HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 28 Case :- U/S 482/378/407 No. - 1580 of 2011 Applicant :- [ENTITY] Opposite Party :- The State. Thru C.B.I / A.C.B., Distt Lucknow Counsel for Applicant :- [ENTITY] Counsel for Opposite Party :- [ENTITY] Hon'ble [ENTITY],J.
1. This petition under [SECTION] [ACT] has been filed for quashing the criminal proceedings of [CASE NUMBER], under [SECTION], [SECTION], [SECTION] and [SECTION] [ACT] and under [SECTION] [ACT] arising out of Case Reference No.0062009A0012 of C.B.I./ACB, Lucknow pending in the Court of Special Judge, C.B.I., Court No.1, Lucknow.
2. The facts, in nut shell, are that the petitioner is a practicing Advocate and has been in the Bar for the last 53 years. He had been a panel Lawyer of Canara Bank for several years and in several other cases of loan, he had given legal scrutiny report. It has been said that the petitioner has been representing several other banks including Bank of Baroda, Oriental Bank of Commerce, Federal Bank Limited, Indian Overseas Bank, Dena Bank. City Union Bank, South Indian Bank Baroda U.P. Bank etc. One of the co-accused [ENTITY], Proprietor of M/s SRA Auto World had obtained Over Cash Credit (OCC) limit in his favour to the tune of Rs.50 lakhs by mortgaging the immovable property bearing House No.169, Rajapur, Allahabad. The same property was, however, mortgaged with United Bank of India by showing it House No.365/169, Arazi No.327, Rajapur, Allahabad by the co-accused [ENTITY]. In the revenue record, this property bearing no.169, Rajapur, Allahabad was not shown to have any mortgage till 27.3.2011 and a non encumbrance certificate in respect of the aforesaid property was issued by the Sub-Registrar, Sadar-I, Allahabad on 30.3.2011. Even the index register did not mention of any mortgage or lien on the aforesaid immovable property. Further, in the index register, the property mortgaged with the United Bank of India was recorded as House No.365/169, Arazi No.327, Rajapur, Allahabad. The petitioner gave legal scrutiny report on 12.2.2007 in respect of the property bearing no.169, Rajapur, Allahabad (Annexure-4) stating that [ENTITY], [ENTITY] and [ENTITY] sons of Late [ENTITY], were the owners in possession of property situate at Rajapur, Allahabad. It was further said that there was no prior mortgage or charge, which could be found out from the inspection of available record of the Sub-Registrar, Allahabad from 1.1.1994 to 5.2.2007 and, therefore, it was opined that if the documents in respect of the property were deposited in the manner required, it would satisfy the requirement of equitable mortgage.
3. It appears that by committing fraud, the said property, which was already mortgaged with the United Bank of India, was also mortgaged in favour of the Canara Bank and OCC limit of Rs.50 lakhs was obtained by the co-accused [ENTITY]. When the accused [ENTITY] did not pay back the amount withdrawn against OCC limit, the Canara Bank had filed proceedings against him before the Debt Recovery Tribunal through the petitioner.
4. An FIR came to be registered on 22.4.2009 against some of the bank officials and [ENTITY] and others. The petitioner was not named in the FIR. The Central Bureau of Investigation, however, after conclusion of the investigation, had filed the impugned charge sheet against the accused, including the petitioner, under [SECTION], [SECTION], [SECTION] and [SECTION] [ACT] and under [SECTION] [ACT] as mentioned above.
5. The allegations in the charge sheet against the petitioner, are that he prepared a false legal scrutiny report certifying that there was no prior mortgage or charge whatsoever could be seen from the inspection of available record of the Sub-Registrar, Allahabad from 1.1.1994 to 5.2.2007, whereas the Sub-Registrar, Sadar-I, Allahabad had confirmed the registered mortgage deed between [ENTITY], [ENTITY] and the Manager of United Bank of India, Tagore Town Branch, Allahabad, which was registered in his office on 23.3.2005 in respect of the said property.
6. Heard Sri [ENTITY], learned counsel representing the petitioner and Sri [ENTITY], learned counsel representing the Central Bureau of Investigation.
7. Sri [ENTITY], learned counsel representing the petitioner submits that the only allegation against the petitioner is that he submitted a false legal scrutiny report to the Bank in respect of the house in question against which a co-accused had obtained OCC limit of Rs.50 lakhs by mortgaging the said property. He further submits that the petitioner submitted the legal scrutiny report on the basis of the inspection carried out by him in respect of the said property in the office of the Sub-Registrar, Sadar-I, Allahabad on 30.3.2011. The Sub-Registrar Sadar-I, Allahabad had issued a non-encumbrance report in respect of the immovable property bearing House No.169, Rajapur, Allahabad. The accused had fraudulently shown that House as bearing no.365/169 and had mortgaged the same in favour of the United bank of India. He also submits that for rendering the legal scrutiny report, which was based on the inspection of the record, the petitioner cannot be held liable and prosecuted under the offence as mentioned above as there is nothing on record which would indicate that he had connived with the other co-accused to cheat the bank of the amount of Rs.50 lakhs as alleged or otherwise. He, therefore, submits that the ingredients of the offence of criminal conspiracy are not present in the present case. There was no agreement between the petitioner and other accused to conspire for committing the offence as alleged. He further submits that for rendering a legal scrutiny report or giving legal scrutiny certificate, a Lawyer cannot be prosecuted unless and until it is established that he had connived with other accused to commit the offence.
8. In support of the aforesaid submissions, learned counsel representing the petitioner has placed reliance on the judgement of the Hon'ble Supreme Court in the case of [PRECEDENT] as well as the order passed by the Hon'ble Supreme Court in the case of [ENTITY] and others vs. State of Bihar and others, MANU/SC/1216/2015 passed in [CASE NUMBER] (Arising out of [CASE NUMBER]) decided on 3.8.2015.
9. On the other hand, Sri [ENTITY], learned counsel representing the Central Bureau of Investigation submits that the petitioner has an opportunity before the trial court itself to move a discharge application taking all contentions raised here and the trial court after examining the evidence available on record, would take the decision in respect of framing of charge or discharge of the petitioner. He also submits that at this stage, the High Court should not exercise its powers under [SECTION] [ACT] to quash the criminal proceedings when the offence has been, prima facie, found to have been committed by the petitioner. He, therefore, submits the present petition be dismissed.
10. I have considered the rival submissions of the parties carefully.
11. The sum and substance of the allegation against the petitioner, is that he had given a false legal scrutiny report in respect of the property bearing no.169, Rajapur, Allahabad that the aforesaid property was free from all encumbrances and could be taken in equitable mortgage for giving facility of OCC limit of Rs.50 lakhs to [ENTITY]. There is nothing on record, which would indicate that the petitioner had deliberately given the aforesaid report in connivance with other accused to defraud the bank. It is another thing to say that the petitioner was not very careful while carrying the scrutiny in respect of the property and his services might have been professionally deficient, but to attract the criminal liability, there has to be mens rea and there has to be an agreement between the other accused and the petitioner to attract the offence of criminal conspiracy. There is nothing on record to suggest that the petitioner had entered into a criminal conspiracy with the other accused. The Hon'ble Supreme Court somewhat in similar circumstances in the case of [PRECEDENT] (supra) in paragraphs 29 to 31 has held as under:-
"29. In [PRECEDENT] this Court held that: (SCC p. 562, para 8) "8. There is a world of difference between the giving of improper legal advice and the giving of wrong legal advice. Mere negligence unaccompanied by any moral delinquency on the part of a legal practitioner in the exercise of his profession does not amount to professional misconduct."
30. Therefore, the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank. In the given case, there is no evidence to prove that A-6 was abetting or aiding the original conspirators.
31. However, it is beyond doubt that a lawyer owes an "unremitting loyalty" to the interests of the client and it is the lawyer's responsibility to act in a manner that would best advance the interest of the client. Merely because his opinion may not be acceptable, he cannot be mulcted with the criminal prosecution, particularly, in the absence of tangible evidence that he associated with other conspirators. At the most, he may be liable for gross negligence or professional misconduct if it is established by acceptable evidence and cannot be charged for the offence under [SECTION] and [SECTION] [ACT] along with other conspirators without proper and acceptable link between them. It is further made clear that if there is a link or evidence to connect him with the other conspirators for causing loss to the institution, undoubtedly, the prosecuting authorities are entitled to proceed under criminal prosecution. Such tangible materials are lacking in the case of the respondent herein."
12. Further, relying on the aforesaid judgment, the Hon'ble Supreme Court in the case of [ENTITY] and others (supra) in paragraphs 4 to 6 has held as under :-
"4. The High Court by the impugned judgment has refused to quash the First Information Report (FIR) on the ground that the same prima facie discloses commission of the offences alleged against the Appellants who are the panel advocates of the Bank. A reading of the FIR would go to show that the allegations levelled against the Appellants is that as panel advocates they had furnished false Search Report/NEC/legal opinion with regard to the properties/land documents in order to cheat the Bank and to facilitate obtaining of loan by the concerned persons. On investigation of the FIR, a charge-sheet has been submitted, a copy of which is enclosed to the present Appeal Paper Book. A reading of the charge-sheet does not refer to any specific finding of investigation.
5. Taking into account the contents of the FIR, we are left with the impression that the said allegations are bald and omnibus and do not make any specific reference to the role of the Appellants in any alleged conspiracy. In [PRECEDENT] to which one of us ([ENTITY], J.) was a party, it has been held by this Court that a criminal prosecution on the basis of such bald and omnibus statement/allegations against the panel advocates' of the Bank ought not to be allowed to proceed as the same constitute an abuse of the process of the Court and such prosecution may in all likelihood be abortive and futile. The following view expressed in [PRECEDENT] (supra) will be appropriate to be quoted:
30. Therefore, the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank. In the given case, there is no evidence to prove that A-6 was abetting or aiding the original conspirators.
31. However, it is beyond doubt that a lawyer owes "an "unremitting loyalty" to the interests of the client and it is the lawyer's responsibility to act in a manner that would best advance the interest of the client. Merely because his opinion may not be acceptable, he cannot be mulcted with the criminal prosecution, particularly, in the absence of tangible evidence that he associated with other conspirators. At the most, he may be liable for gross negligence or professional misconduct if it is established by acceptable evidence and cannot be charged for the offence Under [SECTION] and [SECTION] of [ACT] along with other conspirators without proper and acceptable link between them. It is further made clear that if there is a link or evidence to connect him with the other conspirators for causing loss to the institution, undoubtedly, the prosecuting authorities are entitled to proceed under criminal prosecution. Such tangible materials are lacking in the case of the Respondent herein.
6. Taking into account the aforesaid facts and the ratio of the law laid down by this Court in [PRECEDENT] (supra), we are of the view that the High Court was plainly wrong in refusing to interdict the proceedings against the Appellants. We, therefore, set aside the order of the High Court and quash the proceedings in [CASE NUMBER] arising out of [CASE NUMBER] pending before the Chief Judicial Magistrate, Bhojpur, Ara insofar as the two Appellants [ENTITY] and [ENTITY] are concerned."
13. Considering the submissions advanced by the learned counsels representing the parties and the two judgments of the Hon'ble Supreme Court noted above, I am of the opinion that the criminal prosecution on the basis of allegation against the petitioner in the impugned charge sheet ought not to be allowed to be proceeded as the same would constitute the abuse of the process of the Court inasmuch as the prosecution in all likelihood would be a futile exercise.
14. The petition, thus, is allowed and the entire criminal proceedings of [CASE NUMBER] under [SECTION], [SECTION], [SECTION] and [SECTION] [ACT] and under [SECTION] [ACT] arising out of [CASE NUMBER] of C.B.I./ACB, Lucknow pending in the Court of Special Judge, C.B.I., Court No.1, Lucknow, against the petitioner, are hereby quashed.
15. There shall be no order as to cost.
( [ENTITY], J.) Order Date :-April 4th , 2019 Rao/-