CR.MA/5389/2005 1/61 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION No. 5389 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ ================================================= ============= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================= DR.ANIL K. KHANDELWAL & 14 - Applicant(s) Versus SHRI MAKSUD SAIYED & 1 - Respondent(s) ================================================= Appearance : MR KB ANANDJIWALA for Applicant(s) : 1 - 15. MR MM TIRMIZI for Respondent(s) : 1, PUBLIC PROSECUTOR for Respondent(s) : 2, ================================================= CORAM : HONOURABLE MR.JUSTICE K.A.PUJ CR.MA/5389/2005 2/61 JUDGMENT Date : 09/01/2006 ORAL JUDGMENT 1.Criminal Misc. Application No.5389 of 2005 is filed by Dr.Anil K. Khandelwal and 14 others under Section 482 of the Criminal Procedure Code, praying for quashing and setting aside the Criminal Complaint Inquiry No.14 of 2005 lodged by the complainant, namely, Shri Maksud Saiyed, Director of Nagami Nicotine Pvt.Ltd., in the Court of Chief Judicial Magistrate, Vadodara, for the offences punishable under Sections 107, 120-B, 177, 181, 191, 192, 200, 209,405, 409, 415, 420, 425, 463, 464, 468, 470, 471, 499 and 500 of the Indian Penal Code, and which has been registered as M Case No.7/2005 at Sayajiganj Police Station pursuant to the order passed by the Chief Judicial Magistrate, Vadodara, dated 28.2.2005 forwarding the Criminal Complaint for CR.MA/5389/2005 3/61 JUDGMENT investigation under Section 156(3) of the Criminal Procedure Code. 2. The case of the complainant / present respondent is that Dena Bank floated a public issue of 8 crores equity shares of Rs.10/- each for cash at a premium of Rs.17/- at a price of Rs.27/- each aggregating to Rs.216/- crores. The issue of equity share was being made pursuant to the sanction of Government of India and in consultation of the Reserve Bank of India (RBI) vide its letter F No.001/26/2003- BOA dated October 19, 2004 under Section 3(2B) (c ) of the Banking Companies (Acquisition & Transfer of Undertaking) Act, 1970, as amended and the resolution passed at the meeting of Board of Directors of the Bank on October 23, 2003 and the shareholders of the Bank at the EGM held on November 25, 2003. It is alleged by the complainant that in the prospectus CR.MA/5389/2005 4/61 JUDGMENT published for the purpose of Public Issue, some false and misleading information were given with regard to sanctioned limits, the dues and Export Bills of the Company, namely,Nagami Nicotines Pvt. Ltd., of which the complainant is the Director, and thus the accused persons have committed offences. It is further alleged that the accused persons conspired with each other to commit the offences and, therefore, they have committed offence punishable under Section 120-B of the Indian Penal Code. It is also the case of the complainant that accused No.1 has committed an offence punishable under Section 425 of the Indian Penal Code. It is also alleged that the accused persons furnished false information, statements and evidence and thereby they have committed the offence under Sections 191, 192, 177 and 181 of I.P.C. It is also alleged that by making such false statements in the prospectus as regards the CR.MA/5389/2005 5/61 JUDGMENT complainant's company, its dues and the litigations pending, the complainant has been defamed and therefore, the accused persons have committed offence of defamation as defined under Section 499 of I.P.C., and punishable under Section 500 of I.P.C. It is also the case of the complainant that the Bank maliciously filed a claim before the Debt Recovery Tribunal, Ahmedabad, without any justifiable cause by fabricating false evidence. It is also the case of the complainant that he has filed a Civil Suit against the Bank in Baroda for recovery of Rs.993.47 lacs towards damages for non submission of Export Bills and non releasing of the sanctioned limits. It is also the case of the complainant that in the prospectus false information has been furnished that the suit is pending before DRT, Ahmedabad whereas the suit has been filed in the Court of Civil Judge (S.D.) Vadodara. It is also the CR.MA/5389/2005 6/61 JUDGMENT case of the complainant that the accused No.12 had made certain false affirmation and verification and has also fabricated evidence for the same and in the same manner accused no.14 has without any authority signed and affirmed some statements. The gravamen of the allegation of the complainant is that the Bank has filed a false claim against the company by virtue of which the business of the complainant got seriously affected and his reputation in the society has got tarnished and thereby he has been defamed by the Bank. 3. The learned Chief Judicial Magistrate vide order dated 28.1.2005 sent the complaint for investigation by police under Section 156(3) of the Criminal Procedure code and the same came to be registered as M Case No.7 of 2005 at Sayajiganj Police Station, Vadodara. Since the present petitioners / original accused are of CR.MA/5389/2005 7/61 JUDGMENT the view that the complainant has failed to disclose commission of any offence and as the very act of the complainant in lodging such a false, frivolous and vexatious complaint is a gross abuse of process of law, the present petitioners / original accused persons have preferred this petition invoking the inherent powers of this Court under Section 482 of the Criminal Procedure Code for quashing and setting aside the complaint. 4. The Court has issued notice on 12.5.2005 and granted ad interim relief, staying the operation and execution of the impugned order dated 28.2.2005 with respect to M Case No.7 of 2005 in terms of Para-6(B). The petition was admitted and rule was granted and the ad interim relief granted earlier was continued as interim relief. CR.MA/5389/2005 8/61 JUDGMENT 5. The respondent / original complainant have filed Criminal Misc. Application No.9521 of 2005, praying for vacating the interim relief granted in Misc. Criminal Application No.5389 of 2005 or in the alternative, it was prayed for the expeditious hearing of Misc. Criminal Application No.5389 of 2005 in the interest of justice. The hearing of this application is also kept with the hearing of Misc. Criminal Application No.5389 of 2005. 6. Mr.K.B.Anandjiwala, learned advocate appearing for the petitioners has submitted that the petitioner No.1 is the former Chairman and Managing Director of Dena Bank, whereas the petitioner No.2 is the whole time Executive Director of the said Bank. So far as petitioner Nos.3 to 10 are concerned, they are the Directors on the Board of the Bank representing various authorities, namely, CR.MA/5389/2005 9/61 JUDGMENT Government of India, Reserve Bank of India etc., and are not at all concerned with the day today management and conduct of business of the Bank. The petitioner Nos.11 to 14 are employees of the Bank posted at various Branch offences of the Bank and petitioner No.15 was also an employee of the Bank who has now retired. He has further submitted that all these persons have been arraigned as accused in the complaint with the sole object and oblique motive of harassing the accused persons and the learned Chief Judicial Magistrate, Vadodara, without any application of mind and even without considering the nature of allegations and the tenor of the complaint, has blindly directed the police to investigate into the same under the provisions of Section 156(3) of the Criminal Procedure Code. 7. So far as alleged offence under Section 177 CR.MA/5389/2005 10/61 JUDGMENT of I.P.C., is concerned, Mr.Anandjiwala submitted that offence Section-177 of I.P.C., is an offence relating to furnishing false information. Whoever, being legally bound to furnish information on any subject to any public servant, as such furnishes, as true, the information on the subject which he knows or has reason to believe to be false or, if the information which he is legally bound to give respects the commission of an offence is said to have committed offence under Section 177 of I.P.C. Mr.Anandjiwala has submitted that this section contains two branches. The first branch, whoever being legally bound..... or with both- deals with simple case of person who being legally bound to furnish true information to the public servant furnishes false information to him. So far as this case is concerned the accused are only concerned with the first branch. Now, if it is a case of the CR.MA/5389/2005 11/61 JUDGMENT complainant that the offence under Section 177 has been committed, then, who can file a complaint for the same. It is mandatory in view of the provision of Section 195 of the Criminal Procedure Code that a complaint for the offence under Section 177 of I.P.C., has to be a complaint in writing of the public servant concerned or of some other public servant to whom he is subordinate. How can the police under Section 156(3) of Criminal Procedure Code, investigate into the allegations of offence under Section 177 of I.P.C., when there is no complaint regarding the same by the public servant concerned or of some other public servant. 8. So far as alleged offence under Sections 499 and 500 of I.P.C., is concerned, Mr.Anandjiwala has submitted that it is the case of the complainant that the accused persons by making CR.MA/5389/2005 12/61 JUDGMENT false declaration in the prospectus of the public issue which was floated and by filing proceedings of recovery of dues before the DRT has tarnished the image of the complainant's company and the complainant himself as the Director of the company and thereby the accused persons have committed the offence of defamation. He has submitted that the important question is whether the police has got powers to investigate into the allegations which may constitute an offence of defamation as defined under Sections 499 and punishable under Section 500 of I.P.C. He has further submitted that no Court shall take cognizance of the offence of defamation except upon a complaint made by the person aggrieved. There is no dispute as regards this proposition of law. The important question is, can a private complaint for defamation punishable under Section 500 of I.P.C., be ordered to be CR.MA/5389/2005 13/61 JUDGMENT investigated by the police under Section 156(3) of Criminal Procedure Code. He has further submitted that Section 199 of the Criminal Procedure Code makes it very clear that no Court shall take cognizance of an offence punishable under Chapter-XXI of the I.P.C., except upon a complaint made by some person aggrieved by the offence. He has, therefore, submitted that the question would be whether the Court can take cognizance of the offence of defamation on the charge sheet which the police may file at the end of investigation. He has submitted that the answer is obviously no. Therefore, even on this count the investigation is absolutely bad in law and not maintainable. 9. So far as alleged offence under Sections 463, 464, 468, 470 and 471 of I.P.C., are concerned, Mr.Anandjiwala has submitted that it is the case of the complainant that the Bank by CR.MA/5389/2005 14/61 JUDGMENT furnishing false information in the prospectus has committed offences of forgery punishable under Sections 463, 464, 468, 470 and 471 of I.P.C. He has further submitted that misconception on the part of the complainant is that if any statement in a particular document is found to be false or incorrect then the same would render the document as a false document and it would constitute an offence of forgery. The elements of forgery by making a false documents are :- (i) That a person dishonestly or fraudulently makes, signs, seals, or executes the document or part of a document, or make any mark denoting the execution of a document; and (ii) Does as above with the intention of causing it to be believed that such document or part of the document was made, signed, sealed or executed; CR.MA/5389/2005 15/61 JUDGMENT (a) by or by the authority of a person by whom or by whose authority it was not so made, signed, sealed or executed, or (b) at a time at which he knows that it was not made, signed, sealed or executed. 10. He has, therefore, submitted that the assertion of a false claim in a document does not constitute the document a false one, when it is executed by the party who purports to execute it and there is no intention of causing a belief that it was executed by some other person, real or fictitious. He has submitted that assuming for the moment without admitting that some information in the prospectus or some details which have been incorporated in the prospectus were not correct, the same would not constitute forgery on the wrong assumption that the contents are false and, therefore, the document is false. He has, therefore, CR.MA/5389/2005 16/61 JUDGMENT submitted that the other offences which have been alleged are all relating to Chapter-XI of I.P.C., which deals with false evidence and offences against public justice. He has submitted that the Bank floated a public issue and it is absolutely false on the part of the complainant to say that the Bank made false, misleading statement in the prospectus. It is also not correct to say that the Bank concealed the true facts. There may be some mistakes in the prospectus but they can never be termed as malafide or deliberate and most of the bonafide mistakes had nothing to do with the complainant. These mistakes were rectified at the earliest. The concerned authorities like Securities & Exchange Board of India (SEBI), through Lead Manager to the issue, were informed in time and only after clearance from SEBI the Public Issue was concluded as per prescribed time schedule. He has further CR.MA/5389/2005 17/61 JUDGMENT submitted that all statements and averments made in the claim petition before DRT, are true. There are no false statements made deliberately in the Claim Petition. If the complainant feels that the statements and averments made in the Claim Petition before the DRT are false then the remedy for him is to ask the DRT to take appropriate action under the provisions of Section 340 read with Section 195 of the Criminal Procedure Code as the proceedings before the DRT can be termed to be Court proceedings and the offence, if any, as alleged by the complainant is committed by the accused persons then it can be said to have been committed in or in relation to the proceedings in the Court. 11. Mr.Anandjiwala, further submitted that the Bank through its Fatehganj Branch, Vadodara had advanced some financial facilities to the CR.MA/5389/2005 18/61 JUDGMENT complainant. Subsequently for administrative and monitoring purposes the loan accounts of the complainant and other borrowers against whom Claims were filed in DRT, Ahmedabad, were transferred to Asset Recovery Branch (ARB), Ahmedabad, as per the policy of the Bank. Since the loan account of the complainant was transferred to ARB, Ahmedabad, outstanding balances in the loan accounts of the complainant at Fatehganj Branch of the Bank were shown as NIL. Hence, the liability of the complainant to the Bank remained the same due to transfer of their loan account from Fatehganj Branch, Vadodara to ARB, Ahmedabad. This does not mean that nothing was due by the complainant to the Bank. 12. Mr.Anandjiwala further submitted that the documents listed in Para-3A are all genuine documents executed by the concerned parties CR.MA/5389/2005 19/61 JUDGMENT including the complainant during the course of the process of advancing financial facility to the complainant's company. They are duly signed and executed by the concerned parties. It is not correct to say that the documents are false and forged. They were executed by the concerned parties after properly understanding the contents and implications thereof. They were executed during period of 1998-2000. For all these years, no objection was raised by the complainant about the genuineness or legality of the documents. He has further submitted that the complainant has filed his reply to the claim of the Bank in the DRT Ahmedabad. In the said reply no dispute as to the genuineness or legality of the said documents has been raised or challenged. Mr.Anandjiwala further submitted that so far as petitioner Nos.12 and 14 are concerned, they have not made any false statement, affirmation or declaration. So far CR.MA/5389/2005 20/61 JUDGMENT as the petitioner Nos.11 and 13 are concerned, they were not even posted in Gujarat when the alleged transactions were entered into by the Bank with the complainant. 13. Mr.Anandjiwala further submitted that Bank has not made any false statement in respect of Uniform Customs and Practice for Documentary Credit Rules (UCPDC). The statements made in this behalf were on account of inadvertence and they were not intentional. Even SEBI has accepted this fact and permitted the Bank to complete the Public Issue smoothly. He has submitted that the complainant failed to pay up the dues of the Bank for a very very long time inspite of demands by the Bank. The failure of the complainant to pay the dues of the Bank for such a long time clearly showed its intention of not fulfilling its promise. The allegations of the complainant that the Bank had credited CR.MA/5389/2005 21/61 JUDGMENT illegal demand loan credit facility bearing A/c No.BL-36183 is absolutely false and baseless. He has submitted that it was at the instance of the complainant who had operated the accounts at Fatehganj Branch. The complainant was responsible for the Export Bills under Letter of Credit which was returned unpaid and the said amount of Export Bills under letter of credit remained due and payable by the complainant to the Bank as per demand loan account. 14. Mr.Anandjiwala further submitted that the complainant is defaulter and therefore, appropriate actions under the provisions of Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 have been taken against the complainant. The Bank was forced to do so as huge amounts are due and recoverable from the complainant. CR.MA/5389/2005 22/61 JUDGMENT It is further submitted that it is the public money which is involved so far as the Bank is concerned. It is not correct to say that there was any oblique motive or any other intention on the part of the accused to cause any undue harassment to the complainant. The actions which have been taken by the Bank against the complainant are bonafide and within the parameters of law. He has, therefore, submitted that the declarations made in the prospectus were bonafide and substantially true. In fact, the declarations were put on website of the Bank. Necessary corrections were also declared through Press and Electronic media. The Bank never intended either to mislead the public at large or even to cause any harm to any customers including the complainant. 15. Mr.Anandjiwala has further submitted that CR.MA/5389/2005 23/61 JUDGMENT civil litigations between the Bank and the complainant are already pending before the different forums and only with a view to create some pressure on the Bank by the complainant, as a measure of last resort has now tried to harass the accused persons by filing such a false criminal complaint which is being investigated by the police under Section 156(3) of Criminal Procedure Code. He has further submitted that if the police is permitted to continue with the investigation then the same would be nothing but travesty of justice and the accused persons who are all high ranking officers of the Bank and who are public servants will be unnecessarily harassed. He has further submitted that even sanction is necessary under Section 197 of the Criminal Procedure Code before prosecuting the accused persons who are public servants. CR.MA/5389/2005 24/61 JUDGMENT 16. Mr.Anandjiwala has further submitted that the complainant through his advocate got issued a notice to the Bank dated 25.1.2005 asking the Bank to take immediate and urgent action in the interest of the Bank for successful implementation of the public issue as well as in the interest of the public. In the said notice it has been stated that at page No.87 of the prospectus at Sr.No.4 in Table for outstanding litigation where claims amount exceeds Rs.1 crore and above, according to the complainant the same is false. In the notice it is also stated that the litigation which is being shown in the prospectus before the DRT is not correct but the complainant has filed Special Civil Suit No.178 of 2003 on 28.3.2003 and the same is pending for adjudication in the Civil Court, Vadodara before the Civil Judge (S.D.) Vadodara. The Bank immediately gave reply dated 5.2.2005 through its advocate to CR.MA/5389/2005 25/61 JUDGMENT the said notice of complainant dated 25.1.2005 clarifying and explaining the entire position. The Bank has also addressed a detailed letter dated 8.2.2005 to M/s.SBI Capital Markets Ltd., informing that the Bank has not concealed or suppressed any material fact against the interest of the public at large and investors in particular. It was clarified that the bonafide mis-description of mentioning the DRT, Ahmedabad instead of City Civil, Vadodara and the mis-description in setting out the nature of claim was unintentional. As other material particulars like the amount of claim, date of filing and name of the company were correctly mentioned, the mis-description did not materially influence or affect the decision of the investors public. He has, therefore, submitted that this Court may exercise its inherent powers under Section 482 of the Criminal Procedure Code and quash the entire CR.MA/5389/2005 26/61 JUDGMENT complaint which is nothing but gross abuse of process of law. 17. Mr.M.M.Tirmizi, learned advocate is appearing on behalf of the respondent – original complainant. An affidavit in reply is filed by respondent No.2. Written arguments under affidavit were filed by the respondent No.2 and the same are taken on record. At the out set, Mr.Tirmizi has submitted that the petitioners have intentionally omitted to produce documents annexed as Annexure 3 to 11 with the original complaint, third page of notice dated 25.1.2005 annexed as Annexure-B to the petition and second page of reply of the Bank dated 5.2.2005 to the notice of the complainant annexed as Annexure – C to the petition to mislead and misguide this Court by misrepresentation and to suppress their prima facie criminal offences for obtaining stay of CR.MA/5389/2005 27/61 JUDGMENT operation and execution of the impugned order dated 28.2.2005 of the learned Chief Judicial Magistrate, Vadodara and committed offence under Section 175 of the I.P.C. He has further submitted that Bank dishonestly misused false, fabricated and fraudulent documents as submitted in para-3A of the original complaint to file so called original application before the DRT, Ahmedabad on 1.5.2001 under the bogus pretext of the recovery of its so called dues with malicious ulterior motive to cover up its criminal offences, to stall the complaint and claim of the Company before various forums and authorities and to avoid its responsibility and liability as a holder for a value for the amount of illegally withheld export bills to the Company being conspiracy under Section 120A of the I.P.C. Mr.Tirmizi has further submitted that the modus operandi of the Bank to misuse the power by giving so called demand notice of CR.MA/5389/2005 28/61 JUDGMENT one day to the Company being so called borrower is to abuse the RDB Act, 1993 for filing the said so called original application in violation of the natural justice for making false claim under Section-209 by giving false and fabricated statements, information and evidences under Sections 177, 181, 191, 192, 196, 199, 200, 470 and 471 of I.P.C., and the said so called original application is pending for the adjudication for its dismissal as the jurisdiction of the DRT, Ahmedabad is debarred in absence of debt and cause of action and also the so called original application being illegal, mala fide and fraudulent. 18.