Karnataka High Court
Mr. Harry Dhaul vs The Central Bureau Of Investigation on 2 June, 2025
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CRL.P.NO.101199 OF 2017
IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH
DATED THIS THE 02ND DAY OF JUNE, 2025
BEFORE
THE HON'BLE MS.JUSTICE J.M.KHAZI
CRIMINAL PETITION NO.101198 OF 2017
C/W
CRIMINAL PETITION NO.101199 OF 2017
IN CRL.P.NO.101198 OF 2017
BETWEEN:
MR. HARRY DHAUL
S/O. MAJOR INDER MOHAN DHAUL (RETIRED)
AGED ABOUT 61 YEARS
R/AT NO.2, KAUTILYA MARG
NEW DELHI - 110 021
...PETITIONER
(BY SRI. SHYAM SUNDRA, SENIOR COUNSEL
FOR SRI. M.H. HIDAYATHULLAH, ADVOCATE)
Digitally signed by
CHANDRASHEKAR
LAXMAN
KATTIMANI AND:
Location: HIGH
COURT OF
KARNATAKA THE CENTRAL BUREAU OF INVESTIGATION
CBI/BSFC,
BELLARY ROAD
BANGALORE - 560 032
REPRESENTED BY SPECIAL PUBLIC PROSECUTOR
FOR CBI,
HIGH COURT OF KARNATAKA
DHARWAD
...RESPONDENT
(BY SRI. NEELENDRA D. GUNDE, ADVOCATE)
2 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
THIS CRIMINAL APPEAL IS FILED UNDER SECTION 482 OF
CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED 27.09.2016,
PASSED BY THE JUDICIAL MAGISTRATE FIRST CLASS II,
BELAGAVI IN CRIMINAL CASE NO.838/2016 (ANNEXURE - A) IN
TAKING COGNIZANCE AGAINST PETITIONER OF THE ALLEGED
OFFENCES PUNISHABLE UNDER SECTIONS 120-B, 420, 467, 468
AND 471 OF IPC, 1860 AND ETC.
IN CRL.P.NO.101199 OF 2017
BETWEEN:
1. MR. M.V. CHANDRASHEKAR
S/O. LATE SRI. M.V.R. SARMA
AGED ABOUT 82 YEARS
R/AT NO.031/41
GIRL SCHOOL STREET
SURJASHTA APARTMENT
SHESHADRIPURAM
BENGALURU - 560 020.
2. MR. BHASKAR B. JADHAV
S/O. LATE SRI. BHIKAN RAO
AGED ABOUT 57 YEARS
R/AT DESHMUKH GALLI
BHOKARDAN P.O. AND TALUK
JALNA DISTRICT
MAHARASHTRA - 431 132
3. MRS. LAXMI DHAUL
W/O. MR. HARRY DHAUL
AGED ABOUT 62 YEARS
RESIDING AT: NO.2, KAUTILYA MARG
NEW DELHI - 11 021.
...PETITIONERS
(BY SRI. SHYAM SUNDRA, SENIOR COUNSEL
FOR SRI. M.H. HIDAYATHULLAH, ADVOCATE)
3 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
AND:
THE CENTRAL BUREAU OF INVESTIGATION
CBI/BSFC,
BELLARY ROAD
BANGALORE - 560 032
REPRESENTED BY SPECIAL PUBLIC PROSECUTOR
FOR CBI,
HIGH COURT OF KARNATAKA
DHARWAD
...RESPONDENT
(BY SRI. NEELENDRA D. GUNDE, ADVOCATE)
THIS CRIMINAL APPEAL IS FILED UNDER SECTION 482 OF
CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED 27.09.2016
AND 06.12.2016, PASSED BY THE JUDICIAL MAGISTRATE FIRST
CLASS II, BELAGAVI IN CRIMINAL CASE NO.838/2016
(ANNEXURE - A) IN TAKING COGNIZANCE AGAINST PETITIONER
OF THE ALLEGED OFFENCES PUNISHABLE UNDER SECTIONS
120-B, 420, 467, 468 AND 471 OF IPC, 1860 AND TO QUASH THE
ENTIRE PREOCEEDINGS IN CRIMINAL CASE NO.838/2016
(ANNEXURE-A) PENDING ON THE FILE OF JUDICIAL MAGISTRATE
FIRST CLASS II, BELAGAVI AGAINST THE PETITIONERS HEREIN.
THESE PETITIONS HAVING BEEN HEARD AND RESERVED
ON 09.12.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT MADE THE FOLLOWING:
CORAM: THE HON'BLE MS. JUSTICE J.M.KHAZI
CAV ORDER
(PER: THE HON'BLE MS. JUSTICE J.M.KHAZI)
These two petitions are filed under Section 482 of the
Code of Criminal Procedure to quash the criminal proceeding
initiated in C.C.No.838/2016 on the file of JMFC-2, Belagavi
4 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
by setting aside order dated 27.09.2016 by the said Court
taking cognizance against the accused.
2. While Crl.P.No.101198/2017 is filed by accused
No.1, Crl.P.No.101199/2017 is filed by accused Nos.3 to 5.
3. Since these two petitions are arising out of the
same case and involve common discussion, they are clubbed
together and disposed of by a common order.
4. For the sake of convenience, parties are referred
to by their ranks before the trial Court.
5. In support of the petition, accused Nos.1, 3 to 5
have contended that even if the entire prosecution case is
accepted in its totality, no offence under Sections 467, 468
and 471 IPC is made out. There is no evidence of false
document or forged document to attract Section 464 of IPC.
The prosecution has not verified whether the power plant
was completed by BCL. In the absence of proof that the
power plant does not exist, the allegation of diversion of
funds is not established. No reasons are assigned by the trial
Court to the effect that there is a material to take
5 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
cognizance. The absence of visit by the investigating officer
to the subject power plant, the prosecution has failed to
substantiate allegation of diversion of funds. M/s Rao
Srinivasan and Associates have given report regarding
proper utilisation of funds and execution of the work for
which payments have been made to M/s Bhaskar Jadhav
Contractors, M/s Dhananjay Industries and Deshmukh
contractors.
6. Having regard to the nature of the evidence
collected during the investigation, there is every likelihood of
prosecution not able to prove the allegations. There is also
delay of more than 15 years and the fundamental right of
the accused is violated. Given the large number of witnesses,
several years may take to dispose of the case. There is no
material to prove the allegation of conspiracy. In fact, BCL
has arrived at a settlement of all its dues with the bank by
paying Rs.15 Crores and there is no claim of the bank against
the accused persons.
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CRL.P.NO.101199 OF 2017
7. In support of arguments, on behalf of the accused
persons, learned Senior counsel representing them has relied
upon the following decisions:
(i) CBI Vs. Duncans Agro Industries Ltd
1
(Duncans Agro)
(ii) G.Sagar Suri Vs. State of U.P. (Sagar Suri)2
3
(iii) B.S.Joshi Vs. State of Haryana (B.S.Joshi)
(iv) Pankaj Kumar Vs. State of Maharashtra
(Pankaj Kumar)4
(v) Nikhil Merchant Vs. CBI (Nikhil Merchant)5
(vi) Mohd. Ibrahim Vs. State of Bihar
6
(Mohd.Ibrahim)
(vii) Shiji alias Pappu & Ors Vs. Radhika and Anr
7
(Shiji alias Pappu)
8
(viii) CBI Vs. Narendra Lal Jain (Narendra Lal Jain)
(ix) Gold Quest Internation Pvt. Ltd. Vs. State of
9
Tamil Nadu & Ors. (Gold quest)
(x) Vesa Holdings (P) Ltd Vs. State of Kerala
(Vesa Holdings)10
1
(1996) 5 SCC 591
2
(2000) 2 SCC 636
3
(2003) 4 SCC 675
4
(2008) 16 SCC 117
5
(2008) 9 SCC 677
6
(2009) 8 SCC 751
7
(2011) 10 SCC 705
8
(2014) 5 SCC 364
9
(2014) 15 SCC 235
7 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
11
(xi) Tarina Vs.Union of Indian & Anr (Tarina)
8. CBI has filed statement of objections stating that
the petitions are not maintainable either in law or on facts
and liable to be dismissed with exemplary cost. Based on the
source information, on 26.04.2002 case came to be
registered in RC.1(E)/2002 for the offences punishable under
Sections 120-B r/w 420, 467, 468, 471 IPC and Section
13(2) r/w 13(1)(d) of PC Act 1988. It is time that the
Directors of M/s Belgundi Cement Pvt Ltd ('BCPL' for short)
availed credit facilities from Central Bank of India, Belagavi
branch and Mumbai main office for cement and power
projects at Belgundi village Belagavi. Accused No.1 was the
Managing Director from the date of registration of the
company. All the accused persons have entered into criminal
conspiracy from August 1991 to November 1998, to cheat
the Central Bank of India, in the matter of availing credit
facilities and diverting the funds for other purpose and
thereby they have caused wrongful loss to the tune of more
10
(2015) 8 SCC 293
8 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
than Rs.10 crores to the bank during the above mentioned
period.
7.1 The accused/petitioner submitted invoice dated
17.08.1991 for Rs.165 lakhs, in the letterhead of M/s Sumata
Intercontinental, showing purchase/supply of boiler for the
power project. This invoice was submitted in the name of
P.C. Bhargava, Resident Director of M/s BCPL and obtained
disbursement of Rs.123.75 lakhs from the bank, which was
never used for purchase of the boiler. Accused No.3 MV
Chandrasekhar in furtherance of the criminal conspiracy with
the other accused submitted invoice in the name of M/s RCS
Exports to Central Bank of India showing execution of work.
The proceeds were credited to the account of accused No.3,
which was later transferred to M/s BCPL M/s. Suma
Intercontinental as well as M/s RCS Exports are non-existing
companies. The accused persons in furtherance of criminal
conspiracy again obtained another loan of Rs.130 lakhs for
the purchase of one more boiler. In all the accused persons
11
2024 SCC Online SC 2696
9 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
obtained a loan of Rs.253.75 lakhs and out of this, accused
person manage to buy two secondhand boilers at a price of
Rs.68 lakhs only and diverted the remaining funds for other
purposes.
7.2 On 07.05.1997, the accused person sought
additional term loan of Rs.630 lakhs to complete the power
project. Out of Rs.630 lakhs sanctioned by Central Bank of
India, more than Rs.4 crores have been diverted by the
accused No.1 through his own group accounts with the help
of his servants and employees. Rs.40,81,238/- is disbursed
from Mumbai main office in the name of accused No.4
Bhaskar Jadhav, who is the domestic servant of accused
No.1. Accused No.4 along with accused No.1 floated a
fictitious company in the name of M/s Deshmukh contractors
and submitted various invoices and bills showing execution
of civil and mechanical works for the power project. All these
documents in the name of the said firm was signed by
accused No.4.
10 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
7.3 A sum of Rs.1,21,17,139 was disbursed from
Central Bank of India, Mumbai main branch in the name of
M/s Deshmukh Contractors and submitted higher value
invoices showing execution of work of different nature for the
project. An amount of Rs.2,18,46,246/- was disbursed from
Central Bank of India and it was credited to the account of
M/s Dhananjay Industries, maintained at HSBC Ltd Fort
branch, Mumbai, which is jointly operated by the accused
No.1 and his wife accused No.5. More than 90% of the
amount was transferred to the account of accused No.1 and
that of associated group accounts.
7.4 Accused No.1 did not contribute any money on his
own, but cheated Central Bank of India by producing false
receipts and invoices. By this mode, accused No.1 in
furtherance of criminal conspiracy with the other accused
have caused wrongful loss of more than Rs.10 Crores to the
Central Bank of India. After conducting detailed
investigation, a final Report was filed against the accused
persons, including accused No.2, V.K Bhandari, the then
11 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
Manager of Central Bank of India. However, vide order dated
14.09.2011, in Crl.R.P.No.212/2009, he was discharged by
this Court. The same is upheld by the Hon'ble Supreme
Court in SLP(Crl) No.6554/2014.
7.5 The FIR was registered against the accused
persons on the basis of source information and the name of
the public servant was included in the final report. Accused
No.2 was discharged and now the remaining accused
persons are seeking discharge on the ground that accused
No.2 has been discharged and they have settled the dues to
the bank. Payment of dues to the bank or settlement is not a
ground to quash the criminal proceedings against the
remaining persons as held by the Hon'ble Supreme Court.
Accused No.2 was discharged mainly on the ground that the
offences under the provisions of prevention of corruption are
not attracted, whereas the allegations against other accused
are cheating the bank and using as genuine forged
documents. Charge sheet make out a strong prima facie case
against the accused persons. Prosecution be given an
12 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
opportunity to prove the allegations against accused and
pray to dismiss the petitions.
9. Learned counsel representing the complainant has
relied upon the following decisions:
12
(i) Harry Dhaul Vs. CBI (Harry Dhaul)
(ii) Harry Dhaul Vs. CBI (Harry Dhaul)13
(iii) State of Maharashtra Through CBI. Vs.
Vikram Anantrai Doshi & Ors.
(Vikram Anartrai Doshi)14
10. Heard arguments of both sides and perused the
record.
11. Thus accused Nos.1, 3 to 5 are seeking discharge
on the ground that accused No.2, who was the Manager of
the bank and who was instrumental in granting loan is
discharged and that the loan taken from the Central bank of
India is repaid by way of settlement.
12. The undisputed facts are that accused No.1 was the
Managing Director of BCPL. The Directors of BCPL availed
credit facility from Central Bank of India, Belagavi branch
12
Crl.P.No.1859/2005 DD: 05.02.2008
13
Crl.P.No.7710/2009 DD: 14.09.2011
13 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
and Mumbai Main office for cement and power project for
their company situated at Belgundi village Belagavi.
13. The allegations are that a conspiracy was hatched
to plan to cheat the bank and cause wrongful loss by
diverting the loan amount for other purposes. Invoice dated
17.08.1991 for Rs.165 lakhs was issued in the letterhead of
M/s Sumata Intercontinental showing purchase/supply of a
boiler for the power project and the said invoice was issued
in the name of P.C Bhargava, Resident Director of BCPL and
obtained disbursement of Rs.1,23,75,000/-. However, no
such boiler was purchased. Similarly, accused No.3 M.V
Chandrasekhar submitted an invoice in the name of M/s RCS
exports to Central Bank of India showing execution of the
work. The proceeds were credited to the account of accused
No.3, which was later transferred to BCPL.
14. It is the specific allegations of the prosecution that
M/s Sumata Intercontinental, as well as M/s RCS Exports are
non-existent companies. Similarly, it is alleged that the
14
2015 SAR (Criminal) 43
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CRL.P.NO.101199 OF 2017
accused persons obtained another loan of Rs.1,30,00,000 for
purchase of one more boiler. Though, loan in a total sum of
Rs.253.75 lakhs was availed, only a sum of Rs.68 lakhs was
spent to purchase two second hand boilers and the
remaining amount was diverted for other purposes.
15. It is further alleged in the charge sheet that on
07.05.1997, the accused person availed additional term loan
of Rs.630 lakhs to complete the power project. Out of this
more than Rs.4,00,00,000/- were diverted by the accused
persons through their group accounts with the help of
servants and employees. An amount of Rs.40,81,238/- is
disbursed in the name of accused No.4 Bhaskar Jadhav, who
is the domestic servant of the accused and who has floated a
fictitious firm by name M/s Deshmukh contractors and
submitted various invoices and bills showing execution of
civil and mechanical works for the power project. In all
Rs.1,21,17,139/- is disbursed by the bank in the name of
M/s Deshmukh contractors and submitted higher value
invoices showing execution of works of different nature for
15 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
the project. Similarly, a sum of Rs.2,18,46,246/- is disbursed
in the account of M/s Dhananjay industries which is jointly
operated by the accused Nos.1 and 5. More than 90% of the
amount was transferred to the account of accused No.1 and
his associated group accounts. While allegedly carrying out
the work, accused No.1 has not contributed any funds on his
own.
16. Thus, there are specific allegations that the loan
availed from the Central Bank was not utilised for the
purpose for which it was sanctioned. It is for the prosecution
to establish that M/s Sumata Intercontinental and M/s RCS
Exports are non-existing companies. Similarly, M/s
Deshmukh contractors is also a fictitious company. Accused
No.4 Bhaskar Jadhav, a domestic servant of accused No.1
was projected as the Director of the said company. It is
submitted by the learned Senior counsel for accused that
there is no rule that a domestic servant cannot be become a
contractor. Of course, there is no such prohibition. However,
what is required to be examined is whether in fact he
16 CRL.P.NO.101198 OF 2017 C/W
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became a contractor and established a company and
executed the work.
17. It is submitted by the learned counsel for
accused that the power project was established and the
report of the chartered accountant indicate that more than
85% of the work was executed. The accused have also
produced a document said to be an agreement with
Karnataka Power Transmission Corporation Limited regarding
synchronisation approval for 5 MW stage one power
generation from BPCL. This document is of the year 2006.
The accused have not produced any documents to show that
in fact power was generated and was supplied or utilised. Of
course, it is the defence of the accused which is to be
established at the trial. It is also submitted that the loan has
been repaid. However, what is repaid was a one-time
settlement without paying the actual interest with the
principal amount. The issue involved in this case is whether
for the purpose of availing loan, the accused have created
fictitious companies and without actual utilisation of funds for
17 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
the purpose for which it have sanctioned diverted the funds
and utilised for other purpose. There is prima facie material
to show that the companies in whose favour the loan amount
was got disbursed were fictitious and non-existing companies
and in fact, the loan amount has been received by the
accused persons. It is also for the prosecution to prove that
the boilers was not purchased as projected, but on the other
hand only a sum of Rs.68 lakhs were spent for purchasing
second hand boilers.
18. Accused Nos.1, 3 to 5 are also seeking discharge
on the ground that accused No.2 is already discharged. It is
pertinent to note that accused No.2 was discharged on the
ground that he was not the only person who was decision
making authority and the decision to grant loan was a
collective decision of the officers working in the said Central
Bank of India. However, the discharge of accused No.2 would
not be ground for the other accused to seek discharge since
the allegations against them are totally different. It is also
submitted by the learned Senior counsel for accused that the
18 CRL.P.NO.101198 OF 2017 C/W
CRL.P.NO.101199 OF 2017
loan was taken against mortgage of immovable properties
and there was sufficient safety available for the bank to
recover the loan amount. Whether immovable properties
were mortgaged for availing loan is also not the matter in
issue. The specific allegations against accused No.1, 3 to 5 is
that they have availed loan amount, but not utilised the
same for the purpose for which it was sanctioned and they
have diverted it to themselves through fictitious companies.
Therefore, the fact that immovable properties were available
as a security for the loan would not absolve the liability of
these accused.
19. The investigating officer on detailed investigation
has collected sufficient material to proceed against accused
No.1, 3 to 5 and rightly the learned Magistrate has rejected
the application filed by the accused persons seeking
discharge. So far as the decisions relied upon by the accused
are concerned, they are not applicable to the case on hand.
In the result the petitions fail and accordingly following:
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ORDER
under Section 482 of Cr.P.C are rejected.
(ii) The impugned order dated 27.09.2016 and
06.12.2016 in Criminal Case No.838/2016 on
the file of JMFC-II, Belagavi is confirmed.
(iii) The Registry is directed to send a copy of
this order to the trial Court forthwith.
Sd/-
(J.M.KHAZI)
JUDGE
RR
