1 Cri.Appln.No.3676/2010 & Ors. IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD CRIMINAL APPLN/3676/2010 KEDARNATH KASHINATH MUNDADA V/S THE STATE OF MANARASHTRA AND ANR WITH CRIMINAL APPLN/3677/2010 KESHARLAL SITARAM BADHADE V/S THE STATE OF MAH AND ANR WITH CRIMINAL APPLN/3678/2010 SUNIL MADANLAL ZAWAR V/S THE STATE OF MAH AND ANR WITH CRIMINAL APPLN/4353/2010 RAMESH GOKULCHAND LAHOTI V/S POLICE INSPECTOR CITY POLICE STATION JALGAON AND ANOTHER. WITH CRIMINAL APPLN/4354/2010 MRS. MAMATA MILIND RATHI V/S POLICE INSPECTOR CITY POLICE STATION JALGAON A NR 2 Cri.Appln.No.3676/2010 & Ors. WITH CRIMINAL APPLN/4365/2010 MOHAN SURAJI TAYADE V/S POLICE INSPECTOR CITY POLICE STATION JALGAON & ANR. WITH CRIMINAL APPLN/4366/2010 MEHERCHAND SITALDAS NATHANI V/S POLICE INSPECTOR CITY POLICE STATION JALGAON & ANR. WITH CRIMINAL APPLN/4367/2010 NILAMDEVI CHAMPALAL SONI V/S POLICE INSPECTOR CITY POLICE STATION JALGAON & ANR. ***** Mr.PP Chavan, Advocate for Applicants; Mr.VH Dighe, APP for State. ----- CORAM : K.U.CHANDIWAL, J. DATE : 22nd February, 2011. PER COURT : 1) Heard learned Counsel for the applicants/accused and learned APP for State. 3 Cri.Appln.No.3676/2010 & Ors. 2) By the present applications, the Directors of Shri Siddhi Vyankatesh Urban Cooperative Bank Ltd., seek quashment of F.I.R.,vide Crime No.98/2010 dated 31st October, 2010 registered at City Police Station, Jalgaon for offences under Sections 420, 467, 468, 471, 406, 409, 201, 120(B) r/w 34 of Indian Penal Code. 3) The learned Counsel for the applicants submits that the applicants are Directors of the Bank, they had no reason to associate themselves with the mis-management or deficit in the cash accounts, including withdrawals from the accounts of several depositors. According to learned counsel, it was facilitated by few directors in concert with the Branch Manager, Clerk and Accountant. The Counsel submits, no sooner the Chairman and other Directors realize that there is deficit in cash flow in the bank, the matter was brought to the notice of the Joint Registrar, Cooperative Societies, who was put in swing, a resolution was passed to have internal audit conducted and all the powers for appointments, nominations of sub-auditor (Private) were assigned to the Chairman by virtue of Resolution dated 10.6.2006. Consequent upon such resolution, Baheti Achaliya & Associates, Jalgaon was appointed as a Special Auditor for management to 4 Cri.Appln.No.3676/2010 & Ors. make sub-audit for the financial years 2004-2005 and 2005-2006, regarding and limited to following matters, viz. i)The debit balances in current and savings account; ii)The proper and genuine disbursement of loans. The Time schedule to conduct the audit by the Auditor was of fifteen days. 4) The counsel further submits, thus within record period of 11 days, the audit was completed and responsibility of each of such defaulting members, including the Directors, was fixed; no responsibility was fastened to the applicants, who are arrayed as accused by the Auditor at Nos. 48 to 60 in the F.I.R. 5) The Counsel accepts that there were irregularities, misappropriation in the bank to the sum of Rs.1,07,97,847/- and interest at Rs. 1,19,69,396/-, totaling Rs.2,27,567,243=84 ps. during the period from 2005 to 2009. The counsel repeats, with all said and done, the present applicants/accused would not be answerable to meet the irregularities, misappropriation carried in the bank. 6) The learned APP, while opposing the applications, invited my attention to the bye- laws of the Bank to address that Clause 36 5 Cri.Appln.No.3676/2010 & Ors. conceive, powers and functions of the Board of Directors, which include, consideration of applications for membership; allotment, transfer of shares and resignation and also to consider cases of arrears, default of loans, over drafts, advances, cash credits; to consider the proposals; to modify, alter, delete or add to the terms and conditions, governing the outstanding loans, overdraft, cash credit and advances; The Board of Directors, if necessary, are empowered and competent to appoint Sub-Committees of Directors not exceeding five Directors, including the Chairman and Chief Executive Officer and delegate to such Sub-Committees, such powers, as it may deem fit, except the powers vested in the Board of Directors under bye-law 36(v). Even the Board of Directors may appoint a Branch committee for branch situated outside the Head Office town of the bank beyond 25 kms and delegate to it with such powers regarding sanction of loans, as may be deem fit. The learned APP also points that in terms of Section 73(1AB) of the Maharashtra Cooperative Societies Act, 1960 (for short, the Act). There is breach on the part of the applicants as Directors/Chairman of the Bank. 7) Mr.Chavan, while refuting, informs that Section 73(1AB) of the said Act would not be 6 Cri.Appln.No.3676/2010 & Ors. attracted in the present case, as it is a civil liability by Directors in the event of any mis- misfeasance or breach of the terms. It does not provide any penal consequence. The Counsel also submits, that Section 73(1AB) of the said Act would be more concerned with Section 88 of the said Act. 8) Since the applicants were holding a responsible position as Board of Directors, including Chairman, the contention that the applicants were unaware of illegalities of siphoning of the bank’s money or depositors valuables, could not be ably agitated and digested, as it was a joint responsibility of these applicants as Directors. The people trusted them, the trust deficit has caused due to lack in administration, including prima facie interse concert. It would also constitute primary involvement of the accused/applicants with the allegations of mis-appropriation and cheating to the creditors, withdrawing or siphoning of amounts from the depositors’ accounts. Even if some of the Account holders have deposited the amounts, having so informed subsequently, may be under threats of fetters, however, that by itself will not absolve the primary responsibility and liability of the accused/applicants to meet and dwell upon the illegalities committed by 7 Cri.Appln.No.3676/2010 & Ors. Directors or staff and few of the Account holders. It is curious, as on today, after appointing the administrator, the bank is not in a position to clear/pay the depositors’ hard- earned money who are now in lurch. 9) The overall effect of the F.I.R., voluminous documents, prima facie, indicate role of the applicants/accused in a well-organized criminal conspiracy, to which they were party. Even if applicants tacitly allowed the activities of siphoning of the funds, the accused/applicants are bound to face the rigor of section 120(B) coupled with prosecution in terms of Sections 420, 467, 468 and other penal provisions r/w 34 of the Indian Penal Code. 10) The the Hon’ble Lordships of the Apex Court in the matter of State of Haryana and Ors. Vs. Bhajanlal and Ors., reported in 1992 SCC (Cri.) 426, spelt following categories of cases, by way of illustration, wherein such powers could be exercised either to prevent abuse of the process of the court or otherwise to secure ends of justice. The Hon’ble Lordships also made it clear that though it may not be possible to lay down any precise, clearly defined and sufficiently channelized 8 Cri.Appln.No.3676/2010 & Ors. and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused; (2) where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code; (3) where the uncontroverted allegations made in the FIR or 'complaint and the evidence collected in support of the same do not disclose 265 the commission of any offence and make out a case against the accused; (4) where the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no 9 Cri.Appln.No.3676/2010 & Ors. investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code; (5) where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused; (6) where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party; (7) where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” 11) The Hon’ble three Lordships of the 10 Cri.Appln.No.3676/2010 & Ors. Apex Court, in the matter of Inder Mohan Goswami and Another Vs. State of Uttaranchal and Ors., reported in (2008) 1 SCC (Cri.) 259, three-judges Bench of the Hon’ble Supreme Court observed, - “The court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressure the accused. On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the Statute itself and in the above mentioned cases”. 12) The tests embodied in terms of Section 482 Cr.P.C. are under: (i) to give effect to an order under the Code; (ii) to prevent abuse of the process of court, and (iii)to otherwise secure the ends of 11 Cri.Appln.No.3676/2010 & Ors. justice. 13) Thus, taking all the facts into consideration, it cannot be said that the prosecution initiated against the Directors/applicants herein is couched with any vendetta in the mind of the complainant or is sheer abuse of process of the court or wastage of court’s time. 14) The Criminal Applications lack merit, dismissed. ( K.U.CHANDIWAL ) JUDGE bdv/