Full Text
HIGH COURT OF DELHI
Date of Decision: 24th July, 2024
SH LALIT KISHORE & ORS. .....Petitioners
Through: Mr. Puneet Mittal, Sr. Advocate
Through: Mr. Rajesh Kumar, SPP
Ali Khan, Advocates.
Mr. Santosh Kumar Rout, Ms. Dharna Veragi, Advocates for R-2/PNB.
JUDGMENT
1. The present Petition under Articles 226 and 227 of the Constitution of India, 1950 read with Section 482 Cr.P.C., 1973 has been filed on behalf of the petitioners seeking quashing of the FIR No.RC0502022A0016 dated 22.12.2022, registered under Section 420 read with Section 120B of the Indian Penal Code, 1860 (hereinafter referred to as “IPC, 1860”) and Section 13(1) (D) and 13(2) of the Prevention of Corruption Act, 1988.
2. Briefly stated that the petitioner Nos. 1 and 2 are the Directors of M/s Globallite Industries Pvt. Ltd. (hereinafter referred to as “borrower Company”) in which the petitioner Nos. 3 and 4 had stood as Guarantors to the loan limits availed by the petitioners. The petitioner No. 4/ M/s Classic Tradexim Pvt. Ltd. was incorporated in 2002 under the provisions of Companies Act, 1956 and was the Corporate Guarantor of the borrower Company.
3. It is submitted that in the year 2015, the Cash Credit Limit of Rs. 9,00,00,000/- and Rs. 30,00,000/- term loan, was sanctioned for the borrower Company on 28.12.2015. It was availing Cash credit limit of Rs. 11,00,00,000/- under sole banking arrangements (Sub Limit of CC of Rs.
0.60 crores). The term loan of Rs. 12,00,000/- was only maintained with the respondent No. 2/Punjab National Bank.
4. The petitioners had mortgaged their two immovable properties to secure the loan facilities which are i.e. Industrial Plot No. G88, Industrial Area, Surajpur, Site-V, Village Kasna, Greater Noida, Gautam Budh Nagar, U.P. admeasuring 1800 sq. mtr. and Commercial Plot No. 32, Bl, Sector — 50 situated in Noida, Gautam Budh Nagar, U.P.
5. The financial discipline was duly maintained by the borrower Company and the extension of EPCs from time to time was given by the respondent No. 2/Punjab National Bank and renewed/enhanced the limits of the borrower company. However, on 30.11.2018, the respondent NO. 2/Punjab National Bank classified the accounts of the borrower Company as Non-Performing Assets (hereinafter referred to as “NPA”) without informing the petitioners or granting any opportunity of regularization or settlement of the controversy/doubts regarding classification of asset as NPA. Thereafter, the respondent No. 2/Punjab National Bank took the symbolic possession of the said two mortgaged properties on 22.02.2019.
6. The CIR process of the borrower Company was triggered in NCLT vide Order dated 21.10.2019 in the matter of M/s India Factoring & Finance Solutions Pvt. Ltd. vs. M/s Globalite Industries Pvt. Ltd., CP (IB) NO. 564/ND/2019. Further, liquidation Order dated 18.11.2021was also passed in respect of the borrower Company.
7. The Property bearing Industrial Plot No. G-88, Industrial Area, Surajpur, Site-V, Village Kasna, Greater Nodia, Gautam Budh Nagar, Uttar Pradesh, admeasuring 1800 sq. yards was sold by the Liquidator and more than Rs. 3,00,00,000/- was appropriated towards the loan account of borrower Company.
8. Moreover, the Property bearing Commercial Plot No. 32, B[1], Sector 50 situated in Noida, Gautam Budh Nagar, Uttar Pradesh was illegally put on auction on 28.03.2022 by the respondent No. 2/Punjab National Bank. However, a status quo Order was passed by the Debt Recovery Tribunal, Lucknow on 06.05.2022 by observing that the respondent No. 2/Punjab National Bank had neither accepted nor rejected the One Time Settlement (hereinafter referred to as “OTS”) proposal which was made by the petitioners with a view to settle all the dues with the respondent NO. 2/Punjab National Bank. While this OTS proposal was pending, the respondent No. 2/Punjab National Bank proceeded with the sale of the two mortgaged properties.
9. It is submitted that the respondent No. 2/Punjab National Bank had earlier given a finding in its Executive Summary dated 16.09.2021 that as per the transaction audit which was done by M/s Anil Khandelwal & Associates on 25.09.2020, "no fraud angle is perceived" in the account of the borrower Company. Despite this, the respondent No. 2/Punjab National Bank, in a whimsical manner and that too after a period of six months, proceeded to declare the account of the borrower Company as fraud and reported it to the Reserve Bank of India (hereinafter referred to as “RBI”) on 20.11.2021.
10. The Respondent No. 2/Bank issued a Notice dated 26.04.2022 for identification of default in the Loan account of the borrower Company as willful on the grounds of diversion and siphoning of Funds, Unauthorized disposal of the Charged Assets. The Notice dated 26.04.2022 was challenged by the petitioner in W.P. (C) 7955 of 2022 titled as “M/s Classsic Tradexim Pvt. Ltd. & Ors. vs. Punjab National Bank” and the Court vide Order dated 15.07.2022 granted liberty to the petitioners to make a fresh representation against the Notice dated 26.04.2022.
11. Representations dated 10.08.2022 were made to the Respondent NO. 2/bank by the petitioners to which the Reply was received by the petitioners on 23.09.2022.
12. However, Respondent No. 2/Bank issued a Show Cause Notice dated 12.10.2022 for identification of default in the Loan account of the borrower Company and M/s Globalite Retail Pvt. Ltd. through the Identification Committee, which was received by the Petitioners on 20.10.2022.
13. However, respondent no. 2/bank dropped the proceedings of the Willful Defaulters and suddenly moved to the proceedings of fraud and classified the account of the borrower company as Fraud and the same was already reported to the RBI on 20.11.2021. Thereafter, the respondent NO. 2/bank had lodged a Complaint with the Respondent No. 1 dated 20.12.2022 against the Petitioners for the commission of the offence of fraud by siphoning and diversion of funds, Criminal Breach of Trust, Criminal Misappropriation, Cheating, thereby causing wrongful gain to themselves and wrongful loss to the Bank, to the tune of Rs. 10.46 cr. On the basis of this Complaint, the respondent No. 1/CBI registered FIR No. RC0502022A0016 dated 22.12.2022 registered under Sections 420/120B of IPC, 1860 and Sections 13(1)(D) and 13(2) of the Prevention of Corruption Act, 1988 against the petitioners.
14. The petitioners thus, filed Writ Petition bearing No. W.P.(C) 60/2023 titled Lalit Kishore & Ors. vs. RBI & Ors., challenging the constitutional validity of the RBI Circular No. DBS.CO.CFMC.BC. No. 1/23.04.001/2016- 17 dated 01.07.2016 and sought quashing of the decision of the respondent No. 2/Punjab National Bank to classify the account of the borrower company as fraud. Interim protection was provided to the petitioners vide Order dated 04.01.2023.
15. Pertinently, the petitioners and the respondent No. 2/Punjab National Bank entered into a Memorandum of Settlement Agreement dated 26.04.2023 for which an application bearing No. CM APPL. 20874/2023 was filed before this Court in W.P.(C) 60/2023. Essentially, the account of the borrower Company has been settled between the Petitioners and the Respondent No. 2 Bank for an amount of Rs. 3.25 Crores wherein the 0.25 Crores has been paid through cheque drawn on Bank of Baroda on 05.01.2023 as an upfront amount with the OTS proposal and an amount of Rs. 1,00,00,000/- (One Crore Rupees) was paid vide UTRBARBRS52023032400834473 by the Petitioners on 24.03.2023; and Rs. 2,00,00,000/- (Two Crores Rupees) were paid vide RTGS No. BARBR52023032400834473 on 28.03.2023. Thus, the Respondent No. 2 Bank had also issued the No Objection Certificate (“NOC”) dated 20.04.2023 in favor of the Petitioners.
16. Thus, the Division Bench of this Court vide Order dated 22.05.2023 allowed the said Writ petition and held that no opportunity of hearing was granted to the petitioners before declaring the borrower Company as fraud and the RBI Circular No. DBS.CO.CFMC.BC. No. 1/23.04.001/2016-17 dated 01.07.2016 was set aside. Further, the liberty was also granted to the respondent No. 2/Punjab National Bank to proceed in accordance with the law in the light of the judgment of the Apex Court in State Bank of India & Others vs. Rajesh Agarwal & Others, decided vide Civil Appeal NO. 7300/2022.
17. It is submitted that till date no action has been taken by the respondent No. 2/Punjab National Bank in pursuance of the declaration of fraud of the account of the borrower Company.
18. It is further submitted that OTS has been accepted and „No Due Certificate‟ has been granted after liquidating the dues.
19. It is also submitted that the entire transaction had been initiated by the respondent No. 2/Punjab National Bank only in an effort to recover its dues.
20. Learned counsel on behalf of the petitioners has submitted that though the FIR was registered under Section 13(1)(D) and 13(2) of Prevention of Corruption Act, but during the investigations, the said Charges under Prevention of Corruption Act have been dropped and the Chargesheet has been filed only under Sections 420/120B/406 of IPC, 1860. Further, the liability to make good the monetary loss suffered by the Bank has been mutually settled. The only offence which survives against the borrower company is of Sections 420/120B/406 of IPC, 1860 and the respondent NO. 2/Punjab National Bank has already recovered its losses, there is nothing more that survives in the present FIR which may be quashed under Section 482 Cr.P.C.
21. The respondent No. 1/CBI in its detailed Reply has admitted that the transaction audit of the borrower Company was conducted by M/s Anil Khandelwal & Associates which submitted its Report dated 25.09.2020 declaring the account of the borrower Company as fraud. Therefore, where there is bank fraud, the petition quashing cannot be permitted as has been consistently held by the Apex Court in the judgments of M/s Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra, (2021) SCC OnLine SC 315, Satvinder Kaur vs. State (Govt. of NCT of Delhi), (1999) 8 SCC 728, to contest that.
22. Learned Special Public Prosecutor on behalf of the respondent No.1/CBI has also placed reliance on the decision in State of Maharashtra vs. Vikram Anantrai Doshi and Ors., 2014 15 SCC 29, Parbatbhai Aahir @ Parbatbhai vs. The State of Gujarat, (2017) 9 SCC 641, CBI vs. Maninder Singh¸(2016) 1 SCC 389, Sushil Suri vs. CBI, 2011 (5) SCC 709, Apple Natural Resources Pvt. Ltd. vs. Reserve Bank of India and Anr., W.P.(C) 10968/2019, Apple Natural Resources Pvt. Ltd. vs. Reserve Bank of India and Ors., SLP (C) 19330/2023 and State Bank of India & Ors. vs. Rajesh Aggarwal & Ors., Civil Appeal No. 7300/2022.
23. The respondent No. 2/Punjab National Bank in its Reply has admitted that OTS has been entered into by the parties and all accounts have been settled and „No Due Certificate‟ has been granted after liquidating the dues.
24. During the course of arguments, learned counsel for the respondent No. 2/Punjab National Bank has submitted that he had no objection to the quashing of the present FIR as nothing remains due from the Petitioner.
25. The petitioners in their Rejoinder to the Reply of the respondent No. 2/Punjab National Bank and respondent No. 1/CBI respectively, have reaffirmed the submissions that the transaction was essentially civil in nature and the accounts have been settled and, therefore, nothing survives in the FIR which may be quashed as sought by the present petition. Reliance has been placed on CBI, ACB, Mumbai Vs. Narendra Lal Jain (2014) 5 SCC 364; Nikhil Mechant vs. CBI, 2008 (9) SCC 677, Gian Singh vs. State of Punjab, 2012 (10) SCC 303, CBI vs. Narender Lal Jain, 2014 (5) SCC 364, Pawan Jaggi vs. CBI & Ors., 2009 SCC OnLine Del 778, Sanjay Bhandari & Anr. vs. CBI, 2015 (10) AD (Delhi) 86, Zal Balsara vs. State of Delhi & Ors., 2008 SCC OnLine Del 267, In Superintendent and Remembrancer of Legal Affairs, West Bengal vs. Mohan Singh, 1975 (3) SCC 706, SMS Pharmaceuticals Limited vs. Neeta Bhalla, 2007 (4) SCC, State vs. K.V. Rajendran & Ors., 2008 (8) SCC 673, Anil Khadkiwala vs. State & Anr, 2019 (17) SCC 294, Amit Bansal & Anr. vs. The Central Bureau of Investigation, decided by this Court on 20.12.2023 and Sanjay Bansal vs. The Central Bureau of Investigation, decided by this Court on 05.04.2024.
26. Submissions heard and judgements perused.
27. It was the bank loan account which the petitioners had with the respondent No. 2/Punjab National Bank for a long time, though they defaulted in making payments which led to not only the initiation of proceedings in NCLT and DRT but also in registration of FIR on the basis of a Declaration issued by the respondent No. 2/Punjab National Bank that it was a fraud account. However, this Declaration of the respondent NO. 2/Punjab National Bank vide RBI Circular No. DBS.CO.CFMC.BC. NO. 1/23.04.001/2016-17 dated 01.07.2016 declaring the account of the borrower company as fraud, has been set aside by the Division Bench of this Court vide Order dated 22.05.2023 passed in W.P.(C) 60/2023.
28. Admittedly, thereafter, no further action has been taken either by the respondent No. 1/CBI or by the respondent No. 2/Punjab National Bank to initiate afresh any proceedings to declare the bank account of the borrower company as fraud.
29. The Chargesheet has now been filed which is only under Sections 420/120B/406 of IPC, 1860. The allegations are essentially of cheating which are in the nature of a civil dispute. All the accounts have been settled and the respondent No. 2/Punjab National Bank has already given a „No Objection Certificate‟.
30. Considering that no allegations of fraud survive and the dispute that remains is essentially of settlement of account which has already been effected.
31. The Apex Court in Parbatbhai Aahir @ Prabatbhai vs. The State of Gujarat, (2017) 9 SCC 641, observed that criminal cases involving offences which arise from commercial, financial, mercantile, partnership or similar transactions with an essentially civil flavour may in appropriate situations, fall for quashing where parties have settled the dispute.
32. The Supreme Court of India in CBI, ACB, Mumbai Vs. Narendra Lal Jain (2014) 5 SCC 364 has reiterated that when the liability to make good the monetary loss suffered by the Bank had been mutually settled between the parties, then it is essential to understand that the continuance of the criminal proceedings which is likely to become oppressive or may partake the character of lame prosecution and thus, the extraordinary power under Section 482 Cr.P.C. should be invoked.
33. Similarly, in the case of Nikhil Merchant (supra), wherein the allegations pertained to creation of certain documents in order to avail credit facilities beyond the permissible limit only to cheat and defraud the bank, the Apex court took note of the mutual settlement arrived at between the Bank and the accused and held that technicality should not be allowed to stand in the way in the quashing of the criminal proceedings because the continuance of the same after the compromise arrived at between the parties, would be a futile exercise.
34. It was also reiterated in Sanjay Bhandari (Supra) and Gian Singh (Supra) that while the High Court must give due regard to the nature and gravity of the crime and offences like murder, rape, dacoity, etc. cannot be fittingly quashed even after settlement, but when the criminal cases have overwhelmingly and pre-dominatingly civil favour 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 criminal case would put 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.
35. Thus, it emerges that when the parties have amicably settled their disputes which essentially are private and have flavour of civil dispute and the victim has willingly consented to nullification of criminal proceedings, the Courts can quash such proceedings in exercise of its inherent powers under Section 482 Cr.P.C. It is also evident that the declaration of the account of the petitioner as fraud has been quashed by the Order of the Division Bench in the case of Shri Lalit Kishore & Ors. Vs. Reserve Bank of India & Anr. W.P.(C)60/2023 decided on 04.01.2023. Even the Executive summary records that “no fraud angle is perceived”. Further the entire liability has been settled and all the dues have been paid by the petitioners on the basis of which the Respondent no. 2/ bank has already issued the NOC 20.04.2023 and has no objection to the quashing of FIR. The CBI is left with no interest as Charges under the Prevention of Corruption Act have been dropped and Charge Sheet has been filed only under Sections 420/120B/406 of IPC.
36. Pertinently, the judgements relied upon by the Learned Special Public Prosecutor on behalf of the respondent No.1/CBI essentially pertain to settlements sought to be effected in cases where there are allegations of bank frauds. However, as already mentioned above the allegations of fraud have already been dropped and the Charge Sheet has been filed only under Sections 420/120B/406 of IPC where S.420 IPC is a compoundable offence. Thus, the judgments relied upon by the Respondent No. 1/CBI are not applicable to the facts in hand.
37. Thus, in view of the above facts that the parties have amicably resolved their dispute, no useful purpose will be served in continuing with the proceedings. Hence, it would be in the interest of justice to quash the abovementioned FIR and the proceedings pursuant thereto.
38. Moreover, there is no legal impediment in quashing the FIR in question.
39. Accordingly, FIR bearing No. RC0502022A0016 dated 22.12.2022 for offences punishable under Sections 420/120B/406 of IPC, 1860 and all consequential proceedings emanating therefrom, are quashed.
JUDGE JULY 24, 2024