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Raj Kumar Gupta & Others v/s Union of India & Others


    CRM(M). Nos. 375 & 365 of 2020 & Crl. M. Nos. 1396, 1397, 1754, 1755, 1339, 1340 & 1734 of 2020 (Through Virtual Mode)

    Decided On, 29 June 2021

    At, High Court of Jammu and Kashmir

    By, THE HONOURABLE MR. JUSTICE SANJAY DHAR

    For the Petitioners: Vikram Rathore, Advocate. For the Respondents: Vishal Sharma, ASGI.



Judgment Text

1. CRM(M) No.375/2020:

(I) The petitioners, in this petition, have challenged FIR No.RC/DST/2019/A/0004 dated 26.08.2019 for offence under Section 420 read with Section 120-B RPC registered with Central Bureau of Investigation (CBI) as also the proceedings/investigation being conducted by the CBI pursuant to aforesaid FIR.

(II) The impugned FIR has been registered by respondent No.3-CBI on the basis of a complaint lodged by respondent No.4 - Bank of India, vide its complaint dated 9th of August, 2019. As per the said complaint, M/S Jhelum Industries and its Directors, petitioner No.1 and 2 along with other corporate guarantors and individual guarantors indulged in commission of acts of cheating, fraud, diversion/siphoning of funds.

(III) It is alleged that M/S Jhelum Industries had represented that it was managing projects of over Rs.100.00 crores and having business of approximately Rs.400.00 crore in pipeline but it earned a revenue of Rs.5.34 crore and Rs.11.18 crore against the estimates of Rs.117.78 crore and Rs.174.78 crore for the financial years 2012-13 and 2013-14 respectively. It is further alleged that the contracts obtained by M/S Jhelum Industries were as a sub-contractor from the main contractor and company's management/execution of the contracts was not up to the mark which eventually resulted in cancellation of high value Dhanbad Coal Extraction Contract and other contracts as well as revocation of bank guarantee of Rs.6.29 crore by two beneficiaries. The complainant goes on to allege that the company went out of order from September, 2014 due to non-servicing of interest and revocation of bank guarantee vis--vis low turnover in the cash credit account and despite repeated reminders and vigorous follow up, the conduct of the company remained unsatisfactory and ultimately the account was classified as NPA on 31.12.2014 with outstanding amount of Rs.36.50 crore plus bank guarantee of Rs.2.57 crore. It is alleged that the aforesaid company had opened current account with two other banks without permission of respondent No.4 and routed the transactions through these banks. Subsequently, the company again opened a CrlM Nos.1339, 1340 and 1734 of 2020 current account with Canara Bank routing the transactions through the said branch thereby avoiding recovery of bank interest deliberately.

(IV) As per the complaint, the petitioner No.3 had also extended guarantee to secure the limit availed by the company from the respondent No.4. The complaint gives the details of fraud which, are reproduced hereunder:

1. Funds were diverted from A/C No.791230110000017 of M/S JIPIPL to following groups accounts having credit facilities with Banks then MCB, Jammu, aggregating Rs.5.00 crore in CC A/C No.791230110000012 of M/S Jhelum Industries, Rs.3.75 crore in CC A/C No.791230110000013 of M/S I. D. Sood Ispat Pvt. Ltd. and Rs.2.70 crore in CC A/C No.791230110000016 of M/S New Jammu Flour Mills Pvt. Ltd. In the above manner, M/SD JIPIPL diverted Bank's funds for other than sanctioned purposes. For recovery of Bank's dues, the Bank has already filed suit in the borrowing account of M/S JIPIPL with court, Jammu & Kashmir, on 14.03.2016.

2. In the light of extant guidelines of RBI, the forensic audit was assigned to M/S Satya Prakash Mangal & Company and the forensic auditors submitted their report dated 06.09.2016 to the following:

a) On comparison of bank statement with Consolidated Financial Statement (CFS) count of the observed that in the month of March, 2014, share capital has increased to Rs.8.00 crore from Rs.50 lakhs but only Rs.4 crore was received in the bank account of the company and the remaining Rs.3.50 crore was not received in books. Further, a clarification was submitted by the borrower to Bank that Rs.3.50 crore towards share application money pending for allotment was shown under creditors in financial statement of FY 2012-13. However, noted that total trade payable shown in balance sheet was only Rs.0.20 crore. Further, it may be noted that total current facilities shown was only Rs.1.18 crore implying that the intention of borrower was malafide.

b) Borrower submitted two different sets of financial statements for FY 2013-2014 which were audited by same auditor Sunil Kumar Kharkia and firm M/S S. K. Kharkia & Associates, including all notes of accounts, Director Report, Auditor Report. The borrower intention indicated to cheat the Bank (Address of M/S S. K. Kharkia & Associates - Chartered Accountant, Membering No.075490, 217.2nd floor, Sri Ram Plaza, Bank More, PO & Distt. Dhanbad - 826001)

c) During verification of KYC, it was observed that Shri Raj Kumar Gupta was having two PAN Nos.AIQPG6268E & ACVPG6137D.

An explanation in this regard was submitted to bank that he never used PAN AIQPG6268E in any financial transaction. But both PANs were active as per Income tax website. Further, both PAN cards were simultaneously used by Shri Raj Kumar Gupta i.e. for account opening and in annual returns. However, return was filed for ACVPG6137D only. Thus, M/S JIPIL misrepresented their financial position to obtain loan and further dishonestly utilized the funds allocated to them for causing wrongful loss to the Bank.

(V) On the basis of forgoing allegations, the impugned FIR came to be registered and investigation of the case was set into motion.

2) CRM(M) No.365/2020:

(I) Through the medium of this petition, the petitioners have challenged FIR No.RC 0042019A0007 dated 06.11.2019 for offences under Section 409/420 read with Section 120-B RPC registered with CrlM Nos.1339, 1340 and 1734 of 2020 respondent No.2-Central Bureau of Investigation (CBI), and the proceedings/investigation emanating there-from. The impugned FIR has been registered on the basis of complaint dated 05.11.2019 lodged by respondent No.3-State Bank of India with respondent No.2.

(II) As per the complaint, M/S I. D. Sood Ispat Pvt. Ltd, of which petitioner No.1 happens to be the Managing Director, petitioner No.2 happens to be the Director and the petitioner No.3 is guarantor to the loan account advanced by the respondent No.3 to the said company, is alleged to have cheated the respondent Bank to the tune of Rs.18.10 crores (CC limit - 17.48 crore and term loan - 0.62 crore) plus interest during the period from 31.05.2013 to 28.05.2015 by availing the credit facilities, diverting the fund and willfully defaulted the repayment of the bank.

(III) As per the complaint, the Forensic audit of M/S Jhelum Infra Projects India Pvt. Ltd. which includes M/S I. D. Sood Ispat Pvt. Ltd. was conducted and the following findings were recorded:

?4. Forensic Audit: findings of forensic audit in the group account M/S JIPIPL are as follows:

a) On comparison of bank statement with CFS submitted observed that in the month of March 2014, share capital was increased to Rs.8 crore from Rs.50 lacs as per BS dt. 31.03.2014, but only Rs.4 crore has been received in bank account of the company, remaining Rs.3.5 crore not received in books. It is further noted that a clarification submitted by the borrower to bank that Rs.3.5 crore which is an amount of share application money pending for allotment shown under creditors in Financial statement of FY 2012-13. However, noted that total trade payable shown in Balance sheet is only for Rs.0.20 crore. Further it may be noted that total current liabilities shown is only Rs.1.18 crore. This implies the intention of borrower is malafide.

b) In forensic audit report it was bound that borrower has submitted two different sets of Financial statements for FY 2013-2014 audited & signed by the same auditor S. K. Kharkia & Associates including all notes of accounts, Director report, Auditors Report.

c) Further on KYC verification, it was observed that Mr. Raj Kumar Gupta is having two PAN cards AIQPG6268E & ACVPG6137D. An explanation in this regard was submitted to bank that he has never used PAN AIQPG6268E in any financial transaction but as per Income tax website both PAN cards were active. It was further noted that both PAN cards were simultaneously used by Mr. Raj Kumar Gupta.

(IV) The complainant further goes on to allege as under:

As per Bank's investigation report, Company has taken heavy cash withdrawals for Rs.5.00 lacs & above during the period from 24.08.2013 to 23.02.2015 (total aggregating Rs.118.80 lacs). On 07.06.2013, amount of Rs.1.00 crore was transferred from M/S I. D. Sood Ispat Pvt. Ltd. (A/C No.791230110000013) to M/S Jhelum Industries (A/C No.791230110000012), TDR of Rs.12.00 lacs in the name of M/S I.D. Sood Ispat Pvt. Ltd. was issued on 18.03.2014, In the same way Rs.75.50 lacs was transferred from M/S I. D. Sood Ispat Pvt. Ltd. to M/S Jhelum Industries on various dates. Therefore, it is ob served from the above facts that the acts of the company directors constitute cognizable offence under the provisions of law.

(V) On the basis of aforesaid allegations, the impugned FIR came to be registered and the investigation of the case was set into motion by respondent No.2

3) The petitioners have challenged the impugned FIRs and the investigation set into motion by CBI on the grounds that the CBI lacked jurisdiction to register FIR(s) pertaining to the alleged offences which were committed within the territorial jurisdiction of erstwhile State of Jammu and Kashmir. It is contended that no consent, in terms of Section 6 of Delhi Special Police Establishment Act, 1946 [?DSPE Act?for short], for investigation of the instant case has been given by the State government and, as such, the CBI could not have exercised its powers and jurisdiction for investigation of the instant case.

4. It is further contended that after coming into effect of the Jammu and Kashmir Reorganization Act, 2019, and extension of Central Laws to the Union Territory of Jammu and Kashmir, the petitioners could not be booked for offences under repealed laws which were applicable to the erstwhile State of Jammu and Kashmir.

5. On merits, it is contended that the transaction between petitioners and respondent Bank are purely civil in nature, inasmuch as the petitioners had obtained loan facility from the respondent Bank and the dispute is with regard to repayment of the amount of loan. In this regard it is contended that the loan account of the company went into default because of acts of omission and commission on the part of respondent Bank and there was no fraud or deception committed by the petitioners in this regard. According to the petitioners, there is material on record to show that negotiations between them and respondent Bank for settlement of loan amount have taken place from time to time and even onetime settlement of loan account was agreed upon by the parties, pursuant to which the company deposited an amount of Rs.11.78 crores with the respondent Bank.

6. On the basis of the above submissions, it is contended that the contents of impugned FIRs do not make out a criminal offence against the petitioners.

7. I have heard learned counsel for the parties and perused the material on record.

8. The first and foremost contention of the petitioners is that the CBI lacks jurisdiction to investigate the impugned FIRs on the ground that no consent in terms of Section 6 of the DSPE Act has been accorded by the erstwhile State of Jammu and Kashmir to the investigation of the instant cases.

9. The petitioners have relied upon certain note sheets of official files of the Home Department of erstwhile State of Jammu and Kashmir and the reply to the query of one Shri Mukesh Khurana under Right to Information Act given the Government of Jammu and Kashmir, wherein it has been stated that the consent under Section 6 of the DSPE Act is to be given on case to case basis. The petitioners have also relied upon the objections filed by the Government of Jammu and Kashmir to writ petition bearing OWP No.1126/2016, in CrlM Nos.1339, 1340 and 1734 of 2020 which the Government of Jammu and Kashmir has taken a similar stand.

10. For determining the merits of the contentions raised by learned counsel for the petitioners, it will be apt to notice the relevant provisions of DSPE Act. Sections 3, 5 and 6 of the Act are relevant to the context and the same are reproduced below:

3. Offences to be investigated by special police establishment.

--The Central Government may, by notification in the Official Gazette, specify the offences or classes of offences which are to be investigated by the Delhi Special Police Establishment.

5. Extension of powers and jurisdiction of special police establishment to other areas.—

(1) The Central Government may by order extend to any area (including Railway areas) in a State, not being a Union territory the powers and jurisdiction of members of the Delhi Special Police Establishment for the investigation of any offences or classes of offences specified in a notification under section 3.

(2) When by an order under sub-section (1) the powers and jurisdiction of members of the said police establishment are extended to any such area, a member thereof may, subject to any orders which the Central Government may make in this behalf, discharge the functions of a police officer in that area and shall, while so discharging such functions, be deemed to be a member of the police force of that area and be vested with the powers, functions and privileges and be subject to the liabilities of a police officer belonging to that police force.

(3) Where any such order under sub-section (1) is made relation to any area, then, without prejudice prejudice to the provisions of sub-section (2), any member of the Delhi Special Police Establishment of or above the rank of Sub-Inspector may, subject to any orders which the Central Government may make in this behalf, exercise the powers of the officer in charge of a police station in that area and when so exercising such powers, shall be deemed to be an officer in charge of a police station discharging the functions of such an officer within the limits of his station.

6. Consent of State Government to exercise of powers and jurisdiction.--Nothing contained in section 5 shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in a State, not being a Union territory or railway area, without the consent of the Government of that State.

11. The Supreme Court in the case of M. Balakrishna Reddy v. Director, Central Bureau of Investigation, New Delhi, (2008) 4 SCC 409, after noticing the aforesaid three provisions of DSPE Act, explained the conditions which are required to be fulfilled before the CBI exercises its power and jurisdiction to investigate a case in any State. Para 19 of the said judgment is relevant to the context and the same is reproduced as under:

19. Plain reading of the above provisions goes to show that for exercise of jurisdiction by the CBI in a State (other than Union Territory or Railway Area), consent of the State Government is necessary. In other words, before the provisions of the Delhi Act are invoked to exercise power and jurisdiction by Special Police Establishment in any State, the following conditions must be fulfilled;

(i) A notification must be issued by the Central Government specifying the offences to be investigated by Delhi Special Police Establishment (Section 3);

(ii) An order must be passed by the Central Government extending the powers and jurisdiction of Delhi Special Police Establishment to any State in respect of the offences specified under Section 3 (Section 5); and

(iii) Consent of the State Government must be obtained for the exercise of powers by Delhi Special Police Establishment in the State (Section 6).

12. From the aforesaid ratio laid down by the Supreme Court, it is clear that before the CBI, which is an agency constituted und DSPE Act in terms of Section 2 of the said Act, exercises its jurisdiction in a State, there must be a notification by the Central Government specifying the offences to be investigated by CBI. Another condition for invoking jurisdiction in a State is that there must be an order passed by the Central Government extending the powers and jurisdiction of CBI to any State in respect of offences specified under Section 3 and lastly there must be consent of the State Government for exercise of powers by CBI in the State.

13. Coming to the facts of the instant case, the petitioners have themselves placed on record a copy of the Notification No.25/33/60- AVD-II dated 01.04.1964, issued by the Central Government under Section 3 of the DSPE Act, where-under certain offences punishable under the provisions contained in the Jammu and Kashmir Ranbir Penal Code, 1989 including Section 409, 420 and the conspiracies in relation to these offences are included. The petitioners have also placed on record copy of order dated 1st of April, 1964, issued by the Government of India, Ministry of Home Affairs, in exercise of its powers under Section 5 of the DSPE Act, whereby power and jurisdiction of CBI has been extended to the erstwhile State of Jammu and Kashmir for investigation of offences specified in the Schedule thereto, which includes the offences which are subject matter of the instant petitions. A copy of the communication No.S-2533/57-PD dated 7th of May, 1958, addressed by Secretary, Government of Jammu and Kashmir to the Deputy Secretary to Government of India, Ministry of Home Affairs, has also been placed on record by the petitioners, according to which the Government of Jammu and Kashmir has accorded its consent to Delhi Special Police Establishment exercising powers and jurisdiction in the State of Jammu and Kashmir for investigation of certain offences including the offences which are subject matter of the instant petitions.

14. It is the contention of petitioners that the consent in terms of Section 6 of the DSPE Act by the State Government for extending jurisdiction of CBI to investigate the cases in the State of Jammu and Kashmir has to be on case to case basis and not a general consent. The petitioners have placed heavy reliance upon the contents of note sheets of Government file and reply to the RTI query of one Mukesh Khurana to advance their argument that the consent has to be on case to case basis.

15. There can be no dispute to the fact that the consent in terms of Section 6 of the DSPE Act by State Government can either be a general consent or on case to case basis but in the instant case we have on record copy of communication dated 7th of May, 1958, addressed by Secretary to Government of Jammu and Kashmir to the Deputy Secretary to Government of India, Ministry of Home Affairs, whereby a general consent with regard to exercising the powers and jurisdiction in the State of Jammu and Kashmir for investigation of certain offences, has been accorded. The petitioners have not placed on record any document to show that the said general consent accorded by the erstwhile State of Jammu and Kashmir has been withdrawn, revoked or modified at any point of time. That being the position, an answer to an RTI query based upon erroneous understanding of facts and law by some official in the Government Department would not nullify the general consent given by the Government of Jammu and Kashmir in the year 1958. For nullification of this general consent, there has to be a proper approval to this effect from the competent authority and its subsequent communication to the Government of India. The same is missing in the instant case.

16. The petitioners have also placed reliance upon communication dated 15.11.2012 addressed by CBI to Government of Jammu and Kashmir seeking permission to take up investigation in certain cases enumerated therein as also the notification dated 11th March, 2013, issued by the Government of Jammu and Kashmir in response to the aforesaid communication of CBI. Vide the aforesaid notification, the Government of Jammu and Kashmir has accorded consent for investigation of case FIR No.7/2010 of P/S Pir Mitha, case FIR No.3/2010 of P/S Gangyal and case FIR No.117/2011 of P/S Gangyal Jammu by the CBI. On the basis of these documents, it is contended that consent of the Government of J&K has to be on case to case basis.

17. A careful perusal of the above documents relied upon by the petitioners reveals that in the three instances regarding which the notification according permission to the CBI, to exercise its jurisdiction of investigation, the FIRs had been already registered by the State Police meaning thereby the investigation by the State Police was already in progress in all these three cases and by virtue of the notification dated 13th of March, 2013, the investigation of these cases was transferred to the CBI. It was in these circumstances that a specific notification according consent for investigation of the cases by CBI had to be issued by the State Government. The facts of the instant cases are quite different, as the same do not involve transfer of investigation from the State Police to the CBI. The cases at hand would very well be covered by the general consent accorded by the State Government in terms of communication dated 7th of May, 1958.

18. In the face of this factual position, the contention of petitioners' that in the absence of specific consent by the State Government to exercise of jurisdiction by CBI for investigation of instant cases, the aforesaid Investigating Agency lacks jurisdiction to take up the investigation of these cases, is without any merit and the same deserves to be rejected. Even otherwise, after the reorganization of erstwhile State of J&K and its bifurcation into two Union Territories, the question of accord of consent in terms of Section 6 of the DSPE Act becomes irrelevant.

19. The next contention raised by the petitioners is that after the repeal of Ranbir Penal Code by virtue of the Jammu and Kashmir Reorganization Act, 2019, the cases against the petitioners could not have been registered under the repealed laws.

20. So far as the FIR which is subject matter of CRM(M) No.375/2020 is concerned, the same has been registered prior to coming into effect of the Jammu and Kashmir Reorganization Act, 2019 and repeal of the Ranbir Penal Code and, as such, no difficulty is posed in this case in rejecting the contention of the petitioners.

21. So far as the FIR which is subject matter of CRM(M) No.365/2020 is concerned, the same has been registered on 6 th November, 2019, i.e. after the repeal of Ranbir Penal Code. However, the offences which are subject matter of the said FIR, admittedly, relate to a period when the Ranbir Penal Code was in operation. To determine as to under which laws the cases are required to be registered in relation to the offences that have taken place prior to repeal of the laws, we need to have a look at clauses 13 and 14 of the Jammu and Kashmir Reorganization (Removal Difficulties) Order, 2019. These Clauses read as under:

13. The Acts repealed in the manner provided in TABLE -3 of the Fifth Schedule, shall not affect--

(a) the previous operation of any law so repealed or anything duly done or suffered there under;

(b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed;

(c) any penalty, forfeiture or punishment incurred in respect of any offence committed against any law so repealed; or

(d) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed.

14. Anything done or any action taken including any appointment or delegation made, notification, instruction or direction issued, form, bye-law or Scheme framed, certificate obtained, permit or licence granted or registration effected or agreement executed under any law shall be deemed to have been done or taken under the corresponding provisions of the Central laws now extended and applicable to the Union Territory of Jammu and Kashmir and the Union Territory of Ladakh and shall continue to be in force accordingly, unless and until superseded by anything done or any action taken under the Central laws now extended.

22. From a perusal of the afore-quoted Clauses, it is clear that any legal proceeding for enforcing punishment relating to an offence which has been committed prior to coming into effect of the Jammu and Kashmir Reorganization Act, has to be conducted as if the said Act had not been passed, meaning thereby that an offence committed during the period when Ranbir Penal Code was in operation would be covered by the said Code and not by Indian Penal Code or in other words, the date of occurrence of an offence would be the governing factor for application of the laws.

23. The issue is no longer res integra. This Court in Sanjay Kumar Rai v. Union Territory Of J&K & Anr. has already dealt with this aspect of the matter and observed as under:

?At this stage, Mr Sunil Sethi, learned senior counsel, appearing on behalf of the appellant, submits that the sentence awarded by the Court below cannot be executed in view of the fact that no reference order has been made by the Court below in view of the mandate of the erstwhile State Criminal Procedure Code. It is submitted that since the date of occurrence of the proceedings in question happens to be prior to the passing of the Jammu & Kashmir Reorganization Act, 2019, therefore, the trial Court was obliged under law to deal with the case after taking recourse to the erstwhile State Criminal Procedure Code, but the learned trial Court, instead of doing so, has wrongly applied the Central Criminal Procedure Code to the facts and circumstances of the case on hand.

The submission of the learned senior counsel has all the substance as the right which has accrued to the Prosecution to investigate the crime which took place prior to the coming into force of the Central Criminal Procedure Code and which was covered by the erstwhile Act remained unaffected by reason of Clause (C) of Section 6 of the General Clauses Act, 1897 and the application of Clauses 13 and 14 of the Jammu and Kashmir Reorganization (Removal of Difficulties) Order, 2019. This view is fortified by the law rendered by Hon'ble the Supreme Court in case reported as '2012 8 SCC 669'.

In the above background, we are of the view that the trial Court has erred in law by applying the provisions of the Central Criminal Procedure Code to the facts and circumstances of the present case, when, in view of the date of occurrence of the crime, and with the application of Clause (C) of Section 6 of the General Clauses Act, 1897 and Clauses 13 and 14 of the Jammu and Kashmir Reorganization (Removal of Difficulties), Order, 2019, it was the erstwhile State Criminal Procedure Code which was to be made applicable to this case. In that context, we feel it necessary to clarify the position regarding this case, as well as all other cases/ proceedings where the date of occurrence/ institution is prior to the coming into force of the Jammu and Kashmir Reorganization Act, 2019, by observing that it is the repealed Act(s)/ Code(s) that shall be applied to all such cases, instead of the Act(s)/ Code(s) provided by the Jammu and Kashmir Reorganization Act, 2019.?

24. From the foregoing discussion it is clear that the investigating agency has rightly booked the petitioners in offences under Ranbir Penal Code as the same relate to a period when the said Code was in operation. The contention of petitioners in this regard is liable to be rejected.

25. On merits, the petitioners vehemently contend that the transaction between them and the respondent bank was purely of civil nature, inasmuch as it related to advancement of loan and repayment thereof. It has been contended that civil proceedings between the parties in this regard are already pending and even negotiations regarding settlement have also taken place between the parties from time to time.

26. On the other hand, learned counsel for the respondents have vehemently argued that the conduct of the petitioners has remained deceitful and fraudulent right from the inception and, therefore, they CrlM Nos.1339, 1340 and 1734 of 2020 are not only accountable under civil law but they are also criminally liable.

27. In order to test the merits of these contentions, the legal position on the subject needs to be noticed and appreciated.

28. In order to attract the ingredients of Section 420 read with Section 415 RPC, there must be a fraudulent or dishonest inducement on the part of a person and thereby the other party must have parted with his property. To establish an offence under Section 420 RPC, it must be shown that there was a fraudulent and dishonest intention at the time of commission of the offence and that the person practising deceit had obtained the property by fraudulent inducement and willful representation. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction i.e. at the time when the offence is alleged to have been committed.

3. The Supreme Court in the case of Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168, has observed that it is the intention which is the gist of the offence and in order to hold a person guilty of cheating, it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise.

4. Again in Alpic Finance Ltd vs P. Sadasivan And Anr, (2001) 3 SCC 513, the Supreme Court held that =an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception'. Thus, it is necessary to show that a person had fraudulent or dishonest intention at the time of making of promise, to say that he committed an act of cheating.

5. ?Dishonestly?has been defined in Section 24 of RPC to mean deliberate intention to cause wrongful gain or wrongful loss and when, with such intention, deception is practised and delivery of property is induced, then the offence under Section 420 RPC can be said to have been committed.

6. In the face of aforesaid legal position, let us now advert to the facts alleged in the impugned FIRs. In both these FIRs, it has been alleged by complainant Bank that the companies belonging to petitioners had misrepresented their financial position to obtain loan and further dishonestly utilized the funds allocated to the companies thereby causing wrongful loss to the respondent Bank. The complaints contain the allegations that the loanee companies have diverted the bank's funds and there have been instances of heavy cash withdrawal by these companies. It is also alleged that loan amounts advanced by the complainant Bank have been used for the purposes which were not specified in the loan agreements. The companies represented by petitioners are also alleged to have given inflated figures with regard to sales, stocks etc. so as to induce the complainant Bank to advance loan(s) to these companies. There is also an allegation in the complaint that petitioner No.1 has used two PAN numbers in order to deceive the complainant Bank.

7. It is a settled law that where a complaint and the documents annexed thereto make out a, prima facie, case of cheating, it is not for the High Court to consider the version of the accused given out in their petition filed under Section 482 Cr. P. C vis--vis that of the complainant and enter into the debate area as to which of the versions is true. In the instant case, there are clear cut allegations in the complaint of the respondent Bank to show that intention of the petitioners from the very inception has been dishonest and deceitful, inasmuch as they are alleged to have made false representations to the respondent Bank in order to obtain loan. The facts narrated in the complaint may reveal a commercial or money transaction but that is hardly a reason for holding that the offence of cheating would elude such a transaction. In fact, many times a cheating is committed in the course of commercial transactions.

8. The Supreme Court has repeatedly and consistently gone on to hold that quashing of FIR or a complaint in exercise of the inherent powers of the High Court should be limited to very extreme exceptions and the High Court should not enter into arena of investigating agency so as to test the merits of rival contentions raised in a petition under Section 482 Cr. P. C.

9. The principles relating to exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by the Supreme Court in its several decisions. To mention a few- Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre [1988 (1) SCC 692], State of Haryana vs. Bhajanlal [1992 Supp (1) SCC 3

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35], Rupan Deol Bajaj vs. Kanwar Pal Singh Gill [1995 (6) SCC 194], Central Bureau of Investigation v. Duncans Agro Industries Ltd., [1996 (5) SCC 591], State of Bihar vs. Rajendra Agrawalla [1996 (8) SCC 164], Rajesh Bajaj v. State NCT of Delhi, [1999 (3) SCC 259], Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [2000 (3) SCC 269], Hridaya Ranjan Prasad Verma v. State of Bihar [2000 (4) SCC 168], M. Krishnan vs Vijay Kumar [2001 (8) SCC 645], and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [2005 (1) SCC 122]. The principles, relevant to our purpose, which have been culled out by the Supreme Court in M/S Indian Oil Corporation vs. M/S NEPC India Ltd. & Ors (2006) 6 SCC 736 are as under: (i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or CrlM Nos.1339, 1340 and 1734 of 2020 genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable. (iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution. (iv)The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v) A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. 10. From the foregoing enunciation of law on the subject, it is clear that the mere fact that complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available, is not by itself a ground to quash the criminal proceedings. In the instant case, as already noted hereinbefore, the allegations laid in the complaint made by the respondent Bank in both the cases make out a prima facie case of cheating against the petitioners and, as such, the instant cases are not fit for exercise of jurisdiction of this Court under Section 482 of Cr. P. C 11. For the forgoing reasons, the petitions are found to be without any merit and, accordingly, the same are dismissed along with connected CMs. Interim orders shall stand vacated.
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