N.S.Steels Private Ltd.through Pawan Kumar vs Union of India

Surinder Singh, J.

This is a petition filed under Section 482, Code of Criminal Procedure, by Messrs. N.S. Steels Private Limited, Ram Darbar, Industrial Area, PhaseII, Chandigarh, against the Union of India, through its Managing Director Pawan Kumar, with a prayer for quashing of First Information Report, dated February 24, 1983, lodged by the Deputy Chief Controller of Imports and Exports on behalf of the Chief Controller with the Superintendent of Police, Central Bureau of Investigation, New Delhi. A copy of the said Report has been produced as Annexure P/1 to the present petition.

The averments in the petition may be, briefly, recapitulated. It is stated that the petitionerFirm obtained two Advance Licences from the Deputy Chief Controller of Imports and Exports, Amritsar, after complying with all the formalities required under the law for importing goods from foreign countries. One of the basic requirements in the process of import is the execution of legal undertaking and the furnishing of the Bank Guarantees. The contents of these Bank Guarantees have not been in dictated in the petition, but as would be discussed later, the same were requestioned from the respondent Buearo for the purpose of perusal and reference to these documents shall be made at the appropriate stage. According to the petitioner, the Firm had finished valid Bank Guarantees executed by the Manager of Allahabad Bank. It is stated that the Bank Guarantees were executed by the Bank after the requirement of the Bank for deposit of margin money had been complied with by the petitioner in the shape of two Bank Drafts, dated February 1, 1983, issued by the State Bank of India, Sector 37, Chandigarh, in favour of the Allahabad Bank. A copy of the Certificate issued by the State Bank of India in this behalf has been produced as Annexure P/2 to this petition. The petitioner expressed as apprehension in the petition that the Bank which had issued the Bank Guarantees appeared to have denied having done so far some reasons, which the petitioner has tried to speculate. In substance, it is averred that the Bank Guarantees furnished by the petitioner were genuine and the petitioner is being made a goat scape (scapegoat) on account of some complaint having been filed by some persons inimically deposed (disposed) towards the petitioner''. With these allegations, the petitioner contended that the impugned First Information Report is an abuse of the process of the Court and a prayer is made that the same be quashed.

Notice of the present petition having been issued to the respondent, it contested the petition by filing a written reply under the signatures of one Om parkash, Investigating Officer. Inter alia, it was mentioned in the reply that the First Information Report was registered against the petitionerFirm on the basis of a complaint received from official quarters. It was averred that both the Advance Licenses had been issued to the petitionerFirm subject to the condition that bonds with Bank Guarantees and legal undertaking shall be furnished by the Licensee before effecting clearance of goods from the Customs. The Bank Guarantees are said to have been furnished by the petitioner, having been executed by Allahabad Bank, Dharamshala. It is further stated that the execution of the Bank Guarantees had been denied by the concerned Bank. In the same breath, the stand taken is that `the Bank Guarantees appear to have been obtained fraudulently and with the active connivance of the petitioner with the concerned Bank employee''.

The Hon''ble Supreme Court has laid down the law in regard to the quashing of the First Information Report and the proceedings consequent thereto, in the following observations made by Y.V. Chandrachud, Chief Justice and A. Varadarajan J. (concurring with A.N. Sen, J. in State of West Bengal and others v. Swapan Kumar Guha and others and State of West Bengal and others v. Sanchaita Investments and others, AIR 1982 SC 949, would indicate the nature and scope of interference with the investigation of the case in consequence of a First Information Report :

"A First Information Report which does not allege or disclose that the essential requirements of the penal provision are prima facie satisfied cannot form the foundation or constitution the starting point of a lawful investigation.

"An investigation can be quashed if no cognizable offence is disclosed by the FIR. It is surely not within the province of the police to investigate into a Report (FIR) which does not disclose the commission of a cognizable offence and the Code not impose upon them the duty of inquiry in such cases.

The condition precedent to the commencement of investigation under Section 157 of the Code is that the FIR must disclose, prima facie, that a cognizable offence has been committed. It is wrong to suppose that the police have an unfettered discretion to commence investigating under section 157 of the Code. Their right of inquiry is conditioned by the existence of reason to suspect the commission of a cognizable offence and they cannot, reasonably, have reason so to suspect unless the FIR prima facie, discloses the commission of such offence. If that condition is satisfied, the investigation must go on. The Court has then no power to stop the investigation, for to do so would be to trench upon the lawful power of the police to investigate into cognizable offences. On the other hand, if the FIR does not disclose the commission of a cognizable offence, the Court would be justified in quashing the investigation on the basis of the information as laid or receive. The power to investigate into cognizable offences must, therefore, be exercised strictly on the condition on which it is granted by the Code."

The facts and circumstances, of the present case may now by scrutinised in the light of the above observations.

A perusal of the First information Report (Annexure P/1) indicates that various offences have been mentioned in the same. The question arises if the allegations contained in the First Information Report bring out a prima facie case for the commission of any of those offences. The alleged offences, in the first instance are under Sections 420, 468/471, Indian Penal Code. The question of applicability of Section 120B, Indian Penal Code, would come later. In order to make an assessment, certain facts may have to be noticed.

The allegation in the First Information Report is that the petitioner had furnished two Bank Guarantees i.e. No. AB/16/82, dated June 7, 1982 for Rs. 7,80,313/ and No. AB/15/82, dated June 7, 1982, for Rs. 3,05,918/ issued by M/s. Allahabad Bank, Dharamshala, which Guarantees are said to be not genuine. The learned counsel for the petitioner has submitted in the first instance that the production of the Bank Guarantees was not a precondition to the grant of Advance Licences. On the other hand, these Bank Guarantees had to be finished after the grant of these Licences. In the absence of any material excepting the averment made in reply, it was found expedient to peruse the original Bank Guarantees available with the learned Special Public Prosecutor appearing for the respondent. In Clause (3) of the said bank Guarantees, it is clearly stated that the Import and Export Authorities had permitted the importation of the goods specified in the relevant Certificate by issue of an Advance Licence and one of the terms of the Notification provided that the Importer will execute the bond to ensure that within six months from the date of clearance of the importation into India or such further time as may be granted to him by the Authorities, the License would export the resultant produce mentioned in the Certificate and on this being done, the bond shall become void, otherwise it would remain in force for a period of one year from the date of expiry of the export obligation. It is, thus, obvious that the furnishing of the Bank Guarantees is a normal part of the process of import and export of the goods. A significant fact which comes to notice on persual of the two Bank Guarantees is, that they are signed not only by the Managing Director of the petitioner Firm and the Manager of the Allahabad Bank, Dharamshala, but they also bear the signatures of Mr. K.B. Chaudhary, Deputy Chief Controller of Exports, the last mentioned fact having been confirmed by the learned Special Public Prosecutor, on the instructions of the Departmental Officer present in Court. Furthermore, a perusal of the Notes in the Departmental File also reveals that the Manger of the Allahabad Bank, Dharamshala had personally visited the office of the Department and had confirmed the genuineness of the two Bank Guarantees. Faced with this fact, the learned Special Public Prosecutor submitted that though the Bank Guarantees could not be said to be forged, as they bore the signatures of the Manger of the Bank concerned, it was found during investigation that the Manager did not possess the financial powers to sign the Bank Guarantees for the amounts to which they pertain. However, this circumstances cannot be utilised in support of the charges levelled in the First Information Report against the petitionerFirm which cannot be presumed to be aware of the financial powers of the Manager of the Bank. In view of these circumstances, the question of an offence under Section 468/471, Indian Penal Code, does not arise, even prima facie. In so far as the applicability of section 420, Indian Penal Code, is concerned, the necessary ingredients of the said offence are conspicuous by their absence in the First Information Report.

In regard to the mention in the First Information Report of the offence under Section 120B, Indian Penal Code, as already noticed, selfcontradictory allegations have been made in the First Information Report to the effect that the Bank Guarantees are forged and that the Bank Guarantees had been procured fraudulently. The two stands cannot be reconciled. There is no reference whatsoever to any fact which would even remotely bring out a case for criminal conspiracy on the part of the petitioner. The application of section 120B, Indian Penal Code, has, therefore, to be ruled out.

The remaining two offences referred to in the First Information Report are section 135 of the Customs Act and section 5 of the Imports and Exports (Control) Act, 1947. The former provision envisages that if any person is knowingly concerned in any fraudulent evasion of duty chargeable on any goods or acquires possession etc. of any goods which he knows or has reason to believe are liable to confiscation, he can be punished as provided under the said provision. There is not even a semblance of allegation that the petitioner had committed any of the above mentioned acts, because as already discussed, the two bank Guarantees were found not to be forged even by the Department itself. The application of section 135 of the Customs Act, 1962 does not, therefore, arise on the allegations contained in the First Information Report. As regards the other provision, i.e. section 5 of the Imports and Exports (Control) Act, 147, the same provides that if any person contravenes any orders made under the Act, or any condition of a licence granted under such order, he can be punished for such contravention. There is no allegation in the First Information Report about the petitioner having made such a contravention because the basis for any such allegation, i.e. the furnishing of the Bank Guarantees has been found unexceptionable as above. Both the abovementioned provisions do not, therefore, come into play from the facts contained in the First Information Report.

There is another aspect of this matter. The impugned First Information Report had been registered on February 24, 1983. In spite of lapse of about 21/2 years by now, the matter is said to be still at the investigation stage. The Bank Guarantees in question were executed on June 7, 1982 i.e., about eight months prior to the lodging of the First Information Report. The matter does not appear to have made any headway even for such a long time and it is obviously unfair that the Sword of Damocles should be kept hanging over the petitioner for all times. This is an additional circumstance to be considered whether a First Information Report, which even otherwise does not disclose the commission of a cognizable offence, should be kept alive.

In view of the above discussion, the First Information Report (Copy Annexure P/1) is ordered to be quashed.

JUDGMENT accordingly.