Case: State Of Maharashtra Trhu Cbi Vs. Vikram Anantrai Doshi

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.3. On a perusal of the charge sheet, it is evincible that there are allegations to the effect that Vikram Doshi, A 1, Vineet Doshi, A 2, and Sanjay J. Shah, A 3, made number of applications to the Bank of Baroda for sanction of various credit facilities, stating that they wanted to induct the said bank as a new consortium member to replace the existing members, namely, the UTI Bank and the Federal Bank. They requested the said Bank to sanction 15% of the total Working Capital facility sanctioned by the consortium of Banks, so that, that much amount could be transferred to the UTI bank and Federal Bank to take over the existing liabilities with the said two banks. It was revealed during investigation that the account of the company, with the consortium of banks as well as the finance institutions, was highly irregular and in the said condition the accused persons approached the Bank for sanction of loan. In the application to the Bank, the accused persons concealed the fact relating to the dues outstanding against them. Thereafter, when asked for the outstanding position with the existing consortium members, the accused persons willfully and with the criminal intent to mislead the Bank of Baroda, furnished wrong statements about the outstanding position by giving considerably lesser amount as outstanding than the actual.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 theaccount 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 concernedfunds dishonestly and caused wrongful loss to the said Bank.5. As is evident from the chargesheet the transfer of funds of CC and DL to the current account was with a dishonest intention to further divert the funds from the current account, and for transfer of the said funds of CC and WCDL. A-1 used the cheque leaf available with him for the Current Account and substituted out the wordsnd substituted them with. It has come out in the investigation that in order to further divert the funds from the Current Account, A-3 used to issueby obtainingCheque favouring their account with SBI and Dena Bank. It is also perceivable from the chargesheet that though the accused A-1 and A-3 knew that the said Working Capital was sanctioned only for the purpose of taking over the liabilities of UTI Bank and Federal Bank yet they dishonestly diverted the funds to SBI and Dena Bank. The sanctioned money, as alleged, was not used for the purpose it was availed of and the sanction terms and conditions were violated as a consequence of which the Bank could not get the charge in pari passu with the other consortium Banks. The said diversion of funds by A-1 and A-3 deprived the Bank of its security and the entire loan became unsecured.6. The investigation further revealed that A-1 got letter of credits (hereinafter referred asissued 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.7. After so stating the chargesheet proceeds asin two of these fictitious companies, viz., M/s Anew Electronics & M/s Covet Securities, Sh. Vikram Doshi (A-1) and Sh. Vineet Joshi, (A-2) were Directors for some period of time. These two companies were maintaining their accounts at United Western Bank. Sh. Vikaram Doshi (A-1) was also having his personal account in the same bank. From these two Accounts Sh. Vikram Doshi had received a sum of Rs. 1, 48,50,000/-. This amount was utilized by him towards purchase of residential flat. Thus it is clear that the accused persons under the garb of business requirements had obtained credit facilities from the bank but had utilized the funds for acquiring immovable property for personal use. In order to clear the liability generated because of such illegal acts, they had induced the Bank of Baroda to sanction the credit facilities, which facility was dishonestly used by them. The entire amount sanctioned and released by the Bank of Baroda is outstanding and nothing has been repaid. Because of the acts of the accused, the facilities sanctioned by the Bank of Baroda are rendered without any securities and the bank has thus suffered wrongful loss.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 ato 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 suchthe respondent preferred a petition under Section 482 of the Cr.P.C. 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 asthe 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 over-burdened.To arrive at the same conclusion the High Court relied on the decision in Madan Mohan Abbot v. State of Punjab [(2008) 4 SCC 582] and distinguished the pronouncement in A. Ravishanker Prasad (supra).

Court's reasoning:
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. Theof 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 predominatingly civil flavour. The intrinsic character is different. Emphasis is laid on the creation of fictitious companies.We are in respectful agreement with the aforesaid view. Be it stated, that availing of money from a nationalized bank in the manner, as alleged by the investigating agency, vividly exposits fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the chargesheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that whenever there is manipulation and cleverly conceived contrivance to avail of these kind of benefits it cannot be regarded as a case having overwhelmingly and predominantingly of civil character. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the nation. The cleverness which has been skillfully contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of offences which travel far ahead of personal or private wrong. It has the potentiality to usher in economic crisis. Its implications have its own seriousness, for it creates a concavity in the solemnity that is expected in financial transactions. It is not such a case where one can pay the amount and obtain aand enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Article 226 of the Constitution or under Section 482 of the Code and quash the proceeding. It is not legally permissible. The Court is expected to be on guard to these kinds of adroit moves. The High Court, we humbly remind, should have dealt with the matter keeping in mind that in these kind of litigations the accused when perceives a tiny gleam of success, readily invokes the inherent jurisdiction for quashing of the criminal proceeding. Theprincipal duty, at that juncture, should be to scan the entire facts to find out the thrust of allegations and the crux of the settlement. It is the experience of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinize the entire conspectus of facts in proper perspective and quashed the criminal proceeding. The said quashment neither helps to secure the ends of justice nor does it prevent the abuse of the process of the Court nor can it be also said that as there is a settlement no evidence will come on record and there will be remote chance of conviction. Such a finding in our view would be difficult to record. Be that as it may, the fact remains that the social interest would be on peril and the prosecuting agency, in these circumstances, cannot be treated as an alien to the whole case. Ergo, we have no other option but to hold that the order of the High Court is wholly indefensible.