2021 (7) TMI 1282 - SC - Indian Laws

Stay on proceedings - arrest of respondent - loan fraud - voter fraud - term of office of the Board of Directors of the Cooperative Bank - huge acrimony surrounding the elections - overlapping of the allegations relating to loan fraud and voter fraud - declaration of result of election - newly elected Board to take charge - preservation of CCTV footage of a particular period - HELD THAT - It is obvious that the petitioner started a dispute first against the conferment of the title of Chairman Emeritus on the 1st Respondent and then they raised issues with regard to the proposed elections first in a writ petition filed in February 2020 and then in a writ petition filed in November 2020. It is only thereafter that the allegations relating to loan fraud were raised by the petitioner Association. Apparently the petitioner had the blessings of the powers that be which is why a direction was issued on 22.01.2021 by the Hon ble Minister to the Commissioner of Police to register the complaints and report to the Government. It was patently an election dispute which was sought to be converted to a criminal case. More often than not election disputes are fought on different turfs such as polling booths police stations and court rooms. Sometimes persons who raise these disputes manage to camouflage their real motive by words clothed in high moral fiber and strong legal content. But unfortunately the petitioner could not do it successfully in this case as the election disputes came to the court first before the petitioner could fall back upon allegations of loan fraud. Fortunately the High Court saw through the game. This is why the High Court in its impugned order granted the extraordinary relief of stay of further proceedings including the arrest of Respondents 1 to 3 herein. The facts are so glaring and the background setting so shocking that the High Court correctly found it to be a fit and proper case to grant interim reliefs to Respondents 13 herein. One of the interim prayers sought by the petitioner in the civil writ proceedings is for the conduct of a forensic audit. The said prayer is pending consideration. Allegations of the nature projected by the petitioner cannot be taken for their face value without a forensic audit and the court cannot go by the ipse dixit of the petitioner - It is completely wrong on the part of the petitioner to contend that the High Court was swayed by the pendency of civil writ proceedings. The High Court actually took note of the manner in which the color of the entire proceedings changed from February 2020 to February 2021 and it is in that background that the learned Judge took note of the pendency of civil proceedings and the overlapping of allegations. The High Court was perfectly justified in granting interim protection to the Respondents 1 to 3 herein and in ensuring that the supremacy of the ballot is not sabotaged by the authority of the police. Hence the SLPs are dismissed.

Summary

Issues Involved:
1. Legality of High Court's stay on further proceedings and arrest.
2. Prima facie cognizability of offenses in the complaints.
3. Impact of pending civil writ petitions on criminal complaints.
4. Applicability of MultiState Cooperative Societies Act, 2002.

Detailed Analysis:

1. Legality of High Court's Stay on Further Proceedings and Arrest:
The Supreme Court examined the High Court's decision to stay further proceedings, including the arrest of the accused, pending the outcome of petitions to quash criminal complaints. The High Court's reasons included:
- The complaints involved 'loan fraud' and 'voter fraud'.
- The term of the Board of Directors expired, leading to contentious elections.
- Overlapping allegations in writ petitions related to the elections.
- Pre-registration police actions that violated legal mandates.
- Interrelation of 'voter fraud' and 'loan fraud' with election disputes.

The Supreme Court upheld the High Court's decision, noting the extensive reasons provided and the exceptional circumstances justifying the stay.

2. Prima Facie Cognizability of Offenses in the Complaints:
The petitioner argued that the High Court should not have stayed proceedings when cognizable offenses were prima facie established. The Supreme Court referenced the principles in "Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra" and "Skoda Auto Volkswagon India Pvt. Ltd. vs. State of U.P." which allow for interim orders in exceptional cases with detailed reasons. The Court found the High Court's order well-reasoned and in line with these principles.

3. Impact of Pending Civil Writ Petitions on Criminal Complaints:
The petitioner contended that the High Court erred by considering the pendency of civil writ petitions related to voter fraud as influencing the criminal complaints. The Supreme Court noted that the High Court correctly identified the transformation of election disputes into criminal allegations. The Court cited "Mohd. Allauddin Khan vs. State of Bihar" and "K. Jagdish vs. Udaya Kumar GS" but found them inapplicable as the High Court's consideration of civil proceedings was contextually appropriate.

4. Applicability of MultiState Cooperative Societies Act, 2002:
The petitioner argued that the High Court wrongly applied Section 84 of the MultiState Cooperative Societies Act, 2002, which pertains to arbitrable disputes. The Supreme Court clarified that the High Court referenced this section only regarding the admission of members, not the criminal allegations. The Court found no error in the High Court's interpretation.

Conclusion:
The Supreme Court dismissed the Special Leave Petitions, affirming the High Court's stay on further proceedings and arrests. The Court emphasized the importance of detailed reasoning in granting such stays and recognized the High Court's thorough examination of the case's unique circumstances. Consequently, the applications for stay were dismissed, and the previously granted stay was vacated.