Crl. M.C. 1139-2009 Page 1 of 19 * THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Reserved on: 20.07.2009 Judgment delivered on: 09.10.2009 Crl. M.C. 1139/2009 TILAK RAJ BEDI ..... Petitioner vs STATE THRU. CBI & ANR. ..... Respondent Advocates who appeared in this case: For the Petitioner : Mr Sunil Dalal, Mr Deepak Sharma, Ms Rakhi Singhal, Mr Ashish Sharma & Mr Akshay, Advocates. For the Respondent : Mr Harish Gulati & Mr Anindya Malhotra, Advocates. CORAM :- HON'BLE MR JUSTICE RAJIV SHAKDHER 1. Whether the Reporters of local papers may be allowed to see the judgment ? YES 2. To be referred to Reporters or not ? YES 3. Whether the judgment should be reported in the Digest ? YES RAJIV SHAKDHER, J 1. This is a petition filed under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the „Cr.P.C.‟) seeking to quash FIR No. RC3(E)/98/CBI/BS&FC/ND dated 10.08.1998 and the proceedings emanating therefrom, which are pending in the Court of Sh. V.K. Maheshwari, Spl. Judge, CBI. 1.1 It would perhaps be important to mention, at the very outset, that the petitioner/accused had come to this Court by way of a Criminal Revision Petition bearing No. 471/2004 against the order dated 29.10.2004 passed by the then Spl. Judge, CBI whereby charges were framed against the petitioner/accused. The revision petition was Crl. M.C. 1139-2009 Page 2 of 19 dismissed as withdrawn vide order dated 24.04.2006 passed by this Court. 1.2 Since then, charges have been framed against the petitioner/accused, i.e., Tilak Raj Bedi and, one Satish Kumar, the erstwhile manager of the Syndicate Bank, Mayur Vihar Branch, New Delhi (hereinafter referred to as the „Bank‟). Both the petitioner/accused as well as the other accused have been charged under Section 120B of the Indian Penal Code, 1860 (hereinafter referred to as the „IPC‟) read with Section 420 of the IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (hereinafter referred to as the „PC Act‟). In addition, the petitioner/accused has been charged for a substantive offence under Section 420 of the IPC, while the said Satish Kumar has been charged for the substantive offence under Section 13(2) read with Section 13(1)(d) of the PC Act. 2. The background circumstances in which the present petition has arisen, to the extent they are necessary for adjudication of the present petition, are set out hereinafter:- 2.1 The petitioner/accused, who at the relevant time was the authorized signatory of a current account of a concern by the name of Priya Textiles, and a proprietor of another concern by the name of Priya Exports, engaged in certain transactions with the Bank. 2.2 It is broadly alleged that the said Priya Textiles had its credit limits enhanced in October, 1994. For achieving this end, Satish Kumar demanded graft which was paid to him by the petitioner/accused. Resultantly, Satish Kumar made recommendations Crl. M.C. 1139-2009 Page 3 of 19 and obtained approvals by suppressing vital information pertaining to the account of Priya Textiles. It is also alleged that for the very same reason Satish Kumar deliberately ignored security norms mandated by the Export Finance Committee of the Bank, while approving the Packing Credit Loan (in short the „PCL‟) in favour of Priya Textiles. It is further alleged that in order to facilitate the aforesaid, Satish Kumar, who desired to purchase a maruti car, demanded a sum of Rs 10,000/-, which was paid by the petitioner/accused, in the manner detailed out hereinafter. It is also alleged that because of the following specific illegal and unauthorized acts committed by the petitioner/accused, the Bank was cheated of monies to the tune of Rs 1.80 crores. 3 First and foremost, it is alleged that on 19.01.1995, the initial sanction limit of loan of Rs 2.25 crores, which was obtaining in favour of Priya Textiles since 1992, was enhanced to Rs 3.17 crores primarily because Satish Kumar suppressed the irregularities in the account of Priya Textiles. 3.1 Second, one Meghna Garments Ltd, a Dhaka based company, opened a Letter of Credit dated 13.03.1995 for approximately Rs 25.50 lacs favouring Priya Exports. The Letter of Credit was issued by Arab-Bangladesh Bank Ltd, Dhaka (in short the „ABL‟). The petitioner/accused, who was, as indicated hereinabove, the proprietor of Priya Exports, unauthorizedly, without informing ABL, transferred the entire amount of the Letter of Credit in favour of Priya Textiles, in which the petitioner/accused was the authorized signatory. Satish Kumar, who was dealing with the account, permitted sanction of loans in favour of Priya Textiles after the date for negotiation of documents Crl. M.C. 1139-2009 Page 4 of 19 had expired. As per the Letter of Credit conditions, the last date for shipment was 30.03.1995, and the last date for negotiation of the bill was 14.04.1995. Against the export order of Meghna Garments ltd. Priya Textiles despatched two export consignments in March, 1995 to Meghna Garments Ltd. The Bangladeshi buyer, however, did not get them released. Consequently, the entire amount of PCL amounting to Rs 25.50 lacs, obtained by Priya Textiles, remained outstanding. 3.2 Third, there is an allegation with regard to exports made to APT Impex, Dhaka. The funds which were released to Priya Textiles were against six transactions of PCL. Out of these six, three were dealt by Satish Kumar. It is alleged that substantial part of the funds, which were released under the PCL, were diverted to the account of one Kalpana Bedi, wife of the petitioner/accused, in violation of the terms and conditions of the PCL. 3.4 Fourthly, it is also alleged, as indicated hereinabove, that Satish Kumar, who was desirous of purchasing a maruti car, approached one S.P. Bhai for a loan of Rs 10,000/-. The said S.P. Bhai politely declined to give the loan. However, the petitioner/accused told S.P. Bhai that Satish Kumar had approached him with a demand of Rs 10,000/-. S.P. Bhai also confirmed to the investigators that petitioner/accused had told him that he had paid Satish Kumar a sum of Rs 10,000/- after withdrawing the same from the Bank. Investigation also revealed that Satish Kumar allowed the petitioner/accused to unauthorizedly withdraw on 25.10.1994 a sum of Rs 25,000/- from account no. 3246 of Priya Textiles, when the balance in the said account was only Rs 1,005.70. Furthermore, Satish Kumar also permitted withdrawal of another sum of Rs 25,000/- Crl. M.C. 1139-2009 Page 5 of 19 from the current account no. 3335 of Priya Exports by the petitioner/accused, when the balance in that account was only Rs 153.50. None of the accounts enjoyed overdraft facilities. Investigation also revealed that on 25.10.1994, Satish Kumar had issued a cheque for withdrawing the sum of Rs 10,000/- from an overdraft account no. 594, which was subsequently cancelled. 3.5 The aforesaid allegations were investigated; whereupon the investigators filed a chargesheet, as referred to hereinabove, against petitioner/accused along with Satish Kumar in respect of the offences, mentioned above. As indicated hereinabove, the Spl. Judge, CBI, vide his order dated 29.10.2004 framed charges against the petitioner/accused as well as the said Satish Kumar. 3.6 It is pertinent to note that in the interregnum, that is, on 31.10.2002, in the suit filed by the Bank before the Debt Recovery Tribunal (in short the „DRT‟) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the petitioner/accused arrived at a settlement with the Bank. In accordance with the settlement, arrived at with the Bank, the petitioner/accused paid a sum of Rs 77,61,055/- in the form of one-time settlement towards fulfillment of all dues owed by the petitioner/accused to the Bank. As a matter of fact, by an order dated 31.01.2002, the DRT not only recorded the factum of settlement but also returned a finding that the original application filed by the Bank stood satisfied. Consequent thereto, directions were also issued by the DRT for return of original title deeds to the mortgagor by the mortgagee Bank. Crl. M.C. 1139-2009 Page 6 of 19 SUBMISSION OF COUNSELS 4. Based on the aforesaid the learned counsel for the petitioner/accused Mr Sunil Dalal submitted as follows: (i) The transaction between Priya Textiles, which acted through the medium of the petitioner/accused, was in sum and substance a civil dispute. The Bank had initiated the criminal proceeding against the petitioner/accused only to coerce the petitioner/accused to repay the amount. (ii) The petitioner/accused having arrived at a settlement with the Bank, no purpose would be served in continuing with the petitioner‟s/ accused criminal prosecution. For this purpose, the learned counsel for the petitioner/accused relied upon the judgments of the Supreme Court in following cases: B.S. Joshi & Ors. vs State of Haryana & Anr. JT 2003 (3) SC 277, Nikhil Merchant vs CBI & Anr. JT 2008 (9) SC 192 , Manoj Sharma vs State & Ors. JT 2008 (11) SC 674, Ananda Bezbaruah vs UOI; 1994 Cri. L.J. 12, M. Krishna Reddy vs State Deputy Superintendent of Police, Hyderabad; (1992) 4 SCC 45, Madan Mohan Abbot vs State of Punjab; AIR 2008 SC 1969, B.B. Aggarwal & Ors. Vs CBI; Crl. MC 5722-30/2006 & Crl. M.A. 9675/2006 dated 18.04.2009, Pawan Jaggi vs CBI & Ors. Crl. M.C. 3759/2008 & Crl. M.A. 14053/2008 dt. 09.04.2009, Harmanpreet Singh Ahluwalia vs State of Punjab; 2009 (7) SCALE 85 (iii) In support of his submissions, made above, the learned counsel drew my attention to the chargesheet, wherein in the second-last paragraph of the chargesheet it is stated as follows: “…..The allegation that M/s Priya Textiles used a forged export order purported to have been issued by M/s APT Impex, Dhaka, Bangladesh, could not be substantiated. The Crl. M.C. 1139-2009 Page 7 of 19 investigation did not reveal any criminality in any other loan transaction. However, it was revealed that M/s Priya Textiles had a liability of Rs 1.08 crores as on 10.08.1998…..” a) It was, therefore, the contention of the learned counsel for the petitioner/accused that there was, in sum and substance, no criminality that could have been attached to the transactions in issue, which are the subject matter of the chargesheet; and on the basis of which charges had been framed. Therefore, it was contended that the criminal proceeding, as prayed for, ought to be quashed. 5. As against this the learned counsel for the CBI, Mr Harish Gulati, instructed by Mr Anindya Malhotra, Advocate submitted as follows: (i) The prosecution has cited 21 witnesses out of which 14 have already been examined. The perusal of the evidence on record would show that the prosecution has a good chance for bringing home the conviction against the petitioner/accused. (ii) The judgments of the Supreme Court, cited by the petitioner/accused, were distinguishable on facts. The learned counsel submitted that for quashing the criminal proceedings, the power available to a court under Section 482 of the Cr.P.C., will necessarily be governed by the facts and circumstances obtaining in each case cited by the petitioner/accused. In the instant case, he submitted that the criminal conspiracy, which was entered into between the petitioner/accused and Satish Kumar, which led to the Bank being financially defrauded of Rs 1.08 crores, resulted in commission of the offences with which the petitioner/accused and Crl. M.C. 1139-2009 Page 8 of 19 Satish Kumar are charged. In order to buttress his submissions the learned counsel relied upon the following judgments: Rumi Dhar vs State of West Bengal 2009 (5) SCALE 471, Sushil Suri vs CBI; Crl. M.C. 3842/2008 dt. 21.05.2009, Rajiv Khanna vs State (CBI) & Ors Crl. M.C. 588/2009 dated 01.05.2009, CBI vs A. Ravishankar Prasad & Ors (2009) 6 SCC 351, State of M.P. vs Rameshwar & Ors JT 2009 (5) SC 171 6. Having heard the learned counsel for the parties, I am of the view that before dealing with the facts of the instant case it may perhaps be relevant to delineate the principles enunciated in the judgments of the Supreme Court and various High Courts. 6.1 The question which arose in the case of B.S. Joshi (supra) was whether in the absence of power under Section 320 of the Cr.P.C. for compounding of offences under Section 498A and 406 of the IPC the Court could quash the charges in exercise of its inherent power under Section 482 of the Cr.P.C. The Supreme Court came to the conclusion that the power to quash a criminal proceeding under Section 482 of the Cr.P.C. or under Article 226 of the Constitution of India in respect of offences which are not compoundable is not denuded by virtue of the provisions of Section 320 of the Cr.P.C. The Supreme Court in that regard noted as follows: “8. It is thus, clear that Madhu Limaye's case does not lay down any general proposition limiting power of quashing the criminal proceedings or FIR or complaint as vested in Section 482 of the Code or extra ordinary power under Article 226 of the Constitution of India. We are, therefore, of the view that if for the purpose of securing the ends of justice, quashing of FIR becomes necessary, Section 320 would not be a bar to the exercise of Crl. M.C. 1139-2009 Page 9 of 19 power of quashing. It is, however, a different matter depending upon the facts and circumstances of each case whether to exercise or not such a power. 9. The High Court has also relied upon the decision in case of Surendra Nath Mohanty's case (supra) for the proposition that offence declared to be non-compoundable cannot be compounded at all even with the permission of the Court. That is of course so. The offences which can be compounded are mentioned in Section 320. Those offences which are not mentioned therein cannot be permitted to be compounded. In Mohanty's case, the appellants were convicted by the trial court for offence under Section 307. The High Court altered the conviction of the appellants and convicted them for offence under Section 326 and imposed sentence of six months. The trial court had sentenced the appellants for a period of five years RI. The application for compounding was, however, dismissed by the High Court. This Court holding that the offence for which the appellants had been convicted was non-compoundable and, therefore, it could not be permitted to be compounded but considering that the parties had settled their dispute outside the court, the sentence was reduced to the period already undergone. It is, however, to be borne in mind that in the present case the appellants had not sought compounding of the offences. They had approached the Court seeking quashing of FIR under the circumstances above stated.” 6.2 In Nikhil Merchant (supra) the Division Bench of the Supreme Court followed the dicta laid down in the case of B.S. Joshi (supra). It is important to note that in the case of Nikhil Merchant (supra) the accused were charged under the provisions of Sections 120B/420/467/468/471A of the IPC read with Sections 5(2) and 5(1)(d) of the Prevention of Corruption Act, 1947 and Section 13(2) read with Section 13(1)(d) of the PC Act, 1988. The brief background facts were as follows: The appellant had been granted financial assistance by Andhra Bank. On default in repayment of loan, Andhra Bank filed a suit for recovery in 1992. Two years thereafter, i.e., on 19.09.1994 Andhra Bank lodged a complaint. The CBI after a period of four Crl. M.C. 1139-2009 Page 10 of 19 years, i.e., on 30.12.1998 filed a chargesheet against the accused. Notably, the Supreme Court in coming to the conclusion that the criminal proceeding against the accused merited being quashed considered the following submissions: made on behalf of the accused: the accused was only the Managing Director of the company which had procured the loan, and in sum and substance was not the direct beneficiary of the loan; Andhra Bank had not taken any action against employees who were allegedly involved in the illegal transactions; after the filing of the chargesheet on 30.12.1998, the CBI had taken no action in the matter and that, even charges have not been framed (it is only in 2006 that the proceeding came to be stayed by the Supreme Court upon a Special Leave Petition being filed by the accused); the matter had been compromised and in terms of clause (11) of the settlement arrived at between the accused and the Bank, wherein it was specifically stated that neither party, that is, the accused nor the Bank had any claim against the other, and that, they had withdrawn the allegations and counter allegations made by them against each other; and lastly, the dispute was in substance a civil dispute with criminal overtones. 6.3 It is in these background facts and circumstances that in paragraph 27 of the Judgment the Court, while noting that technically the State was right in its contentions made on its behalf that the criminal proceeding should not be quashed, nevertheless quashed the same keeping in perspective the aforementioned facts of the case. 6.4. In the case of Manoj Sharma (supra) once again the offences, with which the accused was charged, were also under Sections Crl. M.C. 1139-2009 Page 11 of 19 420/468/471/34/120B of the IPC. In this case the court proceeded to exercise its power under Section 482 of the Cr.P.C. in quashing the criminal proceedings keeping in perspective that the “dispute was essentially of a private nature”. 6.5. As against this, in the case of Rumi Dhar (supra) the Supreme Court rejected the plea of the accused to quash the criminal proceeding pending against them in exercise of its power under Section 482 of the Cr.P.C. Briefly the facts with which the court grappled were as follows: the accused and her husband alongwith the officers of Oriental Bank of Commerce had taken overdrafts without furnishing the requisite security. In order to recover the amount proceedings were filed before the DRT. In addition, criminal proceedings were also initiated. The proceedings filed before the DRT were settled, and in furtherance thereto, the accused paid to Oriental Bank of Commerce a sum of Rs 21.51 lacs. It transpires that the CBI had returned the title deeds which were given as security by the accused to the bank for the purposes of obtaining the loan. The accused moved an application under Section 239 of the Cr.P.C. for discharge, before the trial court on the following grounds: “…..i) That having regard to the settlement arrived at between her and the Bank no case for proceeding against her has been out. ii) That she having already paid Rs. 25.51 Lacs and the CBI having returned the title deeds which had been kept as security for the loan from the said bank, the criminal proceeding should be dropped relying on or on the basis of the said settlement. iii) That the dispute between the parties were purely civil in nature and that she had not fabricated any document or Crl. M.C. 1139-2009 Page 12 of 19 cheated the bank in anyway what so ever, charges could not have been framed against her….” 6.6 The trial court dismissed the application for discharge. Against which a revision application under Sections 401 and 402 of the Cr.P.C. was filed in the High Court of Calcutta. The single Judge of the High Court of Calcutta dismissed the revision application. Consequently, the matter travelled to the Supreme Court. The Supreme Court, while reaching its verdict, considered the ratio of its judgments both in the case of CBI vs Duncans Agro Industries Ltd. 1996 (5) SCC 591 as also that of Nikhil Merchant (supra). In arriving at its conclusion the Supreme Court made the following crucial observations, in paragraphs 16 to 19 at pages 474 to 479 of the judgment. The same being relevant are extracted hereinbelow: “……….16. Sub-section (1) of Section 320 of the Code specifies the offences which are compoundable in nature; Sub-section (2) providing for the offences which are compoundable with the permission of the court. 17. Appellant is said to have taken part in conspiracy in defrauding the bank. Serious charges of falsification of accounts and forgery of records have also been alleged. Although no charge against the appellant under the Prevention of Corruption Act has been framed, indisputably, the officers of the bank are facing the said charges. 18. It is now a well settled principle of law that in a given case, a civil proceeding and a criminal proceeding can proceed simultaneously. Bank is entitled to recover the amount of loan given to the debtor. If in connection with obtaining the said loan, criminal offences have been committed by the persons accused thereof including the officers of the bank, criminal proceedings would also indisputably be maintainable. When a settlement is arrived at by and between the creditor and the debtor, the offence Crl. M.C. 1139-2009 Page 13 of 19 committed as such does not come to an end. The judgment of a tribunal in a civil proceeding and that too when it is rendered on the basis of settlement entered into by and between the parties, would not be of much relevance in a criminal proceeding having regard to the provisions contained in Section 43 of the Indian Evidence Act. 19. The judgment in the civil proceedings will be admissibile in evidence only for a limited purpose. It is not a case where the parties have entered into a compromise in relation to the criminal charges. In fact, the offence alleged against the accused being an offence against the society and the allegations contained in the first information report having been investigated by the Central Bureau of Investigation, the bank could not have entered into any settlement at all. The CBI has not filed any application for withdrawal of the case. Not only a charge sheet has been filed, charges have also been framed. At the stage of framing charge, the appellant filed an application for discharge. One of the main accused is the husband of the appellant. The complicity of the accused persons was, thus, required to be taken into consideration for the purpose of determining the application for discharge upon taking a realistic view of the matter. While considering an application for discharge filed in terms of Section 239 of the Code, it was for the learned Judge to go into the details of the allegations made against each of the accused persons so as to form an opinion as to whether any case at all has been made out or not as a strong suspicion in regard thereto shall subserve the requirements of law.” 6.7 A careful perusal of the ratio of the judgment in Rumi Dhar (supra) would show that this was a case in which investigation were complete and chargesheet had been filed. It was at the stage of framing of charge that an application for discharge had been moved by the accused. Furthermore, the accused had not been charged with an offence under the PC Act, despite which the Supreme Court refused to interfere with the order of the Special Judge and that of the Single Judge of the High Court of Calcutta who had found that a prima facie case had been made out against the accused for the framing of a Crl. M.C. 1139-2009 Page 14 of 19 charge. The Supreme Court while preserving the power of the High Court to quash the criminal proceedings under Section 482 of the Cr.P.C. and that of the Supreme Court under Article 142 of the Constitution of India did not, in the facts of that case, deem it necessary to interfere with the orders of the High Court and quash the criminal proceedings against the accused. The ratio of this judgment has been reiterated by the Supreme Court in its recent judgment in the case of A. Ravishankar Prasad (supra). 7. I may also touch upon certain other judgments cited by the learned counsel for the petitioner/ accused apart from the ones referred hereinabove. 7.1 In the case of Ananda Bezbaruah (supra) the allegation against the accused