JudicialCompetitionTimes.com
                                                             Let's Make Future Bright

India's Leading website for Online Coaching for Preparation of Judicial and Legal Exams                                                       
[Print]  [Back to Judgement ]
 
SUPREME COURT OF INDIA JUDGEMENTS
 
Corum-
 
Judgement Dated:20-Nov-2013  
-
-
 
Head Note: 20/11/2013: Held,"...not a fit case requiring interference in the excercise if inherent jurisdiction under section 482 cr.p.c."- Supreme Court.
 
Judgement:
                  
     IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION

                    CRIMINAL APEPAL NO.  1958     OF 2013
          (ARISING OUT OF SLP(CRL.)NO.7466 OF 2011)

      TAMIL NADU MERCANTILE BANK LTD.  ... APPELLANT
                            VS.
STATE THROUH DEPUTY SUPERINTENDENT
OF POLICE AND ANR.                   ... RESPONDENTS

                                    WITH

                    CRIMINAL APEPAL NO. 1959     OF 2013
          (ARISING OUT OF SLP(CRL.)NO.1501 OF 2010)
 

TAMIL NADU MERCANTILE BANK LTD.  ... APPELLANT

                        VS.
 
STATE AND ORS.                     ... RESPONDENTS
 
 
 
                               J U D G M E N T
 
SHIVA KIRTI SINGH, J

      Leave granted.
2.     By  the  common  judgment  and  order  dated   17.9.2009   in   CRLOP
No.12646/2007 and 18297/2009, the learned Single Judge of  the  Madras  High
Court has allowed two petitions both  under  Section  482  of  the  Code  of
Criminal Procedure (for  brevity.P.C.)  preferred  by  the  respondents  and
quashed criminal proceedings against some of the accused  in  Criminal  Case
No.  462 of 2004 pending  before  the  learned  Magistrate-II  Tiruppur  for
offences punishable under Sections 406, 409, 420 and 120(b) IPC.
3.    Before granting relief to the five petitioners  out  of  ten  accused,
the High Court noted the relevant facts in brief which disclose that out  of
ten accused in the charge-sheet dated 20th September 2004,  the  first  five
accused  are  Managing  Director/Managing   Partner/Director/Proprietor   of
different private limited companies,  partnership  firms/proprietary  firms.
Some of them are related to each other and some are family friends.  Accused
nos.  6 to 10 are Managers and  Officials  of  Tamil  Nadu  Mercantile  Bank
Limited (hereinafter referred  to  as  ‘Bank’),  Tiruppur  alleged  to  have
colluded with the respondents in  perpetration  of  a  fraud    against  the
bank.  They are not the parties before this Court.
4.    Considering the stage of the  proceedings,  it  is  not  necessary  or
desirable to go into the facts of  the  criminal  case  in  detail.   It  is
sufficient to notice that the respondents  accused  were  operating  current
accounts  with  the  bank  from  the  year  2000.  Allegedly  a  fraud   was
perpetrated by them in collusion with the Branch Manager  of  the  appellant
Bank and other accused during the period September, 2002 and  May,  2003  to
the tune of Rs.2.51 crores  approximately.   The  fraud  was  discovered  in
June, 2003 after the erstwhile Branch Manager  of  the  appellant  Bank  was
transferred and a new Branch Manager took over.  On  discovering  the  fraud
the new Branch Manager lodged  a  complaint  with  police  station,  Central
Crime Branch, Coimbatore leading to  First  Information  Report  dated  20th
June 2003 bearing Crime No.13 of 2003 against the  accused  respondents  and
concerned officers of the Bank.  According to  the  allegations,  the  fraud
was based upon a simple  modus  operandi.   The  accused  presented  cheques
drawn in their favour to the Tiruppur Branch  of  the  Bank  for  encashment
knowing well that there was not  enough  balance  in  the  accounts  of  the
drawers  because  the  cheques  were  drawn  by  parties  known   to   them.
Thereafter, the Branch Manager, in the garb of understanding or  arrangement
known as ‘Local Bill Discounting’  credited  the  accounts  of  the  accused
presenting such cheques before  they  were  sent  to  the  drawee  bank  for
clearance. Immediately  on  the  account  being  credited  with  the  cheque
amount, such amount  was  withdrawn.    Later,  when  the  cheques  returned
unhonoured on account of insufficient balance,  the  accused,  for  clearing
the debt used to deposit similar cheques for even higher  amounts.   Against
such cheques also the accounts of the  accused  were  credited  with  higher
amounts and the money used to be withdrawn.  Due to  repeat  of  such  trick
several times, by the time the fraud was discovered, the Trippur Branch  had
been defrauded to the tune of appoximately  Rs.2.51  crores.   According  to
the charge-sheet, accused Senthil Kumar presented 1278  cheques  during  the
period,  accused  Sanjay  presented  99   cheques,   accused   Murugananthan
presented 90 cheques, accused K.M.M. Murali presented 6 cheques and  accused
Mahamuni presented 3 cheques.
5.    On the basis of FIR, Police  initiated  investigation  and  ultimately
filed a charge-sheet on 20th September, 2004 against ten  persons  as  noted
earlier.  But prior to that, the accused respondent and some others filed  a
petition under Section 482 Cr.P.C. for quashing of the  FIR.  On  filing  of
reply by the informant that petition filed on 7.6.2004 was withdrawn.  After
the charge-sheet, on 18.10.2004 the accused  respondents  along  with  other
accused filed another petition under Section 482 Cr.P.C for quashing of  the
FIR.  That was  dismissed  on  9.2.2005  taking  note  of  the  charge-sheet
already submitted. That order was not challenged.   The concerned  petitions
which have been allowed by the High Court were filed in the  year  2007  and
2009 respectively seeking quashing of the entire  criminal  proceedings  but
without disclosing any fresh cause of action.  In the petition of 2007,  the
High  Court  initially  granted  interim  stay  but   the   appellant   bank
intervened, got impleaded and succeeded in vacation of  the  stay  order  on
13.9.2007.  Thereafter the appellant  filed  a  criminal  original  petition
No.28663 of 2007 seeking orders for expediting the  trial  of  the  criminal
case No.462 of 2004.  The High Court allowed that prayer on  20th  September
2007 and directed to complete the trial within four months.  This order  was
also not challenged by the accused respondents.
6.    A perusal of the judgment and order under appeal shows that  the  High
Court has been persuaded to  quash  the  criminal  proceedings  against  the
accused respondents mainly on the grounds that :
      (1) The dispute between the Bank and  the  accused  respondent  is  of
      civil nature,
      (2) Although some of the alleged fraudulent operations were  performed
      by the accused in the name of a company viz. Shri  Deepadharani  Yarns
      Pvt. Ltd., the company has not been arrayed as an accused while  three
      of its Directors are so arrayed, and
      (3)  The bank has a remedy for recovering the money  in  question  for
      which it has obtained an order of the DRT and can also  take  recourse
      to proceedings under Section 138 of the Negotiable Instruments Act  or
      civil proceedings.

7.  On behalf of the appellant all the three aforesaid grounds for  exercise
of inherent power under Section  482  of  the  Cr.P.C  have  been  seriously
assailed.  It has been contended by the learned counsel  for  the  appellant
that the practice of the bank to permit overdraft facility to credit  worthy
customers cannot be equated with simple civil contracts and  agreements.  In
the latter  case,  a  party  may  not  be  permitted  to  initiate  criminal
proceedings only on breach of terms of the agreement  by  the  other  party,
unless it can be shown  that  the  guilty  party  acted  with  dishonest  or
fraudulent intentions since the conception of  the  contract  or  agreement.
But in the former case, a customer of Bank committing fraud will stand on  a
different footing.
8.    The aforesaid submission has merits.   In  the  case  of  CBI  vs.  A.
Ravishanker Prasad & Ors.,[1]  the accused respondents  who  were  customers
of a nationalized bank sought to justify the fraudulent transactions on  the
basis of agreements evident from letter of  credit,  open  cash  credit  and
also on the ground  that  loan  had  been  repaid  under  a  settlement  and
therefore, criminal proceedings on account of forgery, cheating,  corruption
etc. should not be permitted.  This court set aside the order  of  the  High
Court interfering with a criminal  proceeding  and  reiterated  the  settled
propositions of law which permit exercise of inherent  power  under  Section
482 Cr.P.C. (i) to give effect to an order under the Code; (ii)  to  prevent
abuse of process of the Court and (iii) to  otherwise  secure  the  ends  of
justice.   It  was  reiterated  that  such  extraordinary  power  should  be
exercised sparingly and with great care and caution.
9.    This judgment also supports the other  submission  on  behalf  of  the
appellant that the High Court erred in interfering with criminal  proceeding
on the ground that bank could recover  the  loss  caused  by  fraud  through
orders of Debt Recovery  Tribunal  or  through  the  proceedings  under  the
Negotiable Instruments Act  or  civil  proceedings.   Even  if  the  accused
voluntarily at a later stage settles the  monetary  claim,  that  cannot  be
made a ground to quash the criminal proceedings unless the well  established
principles for exercise of power under Section 482 Cr.P.C. are made out.
10.   It is also a law settled by this Court and reiterated in the  case  of
Monica Kumar (Dr.) vs.  State  of  U.P.[2]  that  criminal  proceedings  can
continue even if the allegation discloses a  civil  dispute  also.    It  is
only when the dispute is purely civil in nature but still the party  chooses
to initiate criminal proceeding, the criminal  proceeding  may  be  quashed.
For such purpose also  the  Court,  save  and  accept  in  very  exceptional
circumstances would not look to any document relied upon by the defence.
11.   In reply, learned  counsel  for  the  respondent  accused  has  placed
reliance upon judgment of this Court in the case  of  Rajeshwar  Tiwari  vs.
Nanda Kishore Roy[3], wherein this Court quashed  the  criminal  proceedings
against the appellant which was initiated by private complainant  by  merely
alleging that acting on behalf of the employer the appellant had deducted  a
particular amount wrongly as income  tax  from  his  monthly  salary.   This
Court found that the employer  was  under  statutory  obligation  to  deduct
income tax and the allegation did not make out a case  for  adjudication  by
the Magistrate on criminal side. In paragraph 29  of  the  report  on  which
reliance has been placed, only the established law has been reiterated  that
when adequate materials are available to show that a proceeding is of  civil
nature or that it is an abuse of process of court, the High Court  could  be
justified in quashing the same.
12.   On going through the relevant facts, particularly the  charge-  sheet,
we find that it is not a case requiring interference in  exercise  of  power
under Section 482 Cr.P.C.   The proceedings cannot be termed as an abuse  of
the process of court because the allegations if  accepted  in  entirety  are
most likely to  make  out  criminal  offence  alleged  against  the  accused
respondents.  The interest of justice is also not attracted in  the  present
case to warrant interference with the criminal proceedings.
13.   In our considered view, the High Court ought to  have  taken  note  of
the fact that on two previous occasions the respondents accused   failed  to
get any relief under Section 482 Cr.P.C.  and  they  did  not  challenge  an
order passed by the High Court at the instance of  the  appellant  bank  for
concluding the trial within a limited time.
14.   For all the aforesaid reasons,  we  find  and  hold  that  the  common
judgment and order under appeal cannot be sustained in law and is fit to  be
set aside.  We order accordingly.
15.   Appeals are allowed with a direction  to  the  learned  Magistrate  to
conclude the trial  expeditiously  in  accordance  with  law  without  being
influenced by any observations made in this order.
20/11/2013.
 
                  
 
                  
 
[Print]