The Supreme Court of India has set aside a High Court order and held that inherent power under Section 482 of CrPC cannot be exercised where allegations are required to be proved in the Court of law.

The judgement came out in one case titled as State of Madhya Pradesh v. Yogendra Singh Jadon.

CASE BACKGROUND

The High Court had quashed the criminal proceedings against the sons of the President of District Cooperative Kendriya Bank (who is now deceased). The allegations were that the President misused his powers. He, with other employees of the bank, committed financial irregularities on the basis of forged documents by misusing his post and by providing fake loans to the relatives. it was alleged that the cash credit limit in his son's application to the bank was sanctioned without following the due procedure. It was also alleged that mortgage deed was not registered nor the signature of the original loanee was found on the mortgage paper. Similar kinds of frauds were also alleged in the case of other relatives of the deceased President.

In this regard, a charge sheet for the offences under Sections 420, 406, 409, 120B IPC  and 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988 was filed. This filing of charges was challenged by the respondents before the High Court via a Criminal Revision Petition.

The High Court found out that the offences under Sections 420 and 120B IPC are not made out against the respondents. The Court held that there is no assertion that the cash credit facility obtained with a knowledge that they will not repay the loan amount.

The Court stated:

  • "12. It may be that the Officers of the Bank, because of the fact that father of the applicants was President of the Bank, had acted in disregard of the relevant rules and regulations in that behalf of conferring benefit upon the applicants, but that will give rise to liability against the officers of the bank who failed to discharge their duties in accordance with prescribed norms and regulations. However, that may not be a ground to proceed against a person who has been granted a cash credit facility.
  • 14. In the instant case, the uncontroverted allegations taken in their entirety do not prima facie establish that the applicants deceived the Bank Authorities or fraudulently or dishonestly induced them to sanction cash credit facility. Thus, the basic ingredient to constitute the offence of 420 of IPC is totally missing in the charge sheet."

It thus quashed the criminal proceedings against the respondents. 

Aggrieved of the judgement, the State went to the Supreme Court. 

The Apex Court after analysing all the aspects found that the High Court has examined the entire issue as to whether the offence under Sections 420 and 120B is made out or not at the pre-trial stage. The respondents were beneficiary of the grant of cash credit limit when their father was the President of the Bank. The Court remarked:

The power under Section 482 of the Code of Criminal Procedure, 1973 cannot be exercised where the allegations are required to be proved in the court of law.

It added that the manner in which loan was advanced without any proper documents and the fact that the respondents are beneficiary of the benevolence of their father prima facie disclose an offence under Sections 420 and 120B IPC. It may be stated that other officials of the Bank have been charge-sheeted for an offence under Sections 13(1)(d) and 13(2) of the Act. The charge under Section 420 IPC was not an isolated offence but it has to be read along with the offences under the Act to which the respondents may be liable with the aid of Section 120B of IPC.

The Top Court thus found the High Court's order to be unsustainable and accordingly set it aside.

The judgement was delivered by Justice L. Nageswara Rao and Justice Hemant Gupta on 31-01-2020.

Read Judgement Here:

 

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