JUDGMENT
N.N. Singh, J.
1. This application under Section 482 of the Code of Criminal Procedure has been filed for quashing the order dated 28.8.96 (passed by Chief Judicial Magistrate, Deoghar in G.R. case No. 405 of 1995 taking cognizance of offence under Sections 420, 406 and 403 of the Indian Penal Code against the petitioner and also for quashing the entire prosecution of Jasidih P.S. Case No. 105 of 1995 pending in the Court of Sri B.B. Lal, Judicial Magistrate, 1st Class Deoghar.
2. The fact leading to filing of this application can be briefly stated as such ; That the petitioner, who was proprietor of M/s. Paints Varnish, was sanctioned a term loan of Rs. 2.50 lacs by the Bihar State Finance Corporation (hereinafter to be referred as the ‘Corporation’) which has now swelled upto Rs. 16,63,667.57 paise (as per counter affidavit) including principal and interest. Sri U.C. Mishra, Branch Manager of the Corporation at Deoghar filed a written report against the petitioner on 31.12.94 alleging further that after getting loan of Rs. 2.50 lacs, this petitioner issued letter of hypothecation on 30.6.79 as well as indenture of agreement dated 30.8.79 agreeing that the assets of the unit shall be held as the exclusive property of the Corporation and as such it was basic responsibility of the petitioner to safeguard hypothecated articles and the petitioner was also guarantor of the loan in his personal capacity. In the written report, it was further alleged that factory of the petitioner was inspected by Sri B.R. Mandal, Deputy Manager and Area Incharge who fond that the tools, machinery and parts as well as other materials of the building, detailed in the written report, were removed Jasidih P.S. case No. 105 of 1995 dated 1.7.95 was registered under Sections 406, 420 and 403 of the Indian Penal Code against this petitioner and the police submitted charge sheet against this petitioner whereupon the impugned order dated 28.8.96 was passed by the Chief Judicial Magistrate, Deoghar.
3. According to the petitioner, from simple reading of the written report of the Branch Manager which has been treated as F.I.R. no offence under Sections 420, 406 and 403 of the I.P.C. was constituted and that even uncontroverted allegation made in the written report and the evidence collected in support of it, did not disclose the commission of any offence making out a case against the petitioner. It was asserted that the allegation in the written report at best make out a case of civil dispute and that the learned Chief Judicial Magistrate committed grave error in not applying his judicial mind before taking cognizance. The petitioner’s case is that the allegations are absurd inherently improbable, and that of the offence under Sections 402, (sic) 406 and 403 of the I.P.C. have not been disclosed in the written report and as such the impugned order taking cognizance and continuation of the prosecution case will tantamount to abuse of the process of the Court and as such not sustainable factually and legally.
4. A counter affidavit was also filed on 6.2.98 on behalf of respondent No. 2 giving details of the amount paid to the petitioner as loan and interest accrued thereon. It was claimed that after sanctioning of the loan to the petitioner, the basic responsibility of the petitioner as per agreement executed by him was to safeguard the assets of the unit which was under his possession. The maintainability of this application for quashing the proceeding was also challenged on the ground that the power to quash the proceeding should be exercised in extra ordinary circumstance only and not in a case where prima facie case is made out.
5. I have heard Sri Shivanand Gupta, the learned advocate for the petitioner, Sri J. P. Shukla, senior advocated appearing for the Corporation and the Addl. P.P. appearing ‘or the State and have also gone through the F.I.R. and the written report dated 31.12.94 filed by Sri U.C. Mishra, Branch Manager of the Corporation. The admitted position is that the petitioner applied for sanction of loan from the Corporation and that a sum of Rs. 2.50 lacs was sanctioned and paid to the petitioner and an agreement was also signed between the parties and the petitioner hypothecated the tools, machine – etc. of the factory to the Corporation. This is also admitted fact that in the agreement, the petitioner had agreed that he shall not, without written consent of the Corporation, remove the plant or any part thereof. Sri Gupta appearing for the petitioner contended that for making out a case of criminal breach of trust there must be an entrustment and there must be allegation of misappropriation and the misappropriation must be with dishonest intention. He further contended that because of hypothecation, the ownership of the hypothecated items did not change and it remained as the property of the petitioner and as such in absence of any entrustment, no case of criminal breach of trust was made out. Sri Gupta asserted that this is not the case of the Corporation that from the very out set, the intention of the petitioner was to misappropriate and to cheat the Corporation. He further contended that non-payment of loan advanced to the petitioners made out a case of civil wrong only, for which a civil remedy was available. It was further contended that there was no allegation that this petitioner induced the Corporation to enter into an agreement and then violated it and in absence of that, no case under Section 420 of the I.P.C. could be made out. According to Sri Gupta, at best it can be a case of breach of term of contract and in absence of any menses, no criminal case is made out from the allegation made in the F.I.R.
6. Sri J.P. Shukla, Senior Advocate appearing for the Corporation submitted that it is not a case of civil nature and that even if it is a case of civil nature, a criminal action was also maintainable along with the civil suit, if the act constitutes both civil wrong and an criminal wrong. He put reliance on a decision of the Supreme Court in . Sri Shukla further submitted that the High Court has no jurisdiction to quash a criminal proceeding at a initial stage on the ground of mala fides or animus of complaint if prima facie case was made out. He relied on a decision of the case of State of Maharashtra v. Ishwar Piraji Kalpatri and Ors. reported at 1996 (1) All PLR 76. Sri Gupta learned Advocate for the petitioner submitted that the aforesaid decision is of no help to the Corporation as the prayer of the petitioner was not to quash the proceeding on the ground of mala fide or animus of complaint. So far as the question of prima facie is concerned, Sri Gupta also relied on the decision of the case of C.B.J. v. Duncans Agro Industries Limited reported in (1996) S.S.C 591, where it was held that on identical allegation on criminal case was made out. The following passage of paragraph 2 7 of the aforesaid judgment could give a line for consideration in
this case also-
When some goods are hypothecated toy a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or beneficial interest in or ownership of it must be in the other person and the offender must hold such property entrust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledge. In the instant case, a floating change was made on the goods by way of security to cover up credit facility. In our view, in such case for disposing of the goods covering the security against credit facility the offence of criminal breach of trust is not committed.
7. In the facts and circumstances of the case and in view of the aforesaid decision of the Supreme Court in Duncans Agro Industries case, (supra) no criminal offence is made out for disposing of hypothecated goods covering the security against the credit facility and in absence of any allegation of inducement, no case under Section 420 of the I.P.C. is also made out. So far as non-payment of loan and its interest is concerned, it was purely a case of civil nature for which a civil remedy is available, specially, when there is no case that from the out set the intention of the petitioner was to cheat, the Corporation and misappropriate the amount. In the circumstances allegations in the written report do not make out any prima facie case of criminal nature against the petitioner, and as such. I find it a fit case in which the impugned order dated 28.8.96 and the entire criminal proceeding of Jasidih P.S. case No. 105 of 1995 (G.R. No. 504 (Sic.) of 1995) pending in the Court of Sri B.B. Lal, Judicial Magistrate, Deoghar be quashed as it is an abuse of the process of the Court.
8. In the result, this application is allowed and the impugned order dated 28.8.96 and the entire criminal proceeding in the aforesaid case are hereby quashed.