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Section 482 of the Code of Criminal Procedure (for brevity.P.C.) = Sections 406, 409, 420 and 120(b) IPC = Fraud played on Bank in collusion with Bank Officers for 2.51 crores – Criminal case – Charge sheet filed – Earlier Quash petitions are withdrawn, dismissed and a direction was also given for speedy trial – reached final – Again for Quash – Single judge allowed as it is a civil case – amount can be recovered through civil means – Apex court allowed the appeal filed by state and set aside the orders of High court stating that Alternative relief for recovery of amount is not a ground for quashing the F.I.R and Charge sheet and with out challenging the earlier orders = 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 = published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40986

Section  482  of  the  Code  of

English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

Criminal Procedure (for  brevity.P.C.) = Sections 406, 409, 420 and 120(b) IPCFraud played on Bank in collusion with Bank Officers for 2.51 crores – Criminal case – Charge sheet filed – Earlier Quash petitions are withdrawn, dismissed and a direction was also given for speedy trial – reached final – Again for Quash – Single judge allowed as it is a civil case – amount can be recovered through civil means – Apex court  allowed the appeal filed by state and set aside the orders of High court stating that Alternative relief for recovery of amount is not a ground for quashing the F.I.R and Charge sheet and with out challenging the earlier orders =

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. =

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.    Again filed petitions for quash

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.

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. =

 

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.

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.
REPORTABLE
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.
………………………………………………J.
(R.M. Lodha)
…………………………………………………J.
(Shiva Kirti Singh)
New Delhi,
November 20, 2013
———————–
[1] 2009(6) SCC 351
[2] 2008 (8) SCC 781
[3] 2010 (8) SCC 442

———————–
13

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