IN THE HIGH COURT OF KERALA AT ERNAKULAM
THE HONOURABLE MR. JUSTICE SUNIL THOMAS
THURSDAY ,THE 27TH DAY OF SEPTEMBER 2018 / 5TH ASWINA, 1940
Crl.MC.No. 1240 of 2012
(AGAINST THE FIR NO.7/2012 OF THE ULIKKAL POLICE STATION)
CHENNALA VEEDU, ARABI, KOLITHATTU POSE, KANNUR.
SRI.SUNIL NAIR PALAKKAT
RESPONDENT/STATE DEFACTO COMPLAINANT:
1 STATE OF KERALA
REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF
2 THE STATION HOUSE OFFICER,
ULIKKAL POLICE STATION, ULIKKAL, KANNUR.
3 THE KOLITHATTU SERVICE CO-OPERATIVE BANK LTD
REPRESENTED BY ITS SECRETARY, KRISHNAN KUTTY,
VAYATHOOR AMSOM DESAM, KOLITHATTU, THALIPARAMBA
TALUK, KANNUR DISTRICT.
SREEJA V PP
THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD
ON 13.09.2018, THE COURT ON 27-9-2018 PASSED THE
Crl.M.C. No.1240/2012 2
The petitioner herein faces investigation in Crime No.7/2012 of
Ulikkal Police station, for offences punishable under sections 406,468
and 423 IPC.
2. Private complaint was laid by the secretary of a Service Co-
operative Bank before the Judicial First Class Magistrate Court,
Mattannur, alleging that the petitioner herein who was the former
Director of the Service Co-operative Bank, had availed various loans
from the bank by offering a registered Continuing Guarantee Bond on
16/3/1994 in relation to 15 cents of land in Vaythoor Amsom, and
thereafter assigned the property to a third party without intimating
the bank. It was stated that, the petitioner herein committed breach
of trust and cheating and, thereby punishable under the relevant
provisions of Indian Penal Code.
3. Pursuant to the crime registered, investigation is progressing.
The petitioner, contending that he has been proceeded against
wrongly due to political reasons and that none of the offence alleged
against him will survive in the eye of law, has approached this court to
quash the proceedings.
4. Heard the learned counsel for the petitioner and the learned
Crl.M.C. No.1240/2012 3
5. 2nd respondent bank did not appear to contest the
proceedings. It seems that, there is no dispute that the petitioner
herein was a former Director and had availed few loans. It is also not
in dispute that, he had executed Continuing Guarantee Bond on
16/3/1004 creating interest in favour of the bank, for recovery of the
money due in relation to an item of his property. It is also not in
dispute that, he had assigned the property to the third party. The
private complaint was laid in January 2012 by the Bank.
6. Assailing the above investigation, the learned counsel for the
petitioner vehemently contended that, even from the admitted facts,
offence attributed to the petitioner herein will not survive, much less
any offence punishable under any of the penal statutes. The crucial
question that arises is whether the act committed by the petitioner
herein amounts to cheating. It is pertinent to note that, in the
complaint though there is an averment that by assigning the property
the petitioner herein committed cheating, there is absolutely no
averment that at the time of availing the loan, nor at any time later at
the time of executing the bond, petitioner herein had dishonest
intention to cheat the bank.
7. This court in an identical situation, in Gopalakrishnan K.
v. State of Kerala and Another (2009 (4) KHC 506), had held that
even if the property is mortgaged to the bank, sale of mortgagor’s
right is not forbidden by law. It was held that, such sale also may not
Crl.M.C. No.1240/2012 4
amount to breach of trust so as to be prosecuted. Such sale in no way
affects the mortgagee’s right. It would be subject to the right of the
mortgagee. Mortgagee can ignore such sale and enforce his right. It
is pertinent to note that, in the case at hand, mortgage deed was a
registered one. Necessarily, the subsequent purchaser must have
notice regarding the existence of mortgage and he purchased
mortgaged property with that information. It is also pertinent to note
that, a mortgage is the transfer of an interest in specific immovable
property for the purpose of securing the payment of money advanced
or to be advanced by way of loan, as defined under section 58 of the
Transfer of Property Act. Hence, there is no entrustment of the
property so as to commit breach of trust to constitute offence under
section 406 IPC,even if the mortgaged property was subsequently
sold. This was the view in Gopalakrishnan’s case(supra) also.
8. The above decision squarely applies to the facts of this case.
Since there is no entrustment of the property or domain over the
property or its dishonest misappropriation to constitute an offence of
breach of trust, the subsequent sale by the petitioner herein will not
constitute an offence punishable under section 406 IPC. The above
decision and the factual matrix show that even if the entire allegation
of the prosecution is accepted, no offence is made out. Since prima
facie no offence is made out, the petitioner herein cannot be called
upon to face the investigation even. The above proceeding is liable to
Crl.M.C. No.1240/2012 5
be given premature termination to avoid inconvenience to the
petitioner herein. In the light of this, I am inclined to allow the
Accordingly, CrlM.C.is allowed. All further proceedings pursuant
to Annexure A1 FIR No.7/12 and complaint dated 6/1/212 stand