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CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.1315 OF 2018
MR. SUNIL RAMJI SINGH ..APPLICANT
VS.
1. THE CENTRAL BUREAU OF INVESTIGATION
2. THE STATE OF MAHARASHTRA
2. VIJAY BANK ..RESPONDENTS
Mr. Sunil R. More a/w Ms. Deepika Singh and Ms.Jamila Khan, for the Applicant.
Mr. Limasin A. i/b Mr.H.S. Venegavkar, for CBI- Respondent
No.1.
Mr. S.H. Yadav, APP for the State- Respondent No.2.
JUDGMENT
1. Heard learned counsel for the applicant, learned counsel for the CBI and learned APP for the State.
2. The challenge in this application is to an order dated 13/08/2018 passed by the Special Judge, Sessions Court in Exhibit 130 in Special Case No. 94 of 2002.
3. The applicant is the original accused no.5. The applicant had preferred an application for discharge which came to be rejected by the impugned order. The FIR No. RC/ 2024:BHC-AS:10677 05(E)/1999/BSFC/BLR was registered on 31/12/1999 against 8 accused. The alleged offences are under section 120B read with 409 and 420 of the Indian Penal Code, 1860 (“IPC”, for short) and under section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988 (“PC Act”, for short). The accused no. 6- M/s.Sunil Silk Mills is a partnership firm dealing in the business of processing of cotton and man-made fabrics against job orders as well as in the business of exports of ready-made garments and bedsheets. Accused no. 4, the present applicant- accused NO. 5, accused no.7 and 8 are the partners of accused no. 6 firm. Accused no.1- Mr.M.Sadananda Shetty was functioning as a Chief Manager of Vijaya Bank, Santacruz Branch during the period from 03/06/1994 to 06/08/1997 and accused NO. 2- Mr. Sudhakar Shetty was the Chief Manager (officiating) from 07/08/1997 to 01/05/1998 in the same branch. Accused no. 3 – Mrs. Leelavati was the Assistant Manager Forex Department from 01/08/1993 to 30/04/1999. The allegations in brief as can be found in the charge-sheet are that the accused no. 1 in conspiracy with the accused nos. 3, 4 and the present applicant during the period from 28/02/1997 to 16/07/1997 permitted various credit facilities to accused no.6- partnership firm inspite of the expiry of earlier credit limits sanctioned by the competent authority of bank. Accused no.1 by abusing his position allowed the export proceeds on the basis of export bills to be adjusted against the outstanding Packing Credit Limit (“PCL ”, for short) although the accused no.6 did not have running account facilities. The accused no.1 issued bank guarantee on the request of accused no. 6 without collecting any margin and also neglecting various onerous conditions to the detriment of the bank. The accused no.1 permitted credit limit without any valid sanction from the competent authority. The sanction had already expired. The accused no.2 also permitted PCL of Rs.305.80 lakhs without any valid sanction to the accused no. 6 firm. The accused no. 2 purchased bills despite repeated dishonour of earlier bills and invocation of guarantee. The accused no.3 without any authority recommended release facilities to the accused no.6 firm. The allegations then are that the accused no.4 did not use the proceeds of PCL for export purpose.
4. So far as the accused no. 5 i.e. present applicant is concerned, it is alleged that he submitted an order issued by M/s. Theokellar GmbH, which had been altered unilaterally, modifying the terms and conditions so as to enable the firm to avail PCLs much in excess of the original value of the order and for longer periods than stipulated. The firm had availed as many as 8 PCLs to the tune of Rs.1.50 crores from Vijaya Bank during the year 1996. These PCLs were later liquidated by the firm by tendering export bills drawn on other parties all of which were dishonoured. It is also alleged that the accused no. 6- firm M/s. Sunil Silk Mills and its partners exported bed-sheets valuing DM 23,25,000 equivalent to Rs.4.65 crores to two German Importers viz M/s. Katex Textilien and M/.s Olff Textilien. These bills were the bills which were discounted/purchased by Vijaya Bank and submitted to foreign bank for collection. However these bills were returned. Then the accused persons (partners of the accused no.6) approached the accused public servants of Vijaya Bank on the pretext that one of the parties is ready to take the consignment for a higher value and requested to return the documents for revising the prices. These documents were returned by partners of the accused no.6 to the bank. However, while returning the documents, the accused partners clandestinely removed the original bills of lading. These bills of lading were provided to the importer directly and the goods were released from port without the knowledge of Vijaya Bank. The importer directly made payment to the partners of the accused no.6 instead of making payment to Vijaya Bank and hence, Vijaya Bank suffered total loss which is allegedly Rs.9.13 crores.
5. It is pertinent to note that Vijaya Bank had filed suits for recovery of amounts. The suits were withdrawn on 08/05/2007 on the basis of the settlement entered out of the Court between Vijaya Bank and the accused. Therefore, on 07/01/2009, all the accused filed an application being MA No.320 of 2008 for discharge before the trial Court on the ground that the amount has been paid and nothing is now outstanding. The Special Court rejected the application on 07/01/2009. Vijaya Bank has issued a No Due Certificate on 10/02/2009. The accused no.8-Sushila R. Singh was discharged by this Court on 24/09/2010. The accused NO. 7- Radha Devi Singh was discharged by the Supreme Court on 08/10/2013. The accused nos. 7 and 8 were discharged as they were found to be the sleeping partners of the partnership firm.
6. The applicant had earlier filed an application under section 227 of the Code of Criminal Procedure before the Special Judge being Misc. Application No. 3 of 2014. By an order dated 28/03/2014, the application for discharge was rejected by the Special Judge by a reasoned order. The Special Judge observed that there is no substance in the contention of the accused no.5 that he was a sleeping partner or dormant partner or he was not taking active part in the business and management of the partnership firm. The Special Judge also observed that considering the evidence against the accused nos. 7 and 8, they were discharged. Paragraphs 11 and 12 of the observations made by the trial Court while rejecting the application for discharge are relevant which reads thus: “11.Besides this, it is the case of the prosecution that the accused No.5 submitted the order after making material alteration in it and he thereby induced bank officers to show undue favour and this was done for seeking various financial facilities. After going through statements of the bank officers, it seems that without co-operation of the bank officers (who are co-accused in this case) it was not possible for partners of M/s.Sunil Silk Mills to obtain the various financial facilities or to acquire custody of the original Bills of Lading for deceiving the bank.
12. At the stage of framing of the charge, if it is shown that evidence collected in the investigation is sufficient to give grave rise to the strong suspicion that accused is involved in the crime, then it is not a case to discharge the accused. In the present matter, after going through entire material on the basis of which the charge-sheet is filed against accused No.5, it is not possible to say that there is no stretch of evidence against him. On the contrary, visits of accused to Germany, letters written by him to the bank along with order which is alleged to be forged, creates sufficient doubt. The important aspect of this case is that the Bills of Lading which were in custody of the bank were obtained by M/s.Sunil Silk Mills and after taking custody of original Bills of Lading, the partners of the Sunil Silk Mills got opportunity to defraud. Under these circumstances, it is not possible to say that there is no iota of evidence against the accused No.5. I have already discussed that the accused Nos. 7 and 8 are discharged only on the ground that both of them were sleeping partners, but the case of accused No.5 is totally different. Therefore, I do not see any merit in this application.”
7. This order dated 28/03/2014 rejecting the application for discharge by the Special Court passed below Misc. Application No. 3 of 2014 was challenged in this Court by way of Criminal Application No. 627 of 2014. By order dated 01/03/2018 the application came to be disposed of in view of the following observations. “1. The learned counsel for the Applicant would invite attention of this Court to the judgments of the Apex Court in the matters of Nikhil Merchant Vs. Central Bureau of Investigation &Anr. decided in S.L.P. (Crl.) No. 6355 of 2005 on 20th August, 2008 and Gian Singh Vs. State of Punjab & Anr. decided in S.L.P. (Crl.) No.8989 of 2010 decided on 24th September, 2012 so as to substantiate his claim that when the complainant having received his entire consideration, the prosecution against the Applicant can be dropped. Admittedly, this plea was never raised before the Trial Court before whom the prosecution against the Applicant was pending.
2. After having heard for some time, the learned counsel for the Applicant, upon instructions, make a motion for withdrawal of the present proceeding with liberty to agitate the for claim for discharge/ compounding of the offence in view of the aforesaid position of law as reflected in the Supreme Court in cases of Nikhil Merchant (supra.) and Gian Singh (supra).
3. If the Applicant moves an application to that effect, it is expected from the Learned Trial Court to deal with the same expeditiously. The stay granted by this Court shall continue for a period of four weeks so as to enable the Applicant to make an application before the Learned Trial Court.
4. In the aforesaid terms, the application stands disposed of.”
8. Pursuant to the liberty granted, the application at Exhibit 130 was made by the applicant for quashing and setting aside the order passed on 28/03/2014 in Misc. Application No. 3 of 2014 in CBI Special Case No. 94 of 2002 on the point of settlement. The Special Court by the impugned order rejected the Misc. Application Exhibit 130. It is contended by learned counsel for the applicant that in view of the amicable settlement by way of compromise between the partnership firm and Vijaya Bank, as the entire transaction was purely civil in nature, continuing the prosecution is an abuse of process of Court. In support of his submissions, learned counsel for the applicant relied upon the decisions in 1 Nikhil Merchant Vs. CBI and anr. Gian Singh Vs. State of Punjab and anr., to submit that having regard to the law laid down by the Supreme Court, the prosecution against the applicant ought to be dropped. It is further submitted that as the claim of Vijaya Bank, at whose behest the prosecution was instituted is settled, therefore, no purpose would be served in continuing the prosecution as the accused are bound to be acquitted in the trial. It is further submitted that in view of the order dated 01/03/2018, the challenge to the order dated 28/03/2014 in Misc. Application No. 3 of 2014 is expressly left open and therefore apart from the point of settlement, it is open for the applicant to agitate the application for discharge on all available grounds. It is further submitted that as the co-accused nos. 7 and 8 have been discharged, even the application made by the applicant for discharge deserves to be allowed.
9. Learned counsel for the respondent no.1 argued in support of the impugned order. Learned counsel placed reliance on the decisions of the Supreme Court in Parbatbhai Aahir Alias Parbatbhai Bhimsinhbai Karmur Vs. State of Gujarat and in 4 Gopakumar B. Nair Vs. CBI and anr. in support of his submissions.
10. Heard learned counsel. By the order dated 28/03/2014 passed in Misc. Application No. 3 of 2014, the Special Judge rejected the application for discharge of the applicant by a reasoned order. The said order was challenged by way of Criminal Application No. 627 of 2014 in this Court. As indicated earlier, on behalf of the applicant, a motion was made for withdrawal of the Criminal Application No. 627 of 2014 with liberty to agitate the claim for discharge/ compounding of the offence in view of the position of law as reflected in Nikhil Merchant (supra) and Gian Singh (supra). In that context, this Court observed that if the applicant moves an application to that effect, it is expected from the learned trial Court to deal with the same expeditiously.
11. Pursuant to the order passed by this Court, the application Exhibit 130 was preferred. The contents of the application will reveal that the application for quashing and setting aside order dated 28/03/2014 in Misc. Application No. 3 of 2014 was made only on the point of settlement based on the guidelines laid down by the Apex Court in Nikhil Merchant (supra) and Gian Singh (supra). In my opinion, except of settlement/compromise with Vijaya Bank in view of the order dated 28/03/2014 in Misc. Application No. 3 of 2014 of this Court the order dated 28/03/2014 has attained finality. No doubt, the accused partnership firm and the partners settled/compromised the matter with Vijaya Bank, but the question is whether in the light of the accusations and the materials forming part of the chargesheet, the applicant should be discharged only on the ground of such settlement. The accusations faced by the firm and the applicant involve serious economic implications apart from there being a charge of conspiracy under the PC Act.
12. The observations in Gian Singh are relied upon by learned counsel for the applicant in support of the submission that the criminal cases having overwhelmingly and predominatingly 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 where the wrong is basically private or personal in nature and the parties have resolved their entire dispute. Paragraph 57 in Gian Singh summarises the approach to be adopted while quashing criminal proceedings or FIR or complaint in exercise of its inherent jurisdiction which is different and distinct from the power given to a criminal court for compounding the offences under section 320 of the Code. Paragraphs 57& 58 of Gian Singh read thus: “57. 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 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 predominatingly 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 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. 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.
58. 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. Let these matters be now listed before the concerned Benches).“
13. The Supreme Court in Gopakumar B. Nair (supra) after considering Gian Singh and Nikhil Merchant made the following observations in paragraphs 13 and 14 which are significant:- “13. The decision in Gian Singh (supra) holding the decision rendered in Nikhil Merchant (supra) and other cases to be correct is only an approval of the principle of law enunciated in the said decisions i.e. that a noncompoundable offence can also be quashed under Section 482, Cr PC on the ground of a settlement between the offender and the victim. It is not an affirmation, for there can be none, that the facts in Nikhil Merchant (supra) justified/called for the due application of the aforesaid principle of law. Also, neither Nikhil Merchant (supra) nor Gian Singh (supra) can be understood to mean that in a case where charges are framed for commission of noncompoundable offences or for criminal conspiracy to commit offences under the PC Act, if the disputes between the parties are settled by payment of the amounts due, the criminal proceedings should invariably be quashed. What really follows from the decision in Gian Singh (supra) is that though quashing a non-compoundable offence under Section 482, Cr PC, following a settlement between the parties, would not amount to circumvention of the provisions of Section 320 of the Code the exercise of the power under Section 482 will always depend on the facts of each case. Furthermore, in the exercise of such power, the note of caution sounded in Gian Singh (supra) (para 61) must be kept in mind. This, in our view, is the correct ratio of the decision in Gian Singh (supra).
14. The aforesaid principle of law may now be applied to the facts of the present case. At the very outset a detailed narration of the charges against the accused-appellant has been made. The appellant has been charged with the offence of criminal conspiracy to commit the offence under Section 13(1)(d). He is also substantively charged under Section 420 (compoundable with the leave of the Court) and Section 471 (non-compoundable). A careful consideration of the facts of the case would indicate that unlike in Nikhil Merchant (supra) no conclusion can be reached that the substratum of the charges against the accused-appellant in the present case is one of cheating nor are the facts similar to those in Narendra Lal Jain (supra) where the accused was charged under Section 120- B read with Section 420, IPC only. The offences are certainly more serious; they are not private in nature. The charge of conspiracy is commit offences under the Prevention of Corruption Act. The accused has also been charged for commission of the substantive offence under Section 471, IPC. Though the amounts 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 acknowledgment 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 the totality of the facts stated above, if the High Court has taken the view that the exclusion spelt out in Gian Singh (supra) (para 61) applies to the present case and on that basis had come to the conclusion that the power under Section 482, Cr PC should not be exercised to quash the criminal case against the accused, we cannot find any justification to interfere with the said decision. The appeal filed by the accused is, therefore, dismissed and the order dated 25.06 2013 of the High Court, is affirmed.”
14. Reference to the decision of the Supreme Court in Parbatbhai Aahir (supra) reveals the broad principles which emerge from the precedents on the subject of quashing of FIR where parties have settled the dispute. Paragraph 15 is important which reads thus: “15. The broad principles which emerge from the precedents on the subject, may be summarised in the following propositions:
(i) Section 482 preserves the inherent powers of the High
Court to prevent an abuse of the process of any court or to secure the ends of justice. The provision does not confer new powers. It only recognises and preserves powers which inhere in the High Court;
(ii) The invocation of the jurisdiction of the High Court to quash a First Information Report or a criminal proceeding on the ground that a settlement has been arrived at between the offender and the victim is not the same as the invocation of jurisdiction for the purpose of compounding an offence. While compounding an offence, the power of the court is governed by the provisions of Section 320 of the Code of Criminal Procedure, 1973. The power to quash under Section 482 is attracted even if the offence is non-compoundable.
(iii) In forming an opinion whether a criminal proceeding or complaint should be quashed in exercise of its jurisdiction under Section 482, the High Court must evaluate whether the ends of justice would justify the exercise of the inherent power;
(iv) While the inherent power of the High Court has a wide ambit and plenitude it has to be exercised; i) to secure the ends of justice or ii) to prevent an abuse of the process of any court;
(v) The decision as to whether a complaint or First
Information Report should be quashed on the ground that the offender and victim have settled the dispute, revolves ultimately on the facts and circumstances of each case and no exhaustive elaboration of principles can be formulated;
(vi) In the exercise of the power under Section 482 and while dealing with a plea that the dispute has been settled, the High Court must have due regard to the nature and gravity of the offence. Heinous and serious offences involving mental depravity or offences such as murder, rape and dacoity cannot appropriately be quashed though the victim or the family of the victim have settled the dispute. Such offences are, truly speaking, not private in nature but have a serious impact upon society. The decision to continue with the trial in such cases is founded on the overriding element of public interest in punishing persons for serious offences;
(vii) As distinguished from serious offences, there may be criminal cases which have an overwhelming or predominant element of a civil dispute. They stand on a distinct footing insofar as the exercise of the inherent power to quash is concerned;
(vil) 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;
(ix) In such a case, the High Court may quash the criminal proceeding if in view of the compromise between the disputants, the possibility of a conviction is remote and the continuation of a criminal proceeding would cause oppression and prejudice; and
(x) There is yet an exception to the principle set out in propositions (viii) and (ix) above. Economic offences involving the financial and economic well-being of the State have implications which lie beyond the domain of a mere dispute between private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance.“
15. No doubt, in terms of clause (viii) of paragraph 15 in Parbatbhai Aahir, 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. In clause (ix) of paragraph 15, the Supreme Court observed that in such a case the High Court may quash the criminal proceeding if in view of the compromise between the disputants, the possibility of a conviction is remote and the continuation of a criminal proceeding would cause oppression and prejudice. However, it has to be borne in mind that the Supreme Court has also observed that there is yet an exception to the principle set out in propositions (viii) and (ix) in paragraph
15. It is observed that the economic offences involving the financial and economic well-being of the State have implications which lie beyond the domain of a mere dispute between private disputants. Their Lordships observed that the High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance.
16. Bearing in mind the above principles which have been laid down by the Supreme Court, I am not inclined to entertain the present application for discharge on the ground that there has been settlement/compromise between the partnership firm and Vijaya Bank. The materials on record would demonstrate that this is not a simple case of recovery of money belonging to Vijaya Bank from the partnership firm. Vijaya Bank may have issued the No Due Certificate to the partnership firm on account of out of Court settlement as a result of which the civil proceedings before the Civil Courts are withdrawn. Apart from the economic offence, the present is a case involving allegations also under the PC Act. The partners of the firm conspired with the bank officials in permitting various credit facilities inspite of expiry of earlier credit limits sanctioned by the competent authority of bank. Accused no.1, the then Chief Manager of Vijaya Bank by abusing his position allowed the export proceeds of export bills to adjust against the outstanding Packing Credit Limit, although the accused no.6 firm did not have running account facilities. Accused no.1 issued bank guarantee on the request of the accused no. 6 without collecting any margin and also neglecting various onerous conditions to the detriment of the bank. The Accused no.1 permitted Packing Credit Limit without any valid sanction from the competent authority though sanction had expired and doled out other benefits in favour of the partnership firm in breach of the banking norms which resulted in financial loss to the bank. The dormant/sleeping partners came to be discharged. The applicant is an active partner whose involvement in the offence is prima facie evident as the materials on record indicate. The details of the active part played by the applicant as a partner of the firm in the commission of the offence is set out hereinbefore. From the materials on record, prima facie, it is evident that the applicant has committed a serious economic offence having bearing on vital societal interest where the accused are involved in an activity akin to a financial or economic fraud or misdemeanour. In my opinion, the offence alleged cannot be construed to be merely a private or a civil dispute. In any case, the Special Court by an order dated 28/03/2014 had rejected the application for discharge on merits which has attained finality in view of the order dated 01/03/2018 passed by this Court in Criminal Application No. 627 of 2014 except for the limited liberty. The limited liberty granted by the Court was permitting the applicant to make an application to the trial Court for discharge/ compounding of the offence in view of the compromise/settlement which the partnership firm had entered into with Vijaya Bank. There is nothing on record to indicate that there is acknowledgment on the part of the bank in exonerating the partnership from criminal liability. A careful consideration of the facts in the present case would indicate that unlike in Nikhil Merchant (supra) no conclusion can be reached that the substratum of the charges against the accused-applicant in the present case is one of cheating or that the applicant was charged under Section 120-B read with Section 420, IPC only. The offences are certainly more serious. They are not private in nature. The allegation is of conspiracy to commit offence under the PC Act as well. The accused have also been charged for commission of the substantive offence under section 471 of IPC. The applicant has committed the offence in connivance with the co-accused who are bank officials. The amounts have been paid to Vijaya Bank under a private settlement unlike in Nikhil Merchant’s case where compromise was a part of the decree of the Court. There is no acknowledgment on the part of Vijaya bank exonerating the applicant-accused of the criminal liability unlike the terms of compromise decree in Nikhil Merchant (supra). The decision in Nikhil Merchant is distinguishable on facts. In my opinion, this is not a fit case to warrant any interference with the view taken by the trial Court. This application filed under section 482 of CrPC is dismissed.
17. At this stage, a request for continuation of interim protection is made. The request is rejected. (M. S. KARNIK, J.) Designation: PS To Honourable Judge