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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

1. CRM-M-32288-2016 [OM]
Date of Decision:- August 10, 2017

N.D. Prashar ….Petitioner

Versus

State of Haryana and another ….Respondents

2 CRM-M-13299-2017

Mehar Chand Prashar and another ….Petitioners

Versus

State of Haryana and others ….Respondents

CORAM: HON’BLE MR. JUSTICE SHEKHER DHAWAN

Present: Mr. P.S.Ahluwalia, Advocate,
for the petitioner in CRM-M-32288-2016.

Mr. Mohan Sharma, Advocate,
for the petitioners in CRM-M-13299-2017

Mr. Munish Dev Sharma, AAG, Haryana

Mr. Rahul Dev Singh, Advocate for
Mr. Rakesh Gupta, Advocate,
for respondent No.2.

SHEKHER DHAWAN, J.

The above mentioned two petitions under Section 482 of

Code of Criminal Procedure [Cr.P.C.] are for quashing of FIR No. 257

dated 31.12.2015(Annexure P/1) registered under Sections 406, 420 and

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120-B IPC at Police Station, Sector 14, Panchkula and all consequential

proceedings arising therefrom. Therefore, both the petitions are being

disposed of by this common order. For facility of reference, facts are

being taken from CRM-M-32288-2016.

2. Facts relevant for the purpose of decision of these cases; that

Canara Bank submitted a complaint that M/s Globe Enterprises had taken

a loan and in lieu thereof had hypothecated the entire stock with the bank

and the said hypothecated stock was disposed of in clandestine manner

with a view to cause loss to the bank. In fact, the present FIR relates to a

dispute out of loan account whereby M/s Globe Enterprises had

approached the complainant bank for grant of financial assistance and

limit of Rs.2.00 Crores was sanctioned and the same was utilized by M/s

Globe Enterprises. Besides mortgaging their immovable property, stocks

of the firm were also hypothecated as a security for repayment of loan

amount. At the time of visit of bank officials to the premises of M/s Globe

Enterprises, it was discovered that the entire stocks which were

hypothecated with the bank, had been removed and the factory premises

were lying vacant and that was done by the accused persons to defeat the

securities of the bank. Plant and machinery, which was installed at the

factory site, was also found missing.

3. Petitioners have sought quashing the the FIR on the grounds

viz:-

i). that the investigating agency had not taken into
consideration the fact that petitioner N.D.Prashar had
retired from the firm in September, 2014 vide retirement
deed, Annexure P/2. In fact, the present petitioner is co-

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victim with the complainant bank as N.D.Prashar had
been cheated and defrauded by his own brother and
family members. He himself has filed a complaint
(Annexure P/3) for cheating, theft and embezzlement
against his brother on 18.8.2015;

ii). That nothing survives in the case as the brother of the
petitioner, through his family members has repaid the
entire loan amount qua M/s Globe Enterprises which had
led to the registration of the FIR in the present case and
the said fact is also reflected from the order (Annexure
P/4) passed by learned Sessions Judge, Panchkula.
Iii). That on the basis of entire facts, no offence punishable
under Section 406 IPC is made out against the
petitioners.

4. In the reply filed by the State, contention was raised that the

FIR No. 257 dated 31.12.2015 (Annexure P/1) under Sections 406, 420

and 120-B IPC was registered against the present petitioners and co-

accused Deepak Prashar. Final report under Section 173 Cr.P.C. was

submitted on 29.11.2016. As per bank records, loan amount was paid

and bank account of M/s Globe Enterprises was closed. However, while

replying on merits, the State took the plea that there are serious

allegations against the petitioners and they are not entitled to invoke the

inherent jurisdiction of this Court under Section 482 Cr.P.C. as the

petitioners have violated the conditions of loan agreement and after

securing the loan from the bank, they removed the entire stock from the

premises of the factory to defeat the security of the bank. N.D. Prashar,

petitioner never informed the bank with regard to his retirement from M/s

Globe Enterprises. However, repayment of loan amount by the family

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members of the petitioner cannot absolve them from their criminal liability

as the petitioners disposed of the property hypothecated with the bank

and prayed that the present petition be dismissed.

5. At the time of arguments, learned counsel for the petitioners

submitted that the allegations against the petitioners are regarding

misappropriation of hypothecated goods. However, as per judgment of

Hon`ble Supreme Court in M/s Indian Oil Corporation Vs. M/s NEPC

India Ltd. and others, 2006(3) R.C.R. (Criminal) 740, such an act does

not amount to misappropriation or cheating and no offence can be said to

have been committed by the petitioners under Sections 406 and 420 IPC.

6. Learned counsel for the petitioners further contended that in the

present case also, if at all the allegations of the complainant are taken to

be correct, the ownership and possession of the hypothecated property

was never transferred to the bank and as such, it was not a case of

misappropriation or cheating at any stage. On the basis of these facts, the

liability, if any, towards the bank is a civil liability and not a criminal liability.

More so, if at all, the entire version of FIR is taken into consideration, no

offence under Section 420 IPC is made out as there are no allegations of

the complainant – bank that intention of the present petitioners was

dishonest to cheat the bank at the outset. On this point, reliance was

placed upon judgment of this Court in Pardeep Kumar Vs. State of

Haryana, 1996(2) R.C.R. (Criminal) 791.

7. While arguing on these points, learned State counsel as well as

learned counsel for complainant-bank (respondent No.2) submitted that

such like cases of misappropriation of hypothecated property involving

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dishonest intention on the part of loanee, result into economic offence and

there are no grounds for quashing of criminal proceedings. On this point,

reliance was placed on the judgment of Hon`ble Supreme Court in State,

Rep. by Inspector of Police Central Crime Branch Vs. R. Vasanthi

Stanley and Anr., 2015 AIR (SCW) 5375 and Central Bureau of

Investigation Vs. Maninder Singh, 2015 (4) R.C.R. (Criminal) 190.

8. Learned counsel for the respondents also submitted that

petitioner – N.D. Prashar had given in writing to the Superintendent of

Police, SAS Nagar, Mohali that they had constituted two separate firms

and the entire business was being looked after, controlled and managed

by him and M.C.Prashar and his wife Sunita Rani and in fact, the loan

amount raised from the bank account was siphoned to different accounts

and cheating was done by the petitioners and now they cannot take the

plea that no offence has been committed. They further submitted that the

matter is otherwise pending before the Court below for arguments on

charge and these please can at the best be taken by the petitioners before

the trial Court, but it does not make out a case for quashing of FIR.

9. Having considered the submissions made by learned counsel

for the parties and appraisal of record and facts of this case, this Court is

of the considered view that undisputedly, loan facility was sanctioned in

favour of M/s Globe Enterprises and that facility was actually availed by

the petitioners. The properties of M/s Globe Enterprises were

hypothecated with the bank as security and that way, the same was

entrusted-property with the bank. At the time of visit by the officials of the

bank to the factory premises of M/s Globe Enterprises, it was found that

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the entire hypothecated stock was missing and even plant and machinery

was missing and on that basis, present FIR was registered.

10. Now, question comes for consideration is whether disposal of

hypothecated property by the loanee would be a case of misappropriation

and cheating and whether that can be made the basis for registration of

FIR and continuation of criminal proceedings?

11. Learned counsel for the petitioners had placed reliance upon

the judgment in M/s Indian Oil Corporation’s case (supra). However,

the facts of the present case are entirely distinguishable from the facts of

the cited case. In that case, M/s Indian Oil Corporation had taken re-

course to civil remedies and filed two civil suits for recovery of the amount

and also initiated proceedings for winding up of M/s NEPC India Limited

and the Court observed that those facts established that civil remedies

were available in law and IOC had taken recourse to such remedies.

Moreso, Hon`ble Apex Court observed that the defence, that may be

available or facts/aspects when established during the trial, may lead to

acquittal are not grounds for quashing the complaint at the threshold and

that at this stage, the Court was only concerned with the question whether

the averments in the complaint spell out the ingredients of a criminal

offence or not. The facts of the case are also distinguishable from the

facts of M/s Indian Oil Corporation’s case (supra), as in that case,

aircrafts were continued to be stationed at Chennai and Coimbatore

Airports; that the two engines of VT-NEK through removed from the

aircraft were still lying at Madras Airport; the two DART 552 TR engines of

VT-NEJ were dismantled for the purpose of overhauling/repairing; they

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were fitted to another Aircraft (VT-NEH). The facts of the present case do

not indicate any such circumstance.

12. As regard to the view taken by this Court in Pardeep Kumar’s

case (supra), again the facts of the case in hand are quite at variance

from the facts of cited case because in Pardeep Kumar’s case (supra),

the loanee had taken a loan of Rs.25000/- from Punjab National Bank in

March, 1984 and the loan amount was repaid with interest at the agreed

rate in 72 installments. The loanee had been paying the installments upto

17.9.1994 and thereafter, he had not paid the balance amount. On the

basis of FIR, only allegations were that he had violated the terms of

agreement entered into between him and the bank and that was the

reason and basis for quashing of FIR in that case.

13. However, similar matter regarding quashing of FIR involving

economic offence was before Hon`ble Supreme Court in R. Vasanthi

Stanley’s case (supra) and it was observed by the Apex Court that

offence that has the potentiality to create a dent in the financial health of

the institutions is not to be quashed on the ground that there is delay in

trial or the principle that when the matter has been settled it should be

quashed to avoid the loan on the system.

14. Similar view was taken by the Apex Court in Janta Dal Vs.

H.S.Chowdhary, (1992) 4 SCC 305, wherein it was observed as under:-

“.. the inherent power Under Section 482 Code of Criminal
Procedure though unrestricted and undefined should not be
capriciously or arbitrarily exercised, but should be exercised in
appropriate cases, ex debito justitiae to do real and substantial
justice for the administration of which alone the courts exist.”

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15. Hon`ble Apex Court in Maninder Singh’s case (supra)

while dealing with such like cases involving dishonest intention on the part

of the loanee after availing loan from the bank or settling the loan amount

by making the repayment, observed as under :-

(i). Development in means of communication, science

technology etc. have led to an enormous increase in

economic crimes viz. phishing, ATM frauds etc. which are

being committed by intelligent but devious individuals

involving huge sums of public or government money. These

are actually public wrongs or crimes committed against

society and the gravity and magnitude attached to these

offences is concentrated at public at large.

(ii). In economic offences, court must not only keep in view that

money has been paid to the bank which has been defrauded

but also the society at large.

(iii). On the ground that the accused has settled the amount with

the bank would be a misplaced sympathy.

(iv). If the prosecution against the economic offenders are not

allowed to continue, the entire community is aggrieved.”

16. In this case, the allegations against the petitioners are of

‘forgery’, ‘breach of trust’, ‘cheating’ and ’embezzlement of public money’.

After facing such serious charge of forgery, the petitioners want the

proceedings to be quashed on account of some settlement with the bank.

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The development in means of communication, science and technology

etc. have led to an enormous increase in economic crimes viz phishing,

ATM frauds etc. which are being committed by intelligent but devious

individuals involving huge sums of public or Government money. These

are actually public wrongs or crimes committed against society and the

gravity and magnitude attached to these offences is concentrated at public

at large.

17. Hon’ble Supreme Court, while dealing with such like matters

for quashing of FIR and criminal proceedings in exercise of inherent

power under Section 482 Cr. P.C., in Maninder Singh’s case (supra) ,

concluded as under:-

“11. The inherent power of the High Court Under Section 482
Code of Criminal Procedure should be sparingly used. Only
when the Court comes to the conclusion that there would be
manifest injustice or there would be abuse of the process of
the Court if such power is not exercised, Court would quash
the proceedings. In economic offences Court must not only
keep in view that money has been paid to the bank which has
been defrauded but also the society at large. It is not a case
of simple assault or a theft of a trivial amount; but the offence
with which we are concerned is a well planned and was
committed with a deliberate design with an eye of personal
profit regardless of consequence to the society at large. To
quash the proceeding merely on the ground that the accused
has settled the amount with the bank would be a misplaced
sympathy. If the prosecution against the economic offenders
are not allowed to continue, the entire community is
aggrieved.”

18. It is well established principle of law that inherent power

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conferred on this Court under Section 482 Cr.P.C. has to be exercised

sparingly with circumspection and in rare cases and that too to correct

patent illegalities of when some miscarriage of justice is done. The most

common case where inherent jurisdiction is generally exercised is where

criminal proceedings are initiated illegally, vexatiously or without

jurisdiction and where the allegations made in the complaint, even if they

are taken at their face value and accepted in their entirety, do not prima

facie constitute the alleged offence and make out a case against the

petitioner. Such a view was taken by Hon`ble Apex Court in Union of

India Vs. Bajanlal, AIR 1992 SC 604. However, in the present case, if

the contents of the FIR and the material available on the file and relevant

provisions of law, referred to by learned counsel for the parties, are taken

into consideration in the light of the above observations, it is not a case

where prima facie case is made out or there is sufficient material available

on the file to quash the present FIR.

19. Resultantly, the present petitions seeking quashing of the FIR

and consequential proceedings arising therefrom, lack merit and stand

dismissed.

20. Any observations made hereinabove shall not be construed

as an expression of opinion on the merits of the case and shall have no

bearing on trial.

August 10, 2017 ( SHEKHER DHAWAN )
som JUDGE
Speaking/Reasoned Yes
Reportable Yes

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