THE HON'BLE SRI JUSTICE M.S.K.JAISWAL CRIMINAL REVISION CASE Nos.1868/2011, 1580 & 1699 of 2012 COMMON ORDER: These three criminal revision cases are filed questioning the correctness of the orders impugned passed in discharge petitions filed by A1(Ch.Laxminarayana), A5(K.Ashok Kumar) & A7(C.C.Mukundan Nambiar) in C.C.No.23/2005 on the file of the III Additional Special Judge for CBI Cases, Hyderabad. 2. Crl.R.C.No.1868/2011 is filed questioning the correctness of the order dated 16.03.2011 in Crl.M.P.No.1834/2007 in CC No.23/2005 on the file of the III Additional Special Judge for CBI Cases, Hyderabad, by and under which, the Court below dismissed the petition filed by the petitioner/A1-Ch.Laxminarayuana under section 239 Cr.P.C seeking to discharge him from the charges levelled against him. 3. Crl.R.C.No.1580/2012 is filed questioning the correctness of the order dated 27.08.2012 in Crl.M.P.No.34/2012 in CC No.23/2005 on the file of the III Additional Special Judge for CBI Cases, Hyderabad, by and under which, the Court below dismissed the petition filed by the petitioner/A5-K.Ashok Kumar under section 239 Cr.P.C seeking to discharge him from the charges levelled against him. 4. Crl.R.C.No.1699/2012 is filed questioning the correctness of the order dated 27.08.2012 in Crl.M.P.No.1833/2007 in CC No.23/2005 on the file of the III Additional Special Judge for CBI Cases, Hyderabad, by and under which, the Court below dismissed the petition filed by the petitioner/A7-C.C.Mukundan Nambiar under section 239 Cr.P.C seeking to discharge him from the charges levelled against him. 5. Heard the learned counsel appearing for the petitioners/A1, A5 & A7 and the learned Special Public Prosecutor, representing the CBI/State. 6. The case of the prosecution is that A1, during his tenure as Chief Manager, SBI, Padmaraongar Branch, Hyderabad, criminally conspired with other accused i.e. A2 to A7, with dishonest and fraudulent intention to cheat the Bank by abusing his official position as public servant and sanctioned Bank Guarantees in favour of A2 to A6, without verifying the genuineness and correctness of their respective Firms, without conducting the pre-sanction inspection of properties, without verifying the genuineness of the sale deeds of properties and encumbrance certificates and without verifying the end use of funds and disbursed the amounts and as a result, the Bank sustained loss of Rs.70.50 lakhs since the amounts were not recovered from A2 to A6. Therefore a case in RC No.11(A)/2003-CBI, HYD was registered against all the accused for the offences under Sections 120-B, 420, 468 and 471 r/w.462 IPC and under Section 13(2) r/w.13(1)(b) of Prevention of Corruption Act, 1988. 7. In so far as the petitioner/A1-Ch.Laxminarayana is concerned, it is alleged that, he being the Chief Manager of State Bank of India, Padmarao Nagar Branch, Hyderabad, conspired with A2 to A7 to cheat the Bank by abusing his official capacity, and in that process, basing on fake and forged documents furnished by A2 to A6, he issued the following Bank Guarantees in favour of National Small Scale Industries Corporation (NSIC) on behalf of A2 to A6 for availing raw material assistance by A2 to A6 from NSIC. Bank Guarantee No. Date Amount Rs. (in lakhs) Beneficiary 19/96-97 23.12.1997 12 lakhs M/s.S.V.Enterprises (A2 concerned) 21/97-98 14.02.1998 12 lakhs M/s.S.V.Enterprises (A2 concerned) 22/97-98 20.03.1998 8 lakhs M/s.S.V.Enterprises (A2 concerned) 23/97-98 26.03.1998 20 lakhs M/s.Suryodaya Hightech Engineers Pvt.Ltd. (A5 concerned) 25/98-99 12.05.1998 15 lakhs M/s.DMK Excavations and Constructions Pvt.Ltd. (A3 concerned) 28/98-99 13.06.1998 20 lakhs M/s.T i mb e r Matix (A6 concerned) 29/98-99 13.07.1998 7 lakhs M/s.S.N.Reddy Enterprises (A4 concerned) Basing on the above mentioned Bank Guarantees A2 to A6 availed the financial assistance from NSIC by placing false and fake invoices and withdrew the amounts and failed to repay the said amounts to NSIC, thereby, NSIC invoked the Bank Guarantees and hence the Bank sustained loss of Rs.70.50 lakhs. 8. In so far as the petitioner/A5 is concerned, it is alleged that by producing false and fake documents he availed Bank Guarantee No.23/97-98 dated 26.03.1998 for Rs.20 lakhs and failed to repay the same, thereby cheated the Bank and misappropriated the amounts. 9. In so far as the petitioner/A7 is concerned, it is alleged that he is instrumental in cheating the Bank by providing assistance to the private parties i.e., A2 to A6 in getting Bank Guarantees sanctioned on the basis of fake and forged securities by influencing A1 and for which he received Rs.44,000/- as commission by way of two cheques from A3. 10. The petitioners/A1, A5 & A7 filed petitions under Section 239 Cr.P.C seeking discharge from the offences alleged against them. The learned trial Court having considered the submissions advanced on either side, dismissed their petitions, observing that there are specific allegations and there is prima facie case to frame charges against the petitioners/A1, A5 & A7. 11. It is the contention of the petitioner/A1 that A1 issued Bank Guarantees as per norms and with permission from the concerned officers and he had been falsely implicated by leaving the concerned officers responsible for sanctioning the same, and that the allegations made against him are baseless. 12. It is the contention of the petitioner/A5 that he had not committed any offence alleged and more over, with the consent of CBI, the matter is compromised and he cleared off the loan and the SBI withdrawn the case before Debt Recovery Tribunal, Hyderbad and there is no loss sustained by the Bank as he discharged the entire loan amount, and therefore, he is entitled for discharge. 13. It is the contention of the petitioner/A7 that he never conspired with other accused and he has nothing to do with sanctioning of Bank Guarantees by A1 and he rendered services in filling forms for which he received remuneration by way of two cheques and he is in no way connected to the crime. 14. The learned Special Public Prosecutor, representing CBI, submits that there is prima facie case against the petitioners/A1, A5 & A7 to proceed. He further submits that the investigating agency examined as many as 73 witnesses and placed on record voluminous documentary evidence, which clearly disclose the key roles played by the petitioners/A1, A5 & A7 in the alleged conspiracy and misappropriation of amounts. 15. The point for consideration is as to whether the petitioners/A1, A5 & A7 are entitled to be discharged under Section 239 Cr.P.C. 16. Both parties, to substantiate their respective contentions, relied upon the Authorities of the Apex Court. The learned Special Public Prosecutor relied upon the following decisions in support of his contentions; 17. In State of Bihar v. Dhirendra Prasad Shrivastava and ors.[1] the Hon’ble Supreme court at paras-5 and 9 held as under: “5. It is in the light of the aforesaid facts revealed by the investigation carried out in respect of the offences alleged that the liability of the accused Respondents to face a full-scale trial was required to be determined by the High Court. The contours of the powers of the High Court to make such determination, at the stage when it was called upon to do so, is well known and would not require a reiteration. Such power Under Section 482 of the Code of the High Court is severely circumscribed. The result and the findings of investigation will have to be accepted as correct in their entirety and it is against such a backdrop that the necessity of a regular trial against the accused Respondents will have to be determined. The truth or veracity of the allegations cannot be agitated or gone into at that stage. If, judged by the aforesaid standard the culpability of the accused is, prima facie, made out, the High Court will have no jurisdiction to interdict the proceedings. 9. The third principal ground on which the High Court thought it proper to grant relief to the Respondents accused is that in a departmental proceeding instituted against the Respondents on the same charges, the Respondents were exonerated. Relying on a decision of this Court in P.S. Rajya v. State of Bihar: 1996 (3) R.C.R. (Criminal) 261 : (1996) 9 SCC 1, the High Court construed the ratio of the aforesaid decision to mean that in a situation where a departmental proceeding against an accused is launched and the accused is exonerated therein, the criminal proceeding on the same charges must necessarily fail and, therefore, should be interdicted. While relying on P.S. Rajya's case supra, the High court failed to notice a subsequent decision of this Court in State v. M. Krishna Mohan: 2007 (4) R.C.R. (Criminal) 882 : 2007 (6) Recent Apex Judgments (R.A.J.) 96 : (2007) 14 SCC 667, where this Court had taken the view that exoneration in a departmental proceeding, ipso facto, would not lead to the acquittal of the accused in the criminal trial. Even otherwise, in a three judge Bench decision of this Court in State (NCT of Delhi) v. Ajay Kumar Tyagi: 2012 (4) R.C.R. (Criminal) 297 : 2012 (4) Recent Apex Judgments (R.A.J.) 415 : (2012) 9 SCC 685, it has been explained that the decision in P.S. Rajya (supra) must be understood to have been rendered in the facts of the case. The above position is clear from a reading of the report in P.S. Rajya (supra) itself. Furthermore in State (NCT of Delhi) v. Ajay Kumar Tyagi (supra), the position has been explained in the following manner: "24. Therefore, in our opinion, the High court quashed the prosecution on total misreading of the judgment in the case of P.S. Rajya (Supra). In fact, there are precedents, to which we have referred to above, that speak eloquently a contrary view i.e. exoneration in departmental proceeding ipso facto would not lead to exoneration or acquittal in a criminal case. On principle also, this view commends us. It is well settled that the standard of proof in department proceeding is lower than that of criminal prosecution. It is equally well settled that the departmental proceeding or for that matter criminal cases have to be decided only on the basis of evidence adduced therein. Truthfulness of the evidence in the criminal case can be judged only after the evidence is adduced therein and the criminal case can not be rejected on the basis of the evidence in the departmental proceeding or the report of the Inquiry Officer based on those evidence. 25. We are, therefore, of the opinion that the exoneration in the departmental proceeding ipso facto would not result in the quashing of the criminal prosecution. We hasten to add, however, that if the prosecution against an accused is solely based on a finding in a proceeding and that finding is set aside by the superior authority in the hierarchy, the very foundation goes and the prosecution may be quashed. But that principle will not apply in the case of the departmental proceeding as the criminal trial and the departmental proceeding are held by two different entities. Further they are not in the same hierarchy." 18. In State of Maharashtra v. Vikram Anantrai Doshi[2], the Hon’ble Supreme Court at paras 8, 9, 20 and 21 made the following observations: “8. During the pendency of the case before the trial court on 30th March 2009 the informant, Bank of Baroda, had transferred its debts to a trust IARC - BOB-01-07 under the control of Kotak Mahindra Bank. The accused, Vikram Doshi, settled the disputes and paid Rs. 42 lacs for settling the dispute. On that basis, Kotak Mahindra Bank issued a "no due certificate" to M/s. Atcom Technology Limited stating that on receipt of Rs. 42 lacs, there was no amount outstanding and payable by them in respect of facility advanced by Bank of Baroda. The said bank also confirmed that the guarantees issued by Vikram Doshi stood discharged. 9. After the receipt of such "No dues certificate" the Respondent preferred a petition Under Section 482 of the Code of Criminal Procedure bearing Criminal Application No. 2239 of 2009 before the High Court of Judicature at Bombay and the learned Single Judge vide order dated 24.2.2010 quashed the criminal proceedings pending before the learned Addl. Metropolitan Magistrate. The learned Single Judge referred to one of its earlier orders and came to hold as follows: Both the offices Under Sections 406 and 420 are compoundable with the permission of the court. As already discussed hereinabove, the Bank has already given its No Due Certificate to the borrower i.e. ATCOM. It can clearly be seen that even if the matter is permitted to go for trial, no fruitful purpose would be served, except burdening the criminal Courts which are already overburdened. 20. The present obtaining factual score has to be appreciated on the anvil of aforesaid authorities. On a studied scrutiny of the principles stated in Gain Singh(supra) it is limpid that the three- Judge Bench has ruled that proceeding in respect of heinous and serious offences and the offences under prevention of corruption Act and all other offences committed by public servants while working in that capacity are not to be quashed. That apart, the court has also emphasized on offences having a serious impact on society. It has been further laid down that criminal cases having overwhelmingly and predominantingly civil flavour stand on a different footing for the purposes of quashing, particularly the offences arising from commercial, financial, mercantile, civil partnership or such like transactions or the offences arising out of matrimony relating to dowry, etc. or the family disputes where the wrong is basically private or personal in nature. In Narendra Lal Jain (supra) the three-Judge Bench quashed the proceeding as the charges were famed Under Section 120/420 Indian Penal Code in respect of the private Respondents. In Gopakumar B. Nair's case the court distinguished the decision in Narendra Lal Jain (supra) and opined that the accused had also been charged for the commission of offence Under Section 471 of Indian Penal Code and on that basis declined to interfere with the order passed by the High Court which had refused to quash the criminal proceeding. 21. In the case at hand, as per the chargesheet the Respondents had got LCs issued from the bank in favour of fictitious companies propped up by them and the fictitious beneficiary companies had got letters of credits discounted by attaching their bogus bills. The names of 10 fictitious companies have been mentioned in the chargesheet. Thus, allegation of forgery is very much there. As is manifest from the impugned order, the learned Single Judge has not adverted to the same. It is not a simple case where an accused has borrowed money from the bank and diverted it somewhere else and, thereafter, paid the amount. It does not fresco a situation where there is dealing between a private financial institution and an accused, and after initiation of the criminal proceedings he pays the sum and gets the controversy settled. The expose' of facts tells a different story. As submitted by the learned Counsel for CBI the manner in which the letters of credits were issued and the funds were siphoned has a foundation in criminal law. Learned Counsel would submit that it does not depict a case which has overwhelmingly and predominantingly civil flavour. The intrinsic character is different. Emphasis is laid on the creation of fictitious companies.” 19. In CBI v. Narendra Lal Jain[3], 3-Judges Bench of the Hon’ble Supreme Court at paras 13 and 14 held as under: “13. In the present case, as already seen, the offence with which the accused-Respondents had been charged are under Section 120B/420 of the Indian Penal Code. The civil liability of the Respondents to pay the amount to the bank has already been settled amicably. The terms of such settlement have been extracted above. No subsisting grievance of the bank in this regard has been brought to the notice of the Court. While the offence under Section 420 Indian Penal Code is compoundable the offence under Section 120B is not. To the latter offence the ratio laid down in B.S. Joshi (supra) and Nikhil Merchant (supra) would apply if the facts of the given case would so justify. The observation in Gian Singh (supra) (para 61) will not be attracted in the present case in view of the offences alleged i.e. under Sections 420/120B Indian Penal Code. 14. In the present case, having regard to the fact that the liability to make good the monetary loss suffered by the bank had been mutually settled between the parties and the accused had accepted the liability in this regard, the High Court had thought it fit to invoke its power under Section 482 Code of Criminal Procedure. We do not see how such exercise of power can be faulted or held to be erroneous. Section 482 of the Code inheres in the High Court the power to make such order as may be considered necessary to, inter alia, prevent the abuse of the process of law or to serve the ends of justice. While it will be wholly unnecessary to revert or refer to the settled position in law with regard to the contours of the power available under Section 482 Code of Criminal Procedure. It must be remembered that continuance of a criminal proceeding which is likely to become oppressive or may partake the character of a lame prosecution would be good ground to invoke the extraordinary power under Section 482 Code of Criminal Procedure.” 20. In Gopakumar B.Nair v. CBI[4], 3-Judges Bench of the Hon’ble Supreme Court at paras-13 and 14 held as under: “13. The decision in Gian Singh v. State of Punjab {(2012) 10 SCC 303} holding the decision rendered in Nikhil Merchant v. CBI {(2008) 9 SCC 677} and other cases to be correct is only an approval of the principle of law enunciated in the said decisions i.e. that a non-compoundable offence can also be quashed Under Section 482 Code of Criminal Procedure on the ground of a settlement between the offender and the victim. It is not an affirmation, for there can be none, that the facts in Nikhil Merchant (supra) justified/called for the due application of the aforesaid principle of law. Also, neither Nikhil Merchant (supra) nor Gian Singh (supra) can be understood to mean that in a case where charges are framed for commission of non-compoundable offences or for criminal conspiracy to commit offences under the PC Act, if the disputes between the parties are settled by payment of the amounts due, the criminal proceedings should invariably be quashed. What really follows from the decision in Gian Singh (supra) is that though quashing a non-compoundable offence Under Section 482 Code of Criminal Procedure, following a settlement between the parties, would not amount to circumvention of the provisions of Section 320 of the Code the exercise of the power Under Section 482 will always depend on the facts of each case. Furthermore, in the exercise of such power, the note of caution sounded in Gian Singh (supra) (para 61) must be kept in mind. This, in our view, is the correct ratio of the decision in Gian Singh (supra). 14. The aforesaid principle of law may now be applied to the facts of the present case. At the very outset a detailed narration of the charges against the accused-Appellant has been made. The Appellant has been charged with the offence of criminal conspiracy to commit the offence Under Section 13(1)(d). He is also substantively charged Under Section 420 (compoundable with the leave of the Court) and Section 471 (non-compoundable). A careful consideration of the facts of the case would indicate that unlike in Nikhil Merchant (supra) no conclusion can be reached that the substratum of the charges against the accused-Appellant in the present case is one of cheating nor are the facts similar to those in CBI v. Narendra Lal Jain {(2014) 5 SCC 364} where the accused was charged Under Section 120B read with Section 420 Indian Penal Code only. The offences are certainly more serious; they are not private in nature. The charge of conspiracy is to commit offences under the Prevention of Corruption Act. The accused has also been charged for commission of the substantive offence Under Section 471 Indian Penal Code. Though the amounts due have been paid the same is under a private settlement between the parties unlike in Nikhil Merchant (supra) and Narendra Lal Jain (supra) where the compromise was a part of the decree of the Court. There is no acknowledgement on the part of the bank of the exoneration of the criminal liability of the accused- Appellant unlike the terms of compromise decree in the aforesaid two cases. In the totality of the facts stated above, if the High Court has taken the view that the exclusion spelt out in Gian Singh (supra) (para 61) applies to the present case and on that basis had come to the conclusion that the power Under Section 482 Code of Criminal Procedure should not be exercised to quash the criminal case against the accused, we cannot find any justification to interfere with the said decision.” 21. In CBI v Jagjit Singh[5] the Hon’ble Supreme Court made the following observations at paras-13, 14, 15 and 16: “13. The very same issue fell for consideration recently before a three-Judge Bench of this Court in Gian Singh v. State of Punjab and Anr.: 2012 (10) SCC 303. In the said case, this Court discussed the relative scope of inherent power of the High Court under Section 482 Code of Criminal Procedure to quash criminal proceedings involving non-compoundable offences in view of compromise arrived at between the parties. That was a case wherein when the special leave petition came up for hearing, a two-Judge Bench vide order reported in Gian Singh v. State of Punjab and Anr.: (2010) 15 SCC 118 doubted the correctness of the decisions of this Court in B.S. Joshi and Ors. v. State of Haryana and Anr.: (2003) 4 SCC 675,Nikhil Merchant v. Central Bureau of Investigation and Anr.: 2008 (9) SCC 677 and Manoj Sharma v. State and Ors: (2008) 16 SCC 1 and referred the matter to a larger Bench. Hence, the question before the Bench was with regard to the inherent power of the High Court under Section 482 Code of Criminal Procedure in quashing the criminal proceedings against an offender who has settled his dispute with the victim of the crime but the crime in which he was allegedly involved was not compoundable under Section 320 Code of Criminal Procedure. Discussing different provisions and taking into consideration the different decisions of this Court, the larger Bench in Gian Singh (supra) held as follows: 61. The position that emerges from the above discussion can be summarised thus: the power of the High Court in quashing a criminal proceeding or FIR or complaint in exercise of its inherent jurisdiction is distinct and different from the power given to a criminal court for compounding the offences under Section 320 of the Code. Inherent power is of wide plenitude with no statutory limitation but it has to be exercised in accord with the guideline engrafted in such power viz.: (i) to secure the ends of justice, or (ii) to prevent abuse of the process of any court. In what cases power to quash the criminal proceeding or complaint or FIR may be exercised where the offender and the victim have settled their dispute would depend on the facts and circumstances of each case and no category can be prescribed. However, before exercise of such power, the High Court must have due regard to the nature and gravity of the crime. Heinous and serious offences of mental depravity or offences like murder, rape, dacoity, etc. cannot be fittingly quashed even though the victim or victim's family and the offender have settled the dispute. Such offences are not private in nature and have a serious impact on society. Similarly, any compromise between the victim and the offender in relation to the offences under special statutes like the Prevention of Corruption Act or the offences committed by public servants while working in that capacity, etc.; cannot