Crl.M.C. 3842/2008 Page 1 of 18 * IN THE HIGH COURT OF DELHI AT NEW DELHI + Crl.M.C. 3842/2008 % Date of reserve: 12.05.2009 Date of decision: 21.05.2009 MR. SUSHIL SURI …PETITIONER Through: Mr. Vijay Aggarwal, Mr. Vishal Garg, advs. Versus C.B.I. AND ANR. ...RESPONDENTS Through: Mr. Harish Gulati, Mr. Anindya Malhotra, advs. CORAM: HON’BLE MR. JUSTICE MOOL CHAND GARG 1. Whether the Reporters of local papers Yes may be allowed to see the judgment? 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be Yes reported in the Digest? MOOL CHAND GARG, J. 1. This order shall dispose of a petition filed by the petitioner under Section 482 Cr.P.C. seeking quashing of an FIR bearing no. R.C.5(E) 2002/SIU/VIII, P.S./CBI/SPE/SIU-VIII registered by Central Bureau of Investigation (CBI) and the proceedings arising therefrom against the petitioner on 23.07.2002 under Sections 120B/420/409/468/471 IPC. It is the case of the petitioner that the present dispute is between the petitioner and the second respondent regarding paying the dues of the second respondent which has been settled in full and final and now Crl.M.C. 3842/2008 Page 2 of 18 there is no dispute left between them. It is submitted that in these circumstances no useful purpose shall be served in continuing with the proceedings/investigations in the aforesaid FIR registered by the CBI as aforesaid. 2. Briefly stating, the facts of the present case are that M/s. Morpen Laboratories Ltd. is a public limited company engaged in manufacture of pharmaceutical products having manufacturing units in District Solan of Himachal Pradesh. To run the affairs of the company various types of advances were taken by the company from different banks/ financial institutions and the money was also raised from the open market from time to time in the form of shares, etc. 3. In the year 1998, accused petitioner and other Directors of the company applied for “Hire Purchase” advance of Rs. 2 crores from Punjab and Sind Bank (hereinafter referred to as „PSB‟), Hire Purchase Branch, Connaught Circus, New Delhi. The purpose mentioned in the loan application was purchase of various machinery items proposed to be installed at the manufacturing units. To avail the advance many forged and fabricated performa invoices of non-existing suppliers were submitted. On this basis, PSB sanctioned the funds to the company of which the petitioner is a Director. The said company neither purchased any plant or machinery and the advance were used for other purposes. 4. On a source information received by the CBI the FIR subject matter of this petition was registered and investigated. During the course of investigation it was revealed that the machinery for which the loan was obtained was not purchased by the petitioners and in fact Crl.M.C. 3842/2008 Page 3 of 18 to defraud the bank with ulterior motives the photograph of already existing/ some other machinery (false security) was taken by affixing label of PSB and the same was provided by the borrower to the PSB, New Delhi fraudulently in confirmation of having purchased the machinery in question. It was further revealed that hire purchase advance taken by the borrower has been repaid to the PSB, New Delhi but the petitioner accused had not purchased any machinery from the fund obtained from the PSB. The purchase of machinery by utilizing the funds obtained from PSB was reflected by the petitioner in the balance sheet. They also claimed depreciation in the income tax/ minimum alternate tax (MAT) amounting to Rs. 52,33,066/- in the year 1998-99 without the existence of any such machinery. 5. Further in the year 1999 also accused petitioner and other Directors of the company again applied for “Hire Purchase” advance of Rs. 3 crores in PSB, in the same branch and the purpose shown was that they wanted advance to install various machineries at manufacturing unit of the company. 6. Similarly, in the balance sheet for the year 1999-2000 they also claimed wrongful benefit of depreciation in the income tax/ minimum alternate tax which amounts to Rs. 1,44,88,605/-. Investigation has revealed that accused K.B. Suri (since expired), Sushil Suri (petitioner) Smt. Kanta Suri, Mahesh Jain, Nityanand Singh, Sanjay Malik, Bipin Chandra Paul Kakkar, Ravinder Malik, Gaurav Malhotra and Sanjay Gupta have committed the offences under Section 120-B read with Section 420/467/468/471 of IPC. Accordingly, the charge-sheet was filed on 13.10.2004 by the CBI in the Court of learned CMM, Delhi. Crl.M.C. 3842/2008 Page 4 of 18 7. According to the petitioner, once the company has made the payment of loan taken from the PSB along with interest, the FIR is liable to be quashed. At the outset, it may be observed that the PSB has not joined the petitioner as a party for quashing of the FIR. The said Bank arrayed as respondent No.2 despite service of summons has neither opposed nor supported the petitioner. 8. The petitioner to support his case has relied upon a judgment delivered by the Hon‟ble Supreme Court in the case of Nikhil Merchant Vs. CBI and Anr. (2008) 9 SCC 677. 9. The petitioners also relied upon the following judgments: i. Seema Grover & Anr. Vs. State & Ors. Crl.M.C. 3627/2006 ii. Ajay Kumar & Ors. Vs. State & Anr. 131 (2006) DLT 130 iii. B.K. Sondhi Vs. State (NCT of Delhi) & Anr. 2001 (1) JCC Delhi 73 iv. Chain Sukh & Ors. Vs. State & Ors. 1999 (1) JCC Delhi 142 v. Yog Raj Arora Vs. State & Ors. 2002 (2) JCC 1103 vi. Govind And Other Vs. the State (Govt. of NCT of Delhi) 2003 II AD (Cr) DHC 537 vii. Mohd. Tahir Vs. State of U.P. 2004 (2) CRJ 422 viii. B.S. Joshi & Ors. Vs. State of Haryana & Anr. 2003 (1) JCC 541 ix. D.C. Singham Vs. State & Anr. 133 (2006) DLT 372 x. G. Udayan Dravid & Anr. Vs. State & Anr. CRL.M.C. No. 227/2005 xi. Mideast India Ltd. & Ors. Vs. State CRL.M.C. No. 8661-64/2006 xii. Daulat Zia Vs. Govt. of NCT of Delhi 74 (1998) DLT 259 (DB) xiii. Rachna Gera & Ors. Vs. State & Ors. 122 (2005) DLT 412 xiv. Anil Kumar Vs. State CRL.M.C. 6558-60/2006 xv. Mrs. Priya Gupta @ Kochar & Ors Vs. (Delhi) 2007 (3) JCC 1940 xvi. Neelu Gupta & Ors. Vs. State 2007 (3) JCC 1938 xvii. Acharya Arun Dev Vs. State 2007 (4) JCC 2662 xviii. Naresh Gupta & Anr. Vs. State 2007 (4) JCC 2661 xix. M/s Ansal Build Well Ltd and Ors. Vs. The State CRL.M.C. 3517/2007 (Rekha Sharma, Order date 21/2008) xx. Mr. Anil Bhasn Vs. State & Anr. Crl.M.C. 2193/2007 xxi. M/s Ansal Build Well Ltd Vs. State Crl.M.C. 3515/2007, 21.1.2008 (Rekha Sharma) xxii. Mr. Harmeet Singh & Ors Vs. state of Delhi & Anr. Crl.M.C. 212/2008, 14.2.2008, Rekha Sharma xxiii. Smt. Jaspreet Kaur & Ors. Vs. State of Delhi & Anr. Crl.M.C. 211/2008, 14/2/200 xxiv. Madan Mohan Abbot Vs. State of Punjab SLP (Crl.) APP.555/2008 (26.3.2008) xxv. Rajiv Talwar Vs. State. Crl.M.C. 2933/2004, order dated 12.03.2008 xxvi. Religare Securities Ltd. & Ors. Vs. State 2008(2) JCC 824 xxvii. Manoj Vs. NCT of Delhi and Anr. W.P.(Crl) 97/2008, 30.04.2008 xxviii. H.B. Chaturvedi Vs. State & Anr. 125(2005) DLT 109 xxix. Nikhil Merchant Vs. CBI & Anr. JT 2008(9) SC 192 xxx. Jagdish Chanana & Ors Vs. State of Haryana & Anr. 2008(2)LRC 137(SC) xxxi. Ramesh Vs. State & Anr (Rajasthan High Court) 1(2007) CCR 116 (304A) Crl.M.C. 3842/2008 Page 5 of 18 xxxii. CBI Spe. SIU (X), New Delhi Vs. Duncans Agro Industries Ltd. Calcutta 1996 SCC (CRL) 1045 xxxiii. Manoj Sharma Vs. State & Ors. Crl.M.A. 1619/2008 @ SLP (Crl.) 5265/2007 order dated 16.10.2008. xxxiv. Mohit Jain Vs. Jain 2008(3) JCC 2112 xxxv. Madan Mohan Abbot Vs. State of Punjab 2008(4) SCC 582 xxxvi. Maninder Singh Vs. CBI Crl.M.C. 2083/2006, 10.02.2009 xxxvii. Smt. Rumi Dhar Vs. State of West Bengal and Anr. JT 2009(5) SC 321 10. They also relied upon the following judgments about the binding nature of the precedents: i. Vijay Laxmi Sadho Vs. Jagdish 2001 AIR (SC) 600 ii. Legal Maxims The Mode of Administerin G. Justice.P.No. 81-83 iii. Central Board of Dawood Bohara Community and Anr. Vs. State of Maharashtra and Anr. 2005(2) SCC 673 iv. Indian Council of Agricultural Research & Anr. 144 (2007) DLT 81 (DB) v. Amulya Kumar Dutta Vs. Union of India 1993(1) CHN) 159 vi. Shri Utpal Mishra, AIR Customs Officer, I.G.I. Airport, New Delhi Vs. Mr. Nicelai Christen 1997 ILR (1) DEL 650 vii. Srinivasan Vs. Sri Madhyarjuneswaraswami 1998 (1) CTC 630 viii. Jabalpur Bus Operators. Associatin Vs. State of M.P. 2003 (1) M.P.L.J. 513 ix. Keva Mukherjee Vs. Magma Leasing Ltd. and Anr. 2008(8) SCC 447 x. Dr. Pannkkal Mohamed Basheer Vs. Union of India and Ors. 1993 ILR (2) DEL 488 xi. Union of India and Anr. Vs. Raghubir Singh (Dead) by LRS. ETC 1989 SCC (2) 754 11. However, respondent/CBI strongly opposed the request made by the petitioner for quashing of the FIR. It is their case that the FIR was registered on the basis of source information which revealed that the petitioner got the loans on the basis of Hire Purchase Agreement of certain machinery twice, but he never purchased such machinery and in fact, showed fabricated documents regarding the purchase for showing compliance of the conditions of the grant of loan. It is also their case that the petitioner and other Directors of the company also defrauded public authorities in claiming depreciation on non-existent machinery and in this manner has cheated the public exchequer to the tune of crores of rupees. In this manner, the petitioner along with others have committed various offences under Section 120-B read with 420/467/468/471 of IPC and, thus, it is not a case where the Crl.M.C. 3842/2008 Page 6 of 18 proceeding can be quashed only on the basis of repayment of loan obtained from the bank along with interest as is claimed by the petitioner. 12. It is also contended by the CBI that the judgments cited on behalf of the petitioner, are of no help to the petitioner in the facts of this case. On their part, they have relied upon the following judgments: i. State of M.P. Vs. Rameshwar & Ors. JT 2009 (5) SC 171 ii. Rumi Dhar Vs. State of West Bengal Crl.App.No. 661/2009 decided on 08.04.2009. iii. Devender Singh & Ors. Vs. State & Anr. and J.K.Singh & Ors. Vs. CBI & Anr. (Crl.M.C.1304/2004 & Crl.M.C.No.6389/2006), both cases decided on 23.05.2008. 13. The questions which arise for consideration in this case is as follows: i) Merely because the company of which the petitioner is a Director has repaid the loan amount to the PSB from where they took a loan for the purpose of purchasing machinery but did not purchase the machinery and claimed depreciation in their income tax returns on the basis of fabricated documents of purchase are entitled to get the proceedings quashed even though FIR has been registered by the CBI and not at the instance of PSB and involves cheating of public authorities and in addition to the offence under Section 420 IPC also makes out case against the petitioner under Section 467, 468, 471 read with Section 120 B of the IPC on account of fabrication of documents and using forged documents as genuine. Crl.M.C. 3842/2008 Page 7 of 18 ii) Whether the judgment given in Nikhil Merchant‟s case (supra) is applicable to the peculiar facts of this case, which judgment has been delivered by taking into consideration Clause 11 of the consent terms which was entered into between the appellant in that case with the Andhra Bank as well as in the light of subsequent judgment delivered by the Apex Court and this Court in the case of Rumi Dhar and Devender Singh & J.K.Singh (Supra) respectively. 14. The judgment delivered in the Nikhil Merchant‟s case (supra) proceeds on the basis of an agreement which was entered into between the financial institution and the appellant in that case of which Clause 11 of the consent terms reads as under: Clause 11. Agreed that save as aforesaid neither party has any claim against the other and parties do hereby withdraw all the allegations and counter allegations made against each other. 15. The relevant observations made in the aforesaid case are reproduced hereunder: 30. In the instant case, the disputes between the Company and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues of the Bank have been cleared and the Bank does not appear to have any further claim against the Company. What, however, remains is the fact that certain documents were alleged to have been created by the appellant herein in order to avail of credit facilities beyond the limit to which the Company was entitled. The dispute involved herein has overtones of a civil dispute with certain criminal facets. The question which is required to be answered in this case is whether the power which independently lies with this Court to quash the criminal proceedings pursuant to the compromise arrived at, should at all be exercised? 31. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S. Joshi's case (supra) and the compromise arrived at between the Company and the Bank as also Crl.M.C. 3842/2008 Page 8 of 18 Clause 11 of the consent terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not be allowed to stand in the way in the quashing of the criminal proceedings, since, in our view, the continuance of the same after the compromise arrived at between the parties would be a futile exercise. 16. A bare perusal of the aforesaid judgment goes to show that the criminal proceedings have been quashed as parties settled the dispute in the light of Clause 11 of the consent terms as aforesaid. 17. However, the facts in the present case are entirely different inasmuch as: i) In the present case the Bank has not joined the petitioner. ii) It is not a case where the question of only repayment of loan was the subject matter of the FIR registered against the petitioner but the FIR proceeds on the basis of a) fabrication of documents by the petitioner to show that they purchased the machinery without purchasing the machinery for which loan was obtained from the Bank in this case. b) Showing the machinery in existence in their balance sheet and thereby claiming depreciation of non- existent machinery. c) Claiming rebate in the tax payable to the income-tax authorities on the basis of depreciation claimed by way of MAT to the tune of crores of rupees by fraudulent acts and deeds. d) CBI is opposing the petition tooth and nail on the aforesaid grounds. 18. It would also be relevant to take note of the judgment delivered by a Learned Single Judge of this Court in Devender Singh‟s case (supra). In the said case facts were as under: 2.1. The facts relevant for this petition are that an FIR No. 376 of 2000 was registered at Police Station Azad Nagar pursuant to a complaint dated 29th May, 2000 by one Mr. K.D. Tandon who was running the business in the name and style of Krishna Motors at Sanjay Gandhi Transport Nagar, Delhi. Mr. Tandon stated that he got Crl.M.C. 3842/2008 Page 9 of 18 introduced to the Petitioner Mr. Devender Singh @ Babboo during his visit to the Azadpur Mandi for work. The petitioner assured Mr. Tandon that if moneys were invested with him, the petitioner would pay interest well above the normal rate. He also assured Mr.Tandon of the safety of the money by representing that his father and he himself were in the business of financing transporters had their own trucks and enjoying a good reputation. Mr. Tandon was shown post dated cheques issued by certain transport companies as well as invoices and transport documents. On the basis of this assurance, Mr. Tandon and his relatives invested a large sum with the petitioner for which they were issued receipts by the petitioner. 2.2 After Rs. 16 lakhs invested by Mr. Tandon and his relatives was unable to be realized,they realized that they had been cheated. When Mr. Tandon went to the address given in the receipt purportedly issued by one of the transport companies, he found that no such company was in existence. It also transpired that the cheques issued in favor of the complainant by the transport companies were fake since no such companies were in existence. The petitioner had opened accounts in his own name, in the name of his friends, and in the names of the fictitious companies and deposited the moneys collected from the complainants and others. During the course of investigation, an FSL report was obtained which confirmed that the receipts and cheques issued were forged by the petitioner. A large number of investors were thus cheated and accordingly a charge sheet was filed. 2.3 During the pendency of the proceedings, the petitioner settled the disputes with each of the complainants and paid them the amounts pursuant thereto. Enclosed with the petition are the affidavits of each investor or complainant acknowledging receipt of the amount and stating that the complainant is not interested in pursuing the criminal proceedings. A copy of a letter dated 9th September, 2000 written by Mr. Tandon to the police seeking the dropping of the criminal proceedings in FIR No. 376 of 2000 against the petitioner has been produced. The petitioner has also filed an additional affidavit dated 9th October, 2006 giving the details of the settlements between him and the complainants. 19. In the aforesaid case the learned Single Judge opined as under: 18. The question really is where does one draw the line when it comes to quashing cases involving non- compoundable offences. Despite the unanimity in the decisions that a case involving the offence of rape ought not to be quashed under Section 482 CrPC, this Court is very often approached by accused with petitions under Section 482 for quashing of cases involving such offence on the ground that the victim and the accused are happily married. In fact the victim joins the accused as a co-petitioner in such cases. Can it be said that for peace and harmony in society such cases must be quashed? Is that then the 'common sense' approach? These are Crl.M.C. 3842/2008 Page 10 of 18 uncomfortable but relevant questions. How far can the court go along with the 'common sense' plea which if taken to its logical end might well include all kinds of offences. One of the purposes for prescribing punishments for crimes is that it serves to deter specifically the accused involved and generally other potential accused from committing similar crimes. By quashing cases like the present, this purpose may be defeated. Also, by widening the scope in this manner, much will depend on the individual outlook of judges as to when to exercise the power to quash. That in turn makes such decisions vulnerable to challenge on the ground of arbitrariness. This Court while exercising its powers under Section 482 is also required to account for the public policy compulsions involved in continuing to treat the offences under Sections 468 and 471 IPC as non-compoundable. In the mass of judicial orders where the power under Section 482 CrPC has been exercised to quash proceedings involving non-compoundable offences, the principle on which to base such decision remains elusive. 20. The ultimate question in each of these cases is whether in the facts and circumstances, the proceedings should be quashed or not. To recapitulate, one of the cases involves creating false receipts in the names of fictitious transport companies and getting cheques issued by such fictitious entities, the second involves tampering with the date of the cheque and the third involves forging receipts and invoices by using white fluid. These are cases involving cognizable offences. The dispute may be characterised as a 'private' one but it cannot be said that the offence is one that does not concern the society. One of the cases involves a 'public financial institution.' In each there is an FSL report being relied upon by the prosecution in support of its plea that the offences can be proved irrespective of the evidence of the complainant who may no longer support the prosecution. In one of the cases, the accused has `settled' the dispute with several persons apart from the complainant. Quashing such a case will defeat the purpose of the probable conviction and punishment acting as a deterrent either specifically or generally. Finally, this Court is unable to overlook the fact that the categorization of certain kinds of offences relating to "Documents and Property Marks" separately in Chapter xviii and their classification as cognizable and non- compoundable is informed by public policy as acknowledged by the legislature. 21. It was submitted by counsel for the petitioners that the evidence that emerges during the trial may well falsify the FSL report; or it may show that the accused was in any event not the person who committed the forgery. That may well be, but equally, it may not. It is not possible to anticipate at this stage which way the trial will go. The question at this stage is whether it can be said that going to trial in these cases is a waste of time and an exercise in futility. In the considered view of this Court it is not possible to come to such a conclusion at this stage in any of the three cases. 22. This Court is therefore unable to accept the plea in each of these cases for quashing of the proceedings Crl.M.C. 3842/2008 Page 11 of 18 on the basis of the settlement arrived at between the accused and the complainant. It is clarified that any observation made hereinabove touching upon the merits of the cases is not intended to influence the decision to be arrived at by any other court at any stage of the proceedings hereafter. 20. The aforesaid judgment was challenged by the petitioners and came up for consideration before the Hon‟ble Supreme Court on 03.12.2008. The SLP filed against the said judgment was dismissed on the same day. 21. The judgment delivered in the cases of Devender Singh and J.K. Singh (supra) has dealt with the specific situation which came up before the Court in that case and the Court was not inclined to quash the proceedings, which approach has not been found wrong by the Apex Court. It is true that the judgment of the Apex Court in this case is a dismissal in limini but the reasoning given by the learned Single Judge applies with full force to the facts of this case. 22. It may also be observed that the judgment delivered by the Apex Court in Nikhil Merchant‟s case (supra) came up for consideration and discussion before the Apex Court in the case of Smt. Rumi Dhar (Supra). In the peculiar facts of that case, it was observed: 17. Appellant is said to have taken part in conspiracy in defrauding the bank. Serious charges of falsification of accounts and forgery of records have also been alleged. Although no charge against the appellant under the Prevention of Corruption Act has been framed, indisputably, the officers of the bank are facing the said charges. 18. It is now a well settled principle of law that in a given case, a civil proceeding and a criminal proceeding can proceed simultaneously. Bank is entitled to recover the amount of loan given to the debtor. If in connection with obtaining the said loan, criminal offences have been committed by the persons accused thereof including the officers of the bank, criminal proceedings would also indisputably be maintainable. When a settlement is arrived at by and between the