K.Sitaram & Anr vs Cfl Capital Financial Ser.Ltd.& Anr

2) Brief facts:

720 lakhs being working capital demand Loan. Due to non-payment of the loan amount, the account became Non-Performing Asset. In order to recover the amount against the borrower, the State Bank of Travancore filed OA No. 96 of 2003 before the Debts Recovery Tribunal (DRT), Mumbai. On 22.07.2005, the DRT passed a partial decree awarding a sum of Rs. 812.26 lakhs with 12 per cent interest.

(b) On 29.03.2006, the State Bank of Travancore assigned the debts due from the complainant-Company to the Kotak Mahindra Bank together with all the securities through an Assignment Deed. On 11.01.2007, the borrower-the respondent Company assigned to Kotak Mahindra Bank the debt due towards it from one Ravishankar Industries Pvt. Ltd. of more than Rs. 32 crores with an agreement that any excess recovery over and above Rs. 90 lakhs from Ravishankar Industries Pvt. Ltd. would be shared equally between the Kotak Mahindra Bank and the complainant-Company. It is pertinent to mention here that the fact of the alleged Assignment Deed came to the notice of the complainant-Company only on 17.01.2007 when the Kotak Mahindra Bank handed over a copy of the application for substituting themselves in place of State Bank of Travancore to the respondent-Company.

(d) On 16.05.2007, the complainant-respondent Company filed a complaint against the Kotak Mahindra Bank and its officers being No. 18/SW/07 before the Metropolitan Magistrate, Bandra, Mumbai under Sections 409, 418, read with 120-B of the Indian Penal Code, 1860 (in short ‘the IPC’). On 25.06.2007, the Additional Chief Metropolitan Magistrate, Bandra, Mumbai issued process against all the accused in the complaint dated 16.05.2007. The accused therein preferred Criminal Revision Applications being Nos. 1024-1026 of 2007 before the Court of Sessions for Greater Bombay. Learned Additional Sessions Judge, vide order dated 03/05.04.2008, allowed the revision applications while setting aside the order of issue of process dated 25.06.2007.

(e) A fresh complaint being No. 0800009/SW/08 was filed by the complainant-the respondent Company before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai under Sections 409, 418, 423 and 425 read with Section 120-B of the IPC against the State Bank of Travancore, Kotak Mahindra Bank Limited and its officers. The Metropolitan Magistrate, I/C ACMM, 8th Court, Esplanade, Mumbai, vide order dated 25.01.2008, issued process against the officers of the State Bank of Travancore and Kotak Mahindra Bank Limited. On 11.05.2008, learned Magistrate excluded the officers of the Kotak Mahindra Bank Limited in view of an application filed by the respondent-Company to withdraw the complaint against them.

Ltd. of more than Rs. 32 crores were assigned to the Kotak Mahindra Bank. Under the agreement, it was agreed that any amount received over and above Rs. 90 lakhs from the Company would be shared equally between the respondent–Company and Kotak Mahindra Bank. The Kotak Mahindra Bank withdrew the proceedings filed by the respondent–Company under Section 138 of the Negotiable Instruments Act against the Ravishankar Industries Pvt. Ltd and also settled an amount of Rs. 225 lakhs without giving any information to it as to the terms of settlement and the mode of payment. It is the allegation of the complainant that if the complainant was informed about the alleged Assignment Deed dated 29.03.2006, it would not have entered into the assignment agreement on 11.01.2007 with the Kotak Mahindra Bank. It is alleged that the suppression of facts and surreptitious execution of the deed of assignment dated 29.03.2006 was deliberately done with a dishonest intention to induce the complainant- Company and to make wrongful losses and to deceive it.

16) When a person files a complaint and supports it on oath, rendering himself liable to prosecution and imprisonment if it is false, he is entitled to be believed unless there is some apparent reason for disbelieving him; and he is entitled to have the persons, against whom he complains, brought before the court and tried. The only condition requisite for the issue of process is that the complainant’s deposition must show some sufficient ground for proceeding. Unless the Magistrate is satisfied that there is sufficient ground for proceeding with the complaint or sufficient material to justify the issue of process, he should not pass the order of issue of process. Where the complainant, who instituted the prosecution, has no personal knowledge of the allegations made in the complaint, the magistrate should satisfy himself upon proper materials that a case is made out for the issue of process. Though under the law, a wide discretion is given to magistrate with respect to grant or refusal of process, however, this discretion should be exercised with proper care and caution.

18) Under the above terms and conditions, when the Kotak Mahindra Bank was already in an agreement with the respondent-Company in order to safeguard its interest, the fact of the Assignment Deed between the State Bank of Travancore and the Kotal Mahindra Bank with regard to alleged rights of the State Bank of Travancore pertaining to the immovable properties allegedly mortgaged in its favour, must be communicated by the State Bank of Travancore to the respondent-Company. More so, the fact of such assignment deed must also be brought to the notice by the Kotak Mahindra Bank to the respondent-Company when it was responsible to provide necessary assistance to the respondent-Company.

22) In view of the above, we are of the considered opinion that there was suppression of facts by both the Banks and the State Bank of Travancore was duty bound to inform the respondent-Company about the Assignment dated 29.03.2006. As regards the appellants herein, appellant No.1 herein has claimed to have joined the State Bank of Travancore on 11.05.2006 i.e. subsequent to the assignment deed dated 29.03.2006 whereas appellant No.2 was the signatory to the said deed.

24) However, from the admitted position, it is evident that the complainant-respondent Company in its wisdom had withdrawn the complaint against the two persons, who were the officers of the Kotak Mahindra Bank Ltd. from a common complaint made against four persons. However, we do not find any reason as to why the remaining two persons, being the present appellants, who were the officers of the State Bank of Travancore at the relevant time, are being prosecuted. Hence, the complaint against the present appellants does not survive and in the interest of justice the same is liable to quashed and is accordingly quashed.

25) In view of the above discussion, the appeal succeeds and is allowed. However, there shall be no order as to costs.

MARCH 21, 2017.