20. cr appln 1234-09.doc RMA IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 1234 OF 2009 Sushila Khushru Baxter .. Applicant Vs The General Manager, Vijaya Bank & Ors .. Respondents Mr. M.S. Mohite i/b Mr. Sunil R. More for the Applicant Mr. Dipankar Das i/b M/s. M.V. Kini & Co for Respondent 1 Mr. Mandar Goswami for Respondent No. 2 CBI Ms. A.A. Mane, APP for the State CORAM : SMT. V.K. TAHILRAMANI, J DATE : 24th SEPTEMBER,2010. P.C.: 1. Heard learned advocate for the applicant, learned advocate for respondent no. 1-bank, learned advocate for respondent no. 2 and learned APP for the State. 2. The applicant-original accused no. 8 is facing prosecution in Special Case No. 94 of 2002. The said case is pending before the Special Judge, Sessions Court, Mumbai. The applicant had preferred application for discharge before the Special Judge. By order dated 7th January 2009, the said application came to be rejected; hence the applicant has approached this Court. It is a common ground that the 1 20. cr appln 1234-09.doc applicant is facing prosecution only under Section 420 of IPC. 3. The prosecution case is that the applicant along with Harish R. Singh- original accused no. 4, Sunil R Singh- original accused no. 5, Radhadevi R. Singh-original accused no. 7 were the partners in M/s. Sunil Silk Mills-original accused no. 6. The said firm was dealing with Vijaya Bank, Santacruz (W) branch, Mumbai since 1986 and enjoying export credit facilities from the bank. It is further the prosecution case that these partners along with the help of officials from the said bank i.e original accused nos. 1 to 3 perpetrated fraud on the bank. The firm applied for and obtained various credit facilities from the bank from time to time, ostensibly for export purposes. During the period from 1996 to 1997, credit facilities interalia in the form of PCLs (Package Credit Limits) availed for export purposes, were not utilized fully for export purposes and exports made were not in accordance with the terms and conditions stipulated by the foreign buyers, as a result of which all the export bills were dishonored and Bank Guarantees invoked, resulting in huge pecuniary losses to the bank. 4. It is not disputed that the firm i.e accused no. 6 and the bank has entered into one time settlement scheme whereby 2 20. cr appln 1234-09.doc the dues of the bank has been settled. 5. Learned advocate for the applicant submitted that after one time settlement with the bank, whole of the decreetal amount as per the settlement has been paid and therefore, Criminal Case should not be continued. 6. In the present case, the only material against the applicant is the statement of one Shri. K.V. Nagaraj, the manager of Vijaya Bank wherein he has stated that the account no. 3792 in the name of Sunil Silk Mills was opened in their bank with initial deposit of Rs. 1000/-. He has stated that the account opening form contained the signatures of Sunil R. Singh, Harish R. Singh, Radhadevi R. Singh and Susheela R. Singh i.e the applicant. Thereafter, the partners liability letter dated 30th August 1994 also contained the signatures of above mentioned four partners of Sunil Silk Mills. Besides this statement of Mr. Nagraj and the two documents referred by him, there is no other material against the applicant. Except the above two documents, there is no correspondence signed by the applicant nor does any witness state that she met any bank officer for release of funds under PCL. There was no interaction of whatsoever nature between the applicant and any of the bank officials in relation to the release of funds under PCL. In such case, 3 20. cr appln 1234-09.doc question of any representation or misrepresentation which is one of the main ingredients for constituting an offence of cheating as contained in Section 415 of IPC does not arise. 7. Learned advocate for respondent no. 2-CBI submitted that since the applicant is one of the partners of M/s. Sunil Silk Mills i.e accused no. 6, there is legal liability of all the partners. 8. In reply, Mr. Mohite, learned advocate for the applicant has relied on a decision of the Supreme Court in the case of R. Kalyani Vs Janak C. Mehta & Ors reported in (2009)1 SCC 516 wherein it is observed in para 32 as under: “Allegations contained in the FIR are for commission of offences under a general statute. A vicarious liability can be fastened only by reason of a provision of a statute and not otherwise. For the said purpose, a legal fiction has to be created. Even under a special statute when the vicarious criminal liability is fastened on a person on the premise that he was in charge of the affairs of the company and responsible to it, all the ingredients laid down under the statute must be fulfilled. A legal fiction must be confined to the object and purport for which it has been created. 9. Reliance was also placed on para 9 of the decision in the case of Sham Sunder Vs State of Haryana reported in (1989) 4 SCC 630 : 1989 SCC (Cri) 783, wherein the Supreme 4 20. cr appln 1234-09.doc Court held as under: ‘9. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not’. The reference to Section 10 here is Section 10 under the Partnership Act. 10. So also in Radhe Shyam Khemca Vs State of Bihar reported in (1993) 3 SCC 54: 1993 SCC (Cri) 591, the law has been laid down by this Court, thus : (SCC pp. 58-59, para 6) ‘………………It need not be impressed that for prosecution for offences under the Penal Code, the complainant has to make out a prima facie case against the individuals concerned, regarding their acts and omissions which constitute the different ingredients of the offences under the Penal Code. It cannot be overlooked that there is a basic difference between the offences under the Penal Code and acts and omissions which have been made punishable under different Acts and statutes which are in nature of social welfare legislations. For framing charges in respect of those acts and omissions, in many cases, mens rea is not an essential ingredient; the concerned statute imposes a duty on those who are 5 20. cr appln 1234-09.doc in charge of the management, to follow the statutory provisions and once there is a breach of contravention, such person becomes liable to be punished. But for framing a charge for an offence under the Penal Code, the traditional rule of existence of mens rea is to be followed.' 11. Keeping in mind the above decision and the fact that there is no overt act on the part of the applicant, no document in relation to the PCL has been signed by her nor addressed by her to the bank officials nor had she interacted with any one in relation to release of PCL, the only material that she was a signatory to the account opening form and the letter dated 1994 cannot be such as to make out a case against her under Section 420 of IPC. It is to be borne in mind that here, I am concerned with a criminal liability under a penal provision and not a civil liability. There is no material to show that there was any mens rea on the part of the applicant. 12. In the present case, it cannot be said that there is any sufficient material against the applicant to make out a case under Section 420 of IPC, hence, the application is allowed and the proceedings in relation to the applicant are quashed. 6 20. cr appln 1234-09.doc 13. It is made clear that the proceedings are quashed only qua the applicant and it does not apply to the proceedings in relation to other accused. 14. Application is disposed of in above terms. [SMT. V.K. TAHILRAMANI, J.] 7