A.V. Patel vs Karnataka State Industrial and Infrastructure Development Co. Ltd. and Others

N. Ananda, J.—The petitioner has sought for quashing the first information registered in FIR No. 11/2011 pursuant to the reference of PCR. No. 44594/2010 under Section 156(3) of Cr.P.C.

The uncontroverted allegations of the complaint and first information are as follows:--

"The petitioner was working as the Law Officer. He was promoted as Assistant General Manager (Legal) and retired as Deputy General Manager (Legal) of Karnataka State Industrial and Infrastructure Development Corporation Limited, which is a State owned corporation. The petitioner had a duty to scrutinize the documents and take necessary securities in accordance with law before the loan is sanctioned. After the retirement of the petitioner, it was found that the petitioner had processed documents of the following companies;

M/s. Aurmira Graphics Pvt. Ltd.,

M/s. H.K. Datarex Pvt. Ltd.,

M/s. Iqra Transports Pvt. Ltd.,

M/s. K.T. Prints Pvt. Ltd.,

M/s. M.E.P Electronic Pvt. Ltd.,

M/s. Prithvi Cashew Pvt. Ltd.,

M/s. Sunsu Garments Pvt. Ltd.,

M/s. Mallikarjuna Dall Industries,

M/s. Project Planning Pvt. Ltd.,

M/s. Rekha Cements Pvt. Ltd.,

M/s. Saafalya Industries Pvt. Ltd.,

M/s. Saroja Texports Corporation,

M/s. Sathya Sai Surgicals Pvt. Ltd.,

It was found that the petitioner in connivance with the partners and managing directors of the aforestated companies had sanctioned loans by flouting the rules and also by taking inadequate securities. As a result, the loans lent to the aforestated companies could not be recovered by the complainant. The matter is under investigation.

Sri. S.G. Bhagawan, learned Counsel for the petitioner would submit that the averments of complaint and first information do not constitute any cognizable offence.

In the complaint, there is detailed reference to the cognizable offences committed by the accused in relation to the loan extended to the aforestated borrowers. There is also reference to the total loss of Rs. 20.00 crores caused to the complainant on account of the aforestated offence committed by the accused. Therefore, the submission of the learned Counsel for the petitioner that the contents of complaint and first information do not disclose any cognizable offence, cannot be accepted.

The learned counsel for the petitioner relying on a Division Bench judgment of this Court reported in Guruduth Prabhu and Others Vs. M.S. Krishna Bhat and Others, would submit that the learned Magistrate before referring the complaint under Section 156(3) of Cr.P.C. should have applied his mind and should have assigned reasons for making such reference.

In the aforesaid judgment, this Court has held as under:--

"10. Let us first consider whether the learned Magistrate had jurisdiction to refer the matter for Police investigation under Section 156(3), Cr. P.C.

Police Officer''s power to investigate cognizable case.--(1) Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a Court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XIII.

(2) No proceeding of a police officer in any such case shall at any stage be called in question on the ground that the case was one which such officer was not empowered under this section to investigate.

(3) Any Magistrate empowered under Section 190 may order such an investigation as above-mentioned.

Sub-section (1) of Section 156 confers on the police unrestricted power to investigate a cognizable offence without the order of a Magistrate or without a formal first information report. The police are entitled to investigate cognizable offence either on information under Section 154 or on their own motion, on their own knowledge or from other reliable information. This statutory right to investigate cognizable offence cannot be interfered with or controlled by the Courts including the High Court. It is open to the Court to take or not to take action when the police prefer a chargesheet after investigation. But the Court''s function does not begin until the chargesheet is filed. Under Sub-section (2) police can investigate any offence taking the matter to be a cognizable offence although ultimately charges are filed for a non-cognizable offence since while investigating a cognizable offence, the police are not debarred from investigating any non-cognizable offence arising out of the same facts and including it in the report to be filed by them under Section 173, Cr.P.C., Sub-section (3) empowers the Magistrate to refer and direct the police to investigate a cognizable offence. But there is a restriction on the Magistrate before directing the police to investigate under Sub-section (3), the Magistrate should form an opinion that the complaint filed by the complainant before him disclose a cognizable offence. When the allegation made in the complaint does not disclose cognizable offence, the Magistrate has no jurisdiction to order police investigation under Sub-section (3). In the present case, the learned Magistrate without applying his mind had directed an investigation by the police. Such an order which is passed without application of mind is clearly an order without jurisdiction. Therefore, the order passed directing the police to investigate under Sub-section (3) of Section 156, Cr.P.C., passed without jurisdiction is liable to be quashed by this Court either under Section 482, Cr.P.C., or under Article 226 of the Constitution of India. We find from the materials on record, the learned Magistrate has not at all applied his mind before directing police investigation under Section 156(3), Cr. P.C. If the Magistrate had applied his mind, the Magistrate could have found that no cognizable offence is made out even if the entire allegations made in the complaint are accepted. We have already come to the conclusion that none of the complaints filed by the complainants disclose a cognizable offence alleged under Section 167, IPC. On this count alone the direction given by the Magistrate is liable to be quashed. The Hon''ble Supreme Court in State of Haryana and others Vs. Ch. Bhajan Lal and others, has held that the High Court could either exercise its power under Article 226 of the Constitution of India or under Section 482, Cr. P.C. and quash the investigation to prevent abuse of the process of law or to secure the end of justice. It has been held that where uncontroverted allegations made in the complaint do not disclose the commission of a cognizable offence justifying an investigation by police, the High Court is empowered to quash such an investigation."

It is true that the learned Magistrate cannot mechanically refer the complaint under Section 156(3) of Cr.P.C. Whether the learned Magistrate had applied his mind before reference or not, is a matter to be considered by looking into the averments of complaint. After going through the averments of complaint, I find that the learned Magistrate was justified in making a reference under Section 156(3) of Cr.P.C.

The learned Counsel for the petitioner has also relied on a decision reported in Central Bureau of Investigation, Hyderabad Vs. K. Narayana Rao, to contend that the legal opinion furnished by the petitioner cannot be a ground to prosecute him.

In the aforesaid judgment the accused was a panel advocate. In the case on hand the petitioner was working as Deputy General Manager (Legal) of the complainant. Therefore, it is not possible to hold that the petitioner was a panel advocate of the complainant.

There is no merit in the petition. The petition is dismissed.