Karnataka High Court
Mrs Ramya G C vs Central Bureau Of Investigation on 30 March, 2022
Bench: M.Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF MARCH, 2022
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.6886 OF 2021
C/W
CRIMINAL PETITION No.9078/2021
IN CRIMINAL PETITION No.6886 OF 2021
BETWEEN:
MRS.RAMYA G.C.,
W/O OF RAMESH B.GOWDA
NON-EXECUTIVE DIRECTOR
GREEN ORGANICS (INDIA) PVT. LTD.,
AGED ABOUT 45 YEARS,
RESIDING AT NO.325/1
14TH MAIN, 5TH CROSS
RMV EXTENSION, SADASHIVANAGAR
BENGALURU
KARNATAKA - 560 080.
... PETITIONER
(BY SRI X.M.JOSEPH, ADVOCATE FOR
SRI GIRISH T.R., ADVOCATE (PHYSICAL HEARING))
AND:
1. CENTRAL BUREAU OF INVESTIGATION
OFFICE OF THE SUPERINTENDENT OF POLICE
NO.36, BELLARY ROAD, KGH LAYOUT
BENGALURU - 560 032.
2
2. MR.BASANTH CHAKRAVARTHY
DEPUTY GENERAL MANAGER
IDBI BANK LIMITED NO.58,
MISSION ROAD,
IDBI HOUSE, NPA
MANAGEMENT GROUP
BENGALURU URBAN - 560 027
KARNATAKA STATE.
... RESPONDENTS
(BY SRI P.PRASANNA KUMAR, ADVOCATE FOR R1;
SRI T.P.MUTHANNA, ADVOCATE FOR R2
(PHYSICAL HEARING))
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE FIR BEARING
NO.RC0372020A0016, BASED ON A COMPLAINT GIVEN BY ONE
MR.BASANTH CHAKRAVARTHY, DEPUTY GENERAL MANAGER OF
IDBI BANK ALLEGING COMMISSION OF OFFENCE U/S.120-B R/W
SEC.420, 409 AND 477A OF IPC, 1860 AND SEC.13(2) R/W
SEC.13(1)(d) OF THE PREVENTION OF CORRUPTION ACT 1988
AGAINST THE PETITIONER, PENDING BEFORE THE LEARNED XXI
ADDITIONAL CITY CIVIL AND SESSIONS AND SPECIAL JUDGE FOR
CBI CASES, BENGALURU REGISTERED BEFORE THE
RESPONDENT.
IN CRIMINAL PETITION No.9078/2021
BETWEEN:
SRI CHANDRASHEKAR
BALASUBRAMANYAM,
S/O. BALASUBRAMANYAM,
AGED ABOUT 48 YEARS
RESIDING AT NO. 325/1,
5TH CROSS, 14TH MAIN ROAD,
RMV EXTENSION,
SADASHIVANAGAR,
BENGALURU - 560 080.
3
DIRECTOR, M/S. GREEN
ORGANICS (INDIA) PVT. LTD.,
... PETITIONER
(BY SRI X.M.JOSEPH, ADVOCATE FOR
SRI GIRISH T.R., ADVOCATE (PHYSICAL HEARING))
AND:
1. CENTRAL BUREAU OF INVESTIGATION
OFFICE OF THE SUPERINTENDENT OF POLICE,
NO. 36, BELLARY ROAD,
KGH LAYOUT,
BENGALURU - 560 032.
2. MR. BASANTH CHAKRAVARTHY
DEPUTY GENERAL MANAGER,
IDBI BANK LIMITED,
NO. 58, MISSION ROAD,
IDBI HOUSE, NPA,
MANAGEMENT GROUP,
BENGALURU 560 027,
KARNATAKA STATE.
... RESPONDENTS
(BY SRI P.PRASANNA KUMAR, ADVOCATE FOR R1;
SRI T.P.MUTHANNA, ADVOCATE FOR R2
(PHYSICAL HEARING))
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE FIR BEARING
NO.RC0372020A0016 OR THE ALLEGED OFFENCE P/U/S 120B
R/W 420, 409 AND 477-A OF IPC AND SEC.13(2) R/W 13(1)(d) OF
P.C ACT AGAINST THE PETITIONER PENDING BEFORE THE
LEARNED XXI ADDITIONAL CITY CIVIL JUDGE AND PRL. SESSIONS
AND SPL.JUDGE FOR CBI CASES (VIDE ANNEXURE-C) BENGALURU
CASE NO.RC.16(A)/2020 REGISTERED BEFORE THE RESPONDENT
SO FAR AS THE PETITIONER IS CONCERNED.
4
THESE CRIMINAL PETITIONS COMING ON FOR ADMISSION
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioners, in both these cases, call in question
registration of a crime against them in Crime No.RC 16A/2020
for offences punishable under Sections 120B, 420, 409, 477A
r/w Sections 13(2) and 13(1)(d) of the Prevention of Corruption
Act, 1988.
2. Heard Sri.X.M.Joseph, learned counsel for petitioners
and Sri. P.Prasanna Kumar, learned counsel for respondent
No.1 and Sri.T.P.Muthanna, learned counsel for respondent
No.2.
3. Brief facts leading to the filing of the present petition, as
borne out from the pleadings, are as follows:
Both the petitioners in these petitions were Directors of
Green Organics (India) Pvt. Ltd., Green Organics (India) Pvt.
Ltd., is alleged to have been the beneficiary of certain diversion
of funds from the Industrial Development Bank of India ('IDBI'
for short) amongst other allegations as could be gathered from
the complaint. The complaint is registered on 26.11.2020
against M/s.Green Organics (India) Pvt. Ltd., and its Directors
for perpetration of fraud on the IDBI Bank. Pursuant to the said
complaint, an FIR is registered in Crime No.RC.16A/2020
against the petitioners for the afore-quoted offences. The
moment the crime is registered, the petitioners have knocked the
doors of this Court, in these petitions, calling in question the
registration of crime against them.
4. Learned counsel Sri.X.M. Joseph appearing for the
petitioners would vehemently argue and contend that the
petitioners being the Directors of accused beneficiary Green
Organics (India) Pvt. Ltd., have no role to play in any
perpetration of fraud, even on perusal of the complaint; the
complaint itself narrates that recovery proceedings are initiated
against Green Organics (India) Pvt. Ltd., by the complainant
themselves; narration in the complaint nowhere names the
petitioners to be the parties to the alleged perpetration of fraud
and would take this Court to the complaint to contend that if the
complaint does not make out an offence, the FIR registered on
the basis of the said complaint should forthwith be obliterated.
He would place reliance upon the following judgments:
(i) MUSSTT REHANA BEGUM V. STATE OF ASSAM AND
ANOTHER reported in 2022 SCC ONLINE SC 82
(ii) DAYLE DE'SOUZA V. GOVERNMENT OF INDIA reported
in 2021 SCC ONLINE SC 1012
(iii) PRATIBHA V. RAMESHWARI DEVI AND OTHERS
reported in (2007)12 SCC 369
(iv) STATE OF A.P V. GOLCONDA LINGA SWAMY AND
ANOTHER reported in (2004)6 SCC 522
(v) SANTHOSH CHINNAPPA REDDY V. STATE OF
KARNATAKA rendered in CRL.P.NO.5194/2018 disposed
on 10.11.2021
5. On the other hand, learned counsel representing the
CBI Sri.P.Prasanna Kumar would vehemently refute the
submissions made to contend that the name of the petitioners
does figure in the complaint for offence of criminal conspiracy
and even for the offence of cheating, as the petitioners are
alleged to have been parties for diversion of funds.
6. I have given my anxious consideration to the
submissions made by the learned counsel for both the learned
counsel and perused the material on record.
7. What requires to be considered is, whether the
complaint makes out a prima facie allegation qua role of the
petitioners or the case is covered by the first postulate of STATE
OF HARYANA v. BHAJANLAL1, which reads as follows:
"(1) Where the allegations made in the first
information report or the complaint, even if they are
taken at their face value and accepted in their
entirety do not prima facie constitute any offence or
make out a case against the accused."
(Emphasis supplied)
This is required to be tested on the bedrock of the complaint
that is registered by the complainant.
1992 Supp. 1 SCC 335
8. The complaint is registered by the IDBI Bank on
26.11.2020 to the CBI. The complaint though not necessary to
be noticed in its entirety, it is necessary to notice the role of the
petitioners, as narrated in the complaint. The submission of the
learned counsel for petitioners is that the issue stands covered
by the afore-quoted clause of BHAJANLAL.
9. The complaint narrates about diversion of funds in
terms of the auditors report submitted on 09.09.2019. The
diversion of fund is one such irregularity that is found in the
Forensic Audit Report. The said narration reads as follows:
"A. Diversion of funds:
Out of total assistance sanctioned to GOIPL,
diversion of funds to the tune of Rs.15.48 crore
was observed to (i) personal SB account of Shri
Ramesh Gowda, (ii) other directors [Smt.Ramya GC
& Shri Candrashekar B.] and (iii) group companies
and firms through various accounts maintained
at Corporation Bank. The funds were diverted to
unrelated transactions including acquisitions of real
estate, retirement of consumer loans by Shri Ramesh
Gowda and payment of his Income Tax dues etc.,"
(Emphasis added)
The other place where the name of the petitioners along
with others is found is at paragraph 8 of the said complaint
which deals with role of accused persons including the role of
public servants. Clause (iii) of the said paragraph reads as
follows:
"(iii) They in furtherance of criminal
conspiracy and with the support of the
documents/reports forged by them have
done diversion of funds and siphoning of
the funds of Rs.15.48 crore sanctioned
out of the loans from the bank to various
accounts such as (i) personal SB Account
of Shri Ramesh Gowda (ii) other directors
[Smt.Ramya GC & Shri Chandrashekar B.]
and (iii) group companies and firms
through various accounts maintained at
Corporation Bank. The funds were diverted
to unrelated transactions including
acquisitions of real estate, retirement of
consumer loans availed by Shri Ramesh
Gowda and payment of his Income Tax dues
etc. The said diversion/siphoning of funds
was committed by the said accused after
agreeing with the Bank under the Loan
agreement and guarantee agreements that
loans/facilities shall not be utilized for any
purpose other than for which it is sanctioned
and in particular it shall be utilized for the
repayment of dues of promoters, associates,
groups, companies or for any speculative
purposes. In view of the said siphoning off
/diversion of the funds out of the loans made
they cheated the Bank to the tune of Rs.65.33
crore."
(Emphasis added)
Clause (iii) observes conspiracy and forgery by all the
accused alleged of being cohorts in crime. The complaint is
registered in the criminal case for the afore-quoted offences. The
respondent-CBI has also filed its statement of objections as to
what has been divulged during the investigation conducted and
would submit that the investigation is complete and a charge
sheet is ready to be filed before the competent Court. The
preliminary observations found and is extracted in the statement
of objections is germane to be noticed. The objections insofar as
the petitioners are concerned read as follows:
"In this regard it is submitted that the investigation
is still under progress and the material collected so
far indicates the intrinsic involvement of the
petitioner in the affairs of the 1st accused company.
It is submitted that the investigation conducted so
far revealed that she is a Director of the company
and a Guarantor of the various credit facilities
sanctioned to M/S Greens Organics (India) Pvt. Ltd.
It is found that she had signed a number of
Cheques for diverting the fund. Further, she is a
signatory of the bogus/forged Balance Sheet of the
company, which shows that the Paid-Up Capital of
the company as Rs.25.00 Crores (approx.) as
against the actual of Rs.1.00 Lakh. Being the
Director of the company, she is equally responsible
for the fraud perpetrated on the IDBI and she
should be treated at par with other Directors. She
is a signatory of the Cheque issued in favour of
M/S Coffee Day Hotels & Resorts Pvt. Ltd for part
of quid pro quo to Shri R.Damodaran/CGM.
Besides, she is also a beneficiary of the funds.
Further, she is a signatory of a number of Cheques
which was used for diverting the fund of the IDBI.
Since the petitioner is involved & incharge of the
day-to-day affairs of the 1st accused/company, the
petitioner being Director has been arrayed as an
accused. It is further submitted that the 1st
respondent / agency is likely to complete the
investigation and file its report, and the entire role
of the petitioner herein will come to light. As such
the said ground cannot be entertained at this
stage."
The narration in the statement of objections does not stop
at what is narrated in the complaint on diversion of funds.
Several other instances of perpetration of such diversion and
becoming a beneficiary of such diversion is alleged against the
petitioners.
10. The contention of the learned counsel appearing for the
petitioners that the complaint does not make out an offence and
the proceedings should not be permitted to be continued, is
unacceptable, as it is trite law that the first information report is
not an encyclopedia of offences and need not contain all the
material that is required to be proved in a full blown trial, except
in exceptional circumstances where the offence alleged would
not even meet the ingredients of such offence on a bare perusal
at the contents of the FIR.
11. It is not a case of that nature where there is no offence
made out in the complaint or in the investigation, as found in
the statement of objections. The judgments relied on by the
learned counsel appearing for the petitioners in the cases (supra)
all deal with the powers of this Court under Section 482 of the
Cr.P.C. to obliterate such proceedings which would at the end
become an abuse of the process of law or result in miscarriage of
justice. There can be no qualm in the principles enunciated by
the Apex Court in the aforesaid judgment as right from the
judgment in the case of BHAJANLAL, the said principles have
been reiterated by the Apex Court in plethora of cases.
12. The learned counsel for petitioners places reliance on
the judgments of the Apex Court in the case of MUSSTT
REHANA BEGUM2, wherein it is held as follows:
"14. In Neeharika Infrastructure v. State of
Maharashtra3, a three-judge Bench of this Court analysed
the precedent of this Court and culled out the relevant
principles that govern the law on quashing of a first
information report4 under Section 482 of the CrPC. The
Court held:
"57. From the aforesaid decisions of this
Court, right from the decision of the Privy Council in
the case of Khawaja Nazir Ahmad (supra), the
following principles of law emerge:
i) Police has the statutory right and duty under the
relevant provisions of the Code of Criminal Procedure
contained in Chapter XIV of the Code to investigate
into cognizable offences;
ii) Courts would not thwart any investigation into the
cognizable offences;
iii) However, in cases where no cognizable offence or
offence of any kind is disclosed in the first
information report the Court will not permit an
investigation to go on;
2022 SCC ONLINE SC 82
iv) The power of quashing should be exercised
sparingly with circumspection, in the 'rarest of rare
cases'. (The rarest of rare cases standard in its
application for quashing under Section 482 Cr.P.C. is
not to be confused with the norm which has been
formulated in the context of the death penalty, as
explained previously by this Court);
v) While examining an FIR/complaint, quashing of
which is sought, the court cannot embark upon an
enquiry as to the reliability or genuineness or
otherwise of the allegations made in the
FIR/complaint;
vi) Criminal proceedings ought not to be scuttled at
the initial stage;
vii) Quashing of a complaint/FIR should be an
exception and a rarity than an ordinary rule;
viii) Ordinarily, the courts are barred from usurping
the jurisdiction of the police, since the two organs of
the State operate in two specific spheres of activities.
The inherent power of the court is, however,
recognised to secure the ends of justice or prevent
the above of the process by Section 482 Cr.P.C.
ix) The functions of the judiciary and the police are
complementary, not overlapping;
x) Save in exceptional cases where non-interference
would result in miscarriage of justice, the Court and
the judicial process should not interfere at the stage
of investigation of offences;
xi) Extraordinary and inherent powers of the Court
do not confer an arbitrary jurisdiction on the Court to
act according to its whims or caprice;
xii) The first information report is not an
encyclopaedia which must disclose all facts and
details relating to the offence reported. Therefore,
when the investigation by the police is in progress,
the court should not go into the merits of the
allegations in the FIR. Police must be permitted to
complete the investigation. It would be premature to
pronounce the conclusion based on hazy facts that
the complaint/FIR does not deserve to be
investigated or that it amounts to abuse of process of
law. During or after investigation, if the investigating
officer finds that there is no substance in the
application made by the complainant, the
investigating officer may file an appropriate
report/summary before the learned Magistrate
which may be considered by the learned Magistrate
in accordance with the known procedure;
xiii) The power under Section 482 Cr.P.C. is very
wide, but conferment of wide power requires the
court to be cautious. It casts an onerous and more
diligent duty on the court;
xiv) However, at the same time, the court, if it
thinks fit, regard being had to the parameters
of quashing and the self-restraint imposed by
law, more particularly the parameters laid
down by this Court in the cases of R.P. Kapur
(supra) and Bhajan Lal (supra), has the
jurisdiction to quash the FIR/complaint; and
xv) When a prayer for quashing the FIR is made by
the alleged accused, the court when it exercises the
power under Section 482 Cr.P.C., only has to
consider whether or not the allegations in the FIR
disclose the commission of a cognizable offence and
is not required to consider on merits whether the
allegations make out a cognizable offence or not and
the court has to permit the investigating
agency/police to investigate the allegations in the
FIR."
(emphasis supplied)
15. ... ... ....
16. In State of Andhra Pradesh v. Golconda Linga
Swamy, a two-judge Bench of this Court elaborated on the
types of materials the High Court can assess to quash an
FIR. The Court drew a distinction between consideration of
materials that were tendered as evidence and appreciation
of such evidence. Only such material that manifestly fails
to prove the accusation in the FIR can be considered for
quashing an FIR. The Court held:
"5.....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."
6. In R.P. Kapur v. State of Punjab [AIR 1960
SC 866 : 1960 Cri LJ 1239] this Court summarised
some categories of cases where inherent power can
and should be exercised to quash the proceedings :
(AIR p. 869, para 6)
(i) where it manifestly appears that there is a legal
bar against the institution or continuance e.g. want
of sanction;
(ii) where the allegations in the first information
report or complaint taken at its 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.
7. In dealing with the last category, it is
important to bear in mind the distinction between a
case where there is no legal evidence or where there
is evidence which is clearly inconsistent with the
accusations made, and a case where there is legal
evidence which, on appreciation, may or may not
support the accusations. When exercising
jurisdiction under Section 482 of the Code, the High
Court would not ordinarily embark upon an enquiry
whether the evidence in question is reliable or not or
whether on a reasonable appreciation of it
accusation would not be sustained. That is the
function of the trial Judge. Judicial process, no doubt
should not be an instrument of oppression, or, needless
harassment. Court should be circumspect and judicious in
exercising discretion and should take all relevant facts and
circumstances into consideration before issuing process,
lest it would be an instrument in the hands of a private
complainant to unleash vendetta to harass any person
needlessly. At the same time the section is not an
instrument handed over to an accused to short-circuit a
prosecution and bring about its sudden death....."
(emphasis supplied)
17. The precedent of this Court clarifies that in
certain circumstances, the High Court is entitled to consider
other materials before exercising its powers of quashing
under Section 482 of the CrPC. In the present case the
appellant and the second respondent were parties to the
decision of the Family Court. No contentious material or
disputed issues of evidence arise. In the above backdrop,
allowing the criminal proceeding to proceed for an offence
under Sections 494 and 495 of IPC would constitute an
abuse of the process. As between the appellant and the
second respondent the issue as to whether she had a
subsisting marriage on the date on which she entered into
a marriage with the second respondent is the subject
matter of a conclusive finding of the Principal Judge of the
Family Court which has attained finality. Explanation (b) to
Section 7(1) of the Family Courts Act 1984 expressly
confers the Family Court with jurisdiction to determine the
matrimonial status of a person. Section 7(1) of the Family
Courts Act 1984 grants a Family Court with the status of a
District Court and Section 7(2) confers it with jurisdiction
exercisable by a Magistrate of the first class under Chapter
IX of the CrPC, thus enabling to collect evidence to make
such a determination. Thus, relying on the judgement of
the Family Court which has jurisdiction to decide the
gravamen of the offence alleged in the criminal complaint,
would not be same as relying on evidentiary materials that
are due for appreciation by the Trial Court, such as the
investigation report before it is forwarded to the Magistrate.
An analogous factual matrix came up for determination
before this Court in P S Rajya v. State of Bihar. This Court
quashed an FIR against an accused under the Prevention
of Corruption Act 1947 by noticing that the accused had
been exonerated on an identical charge in the relevant
departmental proceedings in light of a report submitted by
the Central Vigilance Commission and concurred by the
Union Public Service Commission. A two-judge Bench of
this Court relied on the principles laid down in Bhajan Lal
(supra) and quashed the FIR by holding:
"17. At the outset we may point out that the
learned counsel for the respondent could not but
accept the position 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.
He also accepted that in the present case, the charge
in the departmental proceedings and in the criminal
proceedings is one and the same. He did not dispute
the findings rendered in the departmental
proceedings and the ultimate result of it. On these
premises, if we proceed further then there is no
difficulty in accepting the case of the
appellant. For if the charge which is identical
could not be established in a departmental
proceedings and in view of the admitted
discrepancies in the reports submitted by the
valuers one wonders what is there further to
proceed against the appellant in criminal
proceedings.....
23. Even though all these facts including the
Report of the Central Vigilance Commission were
brought to the notice of the High Court,
unfortunately, the High Court took a view that the
issues raised had to be gone into in the final
proceedings and the Report of the Central Vigilance
Commission, exonerating the appellant of the same
charge in departmental proceedings would not
conclude the criminal case against the appellant. We
have already held that for the reasons given, on the
peculiar facts of this case, the criminal proceedings
initiated against the appellant cannot be pursued.
Therefore, we do not agree with the view taken by
the High Court as stated above. These are the
reasons for our order dated 27-3-1996 for allowing
the appeal and quashing the impugned criminal
proceedings and giving consequential reliefs."
In the case of PRATIBHA V. RAMESHWARI DEVI3, the
Apex Court holds as follows:
"7. Having heard the learned counsel for the parties
and after considering the materials on record and the
complaint filed by the appellant under Sections 498-A and
406 IPC, we are of the view that the High Court had
exceeded its jurisdiction by quashing FIR No. 221 of 2001
in exercise of its inherent powers under Section 482 of the
Code. Before we consider the scope and power of the High
Court to quash an FIR in exercise of its inherent powers
under Section 482 of the Code even before the parties are
permitted to adduce evidence in respect of the offences
alleged to have been made under the aforesaid two
sections (namely Sections 498-A and 406 IPC), we may
keep it on record that two questions merit our
determination in the present case:
(i) whether the High Court while quashing the FIR in
exercise of its inherent powers under Section 482 of the
Code was entitled to go beyond the complaint filed by the
complainant; and
(ii) whether the High Court was entitled to look into
and consider the investigation report submitted by four
officers of the rank of Dy. Superintendent of Police for
quashing the FIR even before the same could be filed
before the Magistrate concerned.
Before we do that, we may first consider how and
when the High Court, in its inherent powers under Section
482 of the Code, would be justified in quashing an FIR. It
is at this stage appropriate to refer to Section 482 of the
Code itself which runs as under:
(2007)12 SCC 369
"482. Saving of inherent powers of High Court.--
Nothing in this Code shall be deemed to limit or affect the
inherent powers of the High Court to make such orders as
may be necessary to give effect to any order under this
Code, or to prevent abuse of the process of any court or
otherwise to secure the ends of justice."
A bare look at this provision would show that while
exercising such inherent powers, the High Court must be
satisfied that either:
(i) An order passed under the Code would be
rendered ineffective; or
(ii) The process of any court would be abused; or
(iii) The ends of justice would not be secured.
8. In State of W.B. v. Swapan Kumar Guha [(1982) 1
SCC 561 : 1982 SCC (Cri) 283] Chandrachud, C.J. (as His
Lordship then was) had observed that if the FIR did not
disclose the commission of a cognizable offence, the court
would be justified in quashing the investigation on the
basis of the information as laid or received. In the same
judgment, A.N. Sen, J. (as His Lordship then was) who has
written the main judgment, has laid down the legal
propositions as follows : (SCC pp. 597-98, paras 65-66)
"65. ... the legal position is well settled. The legal
position appears to be that if an offence is disclosed,
the court will not normally interfere with an
investigation into the case and will permit
investigation into the offence alleged to be completed;
if, however, the materials do not disclose an offence,
no investigation should normally be permitted. ...
Once an offence is disclosed, an investigation into
the offence must necessarily follow in the interests of
justice. If, however, no offence is disclosed, an
investigation cannot be permitted, as any
investigation, in the absence of any offence being
disclosed, will result in unnecessary harassment to
a party, whose liberty and property may be put to
jeopardy for nothing. The liberty and property of any
individual are sacred and sacrosanct and the court
zealously guards them and protects them. An
investigation is carried on for the purpose of
gathering necessary materials for establishing and
proving an offence which is disclosed. When an
offence is disclosed, a proper investigation in the
interests of justice becomes necessary to collect
materials for establishing the offence, and for
bringing the offender to book. In the absence of a
proper investigation in a case where an offence is
disclosed, the offender may succeed in escaping
from the consequences and the offender may go
unpunished to the detriment of the cause of justice
and the society at large. Justice requires that a
person who commits an offence has to be brought to
book and must be punished for the same. If the court
interferes with the proper investigation in a case
where an offence has been disclosed, the offence will
go unpunished to the serious detriment of the
welfare of the society and the cause of the justice
suffers. It is on the basis of this principle that the
court normally does not interfere with the
investigation of a case where an offence has been
disclosed. ...
66. Whether an offence has been disclosed or not
must necessarily depend on the facts and
circumstances of each particular case. ... If on a
consideration of the relevant materials, the court is
satisfied that an offence is disclosed, the court will
normally not interfere with the investigation into the
offence and will generally allow the investigation
into the offence to be completed for collecting
materials for proving the offence."
Further, in the case of STATE OF A.P V. GOLCONDA
LINGA SWAMY4, the Apex Court holds as follows:
"5. 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
recognises 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
(2004)6 SCC 522
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.
6. In R.P. Kapur v. State of Punjab [AIR 1960 SC 866
: 1960 Cri LJ 1239] this Court summarised some categories
of cases where inherent power can and should be
exercised to quash the proceedings : (AIR p. 869, para 6)
(i) where it manifestly appears that there is a legal
bar against the institution or continuance e.g. want of
sanction;
(ii) where the allegations in the first information
report or complaint taken at its 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.
7. In dealing with the last category, it is important to
bear in mind the distinction between a case where there is
no legal evidence or where there is evidence which is
clearly inconsistent with the accusations made, and a case
where there is legal evidence which, on appreciation, may
or may not support the accusations. When exercising
jurisdiction under Section 482 of the Code, the High Court
would not ordinarily embark upon an enquiry whether the
evidence in question is reliable or not or whether on a
reasonable appreciation of it accusation would not be
sustained. That is the function of the trial Judge. Judicial
process, no doubt should not be an instrument of
oppression, or, needless harassment. Court should be
circumspect and judicious in exercising discretion and
should take all relevant facts and circumstances into
consideration before issuing process, lest it would be an
instrument in the hands of a private complainant to
unleash vendetta to harass any person needlessly. At the
same time the section is not an instrument handed over to
an accused to short-circuit a prosecution and bring about
its sudden death. The scope of exercise of power under
Section 482 of the Code and the categories of cases where
the High Court may exercise its power under it relating to
cognisable offences to prevent abuse of process of any
court or otherwise to secure the ends of justice were set out
in some detail by this Court in State of Haryana v. Bhajan
Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] . A note
of caution was, however, added that the power should be
exercised sparingly and that too in the rarest of rare cases.
The illustrative categories indicated by this Court are as
follows : (SCC pp. 378-79, para 102)
"102. (1) Where the allegations made in the
first information report or the complaint, even if they
are taken at their face value and accepted in their
entirety do not prima facie constitute any offence or
make out a case against the accused.
(2) Where the allegations in the first information
report and other materials, if any, accompanying the FIR
do not disclose a cognisable offence, justifying an
investigation by police officers under Section 156(1) of the
Code except under an order of a Magistrate within the
purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the
FIR or complaint and the evidence collected in support of
the same do not disclose the commission of any offence
and make out a case against the accused.
(4) Where the allegations in the FIR do not constitute
a cognisable offence but constitute only a non-cognisable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or
complaint are so absurd and inherently improbable on the
basis of which no prudent person can ever reach a just
conclusion that there is sufficient ground for proceeding
against the accused.
(6) Where there is an express legal bar engrafted in
any of the provisions of the Code or the Act concerned
(under which a criminal proceeding is instituted) to the
institution and continuance of the proceedings and/or
where there is a specific provision in the Code or the Act
concerned, providing efficacious redress for the grievance
of the aggrieved party.
(7) Where a criminal proceeding is manifestly
attended with mala fide and/or where the proceeding is
maliciously instituted with an ulterior motive for wreaking
vengeance on the accused and with a view to spite him
due to private and personal grudge."
8. As noted above, the powers possessed by the
High Court under Section 482 of the Code are very wide
and the very plenitude of the power requires great caution
in its exercise. Court must be careful to see that its decision
in exercise of this power is based on sound principles. The
inherent power should not be exercised to stifle a legitimate
prosecution. High Court being the highest court of a State
should normally refrain from giving a prima facie decision
in a case where the entire facts are incomplete and hazy,
more so when the evidence has not been collected and
produced before the Court and the issues involved,
whether factual or legal, are of magnitude and cannot be
seen in their true perspective without sufficient material. Of
course, no hard-and-fast rule can be laid down in regard to
cases in which the High Court will exercise its
extraordinary jurisdiction of quashing the proceeding at
any stage. [See Janata Dal v. H.S. Chowdhary [(1992) 4
SCC 305 : 1993 SCC (Cri) 36 : AIR 1993 SC 892] and
Raghubir Saran (Dr.) v. State of Bihar [AIR 1964 SC 1 :
(1964) 1 Cri LJ 1] .] It would not be proper for the High
Court to analyse the case of the complainant in the light of
all probabilities in order to determine whether a conviction
would be sustainable and on such premises, arrive at a
conclusion that the proceedings are to be quashed. It would
be erroneous to assess the material before it and conclude
that the complaint cannot be proceeded with. In a
proceeding instituted on complaint, exercise of the inherent
powers to quash the proceedings is called for only in a
case where the complaint does not disclose any offence or
is frivolous, vexatious or oppressive. If the allegations set
out in the complaint do not constitute the offence of which
cognisance has been taken by the Magistrate, it is open to
the High Court to quash the same in exercise of the
inherent powers under Section 482 of the Code. It is not,
however, necessary that there should be meticulous
analysis of the case before the trial to find out whether the
case would end in conviction or acquittal. The
complaint/FIR has to be read as a whole. If it appears that
on consideration of the allegations in the light of the
statement made on oath of the complainant or disclosed in
the FIR that the ingredients of the offence or offences are
disclosed and there is no material to show that the
complaint/FIR is mala fide, frivolous or vexatious, in that
event there would be no justification for interference by the
High Court. When an information is lodged at the police
station and an offence is registered, then the mala fides of
the informant would be of secondary importance. It is the
material collected during the investigation and evidence led
in court which decides the fate of the accused person. The
allegations of mala fides against the informant are of no
consequence and cannot by themselves be the basis for
quashing the proceeding. [See Dhanalakshmi v. R.
Prasanna Kumar [1990 Supp SCC 686 : 1991 SCC (Cri)
142 : AIR 1990 SC 494] , State of Bihar v. P.P. Sharma
[1992 Supp (1) SCC 222 : 1992 SCC (Cri) 192] , Rupan Deol
Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 : 1995
SCC (Cri) 1059] , State of Kerala v. O.C. Kuttan [(1999) 2
SCC 651 : 1999 SCC (Cri) 304] , State of U.P. v. O.P.
Sharma [(1996) 7 SCC 705 : 1996 SCC (Cri) 497] , Rashmi
Kumar v. Mahesh Kumar Bhada [(1997) 2 SCC 397 : 1997
SCC (Cri) 415] , Satvinder Kaur v. State (Govt. of NCT of
Delhi) [(1999) 8 SCC 728 : 1999 SCC (Cri) 1503] , Rajesh
Bajaj v. State NCT of Delhi [(1999) 3 SCC 259 : 1999 SCC
(Cri) 401 : AIR 1999 SC 1216] and State of Karnataka v. M.
Devendrappa [(2002) 3 SCC 89 : 2002 SCC (Cri) 539] ."
13. As observed hereinabove, these were principles in
reiteration of the earlier judgment in the case of BHAJANLAL
and others. Insofar as in the judgment in the case of DAYLE
DE'SOUZA5 (supra), the legal position culled out by the Apex
Court is found at paragraph 21and reads as follows:
"21. The legal position has undergone further
elucidation in a number of judgments.7 However, for the
present decision, we would refer to the summarisation in
National Small Industries Corporation Limited v. Harmeet
Singh Paintal,8 to the following effect:
2021 SCC ONLINE SC 1012
"39. From the above discussion, the following
principles emerge:
(i) The primary responsibility is on the complainant to
make specific averments as are required under the
law in the complaint so as to make the accused
vicariously liable. For fastening the criminal liability,
there is no presumption that every Director knows
about the transaction.
(ii) Section 141 does not make all the Directors liable
for the offence. The criminal liability can be fastened
only on those who, at the time of the commission of
the offence, were in charge of and were responsible
for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a
company registered or incorporated under the
Companies Act, 1956 only if the requisite
statements, which are required to be averred in the
complaint/petition, are made so as to make the
accused therein vicariously liable for offence
committed by the company along with averments in
the petition containing that the accused were in
charge of and responsible for the business of the
company and by virtue of their position they are
liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be
pleaded and proved and not inferred.
(v) If the accused is a Managing Director or a Joint
Managing Director then it is not necessary to make
specific averment in the complaint and by virtue of
their position they are liable to be proceeded with.
(vi) If the accused is a Director or an officer of a
company who signed the cheques on behalf of
the company then also it is not necessary to
make specific averment in the complaint.
(vii) The person sought to be made liable should be in
charge of and responsible for the conduct of the
business of the company at the relevant time. This
has to be averred as a fact as there is no deemed
liability of a Director in such cases."
(Emphasis supplied)
Clause (vi) of the said paragraph directs that if an accused
is a Director or an officer of the company who signed the
cheques on behalf of the company then also it is not necessary
to make specific averment in the complaint.
14. There are specific averments with regard to the
allegations against the petitioners in the complaint. The result
of investigation as is culled out in the objections is that the
petitioners in the capacity of Directors have issued number of
cheques for diversion of such funds. Therefore, it is not a matter
where this Court would interject or interfere with the trial, at
this stage of the proceedings, as there are serious disputed
questions of fact which would need a full blown trial. It is for
the petitioners to come out clean in the trial. The view of mine,
in this regard, is fortified by the judgment of the Apex Court in
the case of KAPTAN SINGH v. STATE OF UTTAR PRADESH6
has held as follows:
"9.1. At the outset, it is required to be noted that in
the present case the High Court in exercise of powers
under Section 482 CrPC has quashed the criminal
proceedings for the offences under Sections 147, 148, 149,
406, 329 and 386 IPC. It is required to be noted that
when the High Court in exercise of powers under
Section 482 CrPC quashed the criminal proceedings,
by the time the investigating officer after recording
the statement of the witnesses, statement of the
complainant and collecting the evidence from the
incident place and after taking statement of the
independent witnesses and even statement of the
accused persons, has filed the charge-sheet before
the learned Magistrate for the offences under
Sections 147, 148, 149, 406, 329 and 386 IPC and
even the learned Magistrate also took the
cognizance. From the impugned judgment and order
[Radhey Shyam Gupta v. State of U.P., 2020 SCC
OnLine All 914] passed by the High Court, it does not
appear that the High Court took into consideration
the material collected during the
investigation/inquiry and even the statements
recorded. If the petition under Section 482 CrPC was
at the stage of FIR in that case the allegations in the
FIR/complaint only are required to be considered and
whether a cognizable offence is disclosed or not is
required to be considered. However, thereafter when
the statements are recorded, evidence is collected
and the charge-sheet is filed after conclusion of the
investigation/inquiry the matter stands on different
footing and the Court is required to consider the
material/evidence collected during the investigation.
Even at this stage also, as observed and held by this
Court in a catena of decisions, the High Court is not
(2021) 9 SCC 35
required to go into the merits of the allegations
and/or enter into the merits of the case as if the High
Court is exercising the appellate jurisdiction and/or
conducting the trial. As held by this Court in Dineshbhai
Chandubhai Patel [Dineshbhai Chandubhai Patel v. State
of Gujarat, (2018) 3 SCC 104 : (2018) 1 SCC (Cri) 683] in
order to examine as to whether factual contents of FIR
disclose any cognizable offence or not, the High Court
cannot act like the investigating agency nor can exercise
the powers like an appellate court. It is further observed
and held that that question is required to be examined
keeping in view, the contents of FIR and prima facie
material, if any, requiring no proof. At such stage, the High
Court cannot appreciate evidence nor can it draw its own
inferences from contents of FIR and material relied on. It is
further observed it is more so, when the material relied on
is disputed. It is further observed that in such a situation, it
becomes the job of the investigating authority at such stage
to probe and then of the court to examine questions once
the charge-sheet is filed along with such material as to
how far and to what extent reliance can be placed on such
material.
9.2. In Dhruvaram Murlidhar Sonar [Dhruvaram
Murlidhar Sonar v. State of Maharashtra, (2019) 18 SCC
191 : (2020) 3 SCC (Cri) 672] after considering the
decisions of this Court in Bhajan Lal [State of
Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992
SCC (Cri) 426] , it is held by this Court that exercise of
powers under Section 482 CrPC to quash the proceedings
is an exception and not a rule. It is further observed that
inherent jurisdiction under Section 482 CrPC though wide
is to be exercised sparingly, carefully and with caution,
only when such exercise is justified by tests specifically
laid down in the section itself. It is further observed that
appreciation of evidence is not permissible at the stage of
quashing of proceedings in exercise of powers under
Section 482 CrPC. Similar view has been expressed by this
Court in Arvind Khanna [CBI v. Arvind Khanna, (2019) 10
SCC 686 : (2020) 1 SCC (Cri) 94] , Managipet [State of
Telangana v. Managipet, (2019) 19 SCC 87 : (2020) 3 SCC
(Cri) 702] and in XYZ [XYZ v. State of Gujarat, (2019) 10
SCC 337 : (2020) 1 SCC (Cri) 173] , referred to hereinabove.
10. The High Court has failed to appreciate and
consider the fact that there are very serious triable
issues/allegations which are required to be gone into and
considered at the time of trial. The High Court has lost
sight of crucial aspects which have emerged during the
course of the investigation. The High Court has failed to
appreciate and consider the fact that the document i.e. a
joint notarised affidavit of Mamta Gupta Accused 2 and
Munni Devi under which according to Accused 2 Ms Mamta
Gupta, Rs 25 lakhs was paid and the possession was
transferred to her itself is seriously disputed. It is required
to be noted that in the registered agreement to sell dated
27-10-2010, the sale consideration is stated to be Rs 25
lakhs and with no reference to payment of Rs 25 lakhs to
Ms Munni Devi and no reference to handing over the
possession. However, in the joint notarised affidavit of the
same date i.e. 27-10-2010 sale consideration is stated to
be Rs 35 lakhs out of which Rs 25 lakhs is alleged to have
been paid and there is a reference to transfer of possession
to Accused 2. Whether Rs 25 lakhs has been paid or not
the accused have to establish during the trial, because the
accused are relying upon the said document and payment
of Rs 25 lakhs as mentioned in the joint notarised affidavit
dated 27-10-2010. It is also required to be considered that
the first agreement to sell in which Rs 25 lakhs is stated to
be sale consideration and there is reference to the payment
of Rs 10 lakhs by cheques. It is a registered document.
The aforesaid are all triable issues/allegations
which are required to be considered at the time of
trial. The High Court has failed to notice and/or
consider the material collected during the
investigation.
11. Now so far as the finding recorded by the High
Court that no case is made out for the offence under
Section 406 IPC is concerned, it is to be noted that the High
Court itself has noted that the joint notarised affidavit
dated 27-10-2010 is seriously disputed, however as per
the High Court the same is required to be considered in the
civil proceedings. There the High Court has committed
an error. Even the High Court has failed to notice
that another FIR has been lodged against the
accused for the offences under Sections 467, 468,
471 IPC with respect to the said alleged joint
notarised affidavit. Even according to the accused
the possession was handed over to them. However,
when the payment of Rs 25 lakhs as mentioned in the joint
notarised affidavit is seriously disputed and even one of
the cheques out of 5 cheques each of Rs 2 lakhs was
dishonoured and according to the accused they were
handed over the possession (which is seriously disputed) it
can be said to be entrustment of property. Therefore, at
this stage to opine that no case is made out for the
offence under Section 406 IPC is premature and the
aforesaid aspect is to be considered during trial. It is
also required to be noted that the first suit was filed
by Munni Devi and thereafter subsequent suit came
to be filed by the accused and that too for permanent
injunction only. Nothing is on record that any suit
for specific performance has been filed. Be that as it
may, all the aforesaid aspects are required to be
considered at the time of trial only.
... ... ... ...
14. In view of the above and for the reasons stated
above, the impugned judgment and order [Radhey Shyam
Gupta v. State of U.P., 2020 SCC OnLine All 914] passed
by the High Court quashing the criminal proceedings in
exercise of powers under Section 482 CrPC is
unsustainable and the same deserves to be quashed and
set aside and is accordingly quashed and set aside. Now,
the trial is to be conducted and proceeded further in
accordance with law and on its own merits. It is made
clear that the observations made by this Court in the
present proceedings are to be treated to be confined to the
proceedings under Section 482 CrPC only and the trial
court to decide the case in accordance with law and on its
own merits and on the basis of the evidence to be laid and
without being influenced by any of the observations made
by us hereinabove. The present appeal is accordingly
allowed."
(Emphasis supplied)
15. For the aforesaid reasons, finding no merit in the
petitions, they stand dismissed.
It is made clear that the observations made in the course
of the order is only for the purpose of consideration of the cases
of the petitioners under Section 482 of Cr.P.C. This would not
bind or influence further proceedings against the petitioners.
In view of dismissal of the petitions, I.A.Nos.1/2022 filed in
both the petitions stand disposed.
Sd/-
JUDGE
bkp
CT:MJ
