[1] IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE JURISDICTION CRIMINAL APPLICATION NO.3225 OF 1997 CRIMINAL APPLICATION NO.3225 OF 1997 CRIMINAL APPLICATION NO.3225 OF 1997 1. Hemakute Industrial Investment 2. Sushil Ratanlal Moraka 3. Shyam Sundar Deviprasad Chhawchharia 4. Suresh Shriram Gupta 5. Hariram C. Poddar. 6. Rajendra P. Karundia ...Applicants. V/s 1. Central Bureau of Investigation 2. State of Maharashtra 3. UCO Bank (United Commercial Bank) ..Respondents. Mr.N.K. Thakore, Vivek Sharma with Mr. Prakash Naik for the applicants. Mr. R.F. Lambe for respondent No. 1 Mrs. M.M. Deshmukh,A.P.P. for State CORAM : S.C. DHARMADHIKARI, J. CORAM : S.C. DHARMADHIKARI, J. CORAM : S.C. DHARMADHIKARI, J. DATE : 1ST SEPTEMBER, 2006. DATE : 1ST SEPTEMBER, 2006. DATE : 1ST SEPTEMBER, 2006. ORAL JUDGMENT ORAL JUDGMENT ORAL JUDGMENT . By this application/petition under section 482 and 401 of Code of Criminal Procedure, the petitioners who are original accused 4 to 9 have challenged the order passed by the learned Special Judge, in Special Case No. 42/1994 framing charges against the applicants. In other words, the prayer is that the order dated 14th August 1997 be set aside and the proceedings in the Special Case be quashed. Prayer clause (a) of the present application reads thus:- [2] "That the order dated 14th August, 1997 passed in Special Case No. 42 of 1994 by the learned Sessions Judge, framing charges be set aside and the charges framed and mentioned in Exhibit B hereto be set aside and the Petitioners be discharged and acquitted in Special Case No. 42 of 1994." 2. This Court admitted this application on 26th February, 1998 and proceeded to stay further proceedings in the above special case. 3. When this application was placed before me for hearing and final disposal, Mr. Lambay appearing for the first respondent, submits that this application is not maintainable. He submits that the order dated 14th August, 1997 is passed on an application for discharge made by the present applicants. Upon rejection of the said application and refusing to discharge the applicants, the Special Judge proceeded to frame the charges. 4. In his submission, once the charges are framed then this Court cannot consider the plea of the applicants for discharging them. There only remedy is now to raise contentions as raised in the present application before the Special Judge during the course [3] of trial. On that basis, they can plead for acquittal from the Special Case but now the stage of discharge is no longer available, once the charges are framed. He submits that the power under Section 401 of Cr.P.C., in this case, to set aside an order refusing to discharge applicants cannot now be passed, once the charges are framed. He also submitted that Section 482 of Cr.P.C. cannot also be invoked by the applicants, once the request is not to quash the process issued or any order passed in that behalf. Thus, the application cannot be proceeded further. Even if it is admitted, it must be dismissed as the application is infructuous, once the charges are framed. 5. He relies upon the judgment of Hon’ble Supreme Court in (1979) 2 SCC, 179 (1979) 2 SCC, 179 (1979) 2 SCC, 179 (Ratilal Bhanji Mithani V. State of Maharashtra and others) . 6. On the other hand, Mr. Thakore appearing for the applicants, submits that firstly, the applicants are challenging not just the order passed on the discharge application but also the charges framed and order framing the same. This Court’s powers under Section 401 and 482 of Cr.P.C. have been invoked by the applicants [4] in this case. The powers under section 482 of the Code have to be exercised sparingly but they are wide enough to take care of any such situation. In fact, this Court can exercise the powers to quash the proceeding in the Special Case itself, if it is satisfied that it is so necessary to do. The said powers cannot be limited or restricted in any manner and much less in the manner suggested by Shri Lambay. 7. Secondly, Mr. Thakore submitted that the petition was admitted by this Court, the charges have been framed prior to the Court admitting this petition. Since both the proceedings as also the orders refusing to discharge the applicants and framing charges are sought to be quashed, this Court admitted the petition and now it is too late in the day to contend that the petition is not maintainable. 8. After perusing the application, as also the orders under challenge and the relevant provisions of the Code of Criminal Procedure, I am of the view, that there is no substance in the objections raised by Mr. Lambay. This Court had admitted the application. It is now placed for hearing and final disposal. While it may [5] be true that such an objection could be raised even at this stage but in the facts and circumstances of the instant case, when this Court’s power to quash both orders refusing to discharge the applicants and the order framing charges coupled with the proceeding in Special Case, itself has been invoked, the Court proceeded to grant Rule and issued interim order staying further proceeding before the trial Court in Special Case No. 42/1994, then, this objection does not hold good. Therefore, no useful purpose will be served if after a period of 9 years, I refuse to go into the merits of the matter. Apart from this, that would cause grave injustice to the applicants, whose application has been admitted and kept pending all this time. Further, as rightly pointed out by Shri Thakore the Judgment of the Hon’ble Supreme Court would apply to a situation where the Magistrate was exercising his powers of discharge. The Supreme Court in the paragraph relied upon by Shri Lambay has distinguished the concept of "discharge" and "acquittal". Distinction is made by the Hon’ble Supreme Court in the context of powers of Magistrate conferred by Cr.P.C. to discharge the accused. Once the charges are framed in a warrant case, instituted either on a complaint or police report, the [6] Magistrate has no power under Cr.P.C. to discharge the accused. The only course open is to acquit or convict them, unless the Magistrate resorts to the provisions set out in para 29 of the Supreme Court decision. In the case before the Supreme Court, after framing charges the Magistrate had proceeded to discharge the accused. That is without holding a trial. Such a discharge has been equated with an acquittal and which without trial could not have been justified. The Supreme Court’s decision must therefore be read and understood in that factual context. 9. The Hon’ble Supreme Court in this case has not discussed ambit and scope of the powers conferred by Section 482 of Cr.P.C. Mr. Lambay does not dispute that this Court can exercise the said powers to secure the ends of justice. The decision relied upon by Shri Lambay, thus does not assist him. The objection raised by him is overruled. 10. Mr. Thakore appearing for the applicants-petitioners, contended that the petitioner No.5 is dead and therefore, the application cannot survive, as far as he is concerned. He has pointed out [7] to me that the Special Case is instituted on the basis that the petitioner No.1 was sanctioned certain facilities by UCO Bank, a Nationalised Bank. These credit facilities are on purchase of bills. The allegation is that the Bank Officials had no authority to grant the facility. The limits of their powers to sanction such facilities were circumscribed and they have exceeded the same. Similarly, the facility was extended on bogus bills. The allegation is that the petitioner No.1 Company and the Bank Officials entered into a criminal conspiracy and submitted bogus lorry receipt of M/s Gwalior Transport Corporation. They were shown to the Manager of this Corporation and in his statement he has stated that consignment/goods of the petitioner company were never booked by the said transport corporation. Thus, the charge is that by filing false and fictitious documents the credit facility is sanctioned to the company. The accused have cheated UCO Bank to the tune of Rs. 44,85,000 approximately. They have caused wrongful loss to the bank in the process of gaining wrongfully. This is the substance of the charges. 11. According to Shri Thakore in the application for [8] discharge, it was pointed out at Exhs. D1,D2 and D3, being the annexures to the application for discharge, that consent terms arrived at in Suit No. 1598/1992 would demonstrate that the lorry receipts and invoices submitted were not bogus and fictitious as alleged. In suit No. 1598/1992 filed by UCO Bank against the petitioner no.1 company and some of the applicants the bank has relied upon these very lorry receipts and other documents. Not only that, in pursuance of the suit and in an application for interim relief at the instance of the UCO bank, Court Receiver was appointed by this Court. The Court Receiver took all these documents into his custody and on the strength of the same, he issued sale notice in respect of the goods covered by the lorry receipts and invoices. The goods have been sold and third parties have purchased the same. Thus, if the Court Receiver has been appointed by this court on the basis that the lorry receipts and invoices, constitute a title in the goods in favour of the UCO Bank, as also the petitioner No.1 company, then, there is no substance in the contention that the documents are fictitious and bogus. In other words, Mr. Thakore submits that the Court receiver could not have been appointed, had these documents not been genuine. Once the lorry receipts and [9] invoices were found to be genuine by this court the Court Receiver was appointed. Therefore, the foundation of the allegations, levelled against the petitioner at the instance of the UCO Bank-original complainant does not survive. No charge could have been framed by the Special Judge in such circumstances. In such circumstances, the application deserves to be allowed. The learned Judge was in patent error in framing the charges. Even otherwise, this is a fit case, where this Court exercises its inherent powers, in as much the entire basis of the complaint is wiped out in the light of the averments made in the plaint. A competent Civil Court has found prima facie substance in the averments made in the plaint. The Bank cannot in one breath rely upon the documents and at the same time allege that they are bogus. If they can be made a basis of civil claim, then documents cannot be said to be fictitious and bogus. In any event, in his submission entire dispute is of civil nature. The bank has relied upon the fact that the facility as sanctioned, could not have been either sanctioned or if sanctioned availed of by petitioners herein. The Bank has proceeded and filed the civil suit. In the civil suit consent terms have been filed. A copy of the same is also annexed. In [10] these circumstances, this is a fit case for this Court to exercise its inherent jurisdiction and proceed to quash the criminal case. 12. Mr. Lambay on the other hand submits that the Special Case instituted by CBI on the basis of the complaint of UCO Bank Prima facie discloses the commission of offence which are serious in nature and punishable under sections 420, 468,471 of I.P.C. This is not the stage to go into the merits and demerits of the case. Once the learned Judge has found a prima facie case and on that basis framed charges, then it is not for this Court to go into the same and hold that the complainant would not ultimately succeed. A prima facie case of the documents being fictitious and bogus being made out, mere pendancy or disposal of the civil suit cannot be a bar for continuation of the proceeding before the Special Judge. In such circumstances, this Court should decline to exercise its inherent powers and proceed to dismiss the petition. 13. At the outset, it must be mentioned that when this petition was placed before this Court on 7th March, 2006 this Court directed that notice be issued to UCO [11] Bank-original complainant. The Petition was permitted to be amended by adding UCO Bank as respondent No.2. I am informed that notice is served but none appears for the Bank. Be that as it may, with the assistance of Counsel for parties, I have perused the petition, the annexures thereto and the affidavit-in-reply. 14. The learned Judge while considering the pleas raised by the applicants/petitioners for discharge has observed that the accused Nos. 1 to 3 before her were Officers of UCO Bank of Main Branch, the present petitioners are accused Nos. 4 to 9 private parties. According to the learned Judge, the criminal conspiracy inter-alia is submission of forged and fictitious documents in the matter of credit facility sanctioned to the firm of accused No.4. The learned Judge in her order, at page 22 of the paper book, after she has summarised the allegations, observes that the proposal for the credit facility was required to be processed by accused No.3, scrutinised by accused No.2 and then put to accused No.1 for final sanction. Accused No. 1, the then AGM of Bank had sanctioned the credit facility. He received the relevant documents. The statement of P.W. 4 was shown to the learned Judge and she has observed on [12] the basis of the same that the documents were not endorsed either by the Director or any other authorised person of the company. The audited balance-sheet was submitted by the party at the time of application which was not certified by any Chartered Accountant or Auditor. Only the letters of the sister concern were given with the application. The letters attached to the balance-sheet were not signed by any one. Therefore, P.W. 4 states that UCO Bank discounted bills of sister concern of accused No.4 also without verifying the bills purchased by the Bank at the time of said discount. The observations of the learned Judge in the initial part of the order are pertaining to accused Nos.1 to 3. 15. In para 3 of her order the learned Judge has taken note of the submissions of the applicants. It is not as if the submissions of Shri Thakore canvassed before me are being so canvassed for the first time. The pendency of the suit, the order on the notice of motion therein, the appointment of Court Receiver and the fact that the Court receiver took custody of the goods were all before the Special Judge. She is aware of the fact that even an Appeal was filed against the interim order on the notice of motion wherein the [13] parties tendered minutes. Accepting each of the averments in the plaint as true, the petitioners submitted to a Decree on Admission. A decree was thus passed by consent in terms of the consent minutes of order. It is in these circumstances, that I have to scrutinise the correctness of the findings of the learned Judge, even at this prima facie stage. The transaction is entered into in 1989. In the opinion of the learned Judge the falsity of the documents or their bogus nature cannot, prima facie, be judged from the factum of filing of the suit much later in 1992. The learned Judge further observed that the offence was complete in 1989. She observed that minutes of order do not show compromise of the offence in this case and it is therefore, the role of each of the accused in criminal conspiracy and using forged documents needs to be seen and in her opinion prima facie case is made out. 16. In my view, the learned Judge has clearly overlooked the basic principle that civil proceedings in this case were based upon the same documents which were stated to be bogus and fictitious. The learned Judge out to have verified this fact from the plaint in the said suit as also the minutes of Decree on Admission and [14] subsequent sale by the Receiver. It is clear that the suit was filed against the petitioner No.1 company for recovery of sum of Rs. 67,81,874.94 which is the liability under credit facility, which was sanctioned in favour of the petitioner No.1. An application was made by way of Notice of Motion No. 1320/1992 for injunction, appointment of Court Receiver and for sale and realisation of the securities. This Court on the notice of motion passed an order on 29th April, 1992 appointing Court receiver of the hypothecated properties and conferred upon him the power to take possession and custody thereof and thereafter put the same for sale. These are moveable properties. The basis for appointment of Court Receiver in respect of these movables was the same documents, lorry receipts and invoices. When the petitioners before me challenged the interim order in Appeal before a Division Bench, the Division Bench not only took cognizance of the appeal but proceeded to decree the suit itself as the present petitioners submitted to a decree before it. The minutes of decree on admission shows that the order in terms thereof was passed in the presence of the parties. That is as per the normal procedure followed in this Court on its original side. The terms of the minutes [15] are at page 44 of the petition-paper book. Clause 2, 3 of the minutes read thus:- "The Defendants apply for instalments to pay the balance of the decretal amount and also apply for release of the goods covered by the lorry receipts. The Defendants further offer to secure the balance of the decretal amount by charging to the extent of Rs. 40,00,00 out of the book debts mentioned in the list annexed hereto as "A" as well as the boiler belonging to the Defendants and lying at Munirabad, district Raichur Karnataka." "Mr. Thakkar appearing for the Plaintiffs has opposed grant of instalments and has also opposed handing over of some of the goods covered by the lorry receipts. At this stage, Mr.Thakkar also states that all the lorry receipts are in the custody of the Central Bureau of investigation." 17. Thereafter, the Division Bench took note of the submission of the plaintiff bank at clause 4 of the minutes. A specific submission was made by the bank that all lorry receipts are in the custody of Central Bureau of Investigation. Despite this position, the Division Bench proceeded to pass the following order. " (a) Defendants are ordered and decreed to pay the balance of the decretal amount in six instalments, five monthly instalments of Rs. 8 lacs each and the sixth instalment for the balance amount. The 1st of such instalment to be paid on or before 5th August 1992 and subsequent instalments to be paid on or before the last day of each succeeding month thereafter. The Defendants undertake to this Hon’ble Court to pay the aforesaid decretal [16] amount on or before its due dates. It is clarified that if the instalment is paid within 15 days of its due dates it shall not be regarded as a default. The instalments shall be adjusted first towards costs and interest and then towards principle of MTLRs. (b) Court Receiver, High Court Bombay appointed Receiver of the goods as per the order dated 29th April, 1992 shall complete the inventory as per the said order forthwith . Court Receiver to make inventory of the boiler mentioned in clause "d". (c) The Defendants declare that the book debts mentioned in the list annexed as "A" are receivable by the 1st Defendants and are unencumbered. The Defendants undertake to this Hon’ble Court that they will not recover or realise the book debts more particularly set out in Annexure "A" hereto to the extent of Rs. 40 lacs in respect of which confirmation shall be obtained as mentioned herein till the entire decretal amounts are paid in full. The Defendants further undertake to this Hon’ble Court that they shall procure letters of confirmation from the said debtors to the extent of Rs.. 40 lacs on or before 5th August, 1992. (d) The defendants further undertake that till the decretal amounts paid in full to the Defendants, the Defendants shall not dispose of or alienate or encumber or create any third party interest in respect of the boiler situated at Munirabad, district Raichur Karnataka. The defendants declare that the said boiler is unencumbered and is the absolute property of the 1st Defendant. (e) The Defendants hereby charge the said book debts of Rs. 40 lacs from out of the book debts referred to in clause (c) above and boiler referred to in clause (d) above as security to pay the balance of the decretal dues. (f) Defendants are permitted to take delivery of the goods covered by following MTLRs. nos. 98, [17] 100 121, 122,125, 134, 164, 187, 213 221, 22, 236, 237 referred to in Exhibit "C" to the Plaint from the transporters directly on the Defendants further undertaking to this Hon’ble Court to bear and pay the demurrage and other charges of the said transporters. The Defendants shall also be permitted to take delivery of the goods covered by MTLRs. Nos. 116 and 120 not a part of the suit and referred to in Exhibit "C" to the plaint from the transporters directly on the Defendants undertaking to bear and pay the demurrage charges of the said transporters. (g) On the Defendants paying the instalments on its due dates as provided above the Defendants shall be permitted to take delivery of the goods covered by the MTLRs as per the statement annexed as "B" on the Defendants undertaking to this Hon’ble Court that the Defendants shall pay demurrage and other charges claimed by the Transporters. (h) Upon payment of the instalments mentioned in clause (a), hereinabove the security created in respect of the said book debts shall automatically stand reduced to the extent of 75% of the amount of instalment paid. The Defendants shall request the Plaintiffs to release the book debts. (i) In the event of the Defendants committing default in getting the letters of confirmation as provided above and in default of payment of any one instalment provided above, the entire decretal amount then due shall forthwith become due and payable and the plaintiffs shall be entitled to forthwith execute the decree. For that purpose leave under Rule 314 of the Bombay High Court (O.S.) Rules is hereby granted. (j) In the event of the decree becoming executable the Court Receiver, High Court, Bombay do stand appointed Receiver to take possession of the undelivered goods covered by the balance of the Lorry Receipts and sell the same and pay over the net sales proceeds to the [18] Plaintiffs and the excess if any to the Defendants. (k) Without prejudice to the Plaintiffs rights to have the said goods sold, Court Receiver do stand appointed Receiver of the book debts mentioned in Annexure "A" hereto as well as the Boiler referred to above with powers to sell and dispose off the same and pay over net sale proceeds on realisation after deducting his costs, charges and expenses to the plaintiffs in or towards the balance of the decretal amount. In the event of there being any surplus, Receiver to pay over the surplus to the Defendants. (l) The Court Receiver, High Court, Bombay do stand discharged after the decretal amounts are paid. The defendants undertake to this Court to bear and pay all costs, charges and expenses of the Court Receiver. (6) The Defendants have no objection if the Plaintiffs adjust the balance of current account of the defendants as on 3rd September, 1991 viz. Rs. 2275.74p towards the decretal claim herein. The current account thereupon shall stand closed. (7) 2/3rd of the return of the institution fees. (8) Court Receiver and