M.N.Ojha & Ors vs Alok Kumar Srivastav & Anr

security of five guarantors including the respondent-

complainant who in turn deposited Fixed Deposit Receipts

(FDRs) worth Rs. 50,000/-, each duly signed authorizing the

bank to appropriate the proceeds of FDRs along with interest

if the timely payments are not made by the borrower. Each

one of them had also executed and signed Agreement of

guarantee jointly and severally guaranteeing to pay the

bank after demand in writing all principal, interest, costs,

charges and expenses due and which may at any time

become due to the bank from the borrower, on accounts

opened in respect of the said limits down to the date of payment and also all loss or damages, costs, charges and

expenses occasioned to the bank by reason of omission,

failure or default temporary or otherwise in such payment by

the borrower. The guarantors further agreed that the bank

may enforce the guarantee without enforcing, selling or

realizing any of the securities kept under lien, hypothecated,

pledged or mortgaged with it, notwithstanding that any bills

or other instruments given by the borrower in the said

account may be in circulation for collection and outstanding.

4. The bank in the month of March, 2000 having realized

that the loan account became totally irregular since the

borrower was not paying any amount whatsoever as

undertaken in terms of the agreement. On 26.3.2002, the

first appellant - Senior Manager having realized that the

recovery of bank loan became impossible adjusted some

amounts from the FDRs furnished by the guarantors as

security towards the dues of the borrower. The bank vide its

notice dated 27.12.2002 informed the borrower as well as

the guarantors that the loan account should be regularized to which there was no response. This was followed by an

FIR lodged by the bank with the concerned police station

against the borrower and guarantors including the

respondent for cheating and for misappropriation of

hypothecated goods. The said case is pending trial.

5. The guarantors addressed a legal notice dated nil to the

Deputy General Manager, Vigilance Cell, PNB, New Delhi,

Zonal Manager, PNB, Patna and Regional Manager PNB,

(Haridwar) alleging therein that they were put to serious

inconvenience due to the misconduct on the part of

Appellant no. 1. It was also alleged that no proper steps

were taken against the borrower for realization of loan

amounts before proceedings against them and to encash the

FDRs offered by them as sureties for recovery of loan.

6. In the said legal notice it was further alleged that one

Prakash Mohan while he was working in Patna City Branch

as assistant had managed a cash credit facilities for a sum of

Rs. 5 lakhs in the name of his own brother Jitender Mohan and that both Prakash as well as appellant no. 1 have

colluded with each other with a view to defraud the bank

and "put the blame upon the innocent guarantors".

7. Thereafter, the complainant Alok Kumar Shrivastava

who was one of the guarantors, being aggrieved by the

action of the bank in appropriating the fixed deposit amount,

filed a Complaint Case No. 916 of 2003 in the court of SDJM,

Patna City under Section 409,422,426 and 120B IPC in

which the other three guarantors were shown as witnesses.

The learned SDJM, Patna City, took cognizance of the case

vide order dated 22.3.2004; and directed non-bailable

warrant of arrest against all appellants herein who were

named as the accused persons in the complaint.

8. In the meanwhile, the bank initiated proceedings

under the Public Demand Recovery Act for recovery of

balance amounts payable by the borrower after adjustment

of the fixed deposit amounts.

9. The appellants being aggrieved by the order of SDJM,

Patna City, Patna preferred a petition under Section 482 of

the Code of Criminal Procedure in the High court of

Judicature at Patna to quash the criminal proceedings

initiated against them by the respondent-complainant. The

High Court disposed of the said petition summarily without

assigning any reasons whatsoever in the following manner:

"Having considered the materials on record and facts stated in the complaint petition, I do not find any merit in this application and so the impugned order does not require any interference. The facts are to be examined and duly considered at the appropriate stage of trial."

Hence this appeal.

SUBMISSIONS:-

10 Shri Dhruv Mehta, learned counsel for the appellants

submitted that the High Court failed to appreciate that the

complaint has been lodged with a completely malicious

intent to simply harass the appellants who were only discharging their duties as public servants which is nothing

but an abuse of the process of law. The averments made in

the complaint are totally indefinite in their nature and none

of the ingredients of the offences alleged to have been

committed are made out against the appellants. It was also

contended that the summoning order has been passed by

the learned SDJM without application of mind and contrary

to the law laid down by this court in more than one

judgment. It was submitted that the complaint was filed as a

counter blast to the FIR already lodged by the bank on

20.2.2003 for cheating and misappropriation of

hypothecated goods against the borrower and as well as the

guarantors.

11. Though the respondent was served on 16.5.2007, he

neither appeared in person nor through counsel.

12. The respondent-complainant is one of the guarantors

who guaranteed repayment of the loan obtained by the

borrower. There is no dispute that the loan account became totally irregular and the bank has been left with no option

but to appropriate the FDRs along with interest accrued

thereon. The action initiated was in terms of the documents

executed by the complainant along with other guarantors. It

is evident from the record that the bank had lodged FIR with

the police on 20.2.2003, for cheating and misappropriation

of hypothecated goods against the borrower as well as the

guarantors. The police initiated action against the

complainant and others based on the said FIR lodged by the

first appellant on behalf of the bank. This fact is specifically

admitted in the legal notice issued for and on behalf of the

guarantors including the complainant. We have no doubt

whatsoever in our mind that the complaint dated 3.12.2003;

filed by the complainant against the appellants almost after

10 months of the FIR lodged by the first appellant on behalf

of the bank is nothing but a clear abuse of the judicial

process to harass the appellants. The complainant himself

admitted in his complaint that the account in question was

gradually becoming irregular and the Manager ought to have taken steps for sale of the hypothecated goods and

appropriated the sale proceeds towards the recovery of loan

amounts. It is the case of the complainant in his complaint

that the first appellant should have appropriated the

hypothecated goods first and only thereafter steps could

have been taken for recovery of the balance amount if any

from the guarantors. It was alleged that the Branch

Manager in conspiracy with the brother of the borrower who

is none other than an employee of the bank allowed the

operation of the account till the things became "bad to

worse". According to him, the Branch Manager conspired

with the borrower and committed criminal breach of trust.

Repeated assertions have been made in the complaint that

all the accused persons in conspiracy with each other have

diverted huge bank money in a fraudulent manner for their

own benefit. Surprisingly enough neither the borrower nor

his brother with whom the bank officers are alleged to have

colluded is arrayed as accused. The complainant in his

complaint freely used choicest expressions such as "fraud, collusion, conspiracy and cheating etc." but did not make

any concrete allegations against the appellants suggesting

commission of any offence. That a plain reading of the

complaint and taking the allegations and averments made

therein to be true on their face value do not reveal the

commission of any offence whatsoever by the appellants

who were only taking steps to realize the amount due to the

bank from the borrower and in the process encashed the

FDRs offered by the guarantors as security for the discharge

of the loan. What is the crime they have committed even if

they did not proceed against the hypothecated properties

before realizing the FDRs offered by guarantors? Where is

the misappropriation of money? Whom did they cheat?

13. In our considered view, criminal law has been set in

motion by the complainant to harass the bank officers

needlessly and to wreak personal vengeance in order to

bring them under pressure not to further prosecute the

proceedings already initiated by the appellants against the

complainant on behalf of the bank.

14. In our considered opinion, the learned SDJM set the

criminal law in motion against the appellants without even

examining the allegations and averments made in the

complaint filed by the respondent-complainant. The learned

SDJM took cognizance of the case without considering the

allegations on merits. Had the learned SDJM perused the

complaint properly he would have realized that the

complainant himself had made a mention about the lodging

of the FIR for criminal breach of trust and other offences

against the respondent-complainant and others. Had he

looked into the complaint properly, he would have certainly

asked the complainant to furnish the copy of the said FIR. A

copy of the legal notice issued on behalf of the respondent-

complainant to the appellants was filed along with the

complaint and a mention is made about it in the order

passed by the learned SDJM. Had the learned SDJM perused

the said legal notice, he would have realized that the

complainant himself admitted about his execution of

agreement of guarantee and other documents unconditionally agreeing to discharge the loan amount in

case of failure of the principal borrower to pay the said

amount to the bank. Had the learned SDJM applied his mind

to the facts and circumstances and sequence of events and

as well as the documents filed by the complainant himself

along with the complaint, surely he would have dismissed

the complaint. He would have realized that the complaint

was only a counter blast to the FIR lodged by the Bank

against the complainant and others with regard to same

transaction. This Court in Pepsi Foods Ltd. & Anr. Vs.

Special Judicial Magistrate & Ors. [(1998)5 SCC 749

held:

"28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."

The case on hand is a classic illustration of non-application

of mind by the learned Magistrate. The learned Magistrate

did not scrutinize even the contents of the complaint, leave

aside the material documents available on record. The

learned Magistrate truly was a silent spectator at the time of

recording of preliminary evidence before summoning the

appellants.

15. The High Court committed a manifest error in disposing

of the petition filed by the appellants under Section 482 of

the Code without even adverting to the basic facts which

were placed before it for its consideration. It is true that the

court in exercise of its jurisdiction under Section 482 of the

Code of Criminal Procedure cannot go into the truth or otherwise of the allegations and appreciate the evidence if

any available on record. Normally, the High Court would not

intervene in the criminal proceedings at the preliminary

stage/when the investigation/enquiry is pending.

Interference by the High Court in exercise of its jurisdiction

under Section 482 of Code of Criminal Procedure can only be

where a clear case for such interference is made out.

Frequent and uncalled for interference even at the

preliminary stage by the High Court may result in causing

obstruction in progress of the inquiry in a criminal case

which may not be in the public interest. But at the same

time the High Court cannot refuse to exercise its jurisdiction

if the interest of justice so required where the allegations

made in the FIR or complaint are so absurd and inherently

improbable on the basis of which no fair-minded and

informed observer can ever reach a just and proper

conclusion as to the existence of sufficient grounds for

proceeding. In such cases refusal to exercise the

jurisdiction may equally result in injustice more particularly in cases where the Complainant sets the criminal law in

motion with a view to exert pressure and harass the persons

arrayed as accused in the complaint. It is well settled and

needs no restatement that the saving of inherent power of

the High Court in criminal matters is intended to achieve a

salutary public purpose "which is that a court proceeding

ought not to be permitted to degenerate into a weapon of

harassment or persecution. If such power is not conceded, it

may even lead to injustice". [See: State of Karnataka Vs.

L. Muniswamy (1977) 2 SCC 699). We are conscious that

inherent powers do not confer an arbitrary jurisdiction on

the High Court to "act according to whim or caprice. That

statutory power has to be exercised sparingly, with

circumspection and in the rarest of rare cases". [See:

Kurukshetra University Vs. State of Haryana (1977) 4

SCC 451].

16. This is one case where the averments and allegations

made in the complaint do not disclose the commission of any

offence by the appellants or any one of them. They were merely discharging their duties to realize and recover the

amounts due to the bank from the borrower as well as the

guarantors. The complaint obviously has been filed as

counter blast to the proceedings already initiated by the

bank including the first information report lodged by the first

appellant against the complainant and the borrower for the

offences of cheating and misappropriation. Sequence of

events undoubtedly suggests that the criminal proceedings

have been maliciously instituted with an ulterior motive of

wreaking vengeance on the appellants and with a view to

spite them due to personal grudge. It was clearly intended

to prevent the public servants from discharging their duties.

The criminal law has been set in motion by the learned SDJM

by mere asking to do so by the complainant. The High Court

almost abdicated its duty in refusing to exercise its

jurisdiction under Section 482 of the Code of Criminal

Procedure though the case on hand required its interference

in order to prevent abuse of the process by a court

subordinate to it. A clear case is made out requiring our interference to secure the ends of justice.

17. For all the aforesaid reasons, the impugned order of the

High Court is set aside and the criminal proceedings arising

out of Complaint Case No. 916 (c) of 2003 are quashed. The

appeal is, accordingly, allowed.

..........................................J. ( R.V. Raveendran)

..........................................J. (B. Sudershan Reddy)

New Delhi;

August 21, 2009.

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