HONOURABLE SRI JUSTICE A. GOPAL REDDY CRIMINAL PETITION No.1366 OF 2008 Dated 03-09-2010 Between: Bala Krishna and others. ….. Petitioners. And: The State of Andhra Pradesh, represented by the Public Prosecutor, High Court of Andhra Pradesh, Hyderabad and another. ….Respondents. HONOURABLE SRI JUSTICE A. GOPAL REDDY CRIMINAL PETITION No.1366 OF 2008 ORDER: This petition is filed under Section 482 Cr.P.C. to quash the F.I.R. in Crime No.300 of 2007 dated 9-10-2007 registered by the Tadepally Police Station, Guntur District wherein the petitioners were arrayed as accused Nos.1 to 4 for the offence under Sections 467, 468, 471 I.P.C. read with 34 I.P.C. At the relevant point of time, the 1st petitioner was working as an Executive Director, HUDCO, Regional Office, Hyderabad; the 2nd petitioner was working as Senior Law Officer, HUDCO, Regional Office, Bangalore; the 3rd petitioner was working as Branch Manager, HUDCO, Visakhapatnam and the 4th petitioner was working as Senior Law Officer, HUDCO, Regional Office, Hyderabad. Petitioners are officials of M/s. Housing and Urban Development Corporation Ltd. HUDCO advanced a loan of Rs.14 crores to the 2nd respondent Dr. C. Suresh- defacto complainant under a loan agreement dated 2-9-1999 and an amount of Rs.13.50 crores was released to him under various rates of interest and accordingly loan documents were executed by the complainant on 6-9-1999. While executing the loan agreement and other documents on 6-9- 1999, the defacto complainant furnished 36 blank signed cheques initially and 50 blank signed cheques after prepayment of Rs.4.00 crores and 100 blank singed cheques after rehabilitation package was offered in lieu of posted dated cheques to be furnished in compliance of the conditions stipulated under the agreement. The petitioners filled-up the date and agreed amount on the cheques, as per the instructions of Head Office, for the amounts due and submitted for realization. When the cheques were returned on presentation with an endorsement “Insufficient funds in the account”, the HUDCO got issued a legal notice demanding payment of amount covered under the cheques. When the defacto complainant failed to pay the amount, a private complaint was filed against him under Section 138 of the Negotiable Instructions Act before the 1st Additional Chief Metropolitan Magistrate’s Court, Hyderabad. Loan is repayable in quarterly installments at 25 lakhs each. While so, alleging that the defacto complainant committed default in payment of five installments, the officials of HUDCO presented five cheques, out of the cheques given towards security package, which were dishonoured for want of endorsement “insufficient funds in the account of the accused”. On dishonoring the said cheques, C.C. Nos.3218 of 2005 and 3242 of 2005 were filed by the Housing and Urban Development Corporation Ltd., before the I Additional Chief Metropolitan Magistrate, Hyderabad for the offence under Section 138 of the Negotiable Instruments Act. The said CCs were ended in acquittal of the defacto complainant by judgment dated 17-10-2006. Questioning the same, HUDCO filed Criminal Appeal Nos.80 and 86 of 2007. When the said appeals were pending, the defacto complainant lodged a complaint on 9-10-2007 alleging that the complainant availed the loan facility of Rs.14 crores for construction of hospital. During the process of loan application, the erstwhile Regional Chief of HUDCO, Mr. Somayajulu demanded bribe from the C.M.D. of the complainant company and in turn Dr. C. Suresh who is the C.M.D. reported the matter to A.C.B. and C.B.I., who registered the case against the said Somayajulu having caught him red-handed. Whereas the accused with a common intention and object individually and collectively in abetment with full knowledge and sympathy on their colleague so caught by ACB, started illegal activities and harassment of the complainant at every stage of the loan processing disbursement and also at the time of redemption (repayment). The accused-petitioners fabricated false demand notes including fabrication of false statement of accounts. The repayment schedules were arbitrarily changed without mutual consent or amendments. Money prepaid by the complainant was not adjusted as per loan agreement, but misappropriated so as to show that the complainant is a defaulter. In fact, the complainant paid 7.65 crores against the due amount of Rs.5.88 crores. The facts were accepted by A.2 in the Court. By falsely showing the complainant as defaulter, accused 1 to 3 fraudulently forged the blank undated cheques extorted from the complainant towards security package after the loan documentation. This illegal action of the accused was to threaten the complainant with action under Section 138 of Negotiable Instruments Act, despite no amount was due and payable by the complainant and only to cause harassment, loss of reputation and loss of good will and thus to put pressure on the C.M.D of the complainant company to alter/withdraw his statement in the Ex- Regional Chief Somayajulu’s anti-corruption case. The accused intentionally took five cheques bearing Nos.000465 dated 30-9-01 for Rs.53.54 lakhs, 273701 dated 30-9- 01 for Rs.51.76 lakhs, 273702 dated 31-12-01 for Rs.52.82 lakhs, 000467 dated 31-3-02 for Rs.56.15 lakhs and 273703 dated 31-3- 02 for Rs.52.11 lakhs and illegally presented the said cheques into the bank knowing that there was no money due. The accused 1 to 3 prepared and fabricated the statement of account and filed false 138 cases against the complainant and its directors. Thus, the accused used these valuable securities created out of those blank cheques to file false cheque bounce cases against the complainant and its directors. Apart from that, the accused placed the information of cheque bounce cases in the Internet World Wide web to cause loss of reputation and credit of the complainant and its directors. All the accused indulged in these criminal acts against the complainant in their individual capacities contrary to their expected roles as officers of financial institutions. But, for the fear of injury and inducement of the accused, the complainant would not give the blank undated cheques. But as per the security package, only post dated cheques be given when both the parties are not bargaining capacity by putting fear and obtained valuable security of the blank undated signed cheques and participated in this criminal action on concealed legal actions. This act of misfeasance, mal-feasance and non-feasance of the accused to a larger extent destroyed the good will of the hospital and forced many doctors to leave the hospital and the suppliers of medicine to stop credit to the hospital. The accused No.3 fabricated a false statement of account on 13-8-2002 to show that the complainant was in default of Rs.788-31 lacs. When the complainant paid Rs.4.00 crores as prepayment along with prepayment fee of Rs.4.00 lakhs to HUDCO to the credit of the complainant’s account. Despite the above prepayment, the principal amount was not reduced or a new repayment schedule was not given. Thus, the accused misappropriated the funds and illegally adjusted from the bottom upwards of the repayment schedule for the year 2010 to 2014 under illegally reduced the repayment period from 15 years to 11 years and Accused 1,2 and 4 have also filed false sworn affidavits before the Metropolitan Magistrate, Hyderabad and Debt Recovery Tribunal, Hyderabad and Accused 1 and 4 have also forged legal documents of personal guarantee of the complainant and escrow agreements by ante dating them and used as genuine, knowing they are not genuine, with an intent to cause loss of money and reputation etc., On filing of the above complaint, police registered a case in Cr.No.300 of 2007 for the offences mentioned above, which is now sought to be quashed. Sri D.Prakash Reddy learned Senior Counsel for the petitioners contended that filling up of blanks in a cheque by itself would not amount to forgery as per Section 463 IPC by furnishing the blank signed document on availing loan and an implied authority is given to the holder of the cheque, to fill the columns therein mentioning the date and amount by words and figures in view of Section 20 of Negotiable Instruments Act. Therefore, the petitioners cannot be charged under Section 468 and 471 I.P.C. The loan account was decentralized with effect from 15-9-2003 as per letter dated 9-3-2004 that means till 15-9-2003. It was Head office which was dealing with the loan transactions. The Regional or Local Officers are in no way concerned with the same and they have to act according to the instructions of the Head Office. The petitioners themselves addressed a letter dated 10-4-2001 requesting the officials of the HUDCO informing that the IDBI Officials are agreeing to extend financial assistance, if HUDCO could extend pari-passu charge on all assets including company shares pledged to HUDCO and as per the claim of Rs.4.00 crores by HUDCO, Rs.4.00 crores from the Global Trust Bank, the complainant agreed to reduce the loan exposure to Rs.9.00 cores and to reduce the burden on the project which is also evidenced from the letter dated 7-9-2001 and 12-12-02 wherein the complainant himself admitted about the repayment of 761.25 lakhs towards the interest and principal to reduce the loan liability and remitted about Rs.4 crores to HUDCO in the month of April, 2001 which was adjusted against the principal only. It is not open for the complainant to complain that falsification of the accounts which were done as per the request of the petitioners. All the allegations are against the local officials. Letters written by the complainant dated 10-4-2001, 7-9-2001, 12.12.2002 shows that the petitioners are no way involved in the commission of offence. The letter of 13-8-2002 written by the complainant shows that the Head Office was dealing with the matter upto 15-9-2003. On the request made by the complainant for reducing the principal for enabling him to avail loan from IDBI, the cheques were filled up and presented. Therefore, the whole complaint lodged by the complainant is only to harass the petitioners, as they are all civil in nature and they were acted officially as per the instructions of the Head Office. Hence, they cannot be prosecuted for the offences and the proceedings in the F.I.R. are liable to be quashed. Per contra, the S.R Ashok, learned senior counsel for the complainant/2nd respondent would contend that the complainant borrowed Rs.13.50 crores and paid more than 7 corers and still Rs.12.75 croes is due. When the complainant paid extra amount of Rs.4, crores, the petitioner officials adjusted extra sum not towards last installment due. The complaint filed a case for dishonouring of cheque under Section 138 of Negotiable Instruments Act. The said proceedings were ended in acquittal and appeal filed against the same was also dismissed. Only when the process is abused, this Court cannot exercise the powers under Section 482 Cr.P.C. When the cheques were filled up with unintended amount, it amounts to forgery. By pointing out to the account issued on 26-2-2003 wherein it shows that for the period between 30-6-2002 to 31-3-2003, no amounts are due as per the repayment schedule and, therefore, putting up the cheques for unintended amount lacks common sense. Making a false document for the purpose of registration fee under Section 464 I.P.C. is an offence, which cannot be quashed at the initial stage and the complainant should be given an opportunity to prove the case. Therefore, he prays to dismiss this Criminal Revision petition. There is no dispute with regard to the availment of loan of 13.50 crores for establishing the hospital by the defacto complainant and his furnishing a blank signed cheques authorizing the HUDCO people to fill up as a security to the loan borrowed by him. The complaint allegations show that the repayment of installments made by the complainant were not accounted for as per the loan agreement and thus, the accused committed misappropriation. The repayment schedules were arbitrarily changed without mutual consent or amendments. Money prepaid by the complainant was not adjusted as per the loan agreement, but misappropriated so as to show that the complainant is a defaulter. The complainant in fact, paid Rs.7.65 crores against the due amount of Rs.5.88 crores and by falsely showing the complainant as defaulter, accused 1, 2 and 3 fraudulently forged the blank undated cheques extorted from the complainant towards security package after the loan documentation. Admittedly, all the cheques were filled up for the amounts mentioned during the period from 30-9-2001 to 31-3-2002 for various amounts, as referred to above. Section 20 of the Negotiable Instruments Act, reads as follows: “When one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly Blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon in a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount: provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder” This Court in a decision reported in CHINTHALA CHERUVU v. STATE OF A.P. ([1]) while referring Section 20 of the Negotiable Instruments Act held that “An implied authority is given to the holder of the cheque, at the time of entrusting a blank cheque containing the signature of the drawer of the cheque alone, to fill the columns therein. Pursuant to the implied authority, if the columns are filled up mentioning the date and amount by words and figures, it will not amount to any offence much less the offence punishable under Section 468 and 471 of the Indian Penal code. Oblivious of the provisions of Section 20 of the Act, it is alleged that it was a case of forgery and fabrication.” Before the said cheques were presented, the complainant addressed two letters to the Regional Chief HUDCO dated 10-4- 2001 and 7-9-2001 respectively wherein the petitioner referring to the letter dated 4-4-2001 addressed to the Industrial Development Bank of India accepting for issuance of pari-passu charge on fixed assets mortgaged to HUDCO in favour of IDBI to the extent of Rs.5.00 crores for procuring the medical equipment. The matter has been discussed with IDBI officials and it has been informed that they will be agreeing to extend financial assistance, if HUDCO could extend pari-passu charge on all assets including company shares pledged to HUDCO apart from pari-passu charge on escrow account including fixed assets already accepted by HUDCO and requested the HUDCO officials to enable the complainant to raise the loan of Rs.5.00 crores for procuring the medical equipment. Further, the HUDCO officials are requested to claim Rs.4 crores from Global Trust Bank against the Bank Guarantee provided to HUDCO as a part security to reduce the loan exposure to Rs.9.00 crores immediately and to reduce the burden on the project. Further, through its letter dated 7-9-2001, the defacto complainant stated that if the defacto complainant prepaid Rs.4.00 crores out of Rs.13.00 crores loan outstanding on 21-4-2001 and also paid an amount of Rs.14.88 lakhs on 5-5-2001 and Rs.62.10 lakhs on 28-5-2001 towards interest and principal, the request for a new payment schedule taking into account of their outstanding loan amount of Rs.8.75 crores as against the earlier outstanding of Rs.13.0 crores is not accepted by the Bank Officials. Therefore, the complainant wrote another letter on 12-12- 2002 stating that they have paid 761.25 lakhs towards interest and principal out of the total loan of Rs.13.50 crores borrowed from HUDCO and to reduce the loan liability, the defacto complainant has remitted Rs.4 crores to HUDCO in the month of April, 2001 which was adjusted against the principal only. It is also admitted that decentralized has been effected from 15-9-2003 wherein the Regional Offices have been authorized to carry out the transactions of creating of new agency, creating of new loan card, feeding of fresh releases and feeding of repayment receipt from the agency. Whereas the petitioner has joined and worked in the Regional Office as Regional Chief from 29-6-1998 to 21-11-2002 and later he was transferred to Head Quarters, Delhi and the 2nd petitioner has joined and worked in the same office as Law Officer from 9-8-2000 to 24-5-2005 and latter he was transferred to Bangalore. Whereas the 3rd petitioner worked as Trainee Officer (Finance) from 15-2-1999 to 5-5-2000 at Hyderabad and 4th petitioner worked as Senior Law Officer from 20-6-2006 to 24-4-2008. The 3rd petitioner who was the Assistant Finance Officer addressed a letter dated 13-8-2002 to the defacto complainant informing him that an amount of Rs.788.31 lakhs is outstanding to be paid by the complainant agency as per the details given and the default is continuing since quarter ending June, 2001 and relates to Scheme number and requested to remit overdue amount along with penal charges as per the loan agreement to HUDCO. The Full Bench of this Court in a decision reported in GIRISH SARWATE v. STATE OF A.P. AND ANOTHER ([2]) held that the High Court’s inherent power to pass orders to secure the ends of justice is not limited by any provision in the Criminal Procedure Code. Therefore, even on those principles, if an FIR does not disclose any offence and a person complains to the High Court, the High Court cannot shut its door to him and tell him to face the investigation and also face the trial. The decision reported in PRATIBHA v. RAMESHWARI DEVI AND OTHERS ([3]) deals with two questions namely, (1) Whether the High Court while quashing the FIR in exercise of its inherent powers under Section 482 Cr.P.C. was entitled to go beyond the complaint filed by the complainant; and (2) Whether the High Court was entitled to look into and consider the investigation report submitted by four officers of the rank of Dy. Superintendent of Police, for quashing the FIR, even before the same could be filed before the Magistrate concerned. It is held that from a plain reading of the findings arrived at by the High Court while quashing the FIR, it is apparent that the High Court had relied on extraneous considerations and acted beyond the allegations made in the FIR for quashing the same in exercise of its inherent powers under Section 482 of the Code and on a careful reading of the illustrations in a decision of the apex Court reported in STATE OF HARYANA v. BHAJAN LAL ([4]) that the allegations emerging from the FIR are not covered by any of the illustrations as noted. It is further held that the High Court was also wrong in directing the report to be submitted before it. It is for the investigating agency to submit the report to the Magistrate under Section 173 of the Code and set aside the order passed by the High Court. In a decision reported in SRI KRISHNA AGENCIES v. STATE OF A.P. AND ANOTHR ([5]) wherein it was held that there is no bar to the simultaneous continuance of a criminal proceeding and a civil proceeding if the two arise from separate causes of action. The crime is registered for the offence under Sections 467, 468 and 471 read with 34 I.P.C. namely forgery of a valuable security, forgery for the purpose of cheating, using as genuine a forged document. This Court in Crl Appeals Nos.80 and 86 of 2007 filed by HUDCO against the complainant filed for the offence under Section 138 of the Negotiable Instruments Act gave a finding as follows: “P.Ws.1 and 2 who were officers of the complainant could not state as to who filled up the cheques and who affixed rubber stamp of the complainant in the column provided for payee on the cheques, one cannot jump to the conclusion that there is material alteration in the cheques. Under Section 87 of the Negotiable Instruments Act, it is only such material alteration in a Negotiable Instrument, which was made without the consent of the drawer, which is void; but if such alteration was made in order to carry out common intention of the original parties, then even if there is any alteration, the instrument will not become void. When the accused who is loanee gave signed cheques to the complainant in pursuance of Ex.P.3 agreement as a security package, then intention of the parties and particularly that of the accused is to enable the complainant to present such cheques by filling them up in case there is default in repayments as per the repayment schedule. So, it cannot be said that the cheques were filled up by the appellant/complainant without consent of the accused. It was to carry out common intention of both the complainant and the accused, the complainant filled up those blanks in the signed cheque and presented the same for encashment. If it is not permitted to be done by the complainant, then there is no purpose for the complainant in obtaining such signed cheques from the accused openly as per terms Ex.P-3 loan agreement as a measure of security package. This Court finds that the cheques were presented by the complainant in pursuance of and in order to carry out common intention of both the parties and accordingly, dismissed the appeal.” Therefore, in view of the finding recorded therein between the same parties it is not open for the complainant to contend that the petitioner-accused have fabricated the documents. Further, for due recovery of the amount, the Bank officials filed O.A.No.7 of 2006 under the agreement wherein the complainant was examined as D.W.1. Only after filing the above O.A., and the appeals against the acquittal of the defacto complainant in cheque bouncing case, the complainant lodged the above complaint to wreak vengeance which falls under Illustration 7 namely 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 as enumerated in STAE OF HARYANA v. BHAJAN LAL (44 t h cited supra) by the Supreme Court which is nothing but abuse of process of Court. In view of the same, the proceedings in Crime No.300 of 2007 dated 9-10-2007 of Tadepally Police Station, Guntur District are hereby quashed. Accordingly, the Criminal Petition is allowed. ____________________ A.GOPAL REDDY, J Dated 03-09-2010 Dvs. HONOURABLE SRI JUSTICE A. GOPAL REDDY CRIMINAL PETITION No.1366 OF 2008 Dated 03-09-2010 [1] 2007 ALT (Cri)-2-104 [2] 2004 (6) ALD 855 (FB) [3] (2007) 12 SCC 369 [4] 1992 Supp (1) SCC 335 [5] (2009) 1 SCC 69