A.Sreenivasa Reddy vs Rakesh Sharma

This Criminal Petition is filed under Section - 482 of the Code of Criminal Procedure, 1973 (for short, ‘the Cr.P.C.’) to quash the proceedings in C.C.No.17 of 2015 pending on the file of Special Judge for CBI Cases at Hyderabad. The petitioner is A.2 in the said case. The offences alleged against him are under Sections 420, 468 and 471 read with 120-B of IPC and under Section 13(2) read with 13(1) (d) of the Prevention of Corruption Act, 1988 ( for short, ‘the PC Act’).

Heard Smt. B.Rachana Reddy, learned counsel for the petitioner, M/s. Pearl Law Associates, learned counsel for the 1st respondent and learned Special Public Prosecutor for CBI appearing for the 2nd respondent. Perused the record.

It is relevant to note that on the complaint lodged by the 1st respondent, 2nd respondent has registered a case in Cr.No.6 of 2013 for the aforesaid offences. Vide proceedings dated 13.02.2015, the 1st respondent has refused to accord permission to prosecute the petitioner herin/A.2 under the provisions of the PC Act. Thereafter, vide proceedings dated 11.04.2015, the 1st respondent has reviewed its earlier order dated 13.02.2015 and accorded sanction to prosecute the petitioner herein under the provisions under the PC Act.

It is also relevant to note that the petitioner herein has questioned the proceedings dated 11.04.2015 by way of filing a writ petition vide W.P.No.33297 of 2016. This Court, vide order dated 30.10.2018 set aside the said proceedings dated 11.04.2015. The 2nd respondent has challenged the said order dated 30.10.2018 passed in W.P.No.33297 of 2016 by the learned Single Judge in Writ Appeal vide W.A.No.119 of 2019 and the Division Bench, vide order dated 15.07.2019, dismissed the said appeal on the ground that the matter is criminal in nature and therefore intra-court appeal would not lie against the said order.

It is relevant to note that the petitioner herein/A.2 along with others have filed discharge application vide Crl.M.P.No.519 of 2015 seeking to discharge him from C.C.No.17 of 2015. Learned III Additional Special Judge for CBI Cases, Hyderabad vide order dated 30.08.2019 considering the above said order dated 30.10.2018 in W.P.No.33297 of 2016 discharged the petitioner herein/A.2 for the offences under Section 13(2) read with 13(1) (d) of the PC Act. However, with regard to discharge application in respect of IPC offences is pending.

The above stated facts would reveal that presently the offences alleged against the petitioner herein are under Sections 420, 468 and 471 read with 120-B of IPC.

The allegations levelled against the petitioner herein in the charge sheet are as follows:-

The petitioner herein was Assistant General Manager, State Bank of India, Overseas Bank, Hyderabad at the relevant point of time. He along with the other accused and in collusion and active connivance with each other hatched a plan to cheat the Bank by sanctioning a corporate loan of Rs.22.50Crores to M/s Sven Genetech Limited, Secunderabad, represented by its Managing Director (A.1). The said Company represented by A.1, had submitted loan proposal for the purpose of purchase of new equipment/implementation of the expansion programme of the said company and Loan Credit limit of Rs.5 Crores for the purpose of purchase of raw material from domestic and a Cash Credit limit of Rs.20.00 Crores for using as working capital from State Bank of India, Overseas Branch, Hyderabad. The facilities sanctioned were not utilized for the purpose for which it was sanctioned and disbursed but diverted the funds for personal benefits and to clear his old debts.

The petitioner herein/A.2, has approved release of corporate loan without compliance of all the pre-disbursement conditions. He has also approved release of Cash Credit limit of Rs.10 Crores on the recommendation of Sri Kuppa Srinivas i.e. A.3-Regional Manager, despite having knowledge of non-installation of machinery proposed to be purchased out of corporate loan amounts. Out of the Loan Credits issued to the tune of Rs.3.99 Crores in favour of M/s Yegna Manojavam Drugs and Chemicals Limited, M/s Haritha Drugs Private Limited and M/s Maxon Organics Private Limited. M/s Sven Genetech Limited did not arrange funds on the respective due dates and hence all the four Loan Credits were devolved on the bank and the devolved liability had to be debited to the Cash Credit Account on respective due dates. The company did not pay the interest and installments on corporate loans and Cash Credit amount and also sale proceeds were not routed through the Cash Credit Account in violation of the sanction terms. The loan accounts of the company were classified as NPA on 28.11.2011 with an outstanding amount of Rs.37.97 Crores. During the said investigation, the 1st respondent-Bank came to know about the said fraud and the role played by the petitioner herein in commission of the aforesaid offences.

The petitioner herein/A.2 had hastily approved the release of Rs.10 Crores out of sanctioned Cash Credit limit of Rs.20 Crores with fraudulent intention to cause wrongful gain to A.1 to A.4 and others. The machinery was not equipped though proposed Cash Credit loan amount for the purpose of purchase of machinery was disbursed in full. Without augmentation of production capacity by equipping new machinery, there was no logic in releasing working capital except for the purpose of cheating. The petitioner herein, being a Branch Manager, it is his responsibility to see the operational functioning of the bank and on his approval only corporate loan amount and working capital was disbursed. Though Sri G.Suresh, Deputy Manager, in his report dated 12.02.2011 had clearly brought out the fact that the opinion reports on suppliers were yet to be obtained and that the search at ROC has not reflected the equity to the tune of Rs.3.416 Crores filing of Form No.2, along with the notice for release of corporate loan amount as requested by the above said company, the petitioner herein and A.3 fraudulently approved on the note to release the loan amount without recording any remarks in respect of non-compliance and sanctioned amount of Rs.3,35,50,000/- was released to the purported suppliers. The said companies were not in existence and not competent to supply the proposed equipment/material but the entire amounts were remitted back to A.1/A.4. The petitioner herein/A.2 had approved to release an amount of Rs.12,26,89,325/- on 28.02.2011 in a similar fashion to the companies without insisting for opinion reports of suppliers which are non-existent or incompetent firms/companies. Thus, the petitioner herein committed the said fraud in connivance with the other accused.

It is relevant to note that the Investigating Officer during the course of investigation, has recorded the statements of 65 witnesses under Section 161 of Cr.P.C. and also collected 545 documents.

Learned counsel for the petitioner would submit that the contents of the charge sheet lack the ingredients of the offences alleged against the petitioner herein. Initially, the 1st respondent has refused to accord sanction to prosecute the petitioner herein and the same was reviewed later. The said proceedings dated 11.04.2015 were set aside by this Court and a Writ Appeal was also dismissed. Therefore, the said order attained finality. The contents of the charge sheet lack the ingredients of the offences alleged against the petitioner herein. The 1st respondent has initiated disciplinary action and imposed penalty on the petitioner herein. The petitioner herein has filed an appeal and the appellate authority has modified the said punishment from ‘reduction to a lower stage in the time scale of pay by one stage for a period of one year with further direction that the Officer will not earn increment(s) to pay during the period of such reduction, and on the expiry of such period, the reduction will have the effect of postponing the future increments to his pay in terms of Rule 67(f) of SBIOSR,’ to ‘administrative warning’. Therefore, the petitioner herein has not committed any offence. Considering the said facts only, the appellate authority has taken a lenient view against the petitioner herein.

Referring to the charge sheet, learned counsel for the petitioner would submit that in the charge sheet itself in the comments column, it was mentioned that the petitioner herein being Assistant General Manager had approved release of only Rs.10.80 Crores and had also observed that regular inspections be conducted and reports put up, which implies that the reports should cover the aspect of machinery installation. While the Assistant General Manager/the petitioner herein had the overall responsibility for follow-up and end-use of funds in loan accounts, he may not be held directly accountable for the lapses in this regard, although he can be held as being vicariously responsible.

Referring to the same, learned counsel for the petitioner would submit that the petitioner herein has not committed any offences. She has also placed reliance on the judgments which will be referred in the following paragraphs. With the said submissions, she sought to quash the proceedings against the petitioner herein in the present Calendar Case.

Learned Special Public Prosecutor for CBI and learned counsel appearing for the 1st respondent would submit that the 1st and 2nd respondents have already taken steps to file SLP challenging the order dated 30.10.2018 in W.P.No.33293 of 2016. Writ Appeal filed by the 2nd respondent was dismissed on maintainability and not on merits. The discharge application filed by the petitioner herein in respect of the offences under the provisions of the PC Act was allowed and with regard to IPC offences is pending. The petitioner herein cannot pursue parallel remedies. The role played by the petitioner herein is specifically mentioned in the charge sheet. Thus, there are specific allegations against the petitioner herein with regard to the release of loan. With the said submissions, he sought to dismiss the present petition.

The above said facts would reveal that the offences alleged against the petitioner herein at present are under IPC Sections only. Prima facie, there are specific allegations against the petitioner herein. The role played by the petitioner herein is also specifically mentioned in the charge sheet. As stated supra, the Investigating Officer has recorded statements of the 65 witnesses under Section 161 of Cr.P.C. and has collected 545 documents during the course of investigation. On consideration of the said statements and documents only, the charge sheet is laid against the petitioner herein.

The above facts would clearly reveal that the allegations levelled against the petitioner herein are serious. It is relevant to note that departmental proceedings are different from the criminal proceedings. It is also relevant to note that the appellate authority has modified the punishment imposed on the petitioner to that of administrative warning. Therefore, the petitioner was not exonerated from the above said charges in toto. However, as stated above, there is no bar for continuation of the criminal proceedings in view of the modification of punishment by the appellate authority. Therefore, the said contention of the learned counsel for the petitioner is not sustainable.

Learned counsel for the petitioner relied upon the principle laid down by the Apex Court in Ashoo Surendranath Tewari Vs. The Deputy Superintendent of Police, EOW,CBI Crl.A.No.575 of 2020 (arising out of SLP(Crl)No.5422 of 2015. In the said case the question fell for consideration was that the standard of proof required in criminal proceedings is higher than that required before the adjudicating authority and in case the accused is exonerated before the adjudicating authority, whether his prosecution on the same set of facts can be allowed or not is the precise question which falls for determination of this case. The Apex Court concluded the proceedings holding that the chances of conviction in a criminal trial involving the same facts appear to be bleak. Therefore, the Apex Court set aside the judgment of the High Court and that of Special Judge and discharged the appellant therein from the offences under the IPC.

Whereas, in the present case, the petitioner herein was not exonerated of the charges levelled against him. The punishment was modified to that of administrative warning, considering the seriousness and graveness of the charges levelled against him. Therefore, the said principle is not applicable to the facts of the present case.

Learned counsel for the respondent has relied upon the judgment of the Apex Court in State of Orissa Vs. Pratima Mohanty Crl.A.Nos.1455-1456 of 2021, dated 11.12.2021 of the Apex Court. wherein the Apex Court, on examination of the facts therein, held that the charge sheet has been filed by the Vigilance Cell after a thorough investigation. It cannot be said that the case falls within any of the exceptions as carved out by this Court in paragraph 102 in the case of State of Haryana Vs. Bhajan Lal AIR 1992 SC 604. It cannot be said that the criminal proceedings initiated against the respondents – accused are an abuse of process of any Court. The allegations levelled against the accused are an instance of abuse of the powers with a mala fide intention and allotment of the plots to the family members by hatching a criminal conspiracy and to allot the plots to the family members at throw away price causing loss to the B.D.A. and the public exchequer. It further held that the power of quashing should be exercised sparingly and with circumspection and in rare case. As per settled proposition of law while examining an FIR/complaint quashing of which is sought, the Court cannot embark upon any enquiry as to the reliability or genuineness of allegations made in the FIR/complaint. Quashing of a complaint/FIR should be an exception rather than any ordinary rule. Normally the criminal proceedings should not be quashed in exercise of powers under Section 482 of Cr.P.C, when after a thorough investigation, the charge sheet has been filed. At the stage of discharge and/or considering the application under Section 482 of Cr.P.C. the Courts are not required to go into the merits of the allegations and/or evidence in detail as if conducing the mini-trial. As held by it, the powers under Section 482 Cr.P.C. is very wide, but conferment of wide power requires the court to be more cautions. It casts an onerous and more diligent duty on the Court.

As stated above, the Investigating Officer has recorded the statements of 65 witnesses under Section 161 of Cr.P.C. and collected 545 documents. On consideration of the same only, the Investigating Officer has laid charge sheet against the petitioner herein and others.

Prima facie, the contents of the charge sheet constitute the offences alleged against the petitioner herein. Therefore, This Court is not inclined to quash the proceedings in C.C.No.17 of 2015 against the petitioner herein.

Learned counsel for the petitioner has also relied upon the judgment in Ashoo Surendranath Tewari (supra) wherein the Apex Court held that whether the accused was exonerated of the charges by the disciplinary authority and criminal proceedings are pending. On considering the principle laid down by it in various judgments, the Apex Court held that the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceedings is on merits. In case, it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the Court. The Apex Court, referring to the report of the Central Vigilance Commission on the same facts, held that the accused should have been exonerated.

As discussed supra, in the present case, the petitioner was not exonerated from the charges by the disciplinary authority. The punishment was modified. Therefore, the facts of the said case are different from the facts of the present case.

It is relevant to note that in the order dated 30.08.2019 in C.C.No.17 of 2015, the trial Court has specifically mentioned that the discharge application vide Crl.M.P.No.519/2015 filed by the petitioner herein for the IPC offences is pending. During the course of arguments, the said facts were admitted by the learned counsel for the petitioner herein. Therefore, the petitioner herein cannot pursue parallel remedies. As discussed supra, the Investigating Officer has recorded the statements of 65 witnesses under Section 161 of Cr.P.C. and collected 545 documents. On consideration of the same only, he has laid charge sheet against the petitioner and other accused. The contents of the charge sheet constitutes the offences alleged against the petitioner herein. The defences taken by the petitioner herein cannot be considered in a petition filed under Section 482 of Cr.P.C. The petitioner herein has to face trial and prove his innocence.

In this regard, it is apt to refer to the decision rendered by the Hon’ble Supreme Court in Kamal Shivaji Pokarnekar v. The State of Maharashtra AIR 2019 SC 847, wherein the Apex Court has categorically held that quashing criminal proceedings was called for only in a case where complaint did not disclose any offence, or was frivolous, vexatious, or oppressive. If allegations set out in complaint did not constitute offence of which cognizance had been taken by Magistrate, it was open to High Court to quash same. It was not necessary that, a meticulous analysis of case should be done before trial to find out whether case would end in conviction or acquittal. If it appeared on a reading of complaint and consideration of allegations therein, in light of the statement made on oath that the ingredients of the offence are disclosed, there would be no justification for High Court to interfere. The defences that might be available, or facts/aspects which when established during trial, might lead to acquittal, were not grounds for quashing complaint at threshold. At that stage, only question relevant was whether averments in complaint spell out ingredients of a criminal offence or not. The Court has to consider whether complaint discloses that prima facie, offences that were alleged against Respondents. Correctness or otherwise of said allegations had to be decided only in trial. At initial stage of issuance of process, it was not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of Accused. Criminal complaints could not be quashed only on ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out in complaint, criminal proceeding shall not be interdicted.

In Skoda Auto Volkswagen India Private Limited Vs. The State of Uttar Pradesh and Ors AIR 2021 SC 931, the Hon’ble Apex Court referring to the various judgments rendered by it categorically held that the High Courts in exercise of its inherent powers under Section 482 of Cr.P.C has to quash the proceedings in criminal cases in rarest of rare cases with extreme caution.

In view of law laid down by the Hon’ble Apex Court and in view of the above said discussion, coming to the present crime as there are serious and specific allegations, this Court is not inclined to quash the proceedings against the petitioner herein/A.2 in C.C.No.17 of 2015 pending on the file of the Special Judge for CBI Cases at Hyderabad.

In the result, the Criminal Petition is dismissed. However, as the subject Calendar Case is of the year 2015, the Special Judge for CBI Cases at Hyderabad, is directed to dispose of the said case (C.C.No.17 of 2015) in accordance with law within a period of three (3) months from the date of receipt of a copy of this order.

Consequently, miscellaneous petitions if any pending, shall stand closed.