Telangana High Court

Bodupally Anil Kumar vs The State Of Telangana on 21 November, 2022

Bench: G.Radha Rani

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             THE HON'BLE DR. JUSTICE G. RADHA RANI


               CRIMINAL REVISION CASE No. 611 of 2019


      This Criminal Revision Case is filed by the Petitioner-Accused No.3

aggrieved by the order dated 21.02.2019 in Cri.M.P.No.324 of 2018 in

C.C.No.20 of 2016 on the file of the III Additional Special Judge for CBI Cases

at Hyderabad in dismissing the discharge petition filed by him.

2.    The case of the revision petitioner was that he obtained housing loan of

Rs.20,00,000/- from Syndicate Bank, JSN Colony Branch, Hyderabad. He paid

more than Rs.6,00,000/- as Equitable Monthly Installments (EMIs) towards his

loan for few years and due to some unforeseen and unavoidable circumstances,

he was not able to pay the monthly installments at a later stage, due to which,

the loan account turned into a Non-Performing Asset (NPA). With due efforts

with an intention to repay the loan amount to the bank, the revision petitioner

collected funds and sent a proposal for One Time Settlement (OTS) of dues to

Syndicate Bank, the same was accepted by the said bank and received payment

of Rs.16,00,000/- from the revision petitioner. The said bank issued a 'No Due

Certificate' (NDC) dated 06.04.2016 stating that "Sri B.Anil Kumar (revision

petitioner herein) had settled his dues with the bank under OTS on 22.02.2016

and they did not have any interest in the property". After clearing the dues in

respect of the housing loan and obtaining NDC from the bank in April,2016, the

revision petitioner received summons dated 05.12.2016 in C.C.No.20 of 2016
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issued by the III Additional Special Judge for CBI Cases at Hyderabad for the

offences punishable under Sections 120-B, 420 and 471 of IPC and Section

13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988.

3.     The contention of the revision petitioner was that even after repaying the

dues to the bank and discharging his liability, the bank was still continuing to

prosecute the case against him which was an abuse of process of law. After

receipt of summons, the revision petitioner appeared before the III Additional

Special Judge for CBI Cases at Hyderabad. On receiving the charge-sheet along

with other documents from the court, the revision petitioner filed a petition

under Section 239 of Cr.P.C. to discharge him from the said case, as the dispute

between the parties was already settled and continuance of prosecution against

the petitioner would be unjust and unlawful. After hearing both sides, the III

Additional Special Judge for CBI Cases at Hyderabad dismissed the discharge

petition.

4.    Aggrieved by the said order, the Petitioner-Accused No.3 preferred this

revision contending that the learned Judge mechanically passed the order

without appreciating that the dispute was of civil in nature with criminal facets

and the offences alleged against the revision petitioner becomes compoundable

on compromise between the accused the de-facto complainant. The Judge erred

in not considering the law laid down in a similar case by the Hon'ble Apex

Court in the case of Nikhil Merchant v. Central Bureau of Investigation and
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others 1 . The Judge ought to have appreciated that the dispute between the

revision petitioner and the Bank was set at rest on the basis of compromise

arrived by them under OTS, whereunder the dues of the Bank had been cleared

and the Bank did not have any further claim against the revision petitioner.

Hence the revision petitioner was entitled to be discharged from the criminal

case. The Judge ought to have appreciated that in the charge-sheet at page 15 in

point No.3, which described the role of borrowers in the offences as per

investigation, the name of the petitioner-accused No.3 was not stated. Hence, it

was admitted by the investigating officer that the petitioner-accused No.3 had

not submitted fraudulent false Income Tax Returns, false final statements of

account of his business, less value collateral securities or had shown high value

construction rates in conspiracy with A1. The continuance of the case against

the revision petitioner and asking him to face the lengthy and protracted trial

would be miscarriage of justice leading to harassment and torture to the

petitioner without any iota of proof against him in the said case. The Judge

ought to have appreciated that there was no prima-facie evidence nor any

incriminating material against the revision petitioner found in the FIR and

charge-sheet with respect to the offences charged and hence the revision

petitioner ought to have been discharged from the offences alleged against him

in the charge-sheet. The Judge erred in not considering that in the absence of

any evidence to show that there had been any common intention or to commit

1
    AIR 2009 SC 428
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criminal conspiracy or dishonest intention to cheat and cause wrongful

economic gain or forgery by the revision petitioner, the said offences against the

revision petitioner were mis-conceived and were not maintainable either in law

or on facts and as such were liable to be rejected and the revision petitioner was

liable to be discharged from the said offences and prayed to allow the criminal

revision case by setting aside the order of the III Additional Special Judge for

CBI Cases, Hyderabad in Cri.M.P.No.324 of 2018 in C.C.No.20 of 2016 dated

21.02.2019.

5.   Heard the learned counsel for the revision petitioner and Sri.N.Nagendran,

learned Special Public Prosecutor for CBI Cases representing the respondent-

complainant.

6. As seen from the record, Mr.M.Mohan Reddy, the Deputy General

Manager of Syndicate Bank, Hyderabad lodged a complaint against one Goli

Sridhar, a realtor of Hyderabad, V.Jagan Mohan Rao, the then Senior Manager,

Hanumantha Rao, the then Chief Manager, T.Guruva Reddy, Senior Manager,

K.Rambabu, Civil Engineer, S.Chandrasekharan, Panel Valuer of Syndicate

Bank, JSN Colony Branch, Habsiguda, Hyderabad and against unknown public

and private persons alleging that the accused persons in conspiracy with other

borrowers had cheated Syndicate Bank through forgery, criminal breach of trust,

use of false documents as genuine and availed seventeen (17) housing loans,

seven (07) personal loans and twenty five (25) housing loans causing loss of

Rs.10.98 Crores to Syndicate Bank.

Dr.GRR, J crlrc_611_2019

7. The SP, CBI, Hyderabad registered FIR bearing No.RC2(A)/2014 under

Sections 120-B, 409, 420, 465, 468, 471 of IPC and under Section 13(2) read

with 13(1)(c)&(d) of Prevention of Corruption Act, 1988 and after investigation,

filed charge-sheet.

8. In the charge-sheet it was alleged that the borrowers A3 to A8 entered

into criminal conspiracy with Sri. V.Jagan Mohan Rao (A1) through

S.Chandrasekharan (A2) and M/S.Sunny Enclave Builders and Developers (A9)

to cheat Syndicate Bank and submitted housing loan applications to A1,

enclosing false Income Tax returns for the assessment years i.e., 2005-06, 2006-

07, 2007-08 and 2008-09. The borrowers had filed IT Returns on self-declared

inflated gross income, less net income in order to become eligible to the housing

loan, because as per the loan policy of the bank, the borrowers are eligible to the

loan amount at six (06) times of gross income declared in the Income Tax

Returns. The borrowers A3 to A8 submitted false construction estimates at a

very high rate than the prevalent market rate. The borrowers submitted

construction agreement with M/S.Sunny Enclave Builders and Developers (A9).

The borrowers also offered short value securities as collateral security to secure

the said housing loans and submitted false asset and liability statement and false

final accounts of their business to Sri.V.Jagan Mohan Rao (A1) for processing

the said loan proposals. In pursuance of the said criminal conspiracy,

Sri.S.Chandrasekharan (A2) submitted false valuation reports inflating the

values of the securities of five (05) Synd Housing Applicants. Sri.V.Jagan

Dr.GRR, J crlrc_611_2019 Mohan Rao (A1), the then Senior Manager (Syndicate Bank), JSN Colony

Branch, Habsiguda, Hyderabad, in pursuance of the said conspiracy, did not

verify asset liability statements of the borrowers, false final accounts of their

business, accepted fake Income Tax Returns and inflated valuation report

submitted by A2. A1 also inspected the properties and falsely submitted

inspection report quoting inflated value of the collateral securities. Thus,

Sri.V.Jagan Mohan Rao (A1) dishonestly got the loan proposal processed and

by abusing his official position as Public Servant sanctioned five (05) housing

loans during the year 2008 and disbursed Rs.92,00,000/- to the borrowers. The

borrowers could not pay the Equitable Monthly Installments (EMIs) to the bank

as they had no business and no source of income. The Bank conducted

departmental enquiry and got the collateral securities revalued through another

Panel Valuer. The Bank found that the value of the properties was very less and

was not matching with the outstanding loan amounts. The houses of A3 and A4

were 100% complete but their values were less than the outstanding amount in

the account. Thus, the Bank suffered a net loss of Rs.47.5 lakhs as on

30.06.2013.

9. Basing on the charge-sheet, the Special Judge for CBI Cases, Hyderabad

had taken cognizance of the case for the offences punishable under Sections

13(2) read with 13(1)(d) of Prevention of Corruption Act and Sections 120-B,

420 and 471 of IPC and issued summons to the accused.

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10. On appearance and on receipt of the charge-sheet and the documents filed

along with the charge-sheet, the petitioner-accused No.3 filed this petition

contending that the charge-sheet or the documents would not show any material

or evidence that he was involved in conspiracy with the bank officials and the

valuer. The allegations in FIR and charge-sheet were vague and the same were

not supported by any evidence. There was no prima-facie evidence nor any

incriminating material against him to attract the offences alleged and relied

upon the judgments of the High Court of Madras in The Additional

Superintendent of Police, CBI v. G.B.Anbalgan2 and of the Hon'ble Apex

Court in Nikhil Merchant v. Central Bureau of Investigation and Others (1

supra).

11. The trial court i.e., the III Additional Special Judge for CBI Cases, on

hearing both the learned counsel for the petitioner and the learned Special

Public Prosecutor for CBI observed that:

"the allegations against the petitioner are that he submitted false Income Tax Returns, inflated valuation report and also submitted false construction estimates at very high rates than the market value in order to get the loan sanctioned in conspiracy with A1, A2 and A9 and the same has to be determined during the course of trial of main case regarding genuineness of the documents submitted by the petitioner to the bank at the time of availing loan and repayment of loan made by him in One Time Settlement as alleged by him will not absolve him from his liability as the allegation constitute the criminal offence and the same has

2014 (4) MLJ (Crl.) 279

Dr.GRR, J crlrc_611_2019 to be determined during the course of trial of the case."

and dismissed the petition.

12. The learned counsel for the revision petitioner relied upon the judgment

of the Hon'ble Apex Court in Nikhil Merchant v. Central Bureau of

Investigation and Others (1 supra) case. In the said case also, the CBI filed

charge-sheet against five (05) accused persons under Section 120-B read with

Sections 420, 468 and 471 of IPC read with Sections 5(2) and 5(1)(d) of the

Prevention of Corruption Act, 1947 and Section 13(2) read with Section 13(1)(d)

of Prevention of Corruption Act, 1988.

13. A civil suit was also filed by the Bank for recovery of the amount and in

the civil suit, the Company and the Bank entered into compromise as the

Company agreed to pay the amounts due as per the schedule mentioned in the

concerned terms and the bank agreed to withdraw all the allegations made

against the company. Consequent upon the compromise of the suit, A3 filed an

application for discharge from the criminal complaint in respect of which

charge-sheet was filed by the CBI. The said application was rejected by the

Special Judge (CBI), Greater Bombay. The same was challenged by the

appellant before the Bombay High Court. The Bombay High Court observing

that the charge-sheet was filed not only under Section 420 of IPC which was

compoundable but was also filed under Sections 467, 468 and 471 of IPC along

with the provisions of Prevention of Corruption Act which were non-

Dr.GRR, J crlrc_611_2019 compoundable, rejected the appellant's prayer for discharge from the criminal

cases.

14. In the appeal, the Hon'ble Apex Court observed that:

"In the instant case, the disputes between the Company and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues of the Bank have been cleared and the Bank does not appear to have any further claim against the Company. What, however, remains is the fact that certain documents were alleged to have been created by the appellant herein in order to avail of credit facilities beyond the limit to which the Company was entitled. The dispute involved herein has overtones of a civil dispute with certain criminal facets. The question which is required to be answered in this case is whether the power which independently lies with this Court to quash the criminal proceedings pursuant to the compromise arrived at, should at all be exercised?"

"On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S.Joshi's 3 case and the compromise arrived at between the Company and the Bank as also Clause 11 of the consent terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not be allowed to stand in the way in the quashing of the criminal proceedings, since, in our view, the continuance of the same after the compromise arrived at between the parties would be a futile exercise."

15. The facts of the said case are squarely applicable to the facts of the

present case.

16. But the learned Special Pubic Prosecutor for CBI contended that the

judgment in Nikhil Merchant v. Central Bureau of Investigation and

2003 (2) RCR (Crl.) 888

Dr.GRR, J crlrc_611_2019 Another (1 supra) was referred to a larger bench by the Hon'ble Apex Court in

Gian Singh v. State of Punjab and Others4 along with two other cases in

B.S.Joshi and Others v. State of Haryana (3 supra) and Manoj Sharma v.

State and Others5 opining that the said three (03) decisions are required to be

re-considered, as in their opinion, something which could not be done directly

also could not be done indirectly. In their prima-facie opinion, the non-

compoundable offences cannot be permitted to be compounded by the court

whether directly or indirectly and the said three (03) decisions didn't appear to

be correctly decided.

17. The learned counsel for the petitioner filed a judgment in Gyan Singh v.

State of Punjab and Others6 decided by the larger bench of three judges on

24.09.2012 wherein it was held that:

"54. Where High Court quashes a criminal proceeding having regard to the fact that dispute between the offender and victim has been settled although offences are not compoundable, it does so as in its opinion, continuation of criminal proceedings will be an exercise in futility and justice in the case demands that the dispute between the parties is put to an end and peace is restored; securing the ends of justice being the ultimate guiding factor. No doubt, crimes are acts which have harmful effect on the public and consist in wrong doing that seriously endangers and threatens well-

being of society and it is not safe to leave the crime-doer only because he and the victim have settled the dispute amicably or that the victim has been paid compensation, yet certain crimes have been made compoundable in law, with or

2010 (13) SCR 1034

2008 (4) RCR (Crl.) 827

2012 10 SCC 303

Dr.GRR, J crlrc_611_2019 without permission of the Court. In respect of serious offences like murder, rape, dacoity, etc; or other offences of mental depravity under IPC or offences of moral turpitude under special statutes, like Prevention of Corruption Act or the offences committed by public servants while working in that capacity, the settlement between offender and victim can have no legal sanction at all. However, certain offences which overwhelmingly and predominantly bear civil flavour having arisen out of civil, mercantile, commercial, financial, partnership or such like transactions or the offences arising out of matrimony, particularly relating to dowry, etc. or the family dispute, where the wrong is basically to victim and the offender and victim have settled all disputes between them amicably, irrespective of the fact that such offences have not been made compoundable, the High Court may within the framework of its inherent power, quash the criminal proceeding or criminal complaint or F.I.R if it is satisfied that on the face of such settlement, there is hardly any likelihood of offender being convicted and by not quashing the criminal proceedings, justice shall be casualty and ends of justice shall be defeated. The above list is illustrative and not exhaustive. Each case will depend on its own facts and no hard and fast category can be prescribed.

18. The learned Special Public Prosecutor for CBI on the other hand relied

upon the judgment of the Hon'ble Apex Court in State of Maharashtra

through Central Bureau of Investigation v. Vikram Anantrai Doshi and

Others 7 wherein by considering the judgment in Gyan Singh v. State of

Punjab and Others (6 supra) held that:

"availing of money from a nationalized bank in the manner, as alleged by the investigating agency, vividly exposits fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge-sheet cannot be put in the

(2014) 15 SCC 29

Dr.GRR, J crlrc_611_2019 compartment of an individual or personal wrong.

It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that whenever there is manipulation and cleverly conceived contrivance to avail of these kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly of civil character. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the nation. The cleverness which has been skillfully contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of offences which travel far ahead of personal or private wrong. It has the potentiality to usher in economic crisis. Its implications have its own seriousness, for it creates a concavity in the solemnity that is expected in financial transactions. It is not such a case where one can pay the amount and obtain a "no due certificate" and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Article 226 of the Constitution or under Section 482 of the Code and quash the proceeding. It is not legally permissible. The Court is expected to be on guard to these kinds of adroit moves. The High Court, we humbly remind, should have dealt with the matter keeping in mind that in these kind of litigations the accused when perceives a tiny gleam of success, readily invokes the inherent jurisdiction for quashing of the criminal proceeding. The Court's principal duty, at that juncture, should be to scan the entire facts to find out the thrust of allegations and the crux of the settlement. It is the experience of the Judge that comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinize the entire conspectus of facts in proper perspective and quashed the criminal

Dr.GRR, J crlrc_611_2019 proceeding. The said quashment neither helps to secure the ends of justice nor does it prevent the abuse of the process of the Court nor can it be also said that as there is a settlement no evidence will come on record and there will be remote chance of conviction. Such a finding in our view would be difficult to record. Be that as it may, the fact remains that the social interest would be on peril and the prosecuting agency, in these circumstances, cannot be treated as an alien to the whole case. Ergo, we have no other option but to hold that the order of the High Court is wholly indefensible."

19. In the light of the principles stated in the above cases, on considering the

facts of this case as laid in the charge-sheet, A3 had conspired with late

Sri.Goli Sridhar, Partner in M/S.Sunny Enclave Builders and Developers

represented by the other partner, Smt. Goli.Sampurna, W/o. late Sri.Goli Sridhar

(A9), and in pursuance of said conspiracy purchased a housing plot from A9

and entered into an agreement with A9 for construction of house on the said

housing plot and furnished guarantee of A6 who was not at all related to A3 to

secure the housing loan and A6 had submitted false Income Tax Returns and A3

obtained inflated valuation report from A2, Panel Valuer of Syndicate Bank and

in conspiracy with A1, A2 and A9 availed housing loan of Rs.20,00,000/-

against the mortgaged property and put the bank into financial risk by not

paying the EMIs and not contributing margin money and when the bank got the