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TMI Blog2015 (6) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... in choosing to enter into such consent terms under the provisions of OTS Scheme has not only exonerated the petitioners, but for all intents and purposes given up the perusal of the complaint and having no grievance against them in any other proceeding whether civil or criminal on the same set of issues. There is no doubt that the trial has been proceeding for offences for the last about 20 years ago. The dispute between the petitioner and complainant Bank 33 years old. A long time has in fact been elapsed since the alleged commission of offences. Still the trial continues. The present petition is maintainable as the same has been filed also on additional grounds and circumstances. No useful purpose would be served if such oppressive trial may continue for many more years. Thus, ends of justice are served by quashing such a proceeding, as the parties cannot be allowed to go through the rigmarole of criminal prosecution for long numbers of years in a matter, it is doubtful in the mind of the Court in whose favour it would be decided. X X X X Extracts X X X X X X X X Extracts X X X X ..... Working Capital facilities from Indian Overseas Bank. In furtherance of the criminal conspiracy, accused No.1 positively recommended the proposal of the petitioners and before the same was approved by the competent authority, he unauthorizedly and fraudulently released ad- hoc credit facilities to the tune of ₹ 65 lakhs and thereby exposed the bank without securing its financial interest. In view of these facts, the contention of the petitioners cannot be accepted. 3.3 The petitioner No.1 in his capacity as proprietor of M/s Indian Herbs, 21, Okhla Industrial Area, Phase II, Scheme III, New Delhi- 110020, opened a current account bearing No.338 in M/s UCO Bank, Delhi High Court Branch, New Delhi on 23rd March, 1989 and that the firm M/s Indian Herbs was fictitious and non-existent business concern, as the address shown in the said bank account application form was a shed of DSIDC, Okhla, Industrial Area, New Delhi, which was not owned/allotted to M/s Indian Herbs and as per the investigation, this shed was allotted to Sh. Deepak Bhandari (one of the Directors of accused company (A-5), and brother of petitioner No.1, for manufacturing of Homeopathic Medicines and ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank is left with no claim, grievance or complaint of any nature whatsoever against either of the respondents. 7. On the basis of the aforesaid settlement/compromise arrived at between the bank and the borrower company, the High Court, by order dated 6th October, 2004 allowed the application of co-accused Shri N.Bhojraj Shetty, Ex-Branch Manager of the complainant bank in his writ petition and directed the bank to release his post-retirement benefits, which the bank had withheld due to the pendency of the departmental enquiry against him, relating to the transactions in question. 8. After the release of aforesaid post-retirement benefits, the bank also withdrew the disciplinary proceedings against the co-accused N. Bhojraj Shetty, leading to the final disposal of his writ petition, vide order dated 18th March, 2005. 9. The trial court, vide order dated 23rd November, 2006 refused to quash the present proceedings against the petitioners on the ground that the power to quash the proceedings on the ground of compromise between the parties are only with the High Court under Section 482 Cr.P.C. and ordered framing of charges against the petitioners. 10. After completion of inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter with Vijaya Bank and paid the entire amount in terms of settlement. He also submits that a 'No Dues certificate' has been issued by the Bank. Relying upon judgment in CBI vs. Narender Lal Jain, Crl. Appeal No.517/2014 arising out of SLP (Crl.) No.6138/2006 decided on 28.02.2014, learned senior counsel for the petitioners contends that the proceedings are liable to be quashed. Notice. Mr.Narender Mann, Special PP accepts notice on behalf of CBI and seeks time to file reply. Let the same be filed before the next date of hearing. Renotify on 18.02.2015 before the Roster Bench. Till the next date of hearing, the trial court will adjourn the matter to any convenient date after 18.02.2015." 15. It is contended by the petitioners that the disputes were mainly of civil nature, in which settlement has been arrived between the parties and a consent decree to that effect has been passed under the Civil Procedure Code by the Debt Recovery Tribunal, Delhi, whereunder the complainant bank had exonerated the petitioners herein of any claims of any nature whatsoever. Further the said settlement was made under Reserve Bank of India's OTS Scheme, which Scheme excludes cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gopakumar B. Nair v. CBI & Anr., (2014) 5 SCC 800 is not attracted in the present case. Per contra, Gopakumar's judgment reaffirms the legal position laid down in Nikhil Merchant (supra) and N L Jain (supra) that the passage of a consent decree in disputes of such nature makes a fit rationale for quashing of proceedings under Section 482 Cr.P.C., as the continuance of such proceedings serve no useful purpose. 20. The prayer is opposed by Mr.Narender Mann, learned counsel for the respondent who states that firstly the petition is not maintainable under Section 482 Cr.P.C. as the allegations made in the charge sheet prima facie discloses the commission of cognizable offences by the petitioners/accused, under Section 120-B IPC read with Section 420, 467, 468, 471 IPC, read with Section 5(1) (d) and Section 5(2) of the P.C. Act, 1947 and Section 13(2) read with 13(l)(d)(ii) of PC Act, 1988 and substantive offences thereof. 21. Secondly, he says that there is no fresh ground available to the petitioner to approach this Court as the similar plea of the petitioner was rejected by this Court. As one of the ground taken by the petitioner before the High Court was that a compromise w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iracy is to commit offences under the Prevention of Corruption Act. They have also been charged for commission of the substantive offences under Section 467, 468 and 471 IPC. As such the ratio of the cases viz. Narender Lal Jain and Nikhil Merchant (supra) do not apply to the instant case. The facts of the instant case are more closure to the facts of Gopakumar B. Nair case (supra) decided by the Supreme Court on 19th September, 2014. 25. Let me now consider the submissions of rival parties. It is admitted position that the three-Judge Bench of the Supreme Court in the case of Gian Singh (supra) who dealt with the issue of quashing of a criminal proceeding on the ground of settlement between an offender and the victim and in this context, it ruled thus as under:- "61. 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 FIR may be exercised where the offender and the victim have settled their dispute would depend on the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or refusing to accept the settlement. Some of the guidelines which are relevant for the present purpose are reproduced herein below :- "(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. (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. (IV) On the other, those criminal cases having overwhelmingly and pre-dominantly civil character, particularly those arising out of commercial transactions or ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contours of the power available under Section 482 CR.P.C. it must be remembered that continuance of a criminal proceeding which is likely to become oppressive or may partake the character of a lame prosecution would be good ground to invoke the extraordinary power under Section 482 Cr.P.C." 28. In the case of Vikram Anantrai Doshi (supra), the Supreme Court distinguished the decision in Narendra Lal Jain (supra) by observing that the accused persons were facing charges under Section 120-B read with Section 13(2) read with 13 (1) (d) of the PC Act 1988 and Section 420/471 of IPC and the facts were not similar to the facts in Narendra Lal Jain (supra) wherein the accused was charged under Section 120-B read with Section 420 IPC. The Supreme Court observed as follows:- "....Though the amount due have been paid the same is under a private settlement between the parties unlike in Nikhil Merchant (supra) and Narendra Lal Jain (supra) where the compromise was a part of the decree of the Court. There is no acknowledgement on the part of the bank of the exoneration of the criminal liability of the accused-appellant unlike the terms of compromise decree in the aforesaid two cases. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances in the present case are similar to the case of Vikram Anantrai Doshi (supra) then the proceedings are not liable to be quashed. But if the same are similar to the cases of Narender Lal Jain (supra) and Nikhil Merchant (supra) and the circumstances are distinct, the Court may exercise its discretion. 31. The facts in the case of Vikram Anantrai Doshi (supra) are that amount of loan sought was sanctioned on 24th January, 2003 by one Mr.K.K.Aggarwal, General Manager and communicated to the branch. As per the terms and conditions of the said Term Loan, the primary security for the same was the first charge to be created on the fixed assets of the company ranking pari passu with the existing Term Lending Institutions. The primary charge for the cash credit and working capital demand loan was the hypothecation of current assets such as stocks, stocks in trade, raw materials and book debts, and, that apart, one of the important terms and conditions was that the CC, WCDL and Term Loan amounts were to be directly paid to the company's account with the UTI Bank and Federal Bank so as to take over the liabilities as well as the securities mortgaged with the two banks. Despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... homeopathy in the city of Delhi. In pursuance to A-3's name and recognition of being the leading practitioner of homeopathy, and to meet the growing demand of homeopathic medicines, sometime during the late 1970s he started a business concern by the name R.K. Bhandari (Homeopath) Pvt. Ltd. to manufacture and sell homeopathic medicines. The said homeopathy unit was located at E- 47/II, Okhla Industrial Area, Phase II, New Delhi. Later i.e. in the year 1985 the said company added an herbal unit to its business by setting up a manufacturing unit in Parwanoo (Himachal Pradesh). Later on, the same company came to be known as RKB Herbals Pvt. Ltd.(A-5), with two business units, namely, the Homeopath Unit located in Okhla Industrial Area, Delhi and Herbal Unit located in Parwanoo, Himachal Pradesh. 33. The relationship of the accused company with the complainant bank dated back to year 1982 with the opening of current account. In the year 1987, the accused company (A-5) made a loan application of about ₹ 2 Crores for its homeopathy as well as Herbal Unit. The bank for three different reasons deferred this application, notably that there was a credit squeeze in the bank at that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision. iv) 26.02.1987 First Loan proposal was deferred by the complainant bank, primarily on the ground that at that time there was credit squeeze in the bank. v) 24.10.1987 Second loan application dated 24.10.1987 was submitted to the complainant bank, wherein, the loan requirement for the herbal unit was reduced to less then half i.e. only ₹ 100 Lacs (one crore) and in this loan application, the loan was applied only for Herbal unit at Parwanoo, which was not availing credit limit from any bank. However, this fact that the Homeopathic Division at New Delhi was already enjoying credit facility from I.O. Bank was known to senior officer of the bank, as the same was very much within the knowledge of the bank and was disclosed to them earlier on many occasions. Since in this second loan application, the request for loan was only for Herbal Unit, therefore, the fact that the company was enjoying credit facility for its homeopathic Division was not specifically mentioned. This according to the C.B.I, is concealment of material fact, constituting an offence of cheating against the accused company. vi) 26.10.1987 A note dated 26.10.1987 was prepared and signed by the Branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted to rebook the consignments covered under the unpaid DBP's so as to enable the party to reprocess sale of the same and approved the enhancement of credit limit to over 2 crores, vide its proposed resolution dated 06.04.1990. for fourteen months, the proposal for revival of the unit was kept pending with the bank and thereafter, suddenly, bank refused to participate in rehabilitation of the unit and for this reason, the company became sick and could not repay its loan in time, leading the bank to file suit for recovery of loan against the company in June, 1993 and then after about a year of filing of the suit, the present criminal case being R.C. no.4A/194 was registered in May, 1994. xiii) 30.06.1993 Recovery suit was filed by the bank against the company and its directors for recovery of loan amount with interest. No allegations of cheating, forgery or criminal misconduct etc. were made either against the branch manager or against the accused company and its directors. xiv) 08.07.1993 Order of ex-part injunction was passed by the High Court in the said suit, restraining the company and its directors from selling, alienating, transferring and parting with possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record. The petitioners and complainant bank reached the aforesaid settlement in accordance with the guidelines of the Reserve Bank of India (RBI) under the One Time Settlement Scheme (OTS Scheme), as stated in paragraph 2 of the Joint Application for settlement filed before the DRT. The RBI, in consultation with the Government of India, notified the said OTS Scheme (DBOD.BP.BC.65/21.04.117/2002-2003) on 29th January, 2003 with the view to give opportunity to the borrowers of all public sector banks to come forward for settlement of their outstanding dues. The OTS Scheme makes it necessary upon the public sector bank to specifically exclude cases of wilful default, fraud and malfeasance. Para 3 of the said OTS Scheme is reproduced herein below for emphasis; "The guidelines will not, however, cover cases of wilful default, fraud and malfeasance. The banks should identify cases of willful default, fraud and malfeasance and initiate prompt action against them." The same provision is repeated in others parts of the OTS Scheme in different words. Suffice to say that the letter and spirit of the OTS Scheme and the intention of Government of India (as the owner share hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual capacity, petitioner No.1 herein, namely Shri Sanjay Bhandari has been charged under Sections 420 and 471 IPC. In her individual capacity, petitioner No.2, namely Smt. Sonia Bhandari has been charged under Sections 420, 467, 468 and 471 IPC. The accused bank employee (public servant) being accused No.1 in the trial, together with the petitioners who are accused No. 2 and 4, have been together charged under Sections 120-BIPC, read with Section 420, 467, 468, 471 IPC read with Section 5 (1) (d) punishable under Section 5 (2) of Prevention of Corruption Act, 1947 and Section 13 (1) (d) (ii) punishable under Section 13 (2) of Prevention of Corruption Act, 1988. 42. The question that comes to require consideration is, whether the complainant bank acknowledged the exoneration of the criminal liability of the accused company? The answer appears to be clearly yes. This is evidenced both in letter and conduct of the complainant bank. Reliance is placed on the No-Objection Letter, and also the Joint Application before the DRT more fully enunciated in Para 4 (d) above. Further reliance is placed on the OTS Scheme under which the settlement was drawn up, which by its very nature e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain part of these proceedings."[Emphasis Supplied) 45. It is submitted by Mr.Tulsi that as per complainant only A-1 has been made accused in the said criminal complaint, even though trial evidence would show that the said accused 1 was not the eventual approval authority and instructions for the approval, continuance and further increase in the said credit facilities were coming from the Zonal Manager, Executive Director up to the Chairman of the complainant bank. The Executive Director of the complainant bank made the first approval of the said credit facilities, after the approval from Divisional Manager and Asstt. General Manager. However, none of the said approving higher officers of the bank have been charged. 46. In this respect, the observation of the Supreme Court in Duncans Agro (supra) becomes pertinent to reproduce : "In the facts of the case, it appears to us that long after the completion of civil suits, the further investigation in connection with the complaints may not be expedient. It may be noted that the opinion given by the Senior Manager (Legal) that the credit facility given to DAIL for its tobacco division should be transferred to the newly formed Company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that uncontroverted evidence has come to light from the trial stage that these uncharged senior bank employees not only approved and continued the credit facilities themselves, but also on many occasions gave oral instructions to the said A-1 to continue and enhance the said credit facilities in favour of the accused applicants. During cross-examination, prosecution and its witnesses were not able to support as to why the other four layers of sanctioning authority were left out from being named as accused in the matter. 50. It is the admitted position that after the parties entered into the aforesaid settlement, leading to the passing of consent decree, even the departmental enquiry against A-1 Mr.N. Bhojraj Shetty, Branch Manager of the complainant bank in respect of the transaction anddebt in question were withdrawn and his retirement benefits were also ordered to be released in his favour on the order passed by this Court. Though not a direct subject matter of this petition, such release of retirement benefits by this Court indicates the complainant bank's exoneration of the accused Branch Manager (A-1). 51. CBI in para 25 of the charge sheet found that the said charge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar to the plea taken in the present petition for quashing. Even if the eventual prayer of both the petitions are same or similar, each are to be determined on the grounds individual to them within the framework of law under which it is being presented to this Court. The question of "fresh grounds" is to be assessed in juxtaposition of both facts and law, and not facts alone. 56. The petitioners are evoking the principles of law in respect of quashing under Section 482Cr.P.C. as pronounced by the Supreme Court of India in the three-judge decision of Narendra Lai Jain & Ors (supra) and the two-judge decision in case of Nikhil Merchant (supra) (as subsequently confirmed by a three-judge bench in the case of Gian Singh (Supra). These decisions of the Supreme Court have been pronounced after the Revision Petition of the petitioners were decided, and therefore the principle of law, as laid down by the Supreme Court (binding on all courts in India, under the provisions of Article 141 of the Constitution of India) were available after passing the N. L. Jain judgment (in April 2014) read together with Gian Singh (in reference to Nikhil Merchant). 57. Even during the cross examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefits, read together with the complainant's bank abandonment of departmental proceedings against the said A1, is to be further read in juxtaposition with the judgment of the Supreme Court in the case of P S Raja vs. State of Bihar reported in (1997) Supreme Court Cr.R. 137:- "The standard of proof required to establish the milt in a criminal case is far higher than the standard of proof required to establish the guilt in the departmental proceedings. In the present case, the charge in the departmental proceeding and in the criminal proceeding is one and the same. There is no dispute as to the findings rendered in the departmental proceedings and the ultimate result of it. On those premises, there is no difficulty in accepting the case of the appellant. For if the charge which is identical could not be established in departmental proceedings and in view of admitted discrepancies in the reports submitted by the valuer, one wonders what is there further to proceed against the appellant in criminal proceedings. On the peculiar facts of this case, the criminal proceedings against the appellant cannot be pursued." [Emphasis Supplied] 61. It is settled law that a charge of crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-judge bench of Supreme Court, after long deliberations on the subject of quashing and compounding of non-compoundable offences, concluded :- "62. In view of the above, it cannot be said that B S Joshi, Nikhil Merchant and Manoj Sharma were not correctly decided. We answer the reference accordingly." 65. The appeal to the Supreme Court in the cases of Nikhil Merchant and N.L. Jain both arise from a common order and judgment of the Bombay High Court dated 28th October, 2005. While the High Court quashed the proceedings in N.L. Jain's case, it refused to do so in the case of Nikhil Merchant. The distinguishing aspects between the two cases, which weighed upon the High Court, was that Nikhil Merchant was charged with substantive offences that were not limited to Section 420 and 120-B IPC, but was also charged under Section 467, 468and 471 IPC and therefore the Bombay High Court did not find it fit to evoke its extraordinary powers to quash a proceeding. In appeal to the Supreme Court, it quashed the FIR against Nikhil Merchant, even though the alleged offences were more than that of N.L. Jain, and provisions of PC Act were also attracted. It is restated that the N.L. Jain judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Managing Director, M/s Neemuch Emballage Ltd., Mumbai, was made Accused 4. The other three accused are official of Andhra Bank." While confirming the judgment of Nikhil Merchant, the Hon'ble Bench in Gian Singh (supra) sounded a word of caution: "61. ... Similarly, any compromise between the victim and the offender in relation to the offences under special statutes like the Prevention of Corruption Act or the offences committed by the public servants while working in that capacity, etc.; cannot provide for any basis for quashing criminal proceedings involving such offences. " 69. Relying upon the judgment of the Supreme Court in the case of Gopakumar B. Nair (supra) wherein the Supreme Court refused to quash the proceedings for the reason that the compromise entered into between the complainant and the accused was not a part of a court decree. In the present case, as in the case of N.L. Jain and Nikhil Merchant, the compromise entered into between the complainant bank and the petitioners was a subject of court proceedings and consent terms were duly entered into under the provisions of Civil Procedure Code. In such circumstances, the distinguishing aspects of the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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