2015 (9) TMI 1762 - SC - Indian Laws

Exercise of inherent jurisdiction Under Section 482 of the Code of Criminal Procedure (Code of Criminal Procedure) or the extraordinary jurisdiction Under Article 226 of the Constitution for quashment of the criminal proceedings - borrower or borrowers after availing finance by creating mortgage on the base of certain documents which, as alleged, are forged, and ingeniously adopt the same modus operandi to avail the benefit from number of banks - setting the criminal law in motion by lodging different FIRs and in the ultimate eventuate in an adroit manner enter into settlements - Should the High Court on the foundation that the continuance of the criminal proceedings would be a Sisyphean endeavour after the settlement has taken place to quash the same? - Whether a former Assistant Commissioner of Commercial Taxes can be allowed to advance a plea, obviously a remarkable one, that she had signed the documents either as a guarantor or as a co-applicant, showing deference to her late husband's desire? HELD THAT - In CBI v. Maninder Singh 2015 (8) TMI 1535 - SUPREME COURT , the allegation against the accused was that bill of lading presented by the proprietors of the accused firms were found forged and cases were registered Under Section 120B Indian Penal Code read with Section 420 Indian Penal Code and Section 5(2) read with Section 5(1)(d) of Prevention of Corruption Act, 1947 and further substantive offences Under Sections 420, 467, 468 and 471 Indian Penal Code. The accused person arrived at a settlement with the Bank and thereafter moved the High Court Under Section 482 Code of Criminal Procedure for quashing of the FIR. The High Court placed reliance on the decision in Nikhil Merchant 2008 (8) TMI 966 - SUPREME COURT and allowed the petition and directed for quashing of the criminal proceedings. The High Court has been erroneously guided by the ambit and sweep of power Under Section 482 Code of Criminal Procedure for quashing the proceedings. It has absolutely fallaciously opined that the continuance of the proceeding will be the abuse of the process of the Court. It has been categorically held in JANATA DAL VERSUS H.S. CHOWDHARY 1992 (8) TMI 301 - SUPREME COURT , that the inherent power Under Section 482 Code of Criminal Procedure though unrestricted and undefined should not be capriciously or arbitrarily exercised, but should be exercised in appropriate cases, ex debito justitiae to do real and substantial justice for the administration of which alone the courts exist. In Inder Mohan Goswami 2007 (10) TMI 550 - SUPREME COURT , it has been emphasised that inherent powers have to be exercised sparingly, carefully and with great caution. Lack of awareness, knowledge or intent is neither to be considered nor accepted in economic offences. The submission assiduously presented on gender leaves unimpressed. An offence under the criminal law is an offence and it does not depend upon the gender of an accused. True it is, there are certain provisions in Code of Criminal Procedure relating to exercise of jurisdiction Under Section 437, etc. therein but that altogether pertains to a different sphere. A person committing a murder or getting involved in a financial scam or forgery of documents, cannot claim discharge or acquittal on the ground of her gender as that is neither constitutionally nor statutorily a valid argument. The offence is gender neutral in this case. The order passed by the High Court is set aside - the trial magistrate directed to proceed in accordance with law - appeal allowed.

Summary

Issues Involved:
1. Whether the High Court should quash criminal proceedings under Section 482 of the Code of Criminal Procedure or Article 226 of the Constitution after settlements between borrowers and banks.
2. Whether a former Assistant Commissioner of Commercial Taxes can claim ignorance of transactions signed as a guarantor or co-applicant.
3. Whether continuance of criminal proceedings is an unnecessary load on the criminal justice system.

Detailed Analysis:

Issue 1: Quashing Criminal Proceedings Post-Settlement
The Supreme Court examined whether the High Court should quash criminal proceedings under Section 482 of the Code of Criminal Procedure or Article 226 of the Constitution after settlements between borrowers and banks. The High Court had quashed criminal proceedings on the basis that "No due certificate" had been issued by the banks and settlements had been reached. The Supreme Court, however, emphasized that even if settlements have been reached and dues cleared, the accused cannot be absolved from criminal culpability without a trial. The Court cited several precedents, including State of Maharashtra through CBI v. Vikram Anantrai Doshi and Central Bureau of Investigation v. Jagjit Singh, highlighting that economic offenses, especially those involving forged documents and financial fraud, have a significant societal impact and cannot be treated as mere civil wrongs. The Court held that such offenses are serious and have the potential to create a dent in the economic spine of the nation, thus, quashing proceedings merely on the basis of settlements would be a misplaced sympathy.

Issue 2: Claim of Ignorance by a Former Assistant Commissioner of Commercial Taxes
The Supreme Court addressed whether a former Assistant Commissioner of Commercial Taxes, who signed documents as a guarantor or co-applicant, can claim ignorance of the transactions. The accused contended that she signed the documents following her husband's instructions without any intention or knowledge to cheat the banks. The prosecution argued that given her position and voluntary retirement from the Commercial Tax Department, she could not claim ignorance. The Supreme Court found that the plea of ignorance was not credible and emphasized that lack of awareness, knowledge, or intent is neither to be considered nor accepted in economic offenses. The Court stated that an offense under criminal law is gender-neutral and does not depend on the gender of the accused. The assertions of ignorance were deemed a mere pretense and sans substance.

Issue 3: Unnecessary Load on the Criminal Justice System
The Supreme Court considered whether the continuance of criminal proceedings constitutes an unnecessary load on the criminal justice system. The High Court had quashed the proceedings partly on the ground that their continuation would be futile and an abuse of the process of law. The Supreme Court, however, held that serious economic offenses or those with the potential to harm financial institutions should not be quashed on the grounds of system load or delay in trial. The Court emphasized that such a principle would undermine the law and order system and strengthen unscrupulous litigations. The Court reiterated that economic offenses have a broader societal impact and must be addressed through proper legal channels.

Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's order, and directed the trial magistrate to proceed in accordance with the law. The Court underscored the importance of addressing economic offenses through trials, regardless of settlements or claims of ignorance, to maintain the integrity of the financial system and uphold justice.