Criminal Application No. 3146 of 2012

3rd October, 2012

Petitioner Counsel: Shri V.D. SAPKAL
Respondent Counsel: Shri L.B. PALLOD, Shri S.D. KALDATE

Cases Cited:
State of Haryana & ors. Vs. Ch.Bhajan Lal & ors., AIR 1992 SC 604 [Para 7]
Ravindra Kumar etc. Vs. Rugmini Ram Raghav Spinners P. Ltd., 2009 ALL MR (Cri) 2159 (S.C.) =AIR 2009 SC 2383 [Para 7]
State of A.P. Vs. Aravapally Venkanna & anr., AIR 2009 SC 1863 [Para 7]
Mrs. Dhanalakshmi Vs. R. Prasanna Kumar & ors., AIR 1990 SC 494 [Para 7]
Rajesh Bajaj Vs. State of NCT of Delhi & ors., 1999 ALL MR (Cri) 548 (S.C.) =AIR 1999 SC 1216 [Para 7]
State of Bihar Vs. Murad Ali Khan & ors., AIR 1989 SC 1 [Para 7]
State Vs. K.V. Rajendran & ors., AIR 2009 SC 46 [Para 7]
Hari Singh Mann Vs. Harbhajan Singh Bajwa & ors., AIR 2001 SC 43 (1) [Para 7]
Om Hemrajani Vs. State of U.P. & anr., 2005 ALL MR (Cri) 240 (S.C.) =AIR 2005 SC 392 [Para 7]
A.V. Mohan Rao & anr. Vs. M. Kishan Rao & anr., 2002 ALL MR (Cri) 2037 (S.C.) =AIR 2002 SC 2653 [Para 7]
Central Bank of India Vs. Ram Harain, AIR 1955 SC 36 [Para 7]
Emperor Vs. Vinayak Damodhar Savarkar, (1911) 13 BOM. L.R. 296 [Para 7]
Pheroze Jehangir Dastoor Vs. The State, AIR 1964 Bom. 264 [Para 7]
M/s Medchl Chemicals & Pharma P. Ltd. Vs. Biological E. Ltd. & ors., 2000 ALL MR (Cri) 999 (S.C.) =AIR 2000 SC 1869 [Para 7]
Lalmuni Devi Vs. State of Bihar & ors., 2001 AIR SCW 2504 [Para 7]
M. Krishnan Vs. Vijay Singh & anr., 2001 ALL MR (Cri) 2406 (S.C.) =AIR 2001 SC 3014 [Para 7]
Prashant Jhunjhunwala s/o Late Shri Rajkumar Jhunjhunwala Vs. Union Territory of Daman & Diu & ors., 2009 ALL MR (Cri) 1964 [Para 7]
M/s Indian Oil Corporation Vs. M/s NEPC India Ltd. & ors., AIR 2006 SC 2780 [Para 7]
K.T. Joseph Vs. State of Kerala & anr., 2009 (15) SCC 199 [Para 8]
S.C. Mathur (Capt.) & anr. Vs. Elektronic Lab. & ors., 2010(2) Bom.C.R. (Cri.) 385 [Para 8]
Netcore Solutions Pvt. Ltd. & ors. Vs. Pinnacle Teleservices Pvt. Ltd. & ors., 2011 ALL MR (Cri) 3873 =2012(1) Bom.C.R. (Cri.) 788 [Para 8]

JUDGMENT

U. D. SALVI, J. :- Rule. Rule made returnable forthwith. Taken up for final hearing by consent of parties.

2. Heard. Perused.

3. Issuance of process under Sections 418 and 420 of the Indian Penal Code, 1860 by learned Chief Judicial Magistrate, Ahmednagar in Criminal Case No.R.T.C.260/2007 is questioned in the present criminal application.

4. The respondent No.1 - National Bank of Oman, registered at Oman, lodged a private complaint (originally numbered as 259/2007 and later on re-numbered as R.T.C. No.260/2007) in the Court of the Chief Judicial Magistrate, Ahmednagar against the petitioner, a resident of District Dakshin Kannada, Karnataka, alleging its cheating resulting in swindling of 43,15,000/- U. A.E. Dirhams, equivalent to 5.178 Crores Indian Rupees at Abu Dhabi (United Arab Emirates).

5. Gist of the complaint is as under -

In the year 1995, the applicant/ accused opened current account with the complainant Bank on a representation that he was holding Indian Passport. The accused slowly gained confidence of the complainant Bank. In February 1996, the accused produced trading licence issued by Abu Dhabi Municipality and Town Planning and represented that he owned firm - M/s Bushra Textiles, situated at Abu Dhabi and engaged in retail and wholesale trading and sale of textiles, garments, stationery items, electronics etc. The accused further represented that he was established in business at Abu Dhabi and was well supported by loyal clientele and was in process of expanding his business, which required financial facilities from the Bank. The accused also represented to the Bank that he had more than enough financial stability and viability to honour the financial commitments and pay back the finances made available to him by the Bank. Based on the said solemn representation, the Company in good faith granted to the accused overdraft facility of 2,50,000/- A. E.D. This facility was enhanced from time to time to the extent of 51 lacs A.E.D. by overdraft loan against trust receipts, local bill limit, credit card etc. till October 2001. The accused, however, committed breach of undertaking and failed to repay the dues of the complainant Bank. The complainant Bank, therefore, contemplated legal action against the accused in order to obtain detention order from the competent Court at U.A.E. The accused thereupon approached the complainant Bank in November 2002 and entered into a restructuring/ settlement agreement with the accused on 12.11.2002 for A.E.D. 43,15,000/- by converting all the outstanding liabilities into a term loan to be repaid in 48 installments. The accused undertook to pay the said amount as per terms of MOU and also issued post dated cheques for 24 monthly installments and gave assurance and undertakings that said cheques would be honoured and loan would be repaid as per the restructuring agreement between the parties and thereby induced the Bank not to take immediate action and obtain detention order. The complainant relied upon the said representation and did not take action against the accused in November 2002. The said cheques were dishonoured for want of sufficient funds in the account of the accused and in meanwhile the accused surreptitiously and clandestinely absconded to India without discharging his loan liability.

6. Challenge to the impugned order is based on the following grounds :-

(i) The allegations made in the complaint and as revealed in the verification, even taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case for issuance of process under Sections 418 and 420 of the Indian Penal Code, 1860.

(ii) The respondent/ accused is residing outside the jurisdiction of Chief Judicial Magistrate, Ahmednagar and yet the process was issued without complying with the mandatory requirements of making an enquiry or directing an investigation for the purpose of deciding whether or not there is sufficient ground for proceeding as contemplated under Section 202 of the Code of Criminal Procedure, 1973.

7. The respondent Bank countered the petition with affidavit-in-reply dated 31.8.2012 and placed before us plethora of judgments as follows :

1. AIR 1992 SC 604

(State of Haryana & ors. Vs. Ch.Bhajan Lal & ors.)

2. AIR 2009 SC 2383 : [2009 ALL MR (Cri) 2159 (S.C.)]

(Ravindra Kumar etc. Vs. Rugmini Ram Raghav Spinners P. Ltd.)

3. AIR 2009 SC 1863

(State of A.P. Vs. Aravapally Venkanna & anr.)

4. AIR 1990 SC 494

(Mrs. Dhanalakshmi Vs. R. Prasanna Kumar & ors.)

5. AIR 1999 SC 1216 : [1999 ALL MR (Cri) 548 (S.C.)]

(Rajesh Bajaj Vs. State of NCT of Delhi & ors.)

6. AIR 1989 SC 1

(State of Bihar Vs. Murad Ali Khan & ors.)

7. AIR 2009 SC 46

(State Vs. K.V. Rajendran & ors.)

8. AIR 2001 SC 43(1)

(Hari Singh Mann Vs. Harbhajan Singh Bajwa & ors.)

9. AIR 2005 SC 392 : [2005 ALL MR (Cri) 240 (S.C.)]

(Om Hemrajani Vs. State of U.P. & anr.)

10. AIR 2002 SC 2653 : [2002 ALL MR (Cri) 2037 (S.C.)]

(A.V. Mohan Rao & anr. Vs. M. Kishan Rao & anr.)

11. AIR 1955 SC 36

(Central Bank of India Vs. Ram Harain)

12. (1911) 13 BOM. L.R. 296

Emperor Vs. Vinayak Damodhar Savarkar

13. AIR 1964 Bom. 264

(Pheroze Jehangir Dastoor Vs. The State)

14. AIR 2000 SC 1869 : [2000 ALL MR (Cri) 999 (S.C.)]

(M/s Medchl Chemicals & Pharma P. Ltd. Vs. Biological E. Ltd. & ors.)

15. 2001 AIR SCW 2504

(Lalmuni Devi Vs. State of Bihar & ors.)

16. AIR 2001 SC 3014 : [2001 ALL MR (Cri) 2406 (S.C.)]

(M. Krishnan Vs. Vijay Singh & anr.)

17. 2009 ALL MR (Cri.) 1964

(Prashant Jhunjhunwala s/o Late Shri Rajkumar Jhunjhunwala Vs. Union Territory of Daman & Diu & ors.)

18. AIR 2006 SC 2780

(M/s Indian Oil Corporation Vs. M/s NEPC India Ltd. & ors.)

8. The petitioner relied upon the following judgments :

1) 2009 (15) SCC 199

(K.T. Joseph Vs. State of Kerala & anr.)

2) 2010(2) Bom.C.R. (Cri.) 385

(S.C. Mathur (Capt.) & anr. Vs. Elektronic Lab. & ors.)

3) 2012(1) Bom.C.R. (Cri.) 788 : [2011 ALL MR (Cri) 3873]

(Netcore Solutions Pvt. Ltd. & ors. Vs. Pinnacle Teleservices Pvt. Ltd. & ors.)

9. It is correct that the complaint lodged by the respondent clearly discloses that the petitioner/ accused did not honour financial commitments he made to the Bank and his post dated cheques were dishonoured for want of sufficient funds. However, the complaint must disclose allegations of deception of the complainant Bank either by misrepresentation of facts or dishonest concealment of facts or both at the time of inducing the Bank to enter into the transactions alleged. Thus, the intention to deceive should be in existence at the time when the inducement was made. Nowhere in the complaint or in the verification statement there is any allegation that the complainant Bank was misrepresented as to the material facts or that there was dishonest concealment of facts on the part of the applicant either at the initial stage or any stage subsequent thereto. Mere failure to keep up a promise subsequently cannot be presumed as leading to cheating. Prima facie, therefore, the bare allegation of cheating does not make out a case against the applicant/ accused for issuance of process under Section 418 or 420 of the Indian Penal code, 1860.

10. Section 202 of the Code of Criminal Procedure, 1973 reads as under :

"Sec. 202 Postponement of Issue of process - (1) Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance of which has been made over to him under section 192, may, if he thinks fit, [and shall in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction,] postpone the issue of process against the accused, and either enquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding.

Provided that no such direction for investigation shall be made-

(a) where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Sessions; or

(b) where the complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath under section 200.

(2) In an inquiry under sub-section (1), the Magistrate may, if he thinks fit, take evidence of witnesses on oath;

Provided that if it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Sessions, he shall call upon the complainant to produce all his witnesses and examine them on oath.

(3) If an investigation under sub-section (1) is made by a person not being a police officer, he shall have for that investigation all the powers conferred by this Code on an officer in charge of a police station except the power to arrest without warrant."

It casts an obligation on the Magistrate to postpone the issuance of process against the accused and either enquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit for the purpose of deciding whether or not there is sufficient grounds for proceeding in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction.

11. Admittedly, the petitioner is a resident of Dakshin Kannada district (Karnataka), a place beyond the area in which Chief Judicial Magistrate, Ahmednagar exercised his jurisdiction. The impugned order, as revealed at annexure to the petition-Page 28, does not reveal that the learned Chief Judicial Magistrate had carried out any enquiry or ordered investigation as contemplated under Section 202 of the Code of Criminal Procedure, 1973 before issuing process. Obviously, the issuance of the impugned order is abuse of the process of law.

12. Order dated 25.2.2011, issuing the process under Sections 418 and 420 of the Indian Penal Code, 1860 by learned Chief Judicial Magistrate, Ahmednagar in Criminal Case R.T.C. No.260/2007 is, therefore, quashed. Rule made absolute in above terms with no order as to costs. Criminal Application No.3146 of 2012 stands disposed off accordingly.

Application allowed.