S.K. Murti and Another vs Govind Prasad Agrawal

Narain Singh ''Azad'', J.

The petitioners seek quashment of criminal proceedings in R.T. (Criminal Case No. 5/92), pending in the Court of J.M.F.C., Itarsi, which these petitioners are facing for offences punishable under Sections 409, 465 and 467 of the IPC.

The respondent filed a complaint, which is registered as R.T. (Criminal Case No. 5/92), in the Court of J.M.F.C., Itarsi, against these petitioners, on these facts that he happens to be "No Limit Contractor", and a partners of Firm Mohanlal Hiralal of Itarsi. This firm obtains and executes big contracts in respect of which various departments of the State Govt. issue tenders. Firm Mohanlal Hiralal has its account with Punjab National Bank, Branch Itarsi (petitioner No. 2) and complainant/respondent Govind Prasad Agrawal also has his personal accounts in aforesaid Branch of petitioner No. 2. Presently, respondent/complainant has 15 FDRs. worth Rs. 3,40,000/- in Itarsi Branch of petitioner No. 2. The details of these FDRs are stated in Para 2 of the complaint, the copy of which is marked as Annexure P-10. The respondent/ complainant pledged all the aforesaid 15 FDRs bearing Nos. 69/86, 23/87, 17/87, 5/85, 37/86, 400/83, 398/83, 399/83, 12/84, 20/85, 219/86, 220/86, 221/86, 222/86 and 223/86, with petitioner No. 2, for obtaining overdraft facilities in connection with business of Firm M/s. Mohanlal Hiralal. The aforesaid FDRs, were pledged with petitioner No. 1, by the respondent/complainant in the capacity of specific trust for being used by the petitioners in case the over-draft facilities is provided for Firm Mohanlal Hiralal. In Sept., 1988, the said Firm Mohanlal Hiralal, closed its over-draft facility account and hence the petitioners were not entitled to utilise the aforesaid FDRs. for any other purpose, in the absence of any specific consent in this regard, given by the respondent/complainant. In February, 1989, when respondent approached petitioner No. 2, for obtaining the FDRs, it was informed by petitioner No. 1 that the FDRs are now stand pledged in connection with bank guarantee facility, provided to Firm Mohanlal Hiralal. On inquiry, it could be known that the FDRs of other partners of Firm Mohanlal Hiralal, which were pledged for bank guarantee facility, were already released and returned to these partners by petitioners, in contravention to Banking Rules and its procedure. It could also be known that with a view to avoid the criminal liability and departmental action, the petitioners unauthorisedly affixed the seal on the respondent''s FDRs., for showing that these FDRs are pledged in connection with bank guarantee.

On the basis of statement of respondent recorded u/s 200 and the statement of S.K. Dubey, Senior Manager of petitioner No. 2, recorded u/s 202 of the Cr.PC, the learned J.M.F.C. took cognizance of offences punishable under Sections 409, 465 and 467 of the IPC, against these petitioners by order dated 2-1-1992. After registering their attendance in the Trial Court, these petitioners filed applications dated 24-6-96 and 5-10-96 respectively, seeking their discharge. The learned J.M.F.C. disallowed both of these applications of these petitioners by a common order dated 21-7-97, and hence these petitioners have knocked the door of this Court seeking exercise of inherent powers, for quashment of proceedings of R.T. (Criminal Case No, 5/92), pending in the Court of J.M.F.C., Itarsi.

As repeatedly explained by Their Lordships in Madhavrao Jiwajirao Scindia and Others Vs. Sambhajirao Chandrojirao Angre and Others, , State of M.P. Vs. Harsh Gupta, , and M/s. Medchl Chemicals and Pharma P. Ltd. Vs. M/s. Biological E. Ltd. and Others, , it is the settled position of law that at the initial stage, if the prosecution is sought to be quashed, the Court has to apply this test that whether the uncontroverted allegations, as made, prima fade establish the offence.

It is also found explained by Their Lordships of Supreme Court in Madhavrao Jiwaji Rao Scindia and another (supra), that:--

"It is also for the Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the Court can not be utilised for any oblique purpose and where in the opinion of the Court chances of an ultimate conviction are bleak and therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the Court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage."

Of course, it is also laid down by Their Lordships of the Supreme Court in Medchl Chemicals & Pharma (P) Ltd., (supra) that if a prima facie case is made out disclosing the ingredients of the offence alleged against the accused Court should not quash the complaint, but it is further found dictated by Their Lordships in aforesaid case that in case the allegations do not constitute any offence as alleged, and appear to be patently absurd and improbable, Court should not hesitate to quash the complaint.

No doubt, in proceedings u/s 482 of the Cr.PC, this Court is not required to examine the defence in detail and record a finding of not guilty, as explained in State of M.P. v. Harsh Gupta (supra), but the Court has to consider whether the complaint and the documents filed along with complaint disclose any or all of the offences, alleged against the petitioners.

For a consideration if on uncontrovertcd allegations made in the complaint and the documents annexed to it, whether a prima facie case for offences punishable under Sections 409, 465 and 467 of the IPC is made out against any of the accused, it would be useful to quote the following paras from Syndicate Bank Vs. Vijay Kumar and others, , for appreciating the legal position, as under:--

"6. In Halsbury''s Laws of England, Vol. 20, 2nd Edn. p. 252, Para 695, lien is defined as follows :--

"Lien is in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is the right given by law and not by contract."

In Chalmers on Bills of Exchange, Thirteenth Edition page 91 the meaning of "Banker''s lien" is given as follows:--

"A banker''s lien on negotiable securities has been judicially defined as "an implied pledge". A banker has, in the absence of agreement to the contrary, a lien on all bills received from a customer in the ordinary course of banking business in respect of any balance that may be due from such customer."

In Chitty on Contract, Twenty-sixth Edition, page 389 Paragraph 3032 the Banker''s lien is explained as under:--

"By mercantile custom the banker has a general lien over all forms of commercial paper deposited by or on behalf of a customer in the ordinary course of banking business. The custom does not extend to valuables lodged for the purpose of safe custody and may in any event be displaced by either an express contract or circumstances which show an implied agreement inconsistent with the lien...... The lien is applicable to negotiable instruments which are remitted to the banker from the customer for the purpose of collection. When collection has been made the process may be used by the banker in reduction of the customer''s debit balance unless otherwise earmarked."

In Paget''s Law of Banking Eighth Edition, Page 498 a passage reads as under :--

"THE BANKER''S LIEN

Apart from any specific security, the banker can look to his general lien as a protection against loss on loan or overdraft or other credit facility. The general lien of bankers is part of law merchant and judicially recognised as such."

In Brandao v. Bamett, (1864) 12 Cl & Fin 787, it was stated as under:--

"Bankers most undoubtedly have a general lien on all securities deposited with them as bankers by a customer, unless there be an express contract, or circumstances that show an implied contract, inconsistent with lien"."

The above passages go to show that by mercantile system the Bank has general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right of the banker judicially recognised and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customer''s debit balance. Such a lien is also applicable to negotiable instruments including FDRs which are remitted the Bank by the customer for the purpose of collection. There is no gain saying that such a Hen extends to FDRs also which are deposited by the customer.

It is the case of respondent/complainant that he pledged his FDRs with petitioner No. 2, for obtaining over draft facility to Firm Mohanlal Hiralal, Ilarsi of which he is a partner, but without there being any specific consent, the respondent''s FDRs, are being used and marked to have been pledged against the bank guarantee facility issued in favour of Firm M/s. Mohanlal Hiralal by affixing the seal to this effect, therefore, in view of the aforesaid legal position, the petitioners are neither found to have acted in violation of any law nor converted the amount of FDRs entrusted to them, dishonestly for any purpose and hence neither any ingredient of any offence is prima facie found proved nor the mens rea, thus the petitioners prosecution is found to be a case of harassment with intent to wreck the vengeance, because the respondent, who is a partner of Firm Mohanlal Hiralal, could not successfully avoid his liability against the facility of bank guarantee, provided to the Firm by the petitioners.

Then in the absence of any mens rea, the alleged unauthorised action on behalf of the petitioners, if at all it is proved, may make them liable for a civil action and not to face the unwarranted and improper prosecution, which is initiated for the oblique purpose to wreck vengeance and on conclusion of which, the chances of ultimate conviction are bleak, therefore, no useful purpose is likely to be served, by allowing the prosecution to continue.

In result, this petition is allowed and the criminal proceedings in R.T. (Criminal Case No. 5/92), pending against these petitioners in the Court of J.M.F.C., Itarsi are quashed. The petitioners stand discharged accordingly in respect of offences punishable u/s 409, 465 and 467 of the IPC.