(Arun Mishra and Mohan M. Shantanagoudar, JJ.)
Central Bureau of Investigation ______________________ Appellant;
v.
Hari Singh Ranka and Others _____________________ Respondent(s).
Criminal Appeal No(s). 1289 of 2017 [Arising out of SLP (Crl.) No. 5857 of 2012], decided on July 18, 2017
The Order of the court was delivered by
Order
1. Leave granted.
2. Heard learned counsel for the parties.
3. The CBI has preferred the appeal aggrieved by the orders passed by the Additional Chief Metropolitan Magistrate discharging the accused persons for the offences registered under Sections 120B, 420, 467, 468, 471 of the Indian Penal Code, 1860 (in short ‘the IPC’). Revisional Court i.e. the Court of Additional Sessions Judge as well as the High Court have confirmed the order. Hence the appeal is before us.
4. The CBI investigated the case and filed a charge-sheet. The facts unfold that on 30.6.2004 a case was registered against Shri H.S. Ranka and Shri Sachin Ranka, Chairman and Managing Director of M/s. Modern Denim Ltd. for commission of the offences punishable under Sections 120B, 420, 467, 468, 471 of the IPC. After the investigation, charge-sheet was filed against the respondents, in all 13 accused persons. The respondents-accused persons filed applications under Section 239 of the Code of Criminal Procedure, 1973 (in short ‘the Cr.P.C.’) seeking discharge, mainly on the ground that M/s. Modern Denim Ltd.- Accused No. 13 had since entered into One Time Settlement (in short ‘the OTS’) with the bank and the allegation of forgery and use of forged documents as genuine were not raised by the bank in the proceedings before the Debt Recovery Tribunal, as such no case was made out against them. It would be futile to proceed in the matter for the other offences under Section 468, 471 & 201 IPC. An offence under Section 420 IPC is compoundable. Other offences hinge around that.
5. The allegation levelled by CBI was that accused entered into a criminal conspiracy during the period between 1994 to 2000 between themselves to cheat the bank of Baroda, Bhadra Branch, Ahmedabad and in pursuance of the said criminal conspiracy they availed working capital facility and several other credit facility from the Bank of Baroda by using false documents as genuine. The funds of the Bank of Baroda to the tune of Rs. 43,86,000/- (Rupees forty three crores and eighty six lakhs only) were misused and not repaid by the aforesaid accused. The facilities under Export Packing Credit (EPC), Inland Bill Discounting (IBD), Inland Letter of Credit (ILC) and Term Loan and Working Capital Demand Loan (TC/WCDL) facilities were availed by the Modern Denim Limited. According to the prosecution there was an outstanding amount of Rs. 6,20,00,000/- (Rupees Six Crores and Twenty Lakhs only), Rs. 1,67,00,000/- (Rupees One Crore Sixty-Seven Lakhs Only), Rs. 10,21,00,000/- (Rupees Ten Crores and Twenty One Lakhs only), Rs. 12,75,00,000/- (Rupees Twelve Crores and Seventy Five Lakhs Only) and Rs. 6,00,00,000/- (Six Crores only) respectively from all these facilities. In the FIR details have been disclosed as to the way in which the aforesaid offences had been committed. The relevant portion is extracted here under:
“8(1) Sh. Ranglal Nahar (A3) is working as Vice President, Cotton Purchase Dept., M/s. Modern Denim Ltd. At Moraiya, Ahmedabad. He has been with the M/s. Modern Denim Ltd. since 1991. He was instrumental in mobilizing all the fictitious firms at Mumbai as LC beneficiaries and Drawees of Bills discounted and for which he made Sh. S.K Jhujhunwala (A5) as the nodal person for operating as the authorised signatory apart from other propped up Directors. He is the link for S/Sh. Hari Singh Ranka (A1) and Sachin Ranka (A2) with Sh. S.K. Jhunjhunwala (A-5).
(ii) Sh. Dharampal Kalwania (A4), is a partner in M/s. Kalwania Carrying Corporation at Mumbai. M/s. Kalwania Carrying Corporation was registered with I.B.A. (Indian Bank Association) and since the nationalised banks accepted Lrs of such Registered Transport agencies with I.B.A. he took advantage of the facility and misused the same. He sold the Lrs. to M/s. Modern Denim Ltd. for a consideration without actually conducting the transport and these were misused in Inland LCs and Bill discounted documents by M/s. Modern Denim Ltd. for obtaining undue facilities from Bank of Baroda, Bhadra Branch, Ahmedabad.
(iii) Sh. S.K. Jhunjhunwala (A5), is a Chartered Accountant by Profession. He was one of the Directors of M/s. Intelligent Management Services P. Ltd. engaged in Finance Consultancy. In due course with the connivance of Sh. Ranglal Nahar (A3), he became the common authorised signatory for several LC beneficiary companies and Drawee companies of Bills discounted by M/s. Modern Denim Ltd. and he made some more persons as second authorised signatories for namesake. He was the nodal person for creating false documents in the form of Bills, invoices, Bills of Exchange on behalf of the fictitious companies to be used by M/s. Modern Denim Ltd. for obtaining facilities from Bank of Baroda, Bhadra Branch, Ahmedabad.
(iv) Sh. Ram Ratan Maheshwari (A6) is a Director of M/s. Modern Denim Ltd. at Mumbai and he is one of the authorised signatories of M/s. Modern Denim Ltd. account opened at Oman International Bank, Nariman Point, Mumbai, and vide Resolution dated 16.10.1996 Sh. Hari Singh Ranka (A1) had authorised him to operate the account. Further vide resolution dated 29.05.1999 of M/s. Modern Woollens Sh. Hari Singh Ranka (A1) had authorised Sh. R.R. Maheshwari (A6) and others to operate the accounts and this account in turn introduced the LC beneficiaries and Inland Bills Drawees accounts at Oman International Bank, Nariman Point, Mumbai like M/s. Paridhan Commercial & Credit Pvt. Ltd. M/s. Manhattan Traders Pvt. Ltd., M/s. Hobart Trading Pvt. Ltd., M/s. Samray Silk Mills Pvt. Ltd. Etc.
(v) Sh. Tarachand Chajera (A7) is a Director of M/s. Modern Denim Ltd., Ahmedabad and he has signed as authorised signatory for M/s. Modern Denim Ltd. on the request letters for the issue of Packing Credit Advances which was in pursuance of the authority given by Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2), similarly he had also signed as authorised signatory for obtaining LC advances and for discounting of Bills which were discounted.
(vi) Sh. Vimal Prakash Agarwal (A8) is a Manager looking after accounts Deptt. of M/s. Modern Denim Ltd., Ahmedabad. He has also signed as authorised signatory on behalf of M/s. Modern Denim Ltd. on LC applications which were in pursuance of the authority given by Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2). He has also signed the Bills of Exchange for Inland LCs discounted at the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2). In the letters of request for advance of Packing Credit Advances also he has signed on the request letters to the Bank for issue of the PC Advances at the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2) citing the Resolution dated 23.06.1994.
(vii) Sh. Pradeep Kumar Jain (A9) is the Vice President looking after Marketing division of M/s. Modern Denim Ltd., Ahmedabad. He has signed several Inland LC applications for issue of LCs and also on Bills of Exchange in the case of Inland Bills Discounted which were done by him as authorised signatory on behalf of M/s. Modern Denim Ltd. At the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2) who had authorised him by Resolutions passed by the company.
(viii) Sh. Sureshchand Maheshwari (A10) an Executive Director of M/s. Modern Terry Towels Ltd., and during the relevant period he was head of finance of M/s. Modern Denim Ltd., Ahmedabad. He has signed the Inland LC applications and also request letters for release of Packing Credit Advances and Bills of Exchange for Inland Bills Discounted, as authorised signatory of M/s. Modern Denim Ltd. at the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2) who had given him the authority by way of Resolution passed by the Board of Directors of the company.
(ix) Sh. Hansmukh Das Sethi (A11) is the Manager looking after accounts dept. Of M/s. Modern Denim ltd., Ahmedabad. He has signed the LC applications for issue of Inland LCs in favour of beneficiaries which were all propped up companies by Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2), Sh. Ranlal Nahar (A3) and Sh. S.K. Jhunjhunwala (A5) and also request letters for grant of packing credit advances as authorised signatories on behalf of M/s. Modern Denim Ltd. At the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2) by way of Resolution passed by the Board of Directors of the company.
(x) Sh. R.J. Rathi (A12) was one of the authorised signatories of M/s. Modern Woollens Ltd., which is the sister concern of Modern Denim Ltd., Ahmedabad. He had introduced an account by name M/s. Nadi Trading Pvt. Ltd. at Oman International Bank Nariman Point, Mumbai. M/s. Modern Woollens Ltd. in turn introduced several other accounts of propped up companies viz. M/s. Paridhan Commercial & Credit Pvt. Ltd., M/s. Manhattan Traders Pvt. Ltd., M/s Hobart Trading Pvt. Ltd., M/s, Samray Silk Mills Pvt. Ltd., M/s. Abhyudaya Garments Pvt. Ltd. Etc. But Sh. R.J. Rathi is reported to have left the services of M/s. Modern Woollens Ltd. and his whereabouts are not known to the authorities of Modern Group. He was not available for investigation also.
(xi) M/s. Modern Denim Ltd. (A13) is a company registered under Companies Act 1956 on 23.02.1994 with the Registrar of Companies Rajasthan Jaipur. Sh. Hari Singh Ranka (A1) was appointed as Director on 03/111978 in the erstwhile Modern Suitings Pvt. Ltd. Which subsequently changed into M/s. Modern Denim Ltd. Sh. Sachin Ranka (A2) was appointed as full time Director of the erstwhile Modern Suitings Ltd., on 01.04.1991 which subsequently became Modern Denim Ltd. The company is promoted by the above mentioned two accused and they have personal stake in the said company. The company was used by the 2 accused to defraud the Bank of Baroda, Bhadra Branch Ahmedabad. The company was manufacturing denim fabric at Moraiya Village, Ahmedabad. Its corporate office is located at Worli, Mumbai.
9. Investigation disclosed that Export Packing Credit (EPC) is the facility granted by the Bank to enable the borrower to purchase raw material, process them, and export the finished goods. The repayment of EPC is by way of proceeds received by realisation of Export Bills by the Bank. For the purpose of releasing the Export Packing Credit (EPC), the company was obliged to submit to the Bank Confirmed Export orders based upon which the Bank was to release the EPC within the overall sanctioned limit, Investigation revealed that there are 33 such instances wherein S/sh. Hari Singh Ranka (A1) and Sachin Ranka (A2) conspired with the other accused authorised signatories viz.; S/sh. Ram Ratan Maheshwari (A6), Tarachand Chajera (A7), Vimal Prakash Agarwal (A8), Pradeep Kumar Jain (A9), Sureshchand Maheshwari (A10) and Hansmukh Das Sethi (A11), through M/s. Modern Denim Ltd., (A13) and authorised them, to issue request letters to the Bank for release of Packing Credit Advances. The Bank of Baroda, Central Office, Mumbai had sanctioned a limit of Rs. 600 lacs under the Export Packing Credit Advances and after the interchangeability was allowed on 06.05.1997 which was to the tune of 20% from Export Packing Credit to Foreign Bills Purchase/Foreign Bill Discount (FBP/FBD) and vice versa for a maximum period up to 90 days. M/s. Modern Denim Ltd. Was already sanctioned Rs. 500 lacs under FBP/FBD limit with the result the company could enjoy combined Packing Credit Advances and FBP/FBD limit to the tune of Rs. 1000 lacs. It was also allowed Rs. 100 lacs interchangeability from FBP/FBD limit to PC limit and Rs. 200 lacs was earmarked in Bill Discounting limit against corresponding amount in the sanctioned FBP/FBD limit of Rs. 500 lacs. Accordingly the operative limit in PC and FBP/FBD was Rs. 800 lacs keeping Rs. 200 lacs under Inland Bills Discounting. The above said accused persons through their company M/s. Modern Denim Ltd. (A13) availed 33 Packing Credit Advances for exporting denim fabric to 10 Foreign Buyers by submitting orders in the form of sale contracts of M/s. Modern Denim Ltd. itself instead of a firm order of the company. The sale contracts are not of Foreign Buyers and they are in the letter head of Modern Denim Ltd. Itself. The identity of authorised signatory on the sale contract of the letterhead of Modern Denim Ltd. is not known and so also the authorised signatory who has signed on behalf of the Foreign buyer. The document is as such a fake export order. In 5 instances even the purported sale contracts are only photocopies and the original were not submitted to the Bank authorities. No LC was opened for any guarantee for realization of funds. Finally against all these 33 instances of packing credit Advances, no Export was made by the accused persons through M/s. Modern Denim Ltd. Consequently, since no foreign bills were sent for collection or discount, no money could be realised by the Bank. However, it was revealed during investigation that the Export Packing Credit Advances obtained by the accused persons were never utilized for the purchase of raw material for export and instead, the funds were used for liquidating/clearing off the dues that were outstanding in respect of certain earlier Inland LCs which had got devolved. Many of these Inland LCs was also drawn in favour of propped up companies who were Inland LC beneficiaries like M/s. Paridhan Commercial & Credit Pvt. Ltd., M/s. Manhattan Traders Pvt. Ltd., and M/s Modfab Marketing Pvt. Ltd. The said 33 Export Packing Credit Advances were obtained during the period 5.6.98 to 11.6.99 such that the drawings never crossed the limit of Rs. 600 lacs limit of Packing Credit. Whenever a Foreign bill was realised and credited in the PC account an equivalent amount of PC advance was immediately obtained but by keeping within the overall limit of Rs. 800 lacs. A chart in the form of Annexure-I showing the 33 Export Packing Credit Advances which were fraudulently obtained by the accused persons and the end use of these funds is enclosed to the charge-sheet. The accused persons were fully aware and had no intention to export against the said Packing Credit Advances being obtained and they dishonestly misrepresented by enclosing the fake sales contracts and used the same as genuine. The end use of the said funds substantiate the allegation that such funds were misused.”
6. The trial court while discharging the accused persons opined that there is no allegation that the documents were forged and the loss was caused. Apart from this, the OTS has been mainly relied upon. It has also been opined that there was no material indicating that the accused persons had acted in collusion between them to cheat the Bank using the documents alleged to be forged. The settlement reached between the parties prima facie indicates that there was no intention of the accused persons to cheat the Bank by producing alleged forged documents. There is no sufficient material to proceed further with the case. Prima facie it appears that the dispute is of civil nature and the Bank has already exhausted the civil remedy for recovery of the amount. The material placed on record falls short for constituting the offense under Sections 420, 467 and 468 of the IPC. The prosecution has quoted in all 33 instances of LPCL advances showing mi’s-utilization of the sum of monies by the accused persons. The Bank, however, did not say that there is non-compliance with the documents required to be furnished for the purpose of the release of the amount. The basic offence is that of cheating and other offences are ancillary to it. Hence the trial court has discharged the accused persons vide order dated 6.2.2008.
7. The CBI filed a Criminal Revision Application bearing No. 500 of 2008 in the Court of Principal Session Judge, City Civil Court, Mumbai against the aforesaid order. The Revision had been dismissed vide order dated 9th January 2009. The OTS has been relied upon by the Revisional Court.
8. The CBI had filed Criminal Writ Petition bearing No. 1309 of 2009 in the High Court under Section 482 Cr.P.C. The High court had affirmed the orders by impugned order dated 11th July 2011.
9. It was submitted by the learned senior counsel appearing on behalf of CBI that none of the courts below had looked into the materials placed on record along with the charge sheet. Considering the nature of the allegation of forgery and serious nature of allegations as against them it was not a case of discharge at all, as had been ordered by the learned trial court. She has relied upon the decision of this Court in Gian Singh v. State of Punjab (2012) 10 SCC 303, Ashok Sadarangani v. Union of India (2012) 11 SCC 321, Rumi Dhar v. State of West Bengal (2009) 6 SCC 364, Narinder Singh v. State of Punjab (2014) 6 SCC 466, Gopakumar B. Nair v. Central Bureau of Investigation (2014) 5 SCC 800 and Sushil Suri v. Central Bureau of Investigation (2011) 5 SCC 708.
10. She has further urged that Considering the facts and circumstances of the case, the instant case was such in which discharge could not have been ordered, in view of the serious allegations which have been made with regard to defrauding and cheating committed with the help of forged documents.
11. On the other hand Sh. Paras Kohad learned senior counsel, assisted by Sh. Hemant Sharma and Sh. Jitin Chaturvedi has taken us through the orders and materials on record and has submitted that no case for interference is made out. He has referred the decisions of this court in Gian Singh’s case (supra), Gopakumar B. Nair’s case (supra), Central Bureau of Investigation v. Sadhu Ram Singh (2017) 5 SCC 350 and Rumi Dhar’s case (supra).
12. We have gone through the orders passed by the High court and the orders passed by the trial court and the revisional court. The order passed by the trial court indicates that it has treated the main offence being that of cheating and it has also been observed that there is no such allegation that documents are forged and pecuniary advantage has been obtained on that basis. The trial court had heavily relied upon the OTS. Its observation that forged documents had not been used to defraud the Bank in our opinion is a palpably incorrect and perverse finding and cannot be sustained. There is overwhelming material placed on record along with charge sheet which indicates that a large number of documents had been forged in the instant case and accused persons thereby have induced the Bank for disbursing the working capital limits to M/s. Modern Denim Ltd. The accused persons had availed credit facility from the Bank in 33 specific instances during the period 19th June 1998 to June 1999 by submitting forged purchase orders purportedly placed on M/s Modern Denim Ltd. by the foreign buyers.
13. There is also the allegation supported by documents that sales contract (purchase order) were prepared on the letter head of M/s. Modern Denim Ltd. It is further the case of the prosecution that the advances obtained by the accused persons were never utilized for the purchase of the material thereto to execute the aforesaid purchase orders, but were diverted by the accused persons to liquidate the outstanding dues of M/s. Modern Denim Ltd. against the LCs which has devolved. The banks had suffered the loss of Rs. 599.08 lakhs in the aforesaid 33 instances where packing credit was availed on the basis of false and forged purchase orders.
14. It was further alleged by the CBI that in the case of FBP/FBD facility the accused persons discounted 12 bills during the period March, 1997 to July, 1998 which were returned unpaid by the foreign banks and remained unrealised. The banks thereby suffered a loss to the tune of USD 629.410 = INR 2,47,56,323/-.
15. It was further alleged by the prosecution that during the period 25.5.1999 to 12.08.1999, M/s. Modern Denim Ltd.- Accused No. 13, submitted 24 Inland Bills for discounting to the Bank which was supported by the false and forged lorry receipt purportedly issued by M/s. Kalwania Carrying Corporation (Transport firm of Dharmpal A. Kalwania (A-4). The CBI alleged that no supply of materials (denim fabric) was made by M/s. Modern Denim Ltd. against the aforesaid 24 bills drawn on eight paper companies. The forged nature of the lorry receipt is evident from the fact that vehicle numbers were mentioned, the LR were found to be those of tractors and two wheelers, it was also the case of the prosecution that the facilities disbursed by the Bank were used to liquidate the remaining outstanding dues of the accused against the earlier LCs in these 24 instances the Bank suffered a loss to the tune of Rs. 1,61,51,052/-.
16. It was further alleged by the CBI that M/s. Modern Denim Ltd. – Accused No. 13, got established 17 letters of credit in favour of three paper suppliers during the period of 7.9.1997 to 12.8.1999. The aforesaid LCs were opened for supply of raw materials to M/s. Modern Denim Ltd. However, no supplies were made instead false documents purported to was submitted which were supported by false and forged lorry receipts issued by M/s. Kalwania Carrying Corporation. It was further alleged that aforesaid LCs were discounted by the accused persons. On the respective due dates M/s. Modern Denim Ltd. did not arrange funds for payment of the LCS. In the aforesaid 17 instances, the bank suffered a loss of Rs. 356.00 lakhs.
17. In the aforesaid backdrop of facts, we take into consideration the effect of OTS. It is apparent that a large number of documents were filed by the CBI along with the Charge sheet. There are serious allegations in the instant case leveled against the accused persons of using fabricated documents whereas there was no supply or no such transactions took place. The letter head of M/s. Modern Denim Ltd.- Accused 13 had also been used. It passes comprehension how the trial court has given a clean chit that offence falls short of constituting the conspiracy under Section 120 B IPC. The trial court has not cared to refer to the aforesaid various materials which have been alleged to be fabricated/forged and as to how the misuse of bank funds was made. In our considered opinion, in the facts of the instant case, the manner in which the trial court has discharged the accused persons, in spite of the overwhelming materials on record, could not be said to be legally justified order at all. The OTS merely deals with the civil liability that too by making of payment of Rs. 25 crores whereas outstanding liability was Rs. 44 crores though it was submitted loss caused was approx. 13 crores. Be that as it may, we are not on the civil liability. Ultimately, the amount which has been settled in OTS Scheme cannot be legally sufficient to wipe out the criminal liability of the accused persons. The OTS could wipe off only the civil liability, of the accused not the criminal one. However, this may not be taken to be the ultimate conclusion on merits of the case, it would be open to the trial court to record any finding after the trial of the case.
18. In Rumi Dhar’s case (supra), this court has observed that when settlement is arrived at between the creditors and the debtor, the offence, if committed, as such does not come to an end. Even a judgment rendered in the civil proceedings, when it is rendered on the basis of a settlement entered into between the parties, would not be of large relevance as per criminal offence required of Section 49 of the Evidence Act. The judgment of the civil court is admissible only for limited purposes.
19. In the State of Maharashtra through Central Bureau of Investigation v. Vikaram Anantrai Doshi [2014 (15) SCC 29], this court has considered the decision in Narinder Singh’s case (supra), Dimpey Gujral v. U.T. Chandigarh, (2013) 11 SCC 497 and Gyan Singh’s case (supra) and has laid down the principles for making interference in such matters thus;
“18. Recently, in Narinder Singh v. State of Punjab (2014) 6 SCC 466 a two-Judge Bench placed reliance on Gian Singh’s case (supra) and Dimpy Gujral v. Union Territory, Chandigarh and distinguished the decision in State of Rajasthan v. Sambhu Kevat, and came to hold that in the facts of the said case the proceedings under Section 307 deserved to be quashed. The two-Judge Bench laid down certain guidelines by which the High Courts would be guided in giving adequate treatment to the settlement between the parties and exercising its power under Section 482 of the Code while accepting the settlement and quashing the proceedings or refusing to accept the settlement. Some of the guidelines which are relevant for the present purpose are reproduced below:—
“29.2(II) When the parties have reached the settlement and on that basis petition for quashing the criminal proceedings is filed, the guiding factor in such cases would be to secure:
(i) ends of justice, or
(ii) to prevent abuse of the process of any court.
While exercising the power the High Court is to form an opinion on either of the aforesaid two objectives.
29.3 (III) Such a power is not be exercised in those prosecutions which involve heinous and serious offences of mental depravity or offences like murder, rape, dacoity, etc. Such offences are not private in nature and have a serious impact on society. Similarly, for offences alleged to have been committed under special statute like the Prevention of Corruption Act or the offences committed by Public Servants while working in that capacity are not to be quashed merely on the basis of compromise between the victim and the offender.
29.4(IV) On the other, those criminal cases having overwhelmingly and pre-dominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves.
29.5 (V) While exercising its powers, the High Court is to examine as to whether the possibility of conviction is remote and bleak and continuation of criminal cases would put the accused to great oppression and prejudice and extreme injustice would be caused to him by not quashing the criminal cases.”
24. In the case at hand, as per the charge sheet, the respondents had got LCs issued from the bank in favour of fictitious companies propped up by them and the fictitious beneficiary companies had got letters of credits discounted by attaching their bogus bills. The names of 10 fictitious companies have been mentioned in the charge sheet. Thus, allegation of forgery is very much there. As is manifest from the impugned order, the learned Single Judge has not adverted to the same. It is not a simple case where an accused has borrowed money from the bank and diverted it somewhere else and, thereafter, paid the amount. It does not fresco a situation where there is dealing between a private financial institution and an accused, and after initiation of the criminal proceedings he pays the sum and gets the controversy settled. The expose of facts tells a different story. As submitted by the learned Counsel for CBI, the manner in which the letters of credits were issued and the funds were siphoned off, has a foundation in criminal law. Learned counsel would submit that it does not depict a case which has overwhelmingly and predominatingly a civil flavour. The intrinsic character is different. Emphasis is laid on the creation of fictitious companies.
26. We are in respectful agreement with the aforesaid view. Be it stated, 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 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 are manipulation and cleverly conceived contrivance to avail of these kinds of benefits, it cannot be regarded as a case having overwhelmingly and predominantly a 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 into 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 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 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.”
20. It has been observed by this court that when the charge sheet reflects that the respondent got LCs issued by the bank in favour of fictitious companies propped up by them and the fictitious beneficiary companies had got letters of credits discounted by attaching their bogus bills. It is not a simple case where an accused has borrowed money from the bank and diverted it somewhere else and, thereafter, paid the amount. Civil settlement of the controversy would not suffice to wipe off the criminal liability. The case reflects fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge sheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. This court has further observed that accepted principle of handling of finance that whenever there are manipulation and cleverly conceived contrivance to avail of this kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly of civil character. The gravity of the offence creates a dent in the economic spine of the nation. The quashing of the case was set aside as social interest would be in peril. The order of the High Court was held to be indefensible. Facts are more or less similar in the instant case, and as such the impugned orders cannot be permitted to be sustained on the anvil of the aforesaid principles.”
21. Reliance has also been placed on Gyan Singh’s case (supra) in which this court has held thus;
“58. Where the High Court quashes a criminal proceeding having regard to the fact that dispute between the offender and victim has been settled although the 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 the 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 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 the 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 the victim and the offender and the 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 the 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.
59. B.S. Joshi 1, Nikhil Merchant, Manoj Sharma and Shiji do illustrate the principle that High Court may quash criminal proceedings or FIR or complaint in exercise of its inherent power under Section 482 of the Code and Section 320 does not limit or affect the powers of the High Court under Section 482. Can it be said that by quashing criminal proceedings in B.S. Joshi, Nikhil Merchant, Manoj Sharma and Shiji this Court has compounded the non-compoundable offences indirectly? We do not think so. There does exist the distinction between compounding of an offence under Section 320 and quashing of a criminal case by the High Court in exercise of inherent power under Section 482. The two powers are distinct and different although the ultimate consequence may be same viz. acquittal of the accused or dismissal of indictment.
60. We find no incongruity in the above principle of law and the decisions of this Court in Simrikhia, Dharampal, Arun Shankar Shukla, Ishwar Singh, Rumi Dhar and Ashok Sadarangani. The principle propounded in Simrikhia that the inherent jurisdiction of the High Court cannot be invoked to override express bar provided in law is by now well settled. In Dharampal, the Court observed the same thing that the inherent powers under Section 482 of the Code cannot be utilized for exercising powers which are expressly barred by the Code. Similar statement of law is made in Arun Shankar Shukla. In Ishwar Singh the accused was alleged to have committed an offence punishable under Section 307 IPC and with reference to Section 320 of the Code, it was held that the offence punishable under Section 307 IPC was not compoundable offence and there was express bar in Section 320 that no offence shall be compounded if it is not compoundable under the Code. In Rumi Dhar although the accused had paid the entire due amount as per the settlement with the bank in the matter of recovery before the Debts Recovery Tribunal, the accused was being proceeded with for the commission of the offences under Sections 120-B/420/467/468/471 IPC along with the bank officers who were being prosecuted under Section 13(2) read with 13(1)(d) of Prevention of Corruption Act. The Court refused to quash the charge against the accused by holding that the Court would not quash a case involving a crime against the society when a prima facie case has been made out against the accused for framing the charge. Ashok Sadarangani was again a case where the accused persons were charged of having committed offences under Sections 120-B, 465, 467, 468 and 471 IPC and the allegations were that the accused secured the credit facilities by submitting forged property documents as collaterals and utilized such facilities in a dishonest and fraudulent manner by opening letters of credit in respect of foreign supplies of goods, without actually bringing any goods but inducing the bank to negotiate the letters of credit in favour of foreign suppliers and also by misusing the cash-credit facility. The Court was alive to the reference made in one of the present matters and also the decisions in B.S. Joshi, Nikhil Merchant, and Manoj Sharma and it was held that B.S. Joshi, and Nikhil Merchant dealt with different factual situation as the dispute involved had overtures of a civil dispute but the case under consideration in Ashok Sadarangani was more on the criminal intent than on a civil aspect. The decision in Ashok Sadarangani supports the view that the criminal matters involving overtures of a civil dispute stand on a different footing.
61. The position that emerges from the above discussion can be summarised thus: the power of the High Court in quashing a criminal proceeding or FIR or complaint in exercise of its inherent jurisdiction is distinct and different from the power given to a criminal court for compounding the offences under Section 320 of the Code. Inherent power is of wide plenitude with no statutory limitation but it has to be exercised in accord with the guideline engrafted in such power viz; (i) to secure the ends of justice or (ii) to prevent abuse of the process of any Court. In what cases power to quash the criminal proceeding or complaint or F.I.R may be exercised where the offender and victim have settled their dispute would depend on the facts and circumstances of each case and no category can be prescribed. However, before exercise of such power, the High Court must have due regard to the nature and gravity of the crime. Heinous and serious offences of mental depravity or offences like murder, rape, dacoity, etc. cannot be fittingly quashed even though the victim or victim’s family and the offender have settled the dispute. Such offences are not private in nature and have a serious impact on society. Similarly, any compromise between the victim and offender in relation to the offences under special statutes like Prevention of Corruption Act or the offences committed by public servants while working in that capacity, etc; cannot provide for any basis for quashing criminal proceedings involving such offences. But the criminal cases having overwhelmingly and pre-dominatingly civil flavour stand on different footing for the purposes of quashing, particularly the offences arising from commercial, financial, mercantile, civil, partnership or such like transactions or the offences arising out of matrimony relating to dowry, etc. or the family disputes where the wrong is basically private or personal in nature and the parties have resolved their entire dispute. In this category of cases, High Court may quash criminal proceedings if in its view, because of the compromise between the offender and victim, the possibility of conviction is remote and bleak and continuation of the criminal case would put the accused to great oppression and prejudice and extreme injustice would be caused to him by not quashing the criminal case despite full and complete settlement and compromise with the victim. In other words, the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and wrongdoer and whether to secure the ends of justice, it is appropriate that criminal case is put to an end and if the answer to the above question(s) is in affirmative, the High Court shall be well within its jurisdiction to quash the criminal proceeding.”
22. The principles laid down by this court in Gian Singh decision (supra) indicate that while exercising the power of quashing, when the offences are not compoundable, the facts and circumstances of each case have to be seen, and thereafter the power is to be exercised. In the instant case, considering the aforesaid principle and the facts and circumstances projected above, the power to discharge or that of quashment under Section 482 Cr.P.C. could not have been exercised at all. Where as the power of discharge exercised by the learned trial judge virtually amounts to the exercise of power under section 482 CrPC which was not available to it and was totally uncalled for exercise that too without adverting to the materials on record.
23. Reliance has been placed on a decision of this Court in Nikhil Merchant v. Central Bureau of Investigation [2008 (9) SCC 677] wherein this Court had quashed the criminal proceedings in peculiar facts of the case by exercising the power under Article 142 of the Constitution of India. The case was not of general application but was confined to the facts of the case. Following is the relevant discussion made by this Court in the said case:
“28. The basic intention of the accused in this case appears to have been to misrepresent the financial status of the company, M/s Neemuch Emballage Limited, Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional amounts of credit to which the company was not otherwise entitled.
29. Despite the ingredients and the factual content of an offence of cheating punishable under Section 420 IPC, the same has been made compoundable under Sub-section (2) of Section 320 Cr.P.C. with the leave of the Court. Of course, forgery has not been included as one of the compoundable offences, but it is in such cases that the principle enunciated in B.S. Joshi’s case (supra) becomes relevant.
30. In the instant case, the disputes between the Company and the Bank have been set at rest on the asis 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?
31. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S. Joshi’s case (supra) 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.
32. We, therefore, set aside the order passed by the High Court dismissing the petitioner’s revision application No. 49 of 2003 in Special Case No. 80 of 1998 and quash the proceedings against the appellant. The appeal is accordingly allowed.”
24. In Ashok Sadarangani’s case (supra) offence was registered by the CBI. Allegation was that they had secured the credit facility by submitting forged documents as collected, and utilized such facilities in a dishonest and fraudulent manner by obtaining letters of credit in respect of foreign suppliers of goods without actually bringing any goods but inducing the bank to negotiate letters of credit in favour of the foreign suppliers and also by exercising the cash credit facility.
25. This court has considered the various decision in Sushil Suri’s case (supra) and Gyan Singh’s case (supra). This court also considered whether when the dispute has been settled by the bank, the continuance of criminal proceedings would be a futility. This court distinguished the decision of Nikhil Merchant (supra) as the case projected larger conspiracy then this court refused to grant the relief in the prayer of quashing of the case.
26. In Sushil Suri v. Central Bureau of Investigation [(2011) 5 SCC 708] this court made following observations;
“23. It is manifest from a bare reading of the Chargesheet, placed on record, that the gravamen of the allegations against the appellant as also the co-accused is that the Company, acting through its directors in concert with the Chartered Accountants and some other persons: (i) conceived a criminal conspiracy and executed it by forging and fabricating a number of documents, like photographs of old machines, purchase orders and invoices showing purchase of machinery in order to support their claim to avail hire-purchase loan from PSB;
(ii) on the strength of these false documents, PSB parted with the money by issuing pay orders & demand drafts in favour of the Company; and
(iii) the accused opened six fictitious accounts in the banks (four accounts in Bank of Rajasthan and two in Bank of Madura) to encash the pay orders/bank drafts issued by PSB in favour of the suppliers of machines, thereby directly rotating back the loan amount to the borrower from these fictitious accounts, and in the process committed a systematic fraud on the Bank (PSB) and obtained pecuniary advantage for themselves.
Precise details of all the fictitious accounts as also the further flow of money realised on encashment of demand drafts/pay orders have been incorporated in the Charge-sheet. Additionally, by allegedly claiming depreciation on the new machinery, which was never purchased, on the basis of forged invoices, etc. the accused cheated the public exchequer as well.”
27. This court considered the modus operandi noted in afore-extracted para 23. Considering the allegations that accused had obtained pecuniary benefit by producing forged documents. The case was dismissed and the trial court was directed to decide the case expeditiously. The facts of the instant case are more or less similar.
28. Learned senior counsel appearing on behalf of the respondents has relied upon the decision of this court in Sadhu Ram Singh’s case (supra), OTS was arrived at between the parties in the wake of that High Court had exercised the power of quashing, which order has been upheld by this Court. The case was registered under Sections 120-B/420/467/468/471 of the IPC read with Section 469 IPC. It was a case in which it could not be corroborated by the evidence that the company had been using credit facility against the hypothecation of the stock, which stock was lying at the port. It was found that the respondent company had fraudulently obtained higher limits which appear to be forged and false. The facts of Sadhu Ram Singh’s case (supra) were totally different. Loss of the stock could not be established was one of the main consideration and facts were not similar. As laid down in Gyan Singh’s case (supra) itself the power of quashing a criminal case has to be exercised considering the nature of allegation and facts and circumstances of each case. Thus, the decision in Gyan Singh’s case (supra) fails to serve cause espoused by the accused.
29. Learned senior counsel has also relied CBI v. Narendra Lal Jain (2014) 5 SCC 364 in which also this court dealt with the question where quashing of criminal proceeding in respect of not compoundable offence on the basis of compromise is warranted. This court dealt with the offence under Section 420 IPC which is a compoundable offence under Section 320 IPC and other sections which were non-compoundable offence. The monetary loss suffered by the Bank has been mutually settled between the parties and both had accepted liability in this regard. The ratio of B.S. Joshi’s case (supra) and Nikhil Merchant’s case (supra) was applied and in the peculiar facts of the case, the order passed by the High Court was upheld. The facts of the instant case are totally different and quite serious.
30. In view of the aforesaid discussion, we are of the considered opinion that the order passed by the trial court affirmed by the revisional court and High court cannot be said to be sustainable. The impugned orders are thus set aside. Let the trial court frame the charges, and proceed further in accordance with law, and conclude the trial positively within a period of one year from today. The appeal is accordingly allowed.
31. We clarify that observations in the order are prima facie and based on charge sheet and not the correctness of the allegations made in the charge sheet the trial court is not to be influenced at all by findings/observations while deciding the case on merits.
Petition(s) for Special Leave to Appeal (Crl.) No(s). 5857/2012
Central Bureau of Investigation ________________________ Petitioner
v.
Hari Singh Ranka & Ors _________________________ Respondent(s)
Date: 18-07-2017 This petition was called on for hearing today.
(Before Arun Mishra and Mohan M. Shantanagoudar, JJ.)
For Petitioner(s) Ms. Vibha Datta Makhija, Sr. Adv.
Ms. Swati Ghildiyal, Adv.
Ms. Disha, Adv.
Mr. M.K. Maroria, Adv.
Mr. Arvind Kumar Sharma, AOR
For Respondent(s) Mr. Paras Kohad, Sr. Adv.
Mr. Hemant Sharma, Adv.
Mr. Jitin Chaturvedi, Adv.
Ms. Indu Sharma, AOR
UPON hearing the counsel the Court made the following
ORDER
32. Leave granted.
33. The appeal is allowed in terms of the signed order.
34. Pending application, if any shall stand disposed of.
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