State Of Maharashtra Trhu Cbi vs Vikram Anantrai Doshi & Ors

The centripodal issue that strikingly emerges, commanding the judicial conscience to ponder and cogitate with reasonable yard-stick of precision, for consideration how far a superior court should proceed to analyse the factual score in exercise of its inherent jurisdiction bestowed upon it under Section 482 of the Code of Criminal Procedure or under Article 226 of the Constitution of India, to quash the criminal proceeding solely on the ground that the parties have entered into a settlement and, therefore, the continuance of the criminal proceeding would be an exercise in futility, or the substantial cause of justice warrants such quashment to make the parties free from unnecessary litigation with the assumed motto of not loading the system with unfruitful prosecution, of course with certain riders, one of which, as regards the cases pertaining to commercial litigations, appreciation of predominant nature of civil propensity involved in the lis or social impact in the backdrop of the facts of the case. The primary question that we have posed has a substantial supplementary issue; i.e. should the courts totally remain oblivious to the prism of fiscal purity and wholly brush aside the modus operandi maladroitly adopted, as alleged by the prosecution, on the part of industrial entrepreneurs or the borrowers on the foundation that money has been paid back to the public financial institutions. We think not, especially regard being had to the obtaining factual matrix in the case at hand.

2. Presently to the factual exposition. On the basis of a written complaint of chief vigilance officer, Bank of Baroda a case was registered against the respondents on 6.1.2006 and after completion of investigation a report was filed before the Special Court, CBI cases, Mumbai with a prayer to forward the chargesheet to the learned Magistrate who was competent to take cognizance of the offences as the involvement of R.C. Sharma, the concerned Bank Officer, a public servant, in the crime in question, could not be prima facie found during the investigation. As the facts would undrape, on 3.2.2006 upon perusal of the chargesheet the learned Special Judge, CBI cases directed to place the chargesheet before the appropriate court and accordingly a fresh chargesheet was filed before the ACMM, 19th Court, Esplanade, Mumbai vide criminal case no. 82/CPW/2006 for commission of offences punishable under Section 120-B, Section 406, 20, 467, 468 and 471 IPC against the accused persons.

4. As further alleged, the amount of loan sought was sanctioned on 24.01.2003 by one Mr. K.K. Aggarwal, General Manager and communicated to the branch. As per the terms and conditions of the said Term Loan, the primary security for the same was the first charge to be created on the fixed assets of the company ranking pari passu with the existing Term Lending Institutions. The primary charge for the cash credit and working capital demand loan was the hypothecation of current assets such as stocks, stocks in trade, raw materials and book debts, and, that apart, one of the important terms and conditions was that the CC, WCDL and Term Loan amounts were to be directly paid to the company’s account with the UTI Bank and Federal Bank so as to take over the liabilities as well as the securities mortgaged with the two banks. Despite the said situation, the Bank on 29.01.2003 intimated the sanction to ATCOM, the company in question. It is further demonstrable from the chargesheet that A-1 and A-2, with the intention to escape personal liabilities, made A-3 and one Mr. Chirag Gandhi directors in ATCOM and got all the loan documents including the Demand Promissory Note (DPN) signed by the said persons. The terms and conditions of the sanction was that the entire Working Capital of Rs.570.00 lakhs (Rs.114.00 lakhs + Rs.456.00 lakhs) and the Term Loan of Rs.360.00 lakhs were to be directly paid to the UTI Bank and Federal Bank. Consequently, the Term Loan was released and paid as per the sanction terms and conditions. As alleged, A-1 induced the Bank to release the sanctioned Working Capital Funds to the Current Account and from the said account money was dishonestly diverted to his own accounts with SBI and Dena Bank, to bring down the outstanding liabilities in those accounts. As per the Chargesheet, Rs.114.00 lakhs of Cash Credit (the Fund Based portion of Working Capital) and Rs.456.00 lakhs (the Demand Based portion of Working Capital) were released into the Current Account on 27.03.2003. Thus, the total funds released into the Current Account was Rs.560.00 lakhs out of which A-1 dishonestly transferred Rs.352.00 lakhs to SBI and about Rs.200.00 lakhs to Dena Bank, which amounted to diversion of concerned Bank’s funds dishonestly and caused wrongful loss to the said Bank.

6. The investigation further revealed that A-1 got letter of credits (hereinafter referred as “LCs”) issued from SBI and Dena Bank in favour of fictitious companies propped by the accused and used the said LCs to siphon the funds from these Banks. The LCs beneficiary firms, favoring whom the A-2 and A-3 had requested the LCs to be issued, were companies existing only on paper without any commercial activity. The said fictitious companies got the LCs discounted by attaching their bogus bills and portion of these discount proceeds were used for personal benefits of A-1 and a certain portion was routed back to ATCOM. On the due dates, ATCOM did not discharge its liabilities with SBI and Dena Bank. In the chargesheet, the particulars of the names of fictitious companies have been given. The said list covers 10 companies. It has been further mentioned in the chargesheet that the Proprietors/Directors of these fictitious companies had issued false bills under their signatures and discounted these false bills backed by the LCs, with the discounting Banks, at the instance of one Kanakranjan Jain. Some of these Proprietors/Directors are the employees and domestic servants of said Kanakrajan Jain.

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.

While exercising the power the High Court is to form an opinion on either of the aforesaid two objectives.

24. Ex consequenti, the appeal is allowed, and the order passed by the High Court is set aside and it is directed that the trial shall proceed in accordance with law. We may hasten to add that our observations in the present appeal are solely in the context of adjudicating the justifiability of order of quashing of the criminal proceeding and it would not have any bearing at the time of trial. And we so clarify.

September 19, 2014.