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Judgment
H.P. Sandesh, J
These petitions are filed under Section 482 of Cr.P.C praying this Court to quash the criminal proceedings initiated against the respective petitioners in C.C.No.15554/2020 pending on the file of CMM Court, Bengaluru for the offences punishable under Sections 417, 418, 420, 421, 423, 424, 465, 467, 468, 471, 474, 120B and 201 of IPC.
Heard the learned counsel appearing for the respective parties.
The factual matrix of the case of the complainant who is respondent No.2 in both the petitions in the complaint that these petitioners colluding with accused Nos.1 to 4 have indulged in creation of documents with an intention to cheat the prospective purchasers. The petitioners who are the office bearers of Hanumanthanagar Co-operative Bank Limited that is Ex-President, Ex-Vice-President and present Vice-President and Directors have joined hands along with one Lashminasimha Murthy and had entered into a joint agreement with Archana Jayaprasad and the same was registered on 29.10.2014. The registered GPA came to be executed by Archana Jayaprasad in favour of K Lakshminarasimha Murthy and K Lalitha on the very same day and all of them joined together in executing the registered sale deed in favour of Archana Jayaprasad and hence, all of them have indulged in creating of depositing of memorandum of title deed in favour of Manager, Hanumanthanagar Co-operative Bank Limited. It is further contended that all these petitioners knowingfully well that the sale deeds are executed in favour of the brother, brother’s wife, sister with an intention to cheat the complainant and prospective purchasers, they have indulged in creation of documents to defeat the claim of the complainant.
The main allegation against these petitioners that they are the agreement holders with accused Nos.1 to 9. In this regard, a private complaint was registered in PCR No.10589/2018. Having considered the allegations made in the complaint, the learned Magistrate referred the matter to the police under Section 156(3) of Cr.P.C to investigate the matter. After the investigation, the police have filed the charge sheet against these petitioners and the learned Magistrate took the cognizance and issued the process. It is also contended in both the petitions that accused Nos.1 to 9 are the owners of the property and they have created the charge over the property and borrowers have committed default in payment of loan. The bank has initiated steps under SARFASEI Act to recover the possession of the property. In order to prevent the legal action, a false complaint is filed and the same is an abuse of process. It is also contended that the allegation in the charge sheet would clearly shows that the entire allegations are against accused Nos.1 to 9 and there is no allegation whatsoever involving these petitioners in the criminal case. It is also contended that when steps to recover the dues has been initiated on 05.01.2018 by issuing demand notice, thereafter possession notice was issued on 15.06.2018 and sale notice was issued on 10.07.2018 but the complaint was filed on 04.08.2018 i.e., after taking of legal steps. It is also an allegation that suits are filed in Civil Court and two writ petitions are also filed before this Court with an intention to prevent the Bank from initiation of proceeding against the property to recover the dues. Lending to the borrowers on security of the property is the normal business activity of the Bank. Lending of money from the Bank to the borrowers on security cannot be considered as an offence. The complainant cannot be considered as an aggrieved person to the alleged crime. The very fact that he has not sued for specific performance of contract till now which clearly shows that his claim is false and there is no bona fide in his claim. It is also contend that filing of private complaint without following the mandate of the Apex Court is unsustainable and the reference for investigation under Section 156(3) of Cr.P.C is mechanically passed by the learned Magistrate without applying mind. These petitioners have not created any documents as claimed in the complaint and the petitioners have not cheated the complainant. If there is any grievance, that should be against accused Nos.1 to 9 and not against these petitioners who are the office bearers of the Co-operative Bank.
The counsel in support of his arguments, reiterated the grounds urged in both the petitions and contend that the complainant is only an agreement holder and accused Nos.1 to 8 have pledged the property to the Bank and loan has been lent. When the loan amount did not repay, proceedings has been initiated under the SARFAESI Act. The counsel also submits that bank loan was sanctioned and sanctioning of the loan not attracts any criminal offence and very complaint is not maintainable against these petitioners.
Per contra, the learned counsel appearing for the respondent No.1 would vehemently contend that the Bank officials colluded with the developer and created the documents. The counsel also brought to notice of this Court to the statement of objections filed by him wherein he would vehemently contend that the said Lakshminarasimha Murthy entered into various agreements of sale with prospective purchasers after entering into the joint development agreement and collected huge amount by way of advance and also executed the sale agreement which have been marked as Ex.R, R1, R2 and R3. It is also contended that the said Lakshminarasimha Murthy in collusion with bank officials created total five sale deeds in favour of his brother, brother’s wife, brother’s son, brother’s daughter and his driver – Dattatreya and the sale deeds are also produced as Ex.R4 to R8. The counsel also submits that he has given the details of said transaction in the statement of objections. The counsel would vehemently contend that in respect of in each and every transactions created sale deeds and mortgages were also created and the same clearly establishes the collusion between the developer and also these petitioners. The petitioners have indulged in sanctioning the loan i.e., first loan, second loan and third loan in respect of very same purchasers. It is contended that the sanctioning of said loan is against the Master Circular on finance for housing schemes issued to Urban Co-operative Banks by RBI dated 01.11.2010 which mandates a maximum loan of Rs.25/- lakh only against per beneficiary of dwelling units. But in the case on hand, loan was sanctioned more than the value of the property and the same is in contravention of RBI guidelines. The counsel also would vehemently contend that it clearly discloses that all of them have committed the offences which have been invoked in the complaint. The counsel also submits that the very contention of the petitioners is that the loan has been granted on security and the same cannot be considered to be as an offence and also contend that banks cannot unscrupulously lend money in contravention to the Master circular issued by the RBI. The Court has to take note of the manner in which the loan was disbursed by the petitioners and the said money is the public money and the petitioners are indulged in misappropriating the public money. It is also contend that the documents are created and it is not the Managers independent individual decision and the Directors of the Bank are directly responsible for their own actions in the capacity of the Directors of the Bank since it is because of their malfeasance and misfeasance public monies have swindled away by dishonest borrowers in the name of home finance. Hence, prayed this Court to dismiss the petitions.
The learned Additional SPP would contend that police have conducted the investigation and filed the charge sheet and having found the material filed the charge sheet, the learned Magistrate has also taken the cognizance hence, it does not requires any interference by this Court.
Having heard the learned counsel appearing for the respective parties and also on perusal of the material available on record, the points that would arise for the consideration of this Court are:
Whether the petitioners have made out the ground to invoke Section 482 of Cr.P.C?
Whether the initiation of criminal proceedings against the petitioners amounts to an abuse of process?
What order?
POINT NOS.1 AND 2:
Having head the learned counsel appearing for the respective parties and also on perusal of the material available on record it discloses that a private complaint is filed and the learned Magistrate invoking Section 156(3) of Cr.P.C referred the matter to the police and after investigating the matter, the police have filed the charge sheet. This Court has to take note of the allegation made in the charge sheet against these petitioners. On perusal of the charge sheet allegation, in paragraph 3, an allegation is made against these petitioners that a loan was availed from the accused persons by submitting the applications to the Hanumanthanagara Co-operative Bank Limited and then Manager-accused No.9 with the earlier President of the Bank along with the Loan Availment Committee Members that is these petitioners and Directors have misused their powers in collusion with accused No.1 to 7 and inspite of knowingfully well that documents are created, advanced the loan for the period from 06.08.2016 to 14.06.2017 to different accused persons and they did not repay the amount and accused Nos.9, 12 to 24 removed the documents and also the spot inspection report. It is also an allegation that accused Nos.1 and 2 have indulged in entering into an sale agreement and also indulged in creation of sale deed and to that effect accused Nos.9, 12 to 24 have advanced the loan as against the By-Law hence, they have committed the offences which have been invoked in the charge sheet against them.
Admittedly, the petitioners are the Ex-President, Ex-Vice-President, present Vice-President and present office bearers of the Co-operative Bank i.e., Directors. It is important to note that the complainant is an agreement holder and he entered into an agreement with the developer agreeing to purchase the property. It is not in dispute that the suit is also filed before the civil Court and it is the contention of the respondents that suit is filed only for the relief of bare injunction. On the other hand, in the reply arguments, the counsel for respondent No.2 submits that suit is also filed for the relief of specific performance and the same is also pending and one more suit though filed for the relief of permanent injunction later on same is converted for the relief of specific performance. It has to be noted that the main allegation is against accused Nos.1 to 8 who are the land owners and also the joint developers who have entered into an agreement with the original owners for the development of the property. It is not in dispute that finance assistance was given by the Co-operative Bank. The main contention of the petitioners’ counsel is that they lent the money who have given the security and when they did not repay the money, action is taken under the SARFAESI Act and in order to prevent the same, the present private complaint is filed and the same is abuse of process.
The counsel for respondent No.2 also would vehemently contend that along with the statement of objections, documents are produced. No doubt, the documents which are produced is with regard to the sale deeds and deposit of title deeds. It is evident from the records that on different stage, loans were given to the purchasers. It is also the contention of the counsel for respondent No.2 that loans are given on three stages in respect of each of the land owners. It is the main contention of the counsel for respondent No.2 that disbursement of the loan is against RBI guidelines.
It has to be noted that in order to initiate criminal action, there must be cheating at the inception and also to invoke the criminal offences, there must be an intentional indulging of an act. But these petitioners are office bearers of the Co-operative Bank and loans are disbursed on offering the security and if there are any violation of RBI guidelines, an action has to be taken by the concerned department and there cannot be any criminal prosecution at the instance of an agreement holder who entered into an agreement with accused Nos.1 to 9. No doubt, the specific allegation is against accused Nos.1 to 9 with whom the complainant entered into an agreement. The material discloses that Bank has taken all steps to recover the money which was advanced to the borrowers and specific pleading is also made that notices were issued to the defaulters when loan amount was not repaid and action was taken on 05.01.2018 by issuing demand notice and thereafter possession notice was also issued on 15.06.2018 and sale notice was issued on 10.07.2018 and also the proceedings has been initiated under the SARFAESI Act and present complaint is filed on 04.08.2018. The contention of the petitioners that in order to prevent the legal action initiated against whom they have committed default, this complainant joined hands with such persons. No doubt, the learned Magistrate referred the matter to the police under Section 156(3) of Cr.P.C and police also investigated the matter and filed the charge sheet against these petitioners along with other accused persons. With regard to indulging of criminal acts as alleged against these petitioners appears that it is an abuse of process since the loan was granted on security. If there is any such violation, there cannot be a criminal prosecution. The only allegation against these petitioners that they have colluded with the developers. If any sale deeds are executed by these petitioners, then it amounts to a civil dispute and not a criminal offence. It is rightly pointed by the petitioners’ counsel that lending of loan is not an criminal offence and if it is done with an intention to cheat, then, it attracts criminal offence.
No doubt, respondent No.2 also produced the documents of sale deeds and mortgage deeds for having lent the money at different stage. The contention of the counsel for respondent No.2 that the same is against the Master Circular of RBI and no action has been initiated by the concerned department. But at the instance of an agreement holder, there cannot be any criminal prosecution against the petitioners herein. Only making an allegation of mis-utilisation of fund of the Co-operative Bank is not enough to prove that the petitioners have indulged in criminal activities. It is also important to note that when the civil suits are pending before the Court whether it is for the permanent injunction or specific performance and the same can be enforced before the Court and also material discloses that writ petitions were also filed before this Court in order to scuttle the proceedings initiated against the borrowers and the proceedings for recovery of money should take place in accordance with law. The petitioners also initiated the proceedings for recovery of money since there was a charge in favour of the Bank and money is not lent without creation of any charge and if any lapse on the part of the Bank, the concerned authority has to initiate the action against the office bearers with regard to any fraud and mis-utilisation of funds. But for disbursing the loan amount is concerned in violation of RBI Master Circular and indulging in such acts there cannot be any criminal prosecution at the hands of the agreement holders. If there is any grievance of cheating is only against the agreement holders who have executed in favour of the purchasers collecting money. Whether such intentional cheating was there at the inception of entering into an agreement has to be scrutinized by the Court and if there is any violation in disbursement of loan amount, the criminal prosecution cannot be continued against these petitioners. Hence, the proceedings of continuation against these petitioners for the offences particularly for the offences punishable under Sections 417, 418 420 and also in respect of 467, 468, 471, 474, 120B of IPC cannot be invoked against these petitioners making a general allegation against them for the act of only disbursing of amount based on the security which has been offered by the original owners. Hence, I do not find any force in the contention of the counsel for respondent No.2 that these petitioners have indulged in such an act of continuation of criminal proceedings. Thus, the petitioners have made out a grounds to invoke Section 482 of Cr.P.C to quash the proceedings which has been initiated against them. Accordingly, I answer the said points as affirmative.
POINT NO.3:
In view of the discussions made above, I pass the following:
ORDER
The criminal petitions are allowed. Consequently, the proceeding initiated against these petitioners in C.C.No.15554/2020 on the file of CMM Court, Bengaluru is quashed.
In view of disposal of the main petitions, I.As. if any, do not survive for consideration and the same stand disposed of.