IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF MARCH, 2019 BEFORE THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR CRIMINAL PETITION No.598 OF 2014 BETWEEN:
SRI. AKSHAY APARANJI S/O DR.AVINASH APARANJI AGED ABOUT 32 YEARS RESIDING AT # 132/4, 2ND CROSS 3RD BLOCK, JAYANAGAR BANGALORE - 560 011 … PETITIONER (BY SHRI. SATISH BHAT, ADVOCATE FOR SHRI. M.S.BHAGWAT, ADVOCATE) AND:
1. THE STATE BY UPPARPET POLICE STATION REPRESENTED BY ITS INSPECTOR BANGALORE - 560 009 2. SARASWAT CO-OPERATIVE BANK LIMITED REPRESENTED BY ITS BRANCH MANGER GANDHINGAR BRANCH BANGALORE - 560 001 ... RESPONDENTS (BY SMT. B.G. NAMITHA MAHESH, HCGP FOR R.1;
SHRI. N. SHANKARANARAYANA BHAT, ADVOCATE FOR R.2) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO QUASH THE CHARGE SHEET IN C.C.NO.6573/2013 ON THE FILE OF IX A.C.M.M., BANGALORE (ANNEXURE-A) AND ALL FURTHER PROCEEDINGS THEREON, IN SO FAR AS THE PETITIONER IS CONCERNED.
THIS CRIMINAL PETITION COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Heard Shri Satish Bhat, learned advocate for the petitioner, Smt. B.G. Namitha Mahesh, learned HCGP for the State and Shri. N. Shankaranarayana Bhat, learned advocate for respondent No.2 - Saraswat Co-operative Bank limited.
2. For the sake of convenience, parties shall be referred to as per the status before the learned Magistrate.
3. The Bank gave a complaint on 26.12.2011, to the Station House Officer of Upperpet Police Station stating that during the usual course of the audit in the Bank, it was found that the borrower and the guarantor had falsely declared their business address. The Bank had sanctioned loan based on such declaration. Borrower and guarantor had made the Bank to believe that the information and declaration were true. They had thus misrepresented and committed criminal breach of trust.
4. Based on the complaint, police registered FIR No.495/2011 on 26.12.2011, for offences punishable under Sections 420, 468 and 471 read with Section 34 of IPC. After investigation, police have filed charge sheet against three persons. Petitioner is accused No.2 and guarantor. He has challenged the criminal proceedings initiated against him in this petition.
5. Learned advocate for the petitioner submits that loan was borrowed by accused No.1 – Miss Nethravathi Umesh Rao. At the material point of time, she was the fiancée of petitioner’s friend Mr. Pradeep. To facilitate his friend and fiancée to have a house, petitioner agreed to be a guarantor. Bank has initiated arbitration proceedings in A.C.No.ARB/SCB/BNG/07/2011-12 and the learned Arbitrator has passed an award on 20.10.2011. In the arbitration proceedings, Bank did not whisper about petitioner’s conduct. On the other hand, Bank relied upon the very same documents seeking an award. Immediately, after award was passed, Bank has given the instant complaint.
6. Shri Satish Bhat, argued that the complaint does not contain any ingredients of Section 420 of IPC. Police, without proper investigation, have converted a purely civil transaction between a Banker and its constituent into a criminal case. Accordingly, he prays for quashing the criminal proceedings initiated against the petitioner.
7. Smt. Namita Mahesh, learned HCGP has produced photocopies of investigation papers for perusal of this Court. She relied upon a ‘Statement Verification Report’ prepared by one Pamac Finserve Pvt. Ltd., and contended that the report prepared for Saraswath Co-operative Bank Ltd. shows that Banker of accused No.2 had stated that the account was in existence and also that the salary of Aditya Birla was not being credited in the said account. Accordingly, she argued that the petitioner has furnished false information and sought to justify prosecution against the petitioner.
8. Learned advocate for respondent No.2 – Bank submits that during the course of the audit, Bank learnt that the documents furnished by the borrower and guarantor contained false particulars. Therefore, complaint was lodged. He also sought to justify criminal prosecution on the premise that false documents were produced to the Bank.
9. I have carefully considered the rival contentions and perused the records.
10. It is not in dispute that a housing loan of Rs.30,00,000/- was sanctioned on 09.10.2010 to accused No.1. Accused No.2 was one of the guarantors. The complaint reads as follows:
“ReferenceNo.SCB:GDN:11-12:
Date:26.12.2011 To, THE STATION HOUSE OFFICER, Upperpet Police Station BANGALORE 560 009 Respected Sir, Sub: Complaint against Ms NETHRAVATHI RAO and others With reference to the above, this is to inform you that Ms NETHRAVATHI RAO (Borrower) D/o UMESH RAO, approached our Bank Gandhi Nagar Branch for a Housing Loan facility for the purpose of purchasing Flat No.T-4, THIRD Floor, “R.K.Enclave”, SITE NO.44, 45 AND 46, OLD KHATHA NOS.1300, 1999, SEEGEHALI VILLAGE, K.R.PURAM, Bangalore.
2. After considering her request, we sanctioned a Housing loan of Rs.30,00,000/- on 09.10.2010 in loan a/c No.SLPUB 09 to her.
3. Sri Akshay Aparanji and Mr Umeshrava Lakshman Rao stood as guarantors for prompt and regular repayment of the aforesaid loan facility availed by Ms NETHRAVATHI RAO (Borrower) D/o UMESH RAO 4. However, after availing the aforesaid loan facility, the said Borrowers have failed to comply with the terms and conditions of the aforesaid loan facility, without any lawful excuse and have thus became chronic defaulters.
5. However, during the usual course of Audit in the Branch, it was found that the borrowers had furnished false address and they had falsely declared their business address. All the aforesaid parties had furnished false particulars. The said loan was sanctioned based on the information and Declaration furnished to the Bank. We state that based on the said information and Declaration furnished by Borrowers and Guarantors, the loan was sanctioned and the said persons made the Bank to believe that the information and declaration was true. They have committed Criminal breach of Trust and misrepresentation of facts, by making the Bank to believe that the information which they furnished was true, but now, it is found that the information are false and incorrect.
6. We state that based on the said information and Declaration furnished by Borrowers and Guarantors, the loan was sanctioned and the said persons made the Bank to believe that the information and declaration was true. They have committed Criminal beach of Trust and misrepresentation of facts, by making the Bank to believe that the information which they furnished was true, but now, it is found that the information are false and incorrect.
7. Further, the Bank Statement and Seal, Income Tax papers are all forged by the Borrowers and Guarantors and the Bank was made to believe that all the said papers are genuine. During the usual course of Audit, it was found the said papers were all forged and concoted and we were made to believe that the same was genuine.
8. With regard to the above mentioned subject we would wish to bring to your notice that the Borrower and Guarantors Colluded mutually and submitted the forged/fudged documents to avail the said Housing Loan.
9. The original documents of the property on which the loan has been availed were submitted in front of the Hon’ble Arbitrators Court, bearing case No.ARB/SCB/BNG/07/2011-12 Bangalore and will be submitted for your perusal as per process and as soon as possible.
10. The Telephone/Mobile No’s provided by the Borrower and the Guarantors at the time of availing the loan were as follows.
Sri Nethravathi:- (Borrower) Mob:-9008065913 Res:- 080-26893171 Off:-080-41654341 Sri Akshay Avinash Aparanji:- (Guarantor) Mob:-9164004272 Res:-080-41446000 Fax:-080-41446006 Sri Umeshraya Lakshmana Rao:- (Guarantor) Mob:-9008065913 Res:080-26893171 In the circumstances, I request your kind goodselves to kindly investigate the matter and do the needful, as per law, in this regard, for which act, I would be obliged to your kind goodselves.
I am herewith enclosing the complete set of copies of documents for your doing the needful.
The details of the Borrowers and the Guarantors are as follows:
BORROWERS:
1.Ms. NETHRAVATHI RAO, D/o UMESH RAO, Aged about 24 years, No.35, Flat No. G, 3rd Floor, C.G.Chinnapa Naidu Layout, Behind Mega Mart, BSK 3rd Stage, Bangalore 560 085 Also At, M/s Picasso Animation, 3rd Floor, GVS Complex, 10th A Main, 3rd Block, Opp. Cosmopolitan Club, Jayanagar, Bangalore-560 011.
GUARANTORS:
1. AKSHAYA APARANJI Aged about 29 year, No.35 , Flat No. G, 3rd Floor, C.G.Chinnapa Naidu Layout, Behind Mega Mart, BSK 3rd Stage, Bangalore 560 085 Also At No.132/4, 2nd Cross, 3rd Block, Jayanagar, Bangalore-560 011. Also At M/s. Aditya Birla Minacs Worldword Ltd, Capus 4A, 2nd Foor, Ecospace Business Park, Ouet Ring Road, Bangalore 530 0373.
2. UMESHRAVA LAKSHMAN RAO S/o Lakshman Rao Aged about 52 year No.5, 7th Main, 9th Cross, R.K.Layout, Padmanabhnagar, BANGALORE 560 070.
Thanking you, Your’s faithfully, For the Saraswat Co-operative Bank Ltd.
Gandhinagar Branch, Bengaluru Officer / Branch Manager ”
11. Bank initiated arbitration proceedings before a sole arbitrator and obtained an award on 20.10.2011. Within next two months, the instant complaint has been filed. No details are forthcoming in the complaint as to which document submitted by the borrower or the accused No.2 did not contain correct details. The Bank statement verification report said to have been obtained by Pamac Finserve Pvt. Ltd. for and on behalf of Saraswath Co-operative Bank Ltd. shows that the Bank had assigned the verification job to a private agency.
12. A careful perusal of the report shows that petitioner’s account was in existence. Learned HCGP argued that the report also shows that the salary was not credited in the said account. The information contained in the report reads as follows:
“REMARKS (Clerarly specify reason for not okay cases and not confirmed cases.) : [REFER TO BANK:] GIVEN STATEMENT IS ONLY TILL 12/2009. NEED LATEST TRANSACTION DETAILS FOR VERIFACTION. CONTACTED PERSON CONFIRMED ONLY ACCOUNT EXISTS. ALSO TOLD APPLICANT SALARY OF ADITYA BIRLA IS NOT CREDITED.” (sic) 13. Learned advocate for the petitioner, in support of his case, relies upon Paragraph No. 10 of decision of Hon’ble Supreme Court in Vinod Natesan Vs. State of Kerala1 and Others which read as follows:
“10. Having heard the appellant as party in person and the learned advocates appearing on behalf of the original accused as well as the State of Kerala and considering the judgment and order passed by the High Court, we are of the opinion that the learned High Court has not committed any error in quashing the criminal proceedings initiated by the complainant. Even considering the allegations and averments made in the FIR and the case on behalf of the appellant, it cannot be said that the ingredients of Sections 406 and 420 are at all satisfied. The dispute between the parties at the most can be said to be the civil dispute and it is tried to be converted into a criminal dispute. Therefore, we are also of the opinion that continuing the criminal proceedings against the accused will be an abuse of process of law and, therefore, the High Court has rightly quashed the criminal proceedings. Merely because the original accused might not have paid the amount in lieu of one month’s notice before terminating the agreement by itself cannot be said to be a cheating and/or having committed offence under Sections 406 and 420 IPC as alleged. We are in complete agreement with the view taken by the High Court.”
14. Admittedly, Bank has initiated recovery proceedings under the provisions of the Arbitration Act 1 2019 (2) SCC 401 and obtained an award. Within two months therefrom, the instant complaint has been filed. Complaint, when read in its entirety, does not disclose as to what misrepresentation was made by accused No.2. On the other hand, Bank Statement Verification Report obtained on behalf of Saraswath Co-operative Bank Ltd. by a private agency shows that petitioner’s account was in existence. Initiation of criminal prosecution is a serious matter. To compel a citizen to undergo criminal investigation and to stand trial, affects his right under Article 21 of the Constitution. Though, the Bank Statement Verification Report was produced in the month of January, 2011, Bank has chosen to file the instant complaint in the month of December, 2011, after obtaining the award. In normal circumstances, Bank is required to take recourse to civil law in recovering the debt. However, it does not preclude the Bank from initiating criminal prosecution in the event, the constituent commits or had committed any criminal act. In the case on hand, except stating that false particulars were given, no specific overt-act is alleged by the Bank in it’s complaint. Strangely, it is stated in the complaint (in Paragraph No.6) that loan was sanctioned based on information and declaration furnished by the borrowers and guarantors. The assertion made on behalf of the petitioner that bank did not whisper about petitioner’s conduct in the Arbitration proceedings is not controverted.
15. In the circumstances, in my view, continuance of criminal prosecution against accused No.2 amounts to abuse of process of law. Resultantly, this petition merits consideration and it is accordingly allowed. All proceedings in C.C.No.6573/2013 pending on the file of IX A.C.M.M., Bengaluru, are quashed so far as petitioner is concerned.
No costs.
Sd/- JUDGE AV