{"id":111335,"date":"1997-06-30T00:00:00","date_gmt":"1997-06-29T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/bank-of-baroda-and-etc-vs-ms-samrat-exports-on-30-june-1997"},"modified":"2016-09-18T08:30:29","modified_gmt":"2016-09-18T03:00:29","slug":"bank-of-baroda-and-etc-vs-ms-samrat-exports-on-30-june-1997","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/bank-of-baroda-and-etc-vs-ms-samrat-exports-on-30-june-1997","title":{"rendered":"Bank Of Baroda And Etc. vs M\/S Samrat Exports on 30 June, 1997"},"content":{"rendered":"<div class=\"docsource_main\">Karnataka High Court<\/div>\n<div class=\"doc_title\">Bank Of Baroda And Etc. vs M\/S Samrat Exports on 30 June, 1997<\/div>\n<div class=\"doc_bench\">Bench: M Chinnappa<\/div>\n<\/p>\n<pre><\/pre>\n<p>ORDER<\/p>\n<p> 1. The petitioners herein are the accused before C.M.M., Bangalore, in C.C. No.<br \/>\n8206\/1996 for the alleged offence under section 409, IPC. The Chief Manager,<br \/>\nChairman, Managing Director and Directors of Bank of Baroda are the accused<br \/>\npersons. They have preferred these petitions against the order passed by the learned<br \/>\nMagistrate directing to issue process to these petitioners.\n<\/p>\n<p> 2. Heard.\n<\/p>\n<p> 3. The learned counsel for the petitioners contended that the complaint was<br \/>\nwithout any bona fide reasons. If the complaint is taken as a whole, no offence is<br \/>\nmade out as against these petitioners. There is no dishonest intention on the part of<br \/>\nthese petitioners to constitute an offence under section 409, IPC. These petitioners<br \/>\nwere not concerned with the transaction as on the date of the alleged incident.<br \/>\nTherefore, he submitted that the learned Magistrate has not applied his judicial mind<br \/>\nin taking cognizance of the offence. Therefore, the petitioners are entitled to be<br \/>\ndischarged.\n<\/p>\n<p> 4. Per contra, the learned counsel for the respondent submitted that all these<br \/>\ncontentions can be raised only before the learned Magistrate. The questions involved<br \/>\nare on factual aspects which cannot be decided by this Court. He also submitted that<br \/>\nit is for the complainant to establish the necessary ingredients to constitute an<br \/>\noffence. As such, the petition is not maintainable.\n<\/p>\n<p> 5. To answer this arguments, it is now necessary to refer to the facts which are<br \/>\nnot in dispute. The petitioner had advanced a loan to Rainbow Granites wherein the<br \/>\ncomplainant was a guarantor. The said Rainbow Granites committed default in<br \/>\npayment of the amount. Therefore, the bank debited a sum of Rs. 82,799\/- to the<br \/>\naccount of the respondent being a guarantor. The debit was notified to the<br \/>\nrespondent. The respondent by his letter dt. 24-8-92 requested for crediting back the<br \/>\namount to his account although he admitted his liability as guarantor. Thereafter, the<br \/>\npetitioner-bank considering the request of the respondent credited his account with<br \/>\nthe amount that has been debited to his account. The respt. became a defaulter in<br \/>\nrespect of the amount due by him to the Bank. Therefore, the petitioner bank filed an<br \/>\napplication before the Debt Recovery Tribunal for recovery of a sum of Rs.<br \/>\n1,15,59,183.74 and the same was nominated to the proprietor of the R 1 when he had<br \/>\nbeen to the bank. It is further alleged by the petitioner that because of the filing of<br \/>\nthe application in Debt Recovery Tribunal, the respdt. appeared to have decided to<br \/>\nharass the bank and its officials on absolutely false and frivolous grounds. With the<br \/>\nview in mind, according to the petitioner, the respondent presented the criminal<br \/>\ncomplaint in the Court of the IV Addl. C.M.M., Bangalore, alleging that by debiting a<br \/>\nsum of Rs. 82,799\/- to his account, the bank has committed an offence of criminal<br \/>\nbreach of trust punishable under section 409, IPC. This complaint was presented on<br \/>\n6-10-1995. The amount was adjusted on 13-2-91. In the meantime, the application<br \/>\nbefore the Debt Recovery Tribunal was also made. Therefore, though the respdt.<br \/>\ncame to know that the amount was debited to its account in the month of August<br \/>\n1992, no complaint was filed against the bank.\n<\/p>\n<p> 6. The learned counsel for the petitioners submitted that on the other hand, the<br \/>\nrespondent had written letters to the bank requesting the bank to proceed against<br \/>\nRainbow Granites to recover the amount or to take possession of the goods belonging<br \/>\nto the Rainbow Granites. Therefore, it is clear that this complaint came to be filed as<br \/>\nrightly pointed out by the learned counsel for the petrs. belatedly, obviously due to<br \/>\nthe fact that an application was filed before the Debt Recovery Tribunal. With this<br \/>\nbackground, it is now necessary to find out as to whether the main ingredient of<br \/>\ndishonest intention has been made out in the complaint.\n<\/p>\n<p> 7. The learned counsel for the petitioners submitted that admittedly this<br \/>\nrespondent was the guarantor and the bank had the lien on all the assets which are<br \/>\navailable in the bank in the account of the respondent and the bank has every right<br \/>\nto credit it to the account due towards the loan either as a prl. borrower or as<br \/>\nguarantor. Hence no offence was made against the petitioner. That being the case,<br \/>\nthe entire proceedings are liable to be quashed. To substantiate this argument he<br \/>\nplaced reliance on a decision, ,<br \/>\n<a href=\"\/doc\/1738333\/\">Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre,<\/a> wherein it is held<br \/>\n(para 7) :\n<\/p>\n<p>  &#8220;The legal position is well-setted that when a prosecution at the initial<br \/>\nstage is asked to be quashed, the test to be applied by the Court is as to whether<br \/>\nthe uncontroverted allegations as made prima facie establish the offence. It is also for<br \/>\nthe Court to take into consideration any special features which appear in a particulars<br \/>\ncase to consider whether it is expedient and in the interest of justice to permit a<br \/>\nprosecution to continue. This is so on the basis that the Court cannot be utilised for<br \/>\nany oblique purpose and where in the opinion of the Court chances of an ultimate<br \/>\nconviction are bleak and, therefore, no useful purpose is likely to be served by<br \/>\nallowing a criminal prosecution to continue, the Court may while taking into<br \/>\nconsideration, the special facts of a case also quash the proceedings even though it<br \/>\nmay be at a preliminary stage.&#8221;\n<\/p>\n<p> With this principle in mind, it is now necessary to consider whether any useful<br \/>\npurpose would be served by continuing this criminal proceedings.\n<\/p>\n<p> From a reading of the entire complaint, it cannot be inferred that the<br \/>\nrequirements of Section 409, IPC. is satisfied. The allegations are that the petitioners<br \/>\nherein had debited a sum of Rs. 82,779\/- to the credit of the bank for the amount due<br \/>\nfrom Rainbow Granites. The complainant&#8217;s grievance is that the bank should have<br \/>\nproceeded against the principal borrower it should not have debited the amount to<br \/>\nthe account of the complainant. Whether that act on the part of the Bank would<br \/>\nconstitute an offence is the questions.\n<\/p>\n<p> 8. To substantiate the argument that it does not amount to an offence, the<br \/>\nlearned counsel for the petitioners placed reliance on a decision , <a href=\"\/doc\/49712\/\">Punjab National Bank v. Surendra Prasad Sinha,<\/a> wherein<br \/>\ntheir Lordships have held that adjustment of FDR securities deposited by a guarantor<br \/>\nthereafter by bank on maturity of said deposits is not a criminal breach of trust. Their<br \/>\nLordships have observed that creditor has right of adjustment in view of the liability<br \/>\nstill subsisting and there is no dishonest intention in adjusting the amount.\n<\/p>\n<p> 9. In , <a href=\"\/doc\/1553951\/\">State Bank of India v. M\/s. Indexport Registered,<\/a> a<br \/>\ndecree was obtained and executed. The said order was challenged before their<br \/>\nLordships on the ground that the decree-holder should have first exhausted the<br \/>\nremedy by way of executing a mortgage decree loan and then proceeded against the<br \/>\nguarantor. Negativing this contention their Lordships over-ruled the decision, , <a href=\"\/doc\/1902450\/\">Union Bank of India v. Manku Narayana and<\/a> held (at p. 1745 of<br \/>\nAIR) :\n<\/p>\n<p>  &#8220;The decree for money is simple decree against the judgment-debtors<br \/>\nincluding the guarantor and in no way subject to the execution of the mortgage<br \/>\ndecree against the judgment-debtor No. 2. If on principle a guarantor could be sued<br \/>\nwithout even suing the principal debtor there is no reason, even if the decretal<br \/>\namount is covered by the mortgaged the decree, to force the decree-holder to<br \/>\nproceed against the mortgaged property first and then to proceed against the<br \/>\nguarantor. It appears the above quoted observation in Manku Narayan&#8217;s case.  (supra) are not based on any established principles of law and\/or<br \/>\nreasons and in fact, are contrary to law. It, of course, depends on the facts of each<br \/>\ncase how the composite decree is drawn up. But if the composite decree is decree<br \/>\nwhich is both a personal decree as well as a mortgage decree, without any limitations<br \/>\non its execution, the decree-holder, in principle, cannot be forced to first exhaust the<br \/>\nremedy by way of execution, of the mortgage decree along and told that only if the<br \/>\namount recovered is insufficient, he can be permitted to take recourse to the<br \/>\nexecution of the persons decree.&#8221;\n<\/p>\n<p> In this case also as stated earlier, the respondent was the guarantor of the bank<br \/>\nand he has debited the amount and subsequently, after the case was filed before the<br \/>\nDebt Recovery Tribunal, the said amount was remitted back to the account of the<br \/>\nrespondent. It may be true that subsequent conduct of the petitioner in remitting<br \/>\nback the amount may not be a mitigating circumstance to proceed against the<br \/>\npetitioners, but the fact clearly discloses that there was no dishonest intention on<br \/>\nthe part of the petitioners not misappropriate this amount for itself.\n<\/p>\n<p> 10. The Madras High Court in <a href=\"\/doc\/653753\/\">N. Mohamed Hussain Sahib v. The Chartered Bank,<br \/>\nMadras,<\/a>  has held :\n<\/p>\n<p>  &#8220;The general lien of bankers over any goods bailed to them is embodied<br \/>\nin S. 171 of the Contract Act. The question is whether any such lien may be over<br \/>\nmoney deposited by the customers &#8230;&#8230;. Whether the right of the bank is called a lien<br \/>\nor set off, the said right can be exercised only by the bank by getting the funds<br \/>\ndeposited in its branch by the customer transferred to it with the consent of the<br \/>\ncustomer.&#8221;\n<\/p>\n<p> It is held that it is not open to the customer to call upon the bank to exercise<br \/>\nany such lien or set off.\n<\/p>\n<p> 11. In Canara Bank v. Taraka Prabhu Publishers Pvt. Ltd., ,<br \/>\nthe Andhra Pradesh High Court has held that in a case of recovery of loan by a bank,<br \/>\ncan transfer the amount deposited in current account to its loan account for set off.<br \/>\nThe Bank has right of set off in terms of contract to recover the debt due to it.\n<\/p>\n<p> 12. From the above decisions and also the averments made in the complaint, it is<br \/>\nabundantly clear that there existed a relationship of creditor and debtor and the<br \/>\ndemands are mutual and between the same parties. Therefore, the bank has a lien or<br \/>\nright of set-off. That right was exercised by the Bank in this case. Therefore, there is<br \/>\nno dishonest intention on the part of the Bank to misappropriate the amount to<br \/>\nconstitution offence under section 409, IPC.\n<\/p>\n<p> 13. The circumstance under which this complaint came to be filed also is a<br \/>\nrelevant factor to be noted. As stated earlier, after the bank approached the Debt<br \/>\nRecovery Tribunal to recover the amount from the complainant after a lapse of about<br \/>\n3 years from the date of adjustment, the complainant filed this case. Therefore, the<br \/>\nlearned counsel for the petitioners is right in his submission that this case was filed<br \/>\nonly to counterblast the claim of the petitioner herein.\n<\/p>\n<p> 14. The learned counsel for the petitioners further argued that entire reading of<br \/>\nthe complaint discloses that all the accused persons &#8216;are&#8217; the office-bearers of the<br \/>\nBank. It is relevant to mention here that the complaint came to be filed on 6-11-95,<br \/>\nwhereas the amount was adjusted on 13-2-91. On the basis of this he submitted that<br \/>\nthese accused persons were never office-bearers of the Bank, during the relevant<br \/>\ntime, i.e. as on 13-12-91. This has not been controverted by the respondent.\n<\/p>\n<p> 15. However, the learned counsel for the respondent submitted that it is purely a<br \/>\nquestion of fact to be established before the Court below. But there must be at least<br \/>\nan averment to the effect that these accused persons were office-bearers as<br \/>\nindicated in the cause title as on the date of the commission of the offence. On the<br \/>\nother hand, the complainant has chosen to file a complaint as against the persons<br \/>\nwho were then office-bearers on the date of filing of the complaint and not on the<br \/>\ndate of debit entry made in the account of the Bank. The learned counsel has also<br \/>\nmade a statement at the Bar that the 2nd accused was not the Chief Manager as on<br \/>\nthat date. So also the 3rd accused was not the Chairman and Managing Director of<br \/>\nthe Bank and all the Directors, i.e. accused Nos. 4 to 14 became Directors much after<br \/>\nthis incident. Therefore, the complaint is filed against them also is not maintainable. It<br \/>\nis also necessary to mention that for the reasons best known to the complainant, he<br \/>\nhas not made the persons who were responsible for debiting to the account of this<br \/>\ncomplainant as accused. It is true that this is a question of fact to be agitated before<br \/>\nthe learned Magistrate but there is nothing to indicate that these are the persons<br \/>\nwho were responsible for the alleged commission of the offence and no material was<br \/>\nplaced before the Court below to show all these accused persons were holding the<br \/>\npost as stated in the cause title. However, bearing in mind the principles enunciated<br \/>\nby their Lordships in (1996 SCC 37) (sic) that High Court can exercise its jurisdiction<br \/>\nunder section 482, Cr.P.C. only in the rarest of rare cases without going into the pros<br \/>\nand cons of the case, I have considered the entire case to find out as to whether the<br \/>\nallegations constitute an offence.\n<\/p>\n<p> 16. For the reasons stated above, I hold that this is a rarest of rare case wherein<br \/>\nit calls for interference by this Court as the complaint came to be filed with a mala<br \/>\nfide motive for the purpose of harassing the petitioner and it Board of Directors just<br \/>\nbecause the petitioner-bank filed the case against the respondent. The issue of<br \/>\nprocess amounts to clear abuse of process of Court resulting in failure of justice.<br \/>\nHence, the petition deserves to be allowed.\n<\/p>\n<p> 17. Accordingly, I proceed to pass the following :\n<\/p>\n<p> ORDER  <\/p>\n<p> Both the petitions are allowed. The entire proceedings in C.C. No. 8206\/95<br \/>\ndirecting issue of process against the accused persons is set aside. The complaint<br \/>\nstands dismissed.\n<\/p>\n<p> 18. Petition allowed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Karnataka High Court Bank Of Baroda And Etc. vs M\/S Samrat Exports on 30 June, 1997 Bench: M Chinnappa 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 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,20],"tags":[],"class_list":["post-111335","post","type-post","status-publish","format-standard","hentry","category-high-court","category-karnataka-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bank Of Baroda And Etc. vs M\/S Samrat Exports on 30 June, 1997 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/bank-of-baroda-and-etc-vs-ms-samrat-exports-on-30-june-1997\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bank Of Baroda And Etc. vs M\/S Samrat Exports on 30 June, 1997 - Free Judgements of Supreme Court &amp; 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