence is
disclosed by the complaint, the court may examine the
question of fact. When a complaint is sought to be
quashed, it is permissible to look into the materials to
assess what the complainant has alleged and whether any
offence is made out even if the allegations are accepted in
toto."
41. After going through the legal position discussed above and the facts
and circumstances of the case, it is noted that allegations are against the
two officers, i.e., the petitioner and Kashibatla Ramakrishna (A-6), who
has already been discharged by this Court vide judgment dated 16.04.2012,
which has attained finality as the same has not been challenged by the CBI.
Moreover, case of the petitioner is on better footing than the case of
Kashibatla Ramakrishna (A-6) for the reason the latter joined the office as
Regional Manager prior to the petitioner in May, 1992, whereas the
petitioner joined on 12.08.1993 as Branch Manager. All the sanctions had
taken place much prior to joining of the petitioner. Thus, after going
through the evidence of all the witnesses, the settled law and submissions
of the counsel for the parties, I am of the considered opinion that if the trial
is allowed to go on and even if the evidence on record remains as
unrebutted, then also, the petitioner cannot be held guilty. Therefore, there
would be no purpose to proceed with the trial against the petitioner as it
will promote injustice. In such an eventuality, jurisdiction of this Court
under Section 482 Cr.P.C. comes to rescue.
42. Keeping in view the legal position discussed above and the facts and
circumstances of the case, the present petition is allowed.
43. Accordingly, the order dated 29.11.2012 and the consequent
proceedings in Criminal Case No.51/11 & RC. No.5(E)/01 under Sections
120B/409 of the Indian Penal Code, 1860 and Sections 13(1) (d) and 13(2)
of the Prevention of Corruption Act, 1988 with emanating proceedings
against the petitioner are hereby quashed.
Crl.M.A.No.8976/2013 (for stay)
With the disposal of the petition itself, the present application has
become infructuous. The same is dismissed accordingly.
SURESH KAIT
(JUDGE)
FEBRUARY 24, 2016
jg/sb
