TMI Blog2017 (7) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... r of documents had been forged in the instant case and Accused persons thereby have induced the Bank for disbursing the working capital limits to M/s. Modern Denim Ltd. In Rumi Dhar's case [ 2009 (4) TMI 999 - SUPREME COURT ], this Court has observed that when settlement is arrived at between the creditors and the debtor, the offence, if committed, as such does not come to an end. Even a judgment rendered in the civil proceedings, when it is rendered on the basis of a settlement entered into between the parties, would not be of large relevance as per criminal offence required of Section 49 of the Evidence Act. The judgment of the civil court is admissible only for limited purposes. The order passed by the trial court affirmed by the revisional court and High court cannot be said to be sustainable. The impugned orders are thus set aside. Let the trial court frame the charges, and proceed further in accordance with law, and conclude the trial positively within a period of one year from today - appeal allowed. - Criminal Appeal No. 1289 of 2017 (Arising out of SLP (Crl.) No. 5857 of 2012) - - - Dated:- 18-7-2017 - ARUN MISHRA AND MOHAN M. SHANTANAGOUDAR, JJ. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly) were misused and not repaid by the aforesaid accused. The facilities under Export Packing Credit (EPC), Inland Bill Discounting (IBD), Inland Letter of Credit (ILC) and Term Loan and Working Capital Demand Loan (TC/WCDL) facilities were availed by the Modern Denim Limited. According to the prosecution there was an outstanding amount of Rs. 6,20,00,000/- (Rupees Six Crores and Twenty Lakhs only), Rs. 1,67,00,000/- (Rupees One Crore Sixty-Seven Lakhs Only), Rs. 10,21,00,000/- (Rupees Ten Crores and Twenty One Lakhs only),Rs. 12,75,00,000/- (Rupees Twelve Crores and Seventy Five Lakhs Only) and Rs. 6,00,00,000/- (Six Crores only) respectively from all these facilities. In the FIR details have been disclosed as to the way in which the aforesaid offences had been committed. The relevant portion is extracted here under: 8(1) Sh. Ranglal Nahar (A3) is working as Vice President, Cotton Purchase Dept., M/s. Modern Denim Ltd. At Moraiya, Ahmedabad. He has been with the M/s. Modern Denim Ltd. since 1991. He was instrumental in mobilizing all the fictitious firms at Mumbai as LC beneficiaries and Drawees of Bills discounted and for which he made Sh. S.K. Jhujhunwala (A5) as the nodal pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has signed as authorised signatory for M/s. Modern Denim Ltd. on the request letters for the issue of Packing Credit Advances which was in pursuance of the authority given by Sh Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2), similarly he had also signed as authorised signatory for obtaining LC advances and for discounting of Bills which were discounted. (vi) Sh. Vimal Prakash Agarwal (A8) is a Manager looking after accounts Deptt. of M/s. Modern Denim Ltd., Ahmedabad. He has also signed as authorised signatory on behalf of M/s. Modern Denim Ltd. on LC applications which were in pursuance of the authority given by Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2). He has also signed the Bills of Exchange for Inland LCs discounted at the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2). In the letters of request for advance of Packing Credit Advances also he has signed on the request letters to the Bank for issue of the PC Advances at the instance of Sh. Hari Singh Ranka (A1) and Sh. Sachin Ranka (A2) citing the Resolution dated 23.06.1994. (vii) Sh. Pradeep Kumar Jain (A9) is the Vice President looking after Marketing division of M/s. Modern Denim Ltd., A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Registrar of Companies Rajasthan Jaipur. Sh. Hari Singh Ranka (A1) was appointed as Director on 03/111978 in the erstwhile Modern Suitings Pvt. Ltd. Which subsequently changed into M/s. Modern Denim Ltd. Sh. Sachin Ranka (A2) was appointed as full time Director of the erstwhile Modern Suitings Ltd., on 01.04.1991 which subsequently became Modern Denim Ltd. The company is promoted by the above mentioned two Accused and they have personal stake in the said company. The company was used by the 2 Accused to defraud the Bank of Baroda, Bhadra Branch Ahmedabad. The company was manufacturing denim fabric at Moraiya Village, Ahmedabad. Its corporate office is located at Worli, Mumbai. 9. Investigation disclosed that Export Packing Credit (EPC) is the facility granted by the Bank to enable the borrower to purchase raw material, process them, and export the finished goods. The repayment of EPC is by way of proceeds received by realisation of Export Bills by the Bank. For the purpose of releasing the Export Packing Credit (EPC), the company was obliged to submit to the Bank Confirmed Export orders based upon which the Bank was to release the EPC within the overall sanctioned limit, Inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, no money could be realised by the Bank. However, it was revealed during investigation that the Export Packing Credit Advances obtained by the Accused persons were never utilized for the purchase of raw material for export and instead, the funds were used for liquidating/clearing off the dues that were outstanding in respect of certain earlier Inland LCs which had got devolved. Many of these Inland LCs was also drawn in favour of propped up companies who were Inland LC beneficiaries like M/s. Paridhan Commercial Credit Pvt. Ltd., M/s. Manhattan Traders Pvt. Ltd., and M/s. Modfab Marketing Pvt. Ltd. The said 33 Export Packing Credit Advances were obtained during the period 5.6.98 to 11.6.99 such that the drawings never crossed the limit of Rs. 600 lacs limit of Packing Credit. Whenever a Foreign bill was realised and credited in the PC account an equivalent amount of PC advance was immediately obtained but by keeping within the overall limit of Rs. 800 lacs. A chart in the form of Annexure-I showing the 33 Export Packing Credit Advances which were fraudulently obtained by the Accused persons and the end use of these funds is enclosed to the charge-sheet. The Accused persons were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legations as against them it was not a case of discharge at all, as had been ordered by the learned trial court. She has relied upon the decision of this Court in Gian Singh v. State of Punjab and Anr. (2012) 10 SCC 303, Ashok Sadarangani and Anr. v. Union of India and Ors. (2012) 11 SCC 321, Rumi Dhar v. State of West Bengal and Anr. (2009) 6 SCC 364, Narinder Singh and Ors. v. State of Punjab and Anr. (2014) 6 SCC 466, Gopakumar B. Nair v. Central Bureau of Investigation and Anr. (2014) 5 SCC 800 and Sushil Suri v. Central Bureau of Investigation and Anr. (2011) 5 SCC 708. 10. She has further urged that Considering the facts and circumstances of the case, the instant case was such in which discharge could not have been ordered, in view of the serious allegations which have been made with regard to defrauding and cheating committed with the help of forged documents. 11. On the other hand Sh. Paras Kohad learned senior Counsel, assisted by Sh. Hemant Sharma and Sh. Jitin Chaturvedi has taken us through the orders and materials on record and has submitted that no case for interference is made out. He has referred the decisions of this Court in Gian Singh's case (supra), Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Bank which was supported by the false and forged lorry receipt purportedly issued by M/s. Kalwania Carrying Corporation (Transport firm of Dharmpal A. Kalwania (A-4). The CBI alleged that no supply of materials (denim fabric) was made by M/s. Modern Denim Ltd. against the aforesaid 24 bills drawn on eight paper companies. The forged nature of the lorry receipt is evident from the fact that vehicle numbers were mentioned, the LR were found to be those of tractors and two wheelers, it was also the case of the prosecution that the facilities disbursed by the Bank were used to liquidate the remaining outstanding dues of the Accused against the earlier LCs in these 24 instances the Bank suffered a loss to the tune of Rs. 1,61,51,052/-. 16. It was further alleged by the CBI that M/s. Modern Denim Ltd.-Accused No. 13, got established 17 letters of credit in favour of three paper suppliers during the period of 7.9.1997 to 12.8.1999. The aforesaid LCs were opened for supply of raw materials to M/s. Modern Denim Ltd. However, no supplies were made instead false documents purported to was submitted which were supported by false and forged lorry receipts issued by M/s. Kalwania Carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court is admissible only for limited purposes. 19. In the State of Maharashtra through Central Bureau of Investigation v. Vikaram Anantrai Doshi and Ors. 2014 (15) SCC 29, this Court has considered the decision in Narinder Singh's case (supra), Dimpey Gujral v. U.T. Chandigarh (2013) 11 SCC 497 and Gyan Singh's case (supra) and has laid down the principles for making interference in such matters thus; 18. Recently, in Narinder Singh v. State of Punjab (2014) 6 SCC 466 a two-Judge Bench placed reliance on Gian Singh's case (supra) and Dimpy Gujral v. Union Territory, Chandigarh and distinguished the decision in State of Rajasthan v. Sambhu Kevat, and came to hold that in the facts of the said case the proceedings Under Section 307 deserved to be quashed. The two-Judge Bench laid down certain guidelines by which the High Courts would be guided in giving adequate treatment to the settlement between the parties and exercising its power Under Section 482 of the Code while accepting the settlement and quashing the proceedings or refusing to accept the settlement. Some of the guidelines which are relevant for the present purpose are reproduced below: 29.2(II) When th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted by the learned Counsel for CBI, the manner in which the letters of credits were issued and the funds were siphoned off, has a foundation in criminal law. Learned Counsel would submit that it does not depict a case which has overwhelmingly and predominatingly a civil flavour. The intrinsic character is different. Emphasis is laid on the creation of fictitious companies. 26. We are in respectful agreement with the aforesaid view. Be it stated, that availing of money from a nationalized bank in the manner, as alleged by the investigating agency, vividly exposits fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge sheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that whenever there are manipulation and cleverly conceived contrivance to avail of these kinds of benefits, it cannot be regarded as a case having overwhelmingly and predominantly a civil character. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court is wholly indefensible. 20. It has been observed by this Court that when the charge sheet reflects that the Respondent got LCs issued by the bank in favour of fictitious companies propped up by them and the fictitious beneficiary companies had got letters of credits discounted by attaching their bogus bills. It is not a simple case where an Accused has borrowed money from the bank and diverted it somewhere else and, thereafter, paid the amount. Civil settlement of the controversy would not suffice to wipe off the criminal liability. The case reflects fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge sheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. This Court has further observed that accepted principle of handling of finance that whenever there are manipulation and cleverly conceived contrivance to avail of this kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly of civil character. The gravity of the offence creates a dent in the economic spine of the nation. The quashing of the case was set aside as social ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty and ends of justice shall be defeated. The above list is illustrative and not exhaustive. Each case will depend on its own facts and no hard and fast category can be prescribed. 59. B.S. Joshi 1, Nikhil Merchant, Manoj Sharma and Shiji do illustrate the principle that High Court may quash criminal proceedings or FIR or complaint in exercise of its inherent power Under Section 482 of the Code and Section 320 does not limit or affect the powers of the High Court Under Section 482. Can it be said that by quashing criminal proceedings in B.S. Joshi, Nikhil Merchant, Manoj Sharma and Shiji this Court has compounded the non-compoundable offences indirectly? We do not think so. There does exist the distinction between compounding of an offence Under Section 320 and quashing of a criminal case by the High Court in exercise of inherent power Under Section 482. The two powers are distinct and different although the ultimate consequence may be same viz. acquittal of the Accused or dismissal of indictment. 60. We find no incongruity in the above principle of law and the decisions of this Court in Simrikhia, Dharampal, Arun Shankar Shukla, Ishwar Singh, Rumi Dhar and Ashok Sadarangani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the criminal intent than on a civil aspect. The decision in Ashok Sadarangani supports the view that the criminal matters involving overtures of a civil dispute stand on a different footing. 61. The position that emerges from the above discussion can be summarised thus: the power of the High Court in quashing a criminal proceeding or FIR or complaint in exercise of its inherent jurisdiction is distinct and different from the power given to a criminal court for compounding the offences Under Section 320 of the Code. Inherent power is of wide plenitude with no statutory limitation but it has to be exercised in accord with the guideline engrafted in such power viz; (i) to secure the ends of justice or (ii) to prevent abuse of the process of any Court. In what cases power to quash the criminal proceeding or complaint or F.I.R. may be exercised where the offender and victim have settled their dispute would depend on the facts and circumstances of each case and no category can be prescribed. However, before exercise of such power, the High Court must have due regard to the nature and gravity of the crime. Heinous and serious offences of mental depravity or offences like murder, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 482 Code of Criminal Procedure could not have been exercised at all. Whereas the power of discharge exercised by the learned trial judge virtually amounts to the exercise of power Under Section 482 Code of Criminal Procedure which was not available to it and was totally uncalled for exercise that too without adverting to the materials on record. 23. Reliance has been placed on a decision of this Court in Nikhil Merchant v. Central Bureau of Investigation and Anr. [2008 (9) SCC 677] wherein this Court had quashed the criminal proceedings in peculiar facts of the case by exercising the power Under Article 142 of the Constitution of India. The case was not of general application but was confined to the facts of the case. Following is the relevant discussion made by this Court in the said case: 28. The basic intention of the Accused in this case appears to have been to misrepresent the financial status of the company, M/s. Neemuch Emballage Limited, Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f foreign suppliers of goods without actually bringing any goods but inducing the bank to negotiate letters of credit in favour of the foreign suppliers and also by exercising the cash credit facility. 25. This Court has considered the various decision in Sushil Suri's case (supra) and Gyan Singh's case (supra). This Court also considered whether when the dispute has been settled by the bank, the continuance of criminal proceedings would be a futility. This Court distinguished the decision of Nikhil Merchant (supra) as the case projected larger conspiracy then this Court refused to grant the relief in the prayer of quashing of the case. 26. In Sushil Suri v. Central Bureau of Investigation and Anr. [(2011) 5 SCC 708] this Court made following observations; 23. It is manifest from a bare reading of the Chargesheet, placed on record, that the gravamen of the allegations against the Appellant as also the co-accused is that the Company, acting through its directors in concert with the Chartered Accountants and some other persons: (i) conceived a criminal conspiracy and executed it by forging and fabricating a number of documents, like photographs of old machines, purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be exercised considering the nature of allegation and facts and circumstances of each case. Thus, the decision in Gyan Singh's case (supra) fails to serve cause espoused by the accused. 28. Learned senior Counsel has also relied upon CBI v. Narendra Lal Jain (2014) 5 SCC 364 in which also this Court dealt with the question where quashing of criminal proceeding in respect of not compoundable offence on the basis of compromise is warranted. This Court dealt with the offence Under Section 420 Indian Penal Code which is a compoundable offence Under Section 320 Indian Penal Code and other Sections which were non-compoundable offence. The monetary loss suffered by the Bank has been mutually settled between the parties and both had accepted liability in this regard. The ratio of B.S. Joshi's case (supra) and Nikhil Merchant's case (supra) was applied and in the peculiar facts of the case, the order passed by the High Court was upheld. The facts of the instant case are totally different and quite serious. 29. In view of the aforesaid discussion, we are of the considered opinion that the order passed by the trial court affirmed by the revisional court and High court canno ..... 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