ORDER
1. The petitioners herein are the accused before C.M.M., Bangalore, in C.C. No.
8206/1996 for the alleged offence under section 409, IPC. The Chief Manager,
Chairman, Managing Director and Directors of Bank of Baroda are the accused
persons. They have preferred these petitions against the order passed by the learned
Magistrate directing to issue process to these petitioners.
2. Heard.
3. The learned counsel for the petitioners contended that the complaint was
without any bona fide reasons. If the complaint is taken as a whole, no offence is
made out as against these petitioners. There is no dishonest intention on the part of
these petitioners to constitute an offence under section 409, IPC. These petitioners
were not concerned with the transaction as on the date of the alleged incident.
Therefore, he submitted that the learned Magistrate has not applied his judicial mind
in taking cognizance of the offence. Therefore, the petitioners are entitled to be
discharged.
4. Per contra, the learned counsel for the respondent submitted that all these
contentions can be raised only before the learned Magistrate. The questions involved
are on factual aspects which cannot be decided by this Court. He also submitted that
it is for the complainant to establish the necessary ingredients to constitute an
offence. As such, the petition is not maintainable.
5. To answer this arguments, it is now necessary to refer to the facts which are
not in dispute. The petitioner had advanced a loan to Rainbow Granites wherein the
complainant was a guarantor. The said Rainbow Granites committed default in
payment of the amount. Therefore, the bank debited a sum of Rs. 82,799/- to the
account of the respondent being a guarantor. The debit was notified to the
respondent. The respondent by his letter dt. 24-8-92 requested for crediting back the
amount to his account although he admitted his liability as guarantor. Thereafter, the
petitioner-bank considering the request of the respondent credited his account with
the amount that has been debited to his account. The respt. became a defaulter in
respect of the amount due by him to the Bank. Therefore, the petitioner bank filed an
application before the Debt Recovery Tribunal for recovery of a sum of Rs.
1,15,59,183.74 and the same was nominated to the proprietor of the R 1 when he had
been to the bank. It is further alleged by the petitioner that because of the filing of
the application in Debt Recovery Tribunal, the respdt. appeared to have decided to
harass the bank and its officials on absolutely false and frivolous grounds. With the
view in mind, according to the petitioner, the respondent presented the criminal
complaint in the Court of the IV Addl. C.M.M., Bangalore, alleging that by debiting a
sum of Rs. 82,799/- to his account, the bank has committed an offence of criminal
breach of trust punishable under section 409, IPC. This complaint was presented on
6-10-1995. The amount was adjusted on 13-2-91. In the meantime, the application
before the Debt Recovery Tribunal was also made. Therefore, though the respdt.
came to know that the amount was debited to its account in the month of August
1992, no complaint was filed against the bank.
6. The learned counsel for the petitioners submitted that on the other hand, the
respondent had written letters to the bank requesting the bank to proceed against
Rainbow Granites to recover the amount or to take possession of the goods belonging
to the Rainbow Granites. Therefore, it is clear that this complaint came to be filed as
rightly pointed out by the learned counsel for the petrs. belatedly, obviously due to
the fact that an application was filed before the Debt Recovery Tribunal. With this
background, it is now necessary to find out as to whether the main ingredient of
dishonest intention has been made out in the complaint.
7. The learned counsel for the petitioners submitted that admittedly this
respondent was the guarantor and the bank had the lien on all the assets which are
available in the bank in the account of the respondent and the bank has every right
to credit it to the account due towards the loan either as a prl. borrower or as
guarantor. Hence no offence was made against the petitioner. That being the case,
the entire proceedings are liable to be quashed. To substantiate this argument he
placed reliance on a decision, ,
Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre, wherein it is held
(para 7) :
“The legal position is well-setted that when a prosecution at the initial
stage is asked to be quashed, the test to be applied by the Court is as to whether
the uncontroverted allegations as made prima facie establish the offence. It is also for
the Court to take into consideration any special features which appear in a particulars
case to consider whether it is expedient and in the interest of justice to permit a
prosecution to continue. This is so on the basis that the Court cannot be utilised for
any oblique purpose and where in the opinion of the Court chances of an ultimate
conviction are bleak and, therefore, no useful purpose is likely to be served by
allowing a criminal prosecution to continue, the Court may while taking into
consideration, the special facts of a case also quash the proceedings even though it
may be at a preliminary stage.”
With this principle in mind, it is now necessary to consider whether any useful
purpose would be served by continuing this criminal proceedings.
From a reading of the entire complaint, it cannot be inferred that the
requirements of Section 409, IPC. is satisfied. The allegations are that the petitioners
herein had debited a sum of Rs. 82,779/- to the credit of the bank for the amount due
from Rainbow Granites. The complainant’s grievance is that the bank should have
proceeded against the principal borrower it should not have debited the amount to
the account of the complainant. Whether that act on the part of the Bank would
constitute an offence is the questions.
8. To substantiate the argument that it does not amount to an offence, the
learned counsel for the petitioners placed reliance on a decision , Punjab National Bank v. Surendra Prasad Sinha, wherein
their Lordships have held that adjustment of FDR securities deposited by a guarantor
thereafter by bank on maturity of said deposits is not a criminal breach of trust. Their
Lordships have observed that creditor has right of adjustment in view of the liability
still subsisting and there is no dishonest intention in adjusting the amount.
9. In , State Bank of India v. M/s. Indexport Registered, a
decree was obtained and executed. The said order was challenged before their
Lordships on the ground that the decree-holder should have first exhausted the
remedy by way of executing a mortgage decree loan and then proceeded against the
guarantor. Negativing this contention their Lordships over-ruled the decision, , Union Bank of India v. Manku Narayana and held (at p. 1745 of
AIR) :
“The decree for money is simple decree against the judgment-debtors
including the guarantor and in no way subject to the execution of the mortgage
decree against the judgment-debtor No. 2. If on principle a guarantor could be sued
without even suing the principal debtor there is no reason, even if the decretal
amount is covered by the mortgaged the decree, to force the decree-holder to
proceed against the mortgaged property first and then to proceed against the
guarantor. It appears the above quoted observation in Manku Narayan’s case. (supra) are not based on any established principles of law and/or
reasons and in fact, are contrary to law. It, of course, depends on the facts of each
case how the composite decree is drawn up. But if the composite decree is decree
which is both a personal decree as well as a mortgage decree, without any limitations
on its execution, the decree-holder, in principle, cannot be forced to first exhaust the
remedy by way of execution, of the mortgage decree along and told that only if the
amount recovered is insufficient, he can be permitted to take recourse to the
execution of the persons decree.”
In this case also as stated earlier, the respondent was the guarantor of the bank
and he has debited the amount and subsequently, after the case was filed before the
Debt Recovery Tribunal, the said amount was remitted back to the account of the
respondent. It may be true that subsequent conduct of the petitioner in remitting
back the amount may not be a mitigating circumstance to proceed against the
petitioners, but the fact clearly discloses that there was no dishonest intention on
the part of the petitioners not misappropriate this amount for itself.
10. The Madras High Court in N. Mohamed Hussain Sahib v. The Chartered Bank,
Madras, has held :
“The general lien of bankers over any goods bailed to them is embodied
in S. 171 of the Contract Act. The question is whether any such lien may be over
money deposited by the customers ……. Whether the right of the bank is called a lien
or set off, the said right can be exercised only by the bank by getting the funds
deposited in its branch by the customer transferred to it with the consent of the
customer.”
It is held that it is not open to the customer to call upon the bank to exercise
any such lien or set off.
11. In Canara Bank v. Taraka Prabhu Publishers Pvt. Ltd., ,
the Andhra Pradesh High Court has held that in a case of recovery of loan by a bank,
can transfer the amount deposited in current account to its loan account for set off.
The Bank has right of set off in terms of contract to recover the debt due to it.
12. From the above decisions and also the averments made in the complaint, it is
abundantly clear that there existed a relationship of creditor and debtor and the
demands are mutual and between the same parties. Therefore, the bank has a lien or
right of set-off. That right was exercised by the Bank in this case. Therefore, there is
no dishonest intention on the part of the Bank to misappropriate the amount to
constitution offence under section 409, IPC.
13. The circumstance under which this complaint came to be filed also is a
relevant factor to be noted. As stated earlier, after the bank approached the Debt
Recovery Tribunal to recover the amount from the complainant after a lapse of about
3 years from the date of adjustment, the complainant filed this case. Therefore, the
learned counsel for the petitioners is right in his submission that this case was filed
only to counterblast the claim of the petitioner herein.
14. The learned counsel for the petitioners further argued that entire reading of
the complaint discloses that all the accused persons ‘are’ the office-bearers of the
Bank. It is relevant to mention here that the complaint came to be filed on 6-11-95,
whereas the amount was adjusted on 13-2-91. On the basis of this he submitted that
these accused persons were never office-bearers of the Bank, during the relevant
time, i.e. as on 13-12-91. This has not been controverted by the respondent.
15. However, the learned counsel for the respondent submitted that it is purely a
question of fact to be established before the Court below. But there must be at least
an averment to the effect that these accused persons were office-bearers as
indicated in the cause title as on the date of the commission of the offence. On the
other hand, the complainant has chosen to file a complaint as against the persons
who were then office-bearers on the date of filing of the complaint and not on the
date of debit entry made in the account of the Bank. The learned counsel has also
made a statement at the Bar that the 2nd accused was not the Chief Manager as on
that date. So also the 3rd accused was not the Chairman and Managing Director of
the Bank and all the Directors, i.e. accused Nos. 4 to 14 became Directors much after
this incident. Therefore, the complaint is filed against them also is not maintainable. It
is also necessary to mention that for the reasons best known to the complainant, he
has not made the persons who were responsible for debiting to the account of this
complainant as accused. It is true that this is a question of fact to be agitated before
the learned Magistrate but there is nothing to indicate that these are the persons
who were responsible for the alleged commission of the offence and no material was
placed before the Court below to show all these accused persons were holding the
post as stated in the cause title. However, bearing in mind the principles enunciated
by their Lordships in (1996 SCC 37) (sic) that High Court can exercise its jurisdiction
under section 482, Cr.P.C. only in the rarest of rare cases without going into the pros
and cons of the case, I have considered the entire case to find out as to whether the
allegations constitute an offence.
16. For the reasons stated above, I hold that this is a rarest of rare case wherein
it calls for interference by this Court as the complaint came to be filed with a mala
fide motive for the purpose of harassing the petitioner and it Board of Directors just
because the petitioner-bank filed the case against the respondent. The issue of
process amounts to clear abuse of process of Court resulting in failure of justice.
Hence, the petition deserves to be allowed.
17. Accordingly, I proceed to pass the following :
ORDER
Both the petitions are allowed. The entire proceedings in C.C. No. 8206/95
directing issue of process against the accused persons is set aside. The complaint
stands dismissed.
18. Petition allowed.