Amar Bajaj S/O Dwarka Das Bajaj vs State Of Madhya Pradesh

Virender Singh, J.

The petitioner has approached this Court for quashing the charge-sheet filed in Crime Number 312/2010 under sections 406, 409, 420, 201, 467, 468,

471, 506 and 120-B IPC and 13(1)(C), 13 (1)(d), r/w. 13(2) of the Prevention of Corruption Act, 1988 registered at Police Station Annapurna against

him and some other persons on the basis of written complaint dated 23/06/1994 filed by the Co-operative Inspector making allegations that the

President and Directors of Savita Grih Nirman Sahkari Sanstha, Indore have misappropriated some amount of its members by forging some

documents and all consequential proceedings of Special case no. 04/2010 pending against him before Special Judge (P.C. Act), Indore.

Relevant facts in brief are that the petitioner was Director of Savita Grih Nirman Sahkari Sanstha Maryadit, Indore (for short Savita Society).

Savita Society purchased agricultural land bearing survey nos. 643/1, 643/1/11, 606/3,597,612,610 and 609 admeasuring 4.605 hectares situated at

Gram Pipliyahana, Indore (for brevity hereinafter called as the disputed land) from Jagriti Grih Nirmaan Sahakari Sanstha Maryadit, Indore (for short

Jagriti Society). As per the complaint, following illegalities have been committed in this sale-purchase:

(i) As per balance sheet of Savita Society of the years 2005-06 an amount to the tune of Rs.78,98,745/- has been shown to be paid to the Jagriti

Society towards purchase of this land but at page no.3 of the same balance sheet an amount to the tune of Rs.30,63,000/-only has been shown paid

towards this purchase. No explanation was submitted to the auditors regarding difference amount of Rs. 48,35,745/-.

(ii) As per balance sheet of the Savita Society, after an earlier payment of Rs. 26,33,000/-, a payment of Rs. 4,30,000/- was made to the Jagriti

Society on account of this purchase in the year 2003-04, while as per Balance Sheet of the Jagriti Society, it had received entire amount of Rs.

30,63,000/- in the year 2002-03. Thus, the President of the Savita Society, Ranbir Singh Chhabda misappropriated this money by making fake entry in

the balance sheet and as such caused loss to the society.

(iii) The Board of Directors of the Savita Society had purchased this land even when most of the plots have already been sold or allotted by the Jagriti

Society to its members. Before this purchase, neither any search report was obtained from the Office of the Registrar, Co-operative Societies nor was

any public notice published.

(iv) This land was already diverted for residential purposes; while office bearers of the Savita Society got the sale deed executed showing it as

agricultural land and evaded stamp duty and as such caused loss to the public exchequer.

Thus, this amount of Rs. 30,63,000/-, which had been collected from the members of the society, has been misappropriated and huge loss is caused to

the Society.

Further, it is alleged that the office bearers of the Savita Society malafidely withheld the information regarding purchase of land bearing survey no.

13/04/02 admeasuring 0.809 hectare situated at village Tejpur from Kasht Nivarak Grih Nirman Sahakari Sanstha Maryadit in the year 2002-03 in

consideration of Rs.46,150/- and they also did not furnish this information to the auditors for next three consecutive years i.e. in 2003-04, 04-05, 05-06.

When this forgery came into the light during inquiry of Kasht Nivarak Society in the year 2006-07, an entry regarding this purchase was made in the

books of account showing this expenditure from the amount received from the petitioner, who was one of director at that time. Thus, the petitioner

forged and fabricated the record by making false and fake entries.

The petitioner has preferred the present petition on the grounds that no complaint has ever been made against the petitioner by the members of the

Society because he has not done anything wrong with them. He has also not done anything contrary to the bylaws, rules and provisions of M.P. Co-

operative Societies Act, 1960. The disputed land has been legally purchased by the Savita Society form the Jagriti Society vide registered sale deeds

dated 26/03/2006 and there is no evidence against him; which shows that he had fabricated, prepared or forged any document and used the same as

genuine for causing loss to the members of the Society.

So far as the allegations are concerned, the contention of the petitioner is that the total sum of Rs.78,98,745/- was paid for purchasing the disputed

land, out of which Rs. 30,63,000/- were paid to the seller Jagriti Society and Rs. 48,35,745/- were paid towards stamp duty and this is clear from bare

perusal of the auditor’s report prepared by the complainant himself and also from the final report submitted by the non-applicant itself.

It is further contended that one of the director of the society Mr. Anil Gupta had preferred a Writ Petition No.5504/2012 before the Hon'ble High

Court of M.P. Bench at Indore for getting a special audit of the society done, which was allowed vide order dated 11.06.2012. Mrs. Usha Kiran

Parkhe, Senior Co-operative Inspector carried out this special audit and held that the amount of Rs.48,35,745/- has been paid by the society for

purchasing stamps and in this special audit, noting objectionable was found in the accounts of the society (Anx A/2& 3).

It is also contended that a case No. 58B-05/2014 under Section 58-B(1) of the Madhya Pradesh Co-operative Societies Act, 1960 was registered

by the Deputy Registrar, Co-operative Societies, Distt. Dhar against the President and Directors of the Savita Society on the basis of the special

report of the same Co-operative Inspector, Mr. R.S. Thakur for the same allegation of misappropriation of Rs. 48,35,745/-spent in purchase of land

from Jagriti Society. In this case, the Deputy Registrar has acquitted the petitioner form all the charges vide order dated 23.05.2015 (Annexure A/4).

The petitioner has not misappropriated Rs.4,30,000/-, which is clear from the Special Audit Report dated 30/10/2014(Annexure A/3).

Thus, allegation of misappropriation of this amount by the petitioner is mistaken, incorrect and erroneous.

Regarding other charges, it is averred that out of the disputed land, the Jagriti Society has never sold or allotted plots to its members and further

the petitioner, who was auditor of the society from 1.04.2005 to 31.03.2006, was not required to enquire about the possession and regarding allotment

of the plots by the Jagriti Society as the sale deed in favour of the Savita Society was executed on the basis of and in compliance of order dated

17/06/2005 passed by the Joint Registrar, Co-operative Societies in case No. E-64/37/05 in which it is clearly mentioned that disputed land is lying

vacant meaning thereby no plot has been sold by the Jagriti Society to its members.

It is asserted that the stamp duty has been paid on diverted land, which is very clear from perusal of the registered sale deed of the disputed land

as well as from the Special Audit Report.

So far as the allegation in respect of Rs.46,150/- paid to the Kasht Nivarak Grih Nirman Sahakari Sanstha Maryadit in the year 2002-03 is

concerned, the aforesaid money was shown paid by the petitioner though due to inadvertent mistake of the accountant, entry to this effect could not be

made in the books, but the mistake was rectified later on as per the provisions of Sec. 61 of M.P. Co-operative Societies Act, 1960, which permit such

rectification. This rectification was found proper as is clear from para 6 of the Special Audit Report dated 30/10/2014 (Annexure A/3).

It is claimed by the petitioner that in the instant case, F.I.R has been lodged ignoring the provision of M.P. Co- operative Societies Act, 1960.

Submission of the petitioner is that in the matters involve dispute between the members and the governing body of the Society, the Registrar (including

Deputy/Joint Registrar etc.), Co-Operative Societies appointed under the Act, 1960 is the only competent authority to initiate the proceedings or to

take action under the provisions of Section 53,57,58 of the Act, 1960 against the erring officials of the Society and to resolve the same. Secondly,

anything done in violation of the provisions of M.P. Co-operative Societies Act, Rules or byelaws is an offence under the Act, 1960 and is punishable

under different provisions of the Act, 1960 itself and the provisions of the Criminal Procedure Code or the Indian Penal Code cannot be invoked in

such cases.

The M.P. Co-operative Societies Act, 1960 itself contains provisions for cognizance of offence and even if any criminal aspect is found in the

business of the Co-operative Society, the Registrar is the only competent authority to lodge the criminal case that too after obtaining permission as per

provisions of the Act, 1960. Section 64, 72 (d), 74 & 76 clearly provide that the police have no authority to investigate the dispute between members

and the Society relating to business of the Society. In the instant case, it is clear from the face of the record that purchasing of land for fulfilling the

object of the Society is purely a business of the Society and if any dispute arises in this regard between the members and the Society, then it is

exclusively required to be dealt with under the provisions of M.P. Co-operative Societies Act, 1960.

Further, byelaw no. 80 of the Society provides that the jurisdiction to resolve the disputes arising out of the course of business of the society or

between the members and the governing body of the society lies with the Registrar, Co-operative Societies, Indore.

Lastly, it is argued that even if all the allegations in the written complaint are taken as true, they did not constitute any criminal offence as defined

u/S. 406, 409, 420, 201, 467, 468, 471, 506 & 120-B of I.P.C and 13(1)(c), 13(1)(d) r/w 13(2) of P.C. Act. Thus, the allegations levelled against the

petitioner regarding misappropriation of money or any other defalcation, are baseless and the final report filed against him cannot be sustained.

In reply so also in written reply, the learned Public Prosecutor has simply supported the allegations made in the complaint and the action taken

thereon by the police. Apart from that the learned Public Prosecutor has also raised few other issues/allegations. It is submitted that the petitioner is a

public servant as defined in Section 2(c)(ix) of the Prevention of Corruption Act, 1988 and Section 87 of the Act, 1960. It is further submitted that as

per the Collector guide line prevailing at that time, the actual value of the land purchased by the Savita Society from the Jagriti Society was Rs.

1,31,72,000/- while this has been shown to be purchased only for Rs. 30,63,000/- and thus huge loss is caused to the members of the Jagriti Society.

No permission of the Registrar, Co-operative Societies was obtained before purchasing the disputed land. Prior to purchase of the disputed land by the

Savita Society, the Jagriti Society had already allotted/sold 25 plots to its members by executing sale deeds/agreements. All transactions have been

done in cash, which is against the law and indicates malafide of the petitioner. The office bearer of the Savita Society prepared a false list of member

and invested their black money through such fake members. Nothing is found in the records of the Kasht Nivaran Society regarding sale of 0.690

hectare land situated in village Tejpur. Former and present presidents of the Kasht Nivaran Society have denied any such transaction in their

statement recorded by the police. While purchasing this land, the Savita Society claimed exemption from the stamp duty twice against the law and

thus, caused loss to the State exchequer to the tune of Rs. 3,32,672/-. The learned Public Prosecutor has prayed for dismissal of the petition.

We have heard rival contentions of both the parties and have gone through the record.

Before appreciating the facts, it would be trite to see the legal position with regard to exercise of jurisdiction by the High Court for quashing the

First Information Report and other consequential proceedings.

The power under Section 482 of Cr.P.C. is extra ordinary in nature and it is settled proposition of law that this power has to be exercised sparingly

and with great care and caution only to give effect to an order under the Code or to prevent abuse of process of the Court or to otherwise secure the

ends of justice and only in the cases where attaining facts and circumstances satisfy that possibilities of miscarriage of justice will arise in case of non-

use of power. In quashing the proceeding, the High Court has to see whether the allegations made in the complaint, if proved, make out a prima facie

offence. In that case only the Court should be permitted to proceed with the trial to establish the liability. At this stage sifting or weighing of the

evidence is neither permitted nor expected. While considering the petition under Section 482 of Cr.P.C., the Courts have to be strictly confined to the

scope and ambit of the provision.

A question as to whether quashing of the FIR filed against the respondent - Bhajan Lal for the offences under Sections 161 and 165, IPC and

Section 5(2) of the Prevention of Corruption Act was proper and legal, came up for consideration before the Hon’ble Supreme Court in State of

Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 (1992 AIR SCW 237 : AIR 1992 SC 604). Reversing the order passed by the High Court, the Apex

Court explained the circumstances under which such power could be exercised. it was explained that such power could be exercised where the

allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just

conclusion that there is sufficient ground for proceeding against the accused. It is observed in para 102 as under:

In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated

by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of

the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could

be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down

any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formula and to give an exhaustive list of myriad kinds of cases

wherein such power should be exercised.

(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety

do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence,

justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section

155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the

commission of any offence and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted

by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever

reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is

instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing

efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for

wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

This propositions of law has later been reiterated in Mahesh Chaudhary v. State of Rajasthan (2009) 4 SCC 443), Shakson Belthissor v. State of

Kerala and Anr, AIR 2010 SC (Supp) 864 and Mosiruddin Munshi v. Md. Siraj AIR 2014 SC 3352 and in many other cases.

It is held in Krishnanan Vs. Krishnaveni (1997 AIR SCW 950 : AIR 1997 SC 987) that when the High Court on examination of the record finds

that there is grave miscarriage of justice or abuse of process of the Courts or the required statutory procedure has not been complied with or there is

failure of justice or order passed or sentence imposed by the Magistrate requires correction, it is the duty of the High Court to have it corrected at the

inception lest grave miscarriage of justice would ensue. It is, therefore, to meet the ends of justice or to prevent abuse of the process that the High

Court is preserved with inherent power and would be justified, under such circumstances, to exercise the inherent power. It may be exercised

sparingly so as to avoid needless multiplicity of procedure, unnecessary delay in trial and protraction of proceedings.

Coming back to the facts of the case in hand. It is vividly clear from the report of auditor of the Savita Society, Special Audit Report of Ms. Usha

Kiran Parkhe, Senior Co-operative Inspector (Anx.A/3) and also from the order of acquittal dated 23.05.2015 delivered by Deputy Registrar, Co-

operative Societies, Dhar (Anx.A/4) that Rs. 48,35,745/-were spent to purchase requisite stamps for the purpose of execution of sale deeds. Thus, we

do not find any substance in the allegation that this money was misappropriated by the petitioner or in the other allegations made in this regard.

It is pertinent to mention here that no objection has been raised by the complainant Shri R.S. Thakur, Co-operative Inspector himself in his audit

report that this amount is misappropriated by the petitioner or that any such information is not furnished to the auditors by him. Further, no opportunity

as provided by Section 61 of the Act, 1960 was granted to the petitioner to explain the expenditure.

There is no dispute that Rs. 30,63,000/- have been paid by the Savita Society to the Jagriti Society towards consideration of the land purchased by

it. Merely due to some discrepancy in the account books of both the Societies regarding the time or date of payment of some amount, until and unless

something is there on record to show that the petitioner was responsible for such laps or that there was any malafide intention in making such entries,

criminal liability cannot be fastened to the petitioner. That apart, no such allegation is made in the complaint against the petitioner.

The learned Public Prosecutor has not rebutted the fact that both the sale deed Nos. 6537 & 6538 dated 26/03/2006 were executed in compliance

of order/direction dated 17/06/2005 given by the Joint Registrar, Co-operative Societies in case No. E-64/37/05. In this order it is mentioned that

disputed land is lying vacant. Otherwise also nothing is on record to show that the purchaser of the disputed land was aware of the fact that some part

of the land he is going to purchase is already been sold by the seller of the land to some other persons. In that case he cannot be held responsible for

cheating. There is no evidence, oral or documentary; is on record to show prima facie that any wrongful loss is caused to any one or the petitioner

wrongfully gained something. Evidence regarding mens rea or cheating is also not produced by the prosecution. Admittedly, no member or office

bearer of the Savita Society has come forward complaining any wrongful loss caused to him due to such wrong decision of the petitioner.

It is mentioned in the sale deed No. 6537 dated 26/03/2006 of survey No. 597, 606/3, 609, 610, 612 area 3.141 hectare village Pipliyahana itself

that the land being sold by the Jagriti Society in favour of the Savita Society is a diverted land. Though such fact is not clearly mentioned in the second

sale deed No. 6538 executed on the same day i.e. 26/03/2006 of survey No. 643/1/1 & 643/1/11 admeasuring 1.464 hectare of the same village

Pipliyahana, but during investigation itself, in reply to the query raised by the City Superintendent of the Police, the Deputy Registrar, Indore; vide

letter No. 579/DyReg/10 Indore dated 24/05/2010 informed that diverted land was sold vide sale deed No. 6537 dated 26/03/2006. This letter further

shows that for registration of the second sale deed also stamp duty is calculated and recovered at the rate determined for diverted land. Therefore,

there is no evasion of stamp duty in execution of both the sale deeds.

The land situated in village Tejpur is purchased in the name of the Savita Society and it is still in the name of the Society. Though this expenditure

of Rs.46,150/- is not disclosed in the account books of the Society in the concerned year 2002-03, but as soon as the mistake brought to the notice by

the auditor, the same was rectified immediately as per the provisions of Sec. 61 of M.P. Co-operative Societies Act, 1960, which permit such

rectification. This rectification was found proper as is clear from para 6 of the Special Audit Report dated 30/10/2014 (Annexure A/3). Thus, this

allegation also cannot withstand on the evidence collected during investigation.

The learned Public Prosecutor could not point out any document or list of members; which the prosecution claims to be forged or fabricated by the

petitioner or that he has used any such document as genuine for causing loss to the members of the Society. In this situation, filing of charge-sheet

under Section 467,468,471 of the IPC does not find support from the record.

In the present case, the prosecution has miserably failed to collect any evidence that the petitioner has abused his authority in any manner or has

dishonestly or fraudulently misappropriated or otherwise converted for his own use any property entrusted to him or has obtained any valuable thing or

pecuniary advantage by corrupt or illegal means or has disposed of any property in violation of any law or contract prescribing the mode of disposal of

such property or even has caused wrongful loss to anyone and need not to say that in absence of such evidence, the prosecution of the petitioner is not

sustainable in the eyes of law.

The prosecution has no reply to the averments of the petitioner mentioned in para 13 to 15 above. We are not reiterating the same here, but it

would be trite to say that the allegations made by the prosecution are related to the matters or disputes which may arise between the members and the

office bearer of the Society or they are related to the conduct of business of the Society. To deal with such matters, the legislation has enacted a

comprehensive law; the Co-operative Societies Act, 1960. There was no occasion for the police to intervene in the matter or to invoke its authority

under the criminal law.

Issues raised by the learned Public Prosecutor during the arguments or in the written reply and mentioned in para 17 above as to whether the

disputed land was undervalued by the parties, stamp duty was not paid properly, exemption on payment of stamp duty was not granted/obtained

legally, transaction in cash between the seller and purchaser was not valid transaction etc. are concerns of the different departments dealing with the

subject. Neither any such allegation is made in the complaint nor is evidence collected or produced with the charge-sheet. Argument that nothing is

found in the records of the Kasht Nivaran Society regarding sale of 0.690 hectare land situated in village Tejpur is contrary to the registered

document, which is still an unchallenged document. It is admitted by the complainant Shri Thakur and by the Dy. Commissioner, Co-operative in their

replies dated 16/03/2013 & 29/04/2014 to the CSP/IO that as per the provisions of the Act, 1960 before purchasing the land by any Co-operative

Society, prior permission of the Registrar, Co-operative Societies is not required. Therefore, the concerns expressed by the learned Public Prosecutor

holds no ground and on these grounds alone, prosecution cannot be permitted to continue.

During perusal of the documents, we have noticed few facts, which we would like to mention here. In the present case, no complaint against the

petitioner is ever made by any member of the society or for that matter by anyone else (Point No. 20 & 11 of reply of the complainant Sh. Thakur &

Dy Commissioner, Co-operative to the CSP/IO dated 16/03/2013 & 01/05/2013), even then the concerned officers of the co-operative department

decided to lodge the FIR on the basis of some discrepancies found in the account books or balance-sheets during audit of the Society that too without

granting him proper opportunity to rectify or to remove the audit objections as prescribed by Section 61 of the Act, 1960. Replies of Deputy

Commissioner, Co-operative to the CSP/IO dated 01/05/2013 & 29/04/2014 shows that audit report of the Savita Society of the year 2005-06 was

communicated to the Society on 30/04/2010. As per the provision of Section 61 of the Act, 1960, the Society was having time to file reply or to rectify

the objections up to 30/06/2010, but without waiting for reply, the decision to file FIR was taken on 19/05/2010 and the same day FIR was lodged by

the auditor himself, the case was registered by the police against the purchaser of the land and the arrest was made, without considering the nature of

the dispute or the documents supplied by the complainant and also without following the process prescribed by Section 76(2) of the Act, 1960; which

prima facie shows lack of bonafide and existence of some extraneous consideration behind the action taken against the petitioner, which needs a deep

probe but that is not the subject matter of the present petition.

Keeping in view the settled proposition of law and the evidence available on record, we are of the considered view that the allegations made

against the petitioner are baseless on the face of it. The case of the petitioner categorically falls under the circumstances; which are deliberated by

Hon’ble the Supreme Court in Bhajan Lal case (supra) under which exercise of extraordinary powers provided under section 482 Cr.P.C. is held

justified. In absence of any element of “cheating†and in nonexistence of any constituent of “misappropriationâ€, and also looking to the

relevant provisions of the Act, 1960 and its overriding effect over the provisions of Cr.P.C. and in view of Section 5 of the Cr.P.C., neither on the

facts nor on the law, the present prosecution is justifiable. The allegations made in the FIR against the petitioner are absurd and inherently improbable.

We are of the considered view that there is no sufficient ground for proceeding against the petitioner. If the prosecution is permitted to be continued,

grave miscarriage of justice would ensue. It is, therefore, to meet the ends of justice or to prevent abuse of the process of law; we hereby quash the

FIR No. 312/2010 registered at Police Station Annapurna and all subsequent and consequential proceedings of Special Case No.04/2010 pending

before Special Judge (P.C. Act) Indore qua the petitioner.