Dilbagh Rai vs State of Haryana

K.K. Srivastava, J.

This is a petition filed under Section 482 Cr.P.C. praying for the quashing of FIR No. 80 dated 5.6.1996, Police Station Sadhaura District Yamuna Nagar under Sections 420 IPC and order dated 15.2.1997 passed by the learned Judicial Magistrate Ist Class, Jagadhari vide which he did not accept the cancellation report submitted by the Investigating Agency and sent the case for proper investigation the Superintendent of Police, Yamuna Nagar.

The facts relevant for the disposal of this case may be noticed as under :

The Branch Manager, Allahabad Bank Branch, Sadhaura, District Yamuna Nagar (for short to be referred as the Bank) lodged impugned FIR being FIR No. 80 dated 5.6.1996 under Sections 420 IPC against the petitioners, Dilbagh Rai and Ghansham Dass, both residents of Mohalla Quazian, Sadhaura, District Yamuna Nagar alleging, inter alia, as follows :

The petitionersaccused Dilbagh Rai and Ghansham Dass raised crop loan from the Bank in the year 1987 and mortgaged their agricultural land measuring 26 kanals 10 marlas situated in the revenue estate of Village Nadipar, Sadhaura vide registered mortgage deed No. 351 dated 11.8.1997 and a valid charge was created in favour of the said Bank vide report No. 574 dated 13.8.1997 showing a lien of the Bank. The loan was to be repaid back with interest and other charges within six months after harvesting the crop but the accusedpetitioners failed to repay the loan, the interest and other charges. Left with no other alternative, the Bank filed a civil suit for recovery of a sum of Rs. 28,568.70 in the Court of Civil Judge, Jagadhari which was pending since 21.2.1990. It was alleged that during the pendency of the civil suit aforesaid, the petitionersaccused, Dilbagh Rai and Ghansham Dass fraudulently sold a part of the mortgaged land vide saledeed bearing No. 514/10516/1 dated 21.11.1995 knowing fully well that the land aforesaid had been mortgaged with the Bank in lieu of the loan advanced to them. It was alleged that the accusedpetitioners had committed the offence of fraud as well as the offences punishable under Sections 406, 409 read with Section 120B IPC.

The investigation of the case was conducted by Ram Kishan, SI/SHO, Police Station Sadhaura and he reached the conclusion that no case was made out as the accused had already repaid the loan. The complainant was, however, not satisfied with the report of the Investigating Agency and filed a protest petition on 17.9.1996 wherein it was alleged that the investigation of the case was not properly conducted inasmuch as the Investigating Officer had neither procured the mortgage deed nor saledeed in question and Investigating Officer had excluded from consideration the fact that the amount was never paid by the accused to the complainantbank and that it was adjusted as bankers lien from the fixed deposits of the accused lying with the complainantbank. It was further alleged that the accused had in fact committed the offence on the day when the saledeed was executed in order to defeat the claim of the complainantbank. The learned Judicial Magistrate Ist Class, Jagadhari after considering the matter was of the view that the case had not been properly investigated and as such he ordered the investigation to be conducted afresh and sent the case for proper investigation.

The accused, Dilbagh Rai and Ghansham Dass feeling aggrieved against the order passed by the learned Judicial Magistrate Ist Class, copy Annexure P1, have filed this petition seeking the setting aside of that order i.e. Annexure P1 and also for quashing of the FIR.

Notice of motion was issued to the respondents, i.e. State of Haryana and Branch Manager, Allahabad Bank Branch, Sadhaura, District Yamuna Nagar. Separate replies have been filed by respondent No. 1State of Haryana and respondent No. 2, the Branch Manager, Allahabad Bank Branch, Sadhaura, District Yamuna Nagar. In the reply filed by respondent No.1State of Haryana, through Shri Ram Kishan, SI/SHO Police Station, Sadhaura, it was mentioned in para 4 as under :

"That the contents of Para No. 4 of the petition are admitted to the extent that the cancellation report sent by the Police was not accepted by the Illaqa Magistrate and vide order dated 15.9.1997 the Ld. Illaqa Magistrate sent the case back for further Investigation. It is further submitted that thereafter the matter was further investigated and after completing Investigation the Challan was put in Court on 23.2.1998."

Respondent No. 2 denied the averments made by the petitioner in the grounds for quashing of the FIR and the impugned order of Judicial Magistrate. It was contended by respondent No. 2 that the money in question which was to be recovered by the Bank from the petitioner has not been voluntarily paid by the petitioner. The amount has been appropriated/liquidated with regard to outstanding amount along with interest and other legal expenses which came to Rs. 65,589.20, from the fixed deposit receipts as the petitioner defaulted and refused to pay the amount in question to the Bank. Regarding the civil suit filed by the Bank for the recovery of the amount from the petitioners it was mentioned in para (v) of the written statement of respondent No. 2 as under :

"That the contents of subpara (v) are absolutely wrong and denied. Though, it is a matter of fact that the Civil suit in question has been withdrawn by respondent No. 2. On the basis of the statement of his counsel that he has recovered the entire amount from the defendant i.e. the petitioner in the present case and on these circumstances, the Civil suit was withdrawn, and the respondent counsel never gave statement that the entire payment had been made. This is even clear from Annexure P/3 which has been produced by the petitioner. So, the petitioner has tried to misrepresent this Hon''ble court by putting false story before this Hon''ble court in the corresponding para, and even on this ground, the present petition for quashing is liable to be dismissed."

I have heard learned counsel for the petitioners and the learned State counsel and also the learned counsel for respondent No. 2 and have fully perused the record of the case and impugned order.

Shri K.K. Aggarwal, learned Sr. Advocate appearing for the petitioners contended that since the amount of loan stood paid by the adjustment of the amount of FDR which was with the bank aforesaid, the impugned FIR did not survive and the learned Judicial Magistrate was in error in law in refusing to accept the cancellation report and to direct the investigation of the case to be made by the Police. In support of his arguments learned counsel for the petitioners placed reliance on a judgment of the Hon''ble Supreme Court reported in C.B.I., New Delhi v. Duncans Agro Industries Ltd., Calcutta, 1996(3) RCR 60. Learned counsel for respondent No. 2 has also placed reliance on the aforesaid decision in the case of C.B.I., New Delhi (supra). The other authority relied by the learned counsel for the petitioners is a judgment of a Single Judge of this Court reported in Sunita Bajaj v. Punjab and Sind Bank, 1998(1) RCR (Criminal) 129. So far as the judgment of the single Judge in Sunita Bajaj (supra) is concerned the learned Single Judge had mainly relied on the judgment of the Hon''ble Supreme Court in Duncans Agro Industries Ltd., Calcutta (supra). The learned Single Judge found that the documents executed by the loanee created hypothecation in favour of the bank which was a floating charge created on the goods which are supposed to be purchased ultimately by the loanee.

It will appear from perusal of Annexure P3, which is the copy of the order passed by Civil Judge (Junior Division), Jagadhari on 29.7.1996 in Civil Suit No. 54/90/95, in the case of Allahabad Bank Head Office and another v. Ghansham Dass and another that the counsel for the plaintiff made a statement before the Civil Judge, (Junior Division) that the entire amount had been recovered from the defendants and the plaintiffBank did not want to proceed with the case and the same was prayed to be dismissed as withdrawn. The learned Civil Judge (Junior Division), Jagadhari accordingly granted the request of the learned counsel for the plaintiff and dismissed the suit as withdrawn. The order passed on 29.7.1996 by the learned Civil Judge (Junior Division), Jagadhari may be referred to which reads as under :

"File taken up today on the application of learned counsel for the plaintiff that he has recovered the entire amount from the defendants and now the plaintiff Bank does not want to proceed with the case and the same may kindly be dismissed as withdrawn. Statement of learned counsel for the plaintiff to this effect. Keeping in view the request and statement of learned counsel for the plaintiff the suit is hereby dismissed as withdrawn. File be consigned to the record room."

It may be mentioned that once the Bank withdrew the civil suit filed for the recovery of the amount against the petitioners and the same was dismissed as withdrawn, the offence of cheating, even if prime facie shown to be committed by the petitioners by their transferring the land hypothecated with the Bank, should be treated as having been compounded as has been held by the Hon''ble Supreme Court in case of Duncans Agro Industries Ltd., Calcutta, (supra) which reads as under :

"Even if an offence of cheating is prima facie constituted, such offence is a compoundable offence and compromise decrees passed in the suits instituted by the Banks for all intents and purposes, amount to compounding of the offence of cheating. It is also to be noted that long time has elapsed since the complaint was filed in 1987. It may also be indicated that although such FIRs were filed in 1987 and 1989, the Banks have not chosen to institute any case against the alleged erring officials despite allegations made against them in the FIRs. Considering that the investigations had not been completed till 1991 even though there was no impediment to complete the investigations and further investigations are still pending and also considering the fact that the claims of the Banks have been satisfied and the suits instituted by the Banks have been compromised on receiving payments, we do not think the said complaints should be pursued any further. In our view, proceeding further with the complaints will not be expedient. In the special facts of the case, it appears to us that the decision of the High Court in quashing the complaint does not warrant any interference under Article 136 of the Constitution. We, therefore, dismiss these appeals."

I find no merit in the contention of respondent No. 2 that the amount loan interest or other charges are yet left to be paid and are still outstanding against the petitioners as this stand is belied by the statement of the learned counsel for the Bank before the Civil Judge, Jagadhari. The Hon''ble Apex Court has held that the transfer of the property which was hypothecated did not by itself constitute an offence under Section 406 IPC. The Hon''ble Apex Court has observed as under :

"In the instant case, a serious dispute has been raised by the learned counsel appearing for the respective party as to whether on the face of the allegation, an offence of criminal breach of trust is constituted or not. In our view, the expression ''entrusted with property'' or ''with any dominion over property'' has been used in a wide sense in Section 405 IPC. Such expression includes all cases in which goods are entrusted, i.e., voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression ''entrusted'' appearing in Section 405 IPC is not necessarily a term of law. It has wide and different implications in different context. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression ''trust'' in Section 405 IPC is a comprehensive expression and has been used to denote various kinds of relationship like the relationship of trustee and beneficiary, bailor and bailee, master and servant, pledger and pledgee. When some goods are hypothecated by a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in other person and the offender must hold such property interest for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee. In the instant case, a floating charge was made on the goods by way of security cover up credit facility. In our view, in such a case for disposing of the goods covering the security against credit facility the offence of criminal breach of trust is not committed. In the facts and circumstances of the case, it however, appears to us that the respondent moved the High Court only in 1991 although the first FIR was filed in 1987 and the second was filed in 1989. The C.B.I., therefore, got sufficient time to complete the investigation for the purpose of framing the charge."

A learned Single Judge has also allowed the said case in Sunita Bajaj (supra).

In this view of the matter the learned Judicial Magistrate Ist Class was in error in sending the case for investigation afresh without taking into consideration these factual pleas regarding the statement of the claim of the Bank and the withdrawal of the civil suit filed by the Bank against the petitioners. Even the continuance of the impugned FIR would be a sheer abuse of the process of the court and would be a fruitless exercise.

Resultantly, the petition is allowed and the impugned FIR and order dated 15.2.1997, passed by the learned Judicial Magistrate Ist Class, Jagadhari are quashed qua the petitioners.