Rasiklal Dalpatram Thakkar vs State Of Gujarat & Ors

banking operations in the State of Gujarat, 2

Maharashtra among other States in India. According

to the Bank, all its activities relating to

disbursement of loans are conducted from the Head

Office at Ahmedabad.

3. In 1992, the appellant's company took loan from

the aforesaid Bank which for the reasons prevailing

closed down its business operations in 2001.

Thereafter, a Scheme of Reconstruction approved by

the Reserve Bank of India was formulated and a new

Board of Management (Administration) came to be

appointed to implement the same. Several

irregularities were discovered regarding the grant

of loans to borrowers with the connivance of the

then Chief Executive Officer, Managing Director and

Chairman of the Bank. Several complaints came to be

registered against the said officers and several

borrowers. Five such complaints were filed against

the appellant on 9th July, 2003, before the Chief

Metropolitan Magistrate, Ahmedabad, who directed 3

the Economic Offences Wing, State C.I.D. (Crime),

Ahmedabad, under Section 156(3) Cr.P.C. to carry

out an investigation. The Investigating Agency

submitted a report stating that the allegations

complained of had been committed within the

territorial limits of the city of Mumbai,

Maharashtra, and that the investigation should,

therefore, be transferred to the Investigation

Agency in Mumbai, Maharashtra.

4. The said report was rejected by the Chief

Metropolitan Magistrate, Ahmedabad, on the ground

that it was not for the Investigating Agency to

decide not to investigate a complaint forwarded to

it under Section 156(3) Cr.P.C. on the ground that

the offence complained of was allegedly committed

outside the territorial jurisdiction of the

Investigating Agency. The learned Magistrate by his

order dated 31.5.2006, directed the Investigating

Agency to carry out a further investigation and 4

report whether the alleged offence had been

committed or not.

5. The said order of the learned Chief Judicial

Magistrate, Ahmedabad, was challenged by the

appellant herein before the City Civil and Sessions

Court at Ahmedabad in revision which was dismissed

on 22.9.2006 by the City Sessions Judge Court

No.11, Ahmedabad. A writ petition was filed in

the High Court by the appellant on 21.11.2006 being

Writ Petition No.2366 of 2006, challenging the

decision of the Sessions Court.

6. Before the High Court it was reiterated that

the loan had been availed of by the appellant's

company from the Mandvi Branch of the Bank in

Mumbai which had an independent identity as a

registered co-operative Society under the

Maharashtra Co-operative Societies Act. It was also

reiterated that the loan amount had been disbursed

from the said Branch in Mumbai. It was contended 5

that since the cause of action for the alleged

offence had arisen outside the territorial

jurisdiction of the Chief Judicial Magistrate,

Ahmedabad, he could not direct the Investigating

Agency under his jurisdiction to conduct an

investigation into the complaint made against the

appellant in respect of such cause of action.

7. Accepting the views expressed by the Chief

Metropolitan Magistrate that the Investigating

Agency was only required to state the outcome of

the investigation pursuant to an order under

Section 156(3) Cr.P.C. and that it had no authority

to state which Court had jurisdiction to inquire

into the alleged offence, the High Court by its

impugned judgment dated 15.3.2007 dismissed the

writ petition filed by the appellant, inter alia,

on the following grounds :-

(i) That the Investigating Agency had travelled beyond its jurisdiction in 6

expressing its views regarding the territorial jurisdiction in regard to a criminal offence which was for the Courts to decide.

(ii) That the Station House Officer is vested with the authority to investigate any cognizable offence in respect of which an F.I.R. is lodged.

(iii) The powers reserved to the High Court under Section 482 Cr.P.C. could not be interfered with or curtailed on the ground that the Investigating Officer had no territorial jurisdiction over the investigation.

8. It appears that when the writ petitions were

taken up for hearing a prayer was made for

amendment of the prayers by incorporating paragraph

14(BBB)in each of the writ petitions. By virtue of

the amended prayer, the appellant wanted the High

Court to quash and set aside Enquiry Case No.21 of

2003 filed before the Chief Metropolitan

Magistrate, Ahmedabad, and to also quash the order 7

directing investigation under Section 156(3)

Cr.P.C. and the proceedings arising therefrom. The

said prayer was rejected by the High Court on the

ground of delay and also on the ground that the

order of the Magistrate dated 9.7.2003 had not been

challenged for a period of four years.

9. Learned counsel Mr. I.H. Syed, appearing for

the appellant submits that the High Court had

dismissed the appellant's Writ Petition on an

erroneous interpretation of the provisions of

Section 156(3) and 181(4) Cr.P.C. Learned counsel

submitted that the High Court had failed to notice

that Sub-section (2) of Section 156 Cr.P.C.

conferred exclusive jurisdiction on the

Investigation Officer to investigate into a case

and no proceeding of a police officer in any case

in which he is entitled to investigate shall at any

stage be called in question. Alleging that the

power of the Magistrate under Sub-section (3) was 8

circumscribed by the powers vested in the

Investigating Agency under Sub-Section (2) of

Section 156 Cr.P.C, and that it was only the

Investigating Agency which could decide the

question relating to the territorial jurisdiction

in respect of the crime committed, learned counsel

submitted that the High Court had erred in

upholding the views expressed by the learned Chief

Metropolitan Magistrate that the Investigating

Agency was only required to state the outcome of

the investigation conducted pursuant to an order

under Section 156(3) Cr.P.C. and that it had no

authority or right to state as to which Court had

jurisdiction to inquire into the alleged offence in

question. Learned counsel submitted that the High

Court had erred in law in observing that it was a

settled proposition of law that when a Magistrate

directs an investigation to be conducted in

exercise of his powers under Section 156(3) Cr.P.C.

the main duty of the Investigating Agency is to 9

submit a report as to the commission of an offence

and, thereafter, it was for the Court concerned to

accept such Report and to decide the question of

jurisdiction and that the learned Magistrate had

rightly rejected the Final Report on the ground

that the Investigating Agency had no authority

under the law to express its opinion on the merits

of a case.

10. Learned counsel re-emphasized the submissions

made before the High Court that although the

Registered Office and Head Office of the Bank were

in Ahmedabad in Gujarat, each of its Branches in

the other States was an independently registered

Co-operative Society and was a unit of its own

under the provisions of the Maharashtra Co-

operative Societies Act. Furthermore, the loan was

availed of and disbursed in Mumbai. Consequently,

since the entire cause of action relating to the

application and disbursement of the loan had arisen 1

in Mumbai, the Gujarat High Court had committed an

error of law in passing the impugned order and the

same was liable to be quashed. In support of his

aforesaid contention, learned counsel referred to

the decision of this Court in Agencia Commercial

International Ltd. vs. Custodian of the Branches of

Banco National Ultramarino [(1982) 2 SCC 482],

wherein while considering a similar question, this

Court held that in the case of a body corporate its

branches are not distinct entities and the Branches

are mere components through which the corporate

entity expresses itself and all transactions

entered into with the Branches are transactions

with the corporate body itself. However, a

distinction was made in cases of Banks which also

operate through its Branches which are regarded for

many purposes as separate and distinct entities

from the Head Office and each other.

1

11. Learned counsel then relied on the decision of

this Court in Satvinder Kaur vs. State (NCT of

Delhi) [(1999) 8 SCC 728} in support of his

submission that in view of the provisions of

Section 156(1) Cr.P.C. a police officer was

competent to investigate any cognizable offence and

was also competent to forward the same to the

police station having territorial jurisdiction if

he came to the conclusion that the crime had been

committed beyond his territorial jurisdiction.

12. Reference was also made to the decision of this

Court in the case of Naresh Kavarchand Khatri vs.

State of Gujarat [(2008) 8 SCC 300], where the

question involved was the High Court's jurisdiction

to transfer an investigation from one police

station to another. In the facts of the said case

it was held that under Section 156 Cr.P.C. the

police authorities exercise statutory powers to

direct transfer of an investigation from one police 1

station to another in the event it was found that

they did not have jurisdiction in the matter and

the Court should not interfere in the matter at an

initial stage in regard thereto.

13. Similar observations were made in Asit

Bhattacharjee vs. Hanuman Prasad Ojha [(2007) 5 SCC

786], though in a different context involving the

transfer of an investigation ordered under Section

156(3) Cr.P.C. to another State where the major

part of the offences had taken place. This Court

reiterated that only in the event an Investigating

Officer arrived at a finding that the alleged crime

had not been committed within his territorial

jurisdiction could the F.I.R. be transferred to the

police having jurisdiction in the matter.

14. Learned counsel urged that once the

Investigating Agency in respect of an order under

Section 156(3) Cr.P.C. came to a finding that it

did not have territorial jurisdiction in the 1

matter, the High Court could not have directed a

fresh investigation into the matter on the ground

that it was not for the Investigating Agency to

decide the question of jurisdiction which is the

prerogative of the Courts.

15. Appearing for the private respondents, Mr. L.N.

Rao, Senior Advocate, submitted that except for

disbursement of the loan amount to the appellant

through the Mandvi Branch of the Bank at Mumbai,

the entire transaction had been proceeded and dealt

with at the Head Office in Ahmedabad. Even the

application for the loan had been made directly to

the Head Office at Ahmedabad instead of filing it

in the Mandvi Branch at Mumbai.

16. On the legal question raised on behalf of the

appellant, Mr. Rao submitted that Section 156

Cr.P.C. only spelt out the powers of a police

officer to investigate a cognizable case and the

power of a Magistrate to order such an 1

investigation to be made. In addition, it was also

stipulated that no investigation by a police

officer at any stage of such investigation could be

questioned on the ground that such officer was not

empowered to conduct such investigation. Mr. Rao

submitted that the decisions cited by Mr. Syed did

not really make any difference to the appellant's

case as the power of the Investigating Officer to

transfer an investigation, which he did not have

the jurisdiction to investigate, to a police

officer having such jurisdiction, was never at

issue in the instant case. What was at issue was

the Investigating Officer's decision not to conduct

an investigation despite an order passed by the

Chief Judicial Magistrate, Ahmedabad, under Section

156(3) Cr.P.C. on the ground that he did not have

territorial jurisdiction to undertake such

investigation. Mr. Rao submitted that an

investigation ordered under the provisions of Sub-

Section (4) of Section 181 Cr.P.C. would have to be 1

read in that context.

17. Appearing for the State, Mr. Hemantika Wahi,

learned Advocate, submitted that the State was

ready to carry out whatever directions that may be

given by the Court in regard to the investigation

directed to be conducted by the Chief Judicial

Magistrate, Ahmedabad.

18. The principal question which emerges from the

submissions made on behalf of the parties is

whether in regard to an order passed under Section

156(3) Cr.P.C. the police authorities empowered

under Sub-Section (1) of Section 156 can

unilaterally decide not to conduct an investigation

on the ground that they had no territorial

jurisdiction to do so.

19. Section 156 Cr.P.C. which is the focus of

consideration in this case, reads as under :-

"156. Police officer's power to investigate cognizable cases.

1 (1) Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XIII.

(2) No proceeding of a police officer in any such case shall at any stage be called in question on the ground that the case was one, which such officer was not empowered under this section to investigate.

(3) Any Magistrate empowered under section 190 may order such an investigation as above mentioned."

20. From the aforesaid provisions it is quite clear

that a police officer in charge of a police station

can, without the order of a Magistrate, investigate

any cognizable offence which a Court having

jurisdiction over such police station can inquire

into or try under Chapter III of the Code. Sub-

section (2) of Section 156 ensures that once an

investigation is commenced under Sub-section (1),

the same is not interrupted on the ground that the 1

police officer was not empowered under the Section

to investigate. It is in the nature of a "savings

clause" in respect of investigations undertaken in

respect of cognizable offences. In addition to the

powers vested in a Magistrate empowered under

Section 190 Cr.P.C. to order an investigation under

Sub-section (1) of section 202 Cr.P.C., Sub-section

(3) of Section 156 also empowers such Magistrate to

order an investigation on a complaint filed before

him.

21. As far as the reference made to Sub-section (4)

of Section 181 is concerned, the same appears to be

misconceived having regard to the contents thereof

which read as follows :-

"181. Place of trial in case of certain offences.

(1) xxx xxx xxx

(2) xxx xxx xxx

(3) xxx xxx xxx (4) Any offence of criminal misappropriation or of criminal breach of 1

trust may he inquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of the offence was received or retained, or was required to be returned or accounted for, by the accused person."

Sub-section (4) only indicates that an inquiry

or trial of an offence of criminal misappropriation

or criminal breach of trust can be conducted by a

Court within whose jurisdiction the offence had

been committed or any part of the property forming

the subject matter of the offence is received or

retained or was required to be returned or

accounted for by the accused person. The said

provisions do not account for a stage contemplated

on account of an order made under Section 156(3)

Cr.P.C.

22. In the instant case, the stage contemplated

under Section 181(4) Cr.P.C. has not yet been

reached. Prior to taking cognizance on the

complaint filed by the Bank, the learned Chief 1

Judicial Metropolitan Magistrate, Ahmedabad, had

directed an inquiry under Section 156(3) Cr.P.C.

and as it appears, a final report was submitted by

the Investigating Agency entrusted with the

investigation stating that since the alleged

transactions had taken place within the territorial

limits of the city of Mumbai, no cause of action

had arisen in the State of Gujarat and, therefore,

the investigation should be transferred to the

police agency in Mumbai. There seems to be little

doubt that the Economic Offences Wing, State CID

(Crime), which had been entrusted with the

investigation, had upon initial inquiries

recommended that the investigation be transferred

to the police agency of Mumbai. In our view, both

the trial Court as well as the Bombay High Court

had correctly interpreted the provisions of Section

156 Cr.P.C. to hold that it was not within the

jurisdiction of the Investigating Agency to refrain

itself from holding a proper and complete 2

investigation merely upon arriving at a conclusion

that the offences had been committed beyond its

territorial jurisdiction. A glance at the material

before the Magistrate would indicate that the major

part of the loan transaction had, in fact, taken

place in the State of Gujarat and that having

regard to the provisions of Sub-section (2) of

Section 156 Cr.P.C., the proceedings of the

investigation could not be questioned on the ground

of jurisdiction of the officer to conduct such

investigation. It was open to the learned

Magistrate to direct an investigation under Section

156(3) Cr.P.C. without taking cognizance on the

complaint and where an investigation is undertaken

at the instance of the Magistrate a Police Officer

empowered under Sub-section (1) of Section 156 is

bound, except in specific and specially exceptional

cases, to conduct such an investigation even if he

was of the view that he did not have jurisdiction

to investigate the matter.

2

23. Having regard to the law in existence today, we

are unable to accept Mr. Syed's submissions that

the High Court had erred in upholding the order of

the learned Trial Judge when the entire cause of

action in respect of the offence had allegedly

arisen outside the State of Gujarat. We are also

unable to accept the submission that it was for the

Investigating Officer in the course of

investigation to decide whether a particular Court

had jurisdiction to entertain a complaint or not.

It is the settled law that the complaint made in a

criminal case follows the place where the cause

arises, but the distinguishing feature in the

instant case is that the stage of taking cognizance

was yet to arrive. The Investigating Agency was

required to place the facts elicited during the

investigation before the Court in order to enable

the Court to come to a conclusion as to whether it

had jurisdiction to entertain the complaint or not. 2

Without conducting such an investigation, it was

improper on the part of the Investigating Agency to

forward its report with the observation that since

the entire cause of action for the alleged offence

had purportedly arisen in the city of Mumbai within

the State of Maharashtra, the investigation should

be transferred to the concerned Police Station in

Mumbai. Section 156(3) Cr.P.C. contemplates a

stage where the learned Magistrate is not convinced

as to whether process should issue on the facts

disclosed in the complaint. Once the facts are

received, it is for the Magistrate to decide his

next course of action. In this case, there are

materials to show that the appellant had filed his

application for loan with the Head Office of the

Bank at Ahmedabad and that the processing and the

sanction of the loan was also done in Ahmedabad

which clearly indicates that the major part of the

cause of action for the complaints arose within the

jurisdiction of the Chief Metropolitan Magistrate, 2

Ahmedabad. It was not, therefore, desirable on the

part of the Investigating Agency to make an

observation that it did not have territorial

jurisdiction to proceed with the investigation,

which was required to be transferred to the Police

Station having jurisdiction to do so.

24. On the materials before him the learned

Magistrate was fully justified in rejecting the

Final Report submitted by the Economic Offences

Wing, State CID (Crime) and to order a fresh

investigation into the allegations made on behalf

of the Bank. The High Court, therefore, did not

commit any error in upholding the views expressed

by the Trial Court. As mentioned hereinbefore,

Section 181(4) Cr.P.C. deals with the Court's

powers to inquire or try an offence of criminal

misappropriation or of a criminal breach of trust

if the same has been committed or any part of the

property, which is the subject of the offence, is 2

received or retained within the local jurisdiction

of the said Court.

25. The various decisions cited by Mr. Syed, and in

particular the decision in Satvinder Kaur's case

(supra) provide an insight into the views held by

the Supreme Court on the accepted position that the

Investigating Officer was entitled to transfer an

investigation to a Police Station having

jurisdiction to conduct the same. The said

question is not in issue before us and as indicated

hereinbefore, we are only required to consider

whether the Investigating Officer in respect of an

investigation undertaken under Section 156(3)

Cr.P.C. can file a report stating that he had no

jurisdiction to investigate into the complaint as

the entire cause of action had arisen outside his

jurisdiction despite there being material available

to the contrary. The answer, in our view, is in

the negative and we are of the firm view that the 2

powers vested in the Investigating Authorities,

under Sections 156(1) Cr.P.C., did not restrict the

jurisdiction of the Investigating Agency to

investigate into a complaint even if it did not

have territorial jurisdiction to do so. Unlike as

in other cases, it was for the Court to decide

whether it had jurisdiction to entertain the

complaint as and when the entire facts were placed

before it.

26. We, therefore, are not inclined to entertain

the appeal and the same is, accordingly, dismissed.

................................................J. (ALTAMAS KABIR)

................................................J. (CYRIAC JOSEPH) New Delhi Dated: November 6, 2009.