Punjab National Bank vs State of Haryana

M.L. Singhal, J.

Crl. Misc. Petition No. 10306M of 1993 has been filed by Punjab National Bank (in short "PNB"), Bhiwani through its Senior Manager Shri P.K. Aggarwal whereby it has prayed that order Annexure P1 dated 16th March, 1991, discharging Lalit Kumar and others in case F.I.R. No. 139 dated 22.10.1989 of PS Civil Lines, Bhiwani under Sections 406/420/120B IPC, be quashed and the case be sent back to the trial court for framing charge against them.

Facts of the case FIR No. 139 dated 22.10.89 (ibid) are as follows :

Anurag Tubes Private Limited, Industrial Area, Bhiwani was the borrower of Punjab National Bank (PNB), Loharu Road, Bhiwani, Lalit Kumar Aggarwal is the Managing Director of the said company. As per agreement dated 2.11.1988 with the bank, the said company was granted a cash credit (hypothecation) limit of Rs. 58 lacs by the bank against the hypothecation of stocks which was duly availed by them. As per clauses of the said agreement, the company cannot sell or dispose of the hypothecated stocks except with the prior written consent of the bank. All the goods which are hypothecated with the bank are held by the borrowers as exclusive property of the bank and the borrowers cannot tamper with the above goods without the prior written consent of the bank. Said company was also provided with the open compound pledge limit (credit facility) of Rs. 31 lacs vide agreement dated 12.4.89. Besides the above facilities, the borrower was also granted some other facilities viz. letter of credit/guarantee etc. Stocks/goods are stored by the company in factory premises situated in industrial area, Bhiwani. Some of the stocks were also stored by the company in their sisterconcern namely M/s. Bharat Agricultural Industries, Railway Road, Near Railway Station, Bhiwani. Said company through its Managing Director Shri Lalit Kumar Aggarwal and their Coordinator Shri M.L. Aggarwal started flouting the clauses of the agreement by way of disposing of the goods without the written consent of the bank and without paying the value thereof in advance. Borrowers were restrained from committing violations but to no effect. Violations are still being committed by Lalit Kumar Aggarwal in connivance with Shri M.L. Aggarwal, coordinator of the above company.

On 21.10.89, Shri D.P. Garg, Senior Manager, Shri P.C. Chitra, Assistant Manager of the said bank in their capacity as bankers/creditors went on routine checking of the goods lying in the factory premises which are hypothecated/pledged to the bank in the said company at about 6.15 P.M. and they found Shri Lalit Kumar and his guarantor Shri M.L. Aggarwal removing the hypothecated goods by loading them in truck No. HNV1955 belonging to the company. This, they were doing stealthily, without the consent of the bank. They, thus, misappropriated the goods on which the bank had lien for the recovery of the loan amount. They, thus committed criminal breach of trust. Truck was loaded with MS pipes. Shri D.P. Garg, Senior Manager and Shri P.C. Chitra, Assistant Manager of the Bank objected to the removal of MS pipes on which the bank had lien for the recovery of the loan amount without the consent of the bank. Shri Lalit Kumar and Shri M.L. Aggarwal refused to hear their protest and threatened that they would remove the entire stocks that night. They went away with the truck together with the goods without their written permission with intent to defraud/cheat and to convert the said goods to their own use thus causing loss to the bank. Matter was reported to the police by Shri D.P. Garg, Senior Manager of the bank on which this case was registered on 22.10.1989.

On 9.3.91, the investigating agency filed an application under Section 173 Cr.P.C. for reinvestigation of the case although the investigation was pending since about 11/2 years. Magistrate ordered the application to be put up on 12.3.91 with the file. On 12.3.91 Magistrate allowed reinvestigation of the case. On 13.3.91, the police reinvestigated the case. On 16.3.91, the police put in discharge report to the Magistrate saying that the dispute between the parties was of civil nature. Through this Crl. Misc. Petition while impugning the order of discharge passed by Chief Judicial Magistrate, Bhiwani, Annexure P1, the bank has imputed bad faith to the investigating agency saying that the earlier investigation took 11/2 years and this time the investigating agency adopted electric speed and concluded the investigation within 3 days. On 5.3.91 when the case was taken up by Chief Judicial Magistrate, Bhiwani, Shri Lalit Kumar Aggarwal made statement that discharge report has been submitted by the prosecution. Ahalmad of the court was directed to put up the discharge report. Ahalmad reported on 5.3.91 itself that no discharge report had been put up by the prosecution. The investigating agency put in application for reinvestigation. Magistrate allowed reinvestigation on 12.3.91. On 13.3.91, the matter was reinvestigated. On 16.3.91, the discharge report was submitted by the investigation agency. It is alleged by the petitioner bank that this shows bad faith. No notice was given to the complainantbank by the Chief Judicial Magistrate, Bhiwani before order Annexure P1 was passed. Before accepting the discharge report, Chief Judicial Magistrate ought to have given notice to the complainantBank, the accused side as well as the State. Discharge report was obtained by the accused in connivance with the police.

This Crl. Misc. Petition has been opposed by respondents No. 2 to 5 urging that the order accepting discharge report by the police to the Magistrate was revisable. No revision was filed either to the court of Session or to the High Court by the bank within the period of limitation. No latitude should be allowed to the bank in the exercise of inherent powers vesting in this court under Section 482 Cr.P.C., when for no reason the bank has failed to avail the ordinary remedy of revision. Act imputed gave rise to criminal as well as civil liability. Act imputed gave rise to civil liability because they were disposing of the stocks which were security with the bank for the recovery of their loan. The act imputed gave rise to criminal liability because they were removing the stocks from the custody of the bank on which the bank had lien with intent to defeat the loan of the bank. No notice was required to have been given to the bank by the Chief Judicial Magistrate, Bhiwani before accepting the order of discharge as it was a State case and the State counsel was duly heard. It was well within the power of the Chief Judicial Magistrate to permit the investigating agency to reinvestigate the case. Police reinvestigated the case after such permission was given to them. Even no such permission was required and the police could themselves investigate the case.

Respondent No. 1 (State of Haryana) also opposed this petition through written statement filed by Shri S.N. Vashisht, Superintendent of Police, Bhiwani.

This is Crl. Misc. No. 9813M of 1992 filed by D.P. Garg, Senior Manager, Punjab National Bank, Bhiwani and P.C. Chitra, Asstt. Manager, Punjab National Bank, Bhiwani whereby they have prayed for the quashing of complaint Annexure P2 under Section 500 IPC and the order Annexure P3 dated 18.7.92 summoning them for trial.

Mohan Lal Aggarwal (complainant) filed complaint under Section 500 IPC against Shri D.P. Garg and Shri P.L. Chitra and two others on the allegations that M/s. Anurag Tubes Pvt. Ltd. is being run by him and his family. His son Shri Lalit Kumar Aggarwal is its Managing Director. Shri D.P. Garg was the Senior Manager while Shri P.L. Chitra was the Assistant Manager of this bank. Shri Bal Kishan was ASI/SHO of PS Civil Lines, Bhiwani. Shri Lalit Kumar Aggarwal took loan for the business of M/s. Anurag Tubes Pvt. Ltd. from Punjab National Bank, Bhiwani. Shri Mohan Lal Aggarwal (complainant) stood surety for Shri Lalit Kumar Aggarwal. There was delay in the repayment of the loan amount. Shri Lalit Kumar, Managing Director and other Directors satisfied Shri D.P. Garg and P.L. Chitra and other bank officials that they would repay the loan amount as early as possible. Still, they filed civil suit in the court of Senior Sub Judge, Bhiwani against M/s. Anurag Tubes Pvt. Ltd., Shri Lalit Kumar and others. Punjab National Bank got an ex parte order dated 30.9.89 restraining the company and its directors from alienating/transferring or creating any type of charge in any manner. Company filed appeal which was decided. On 22.10.89, D.P. Garg, P.L. Chitra in connivance with Shri Dharamvir Arora, Senior Manager, Punjab National Bank, Bhiwani and with the intention of causing harm to the goodwill, respect and business of the company got registered case FIR No. 139 dated 22.10.89 under Sections 496/420/120B IPC at PS Civil Lines, Bhiwani without any basis. At that time, Shri Bal Kishan was posted as SHO of PS Civil Lines, Bhiwani. In the FIR Mohan Lal Aggarwal was mentioned as surety. Lalit Kumar was mentioned as Managing Director. Shri Ram Karan Dass, Satya Bala and Daya Kishan got anticipatory bail. After 2 months of the registration of the case, Bal Kishan, ASI arrested Mohan Lal Aggarwal and Lalit Kumar. He handcuffed them. He paraded them through the bazar before producing them in the court. He secured 2 days police remand by making a wrong statement in the court in connivance with D.P. Garg and P.L. Chitra. On 25.12.89, they were released on bail. With the intention of causing harm to their reputation and respect, D.P. Garg and P.L. Chitra got the news published in some newspapers like Jansatta etc. by levelling wrong allegations and with respect to their arrest and misappropriation of bank money. Thousands of people read and heard this news. After this news, their reputation suffered in the estimation of the business community. Business community started thinking that they are cheats, and they have cheated the government/bank of their money. They suffered in their reputation, respect and goodwill. People began viewing them as cheats. Their business suffered. Challan was got presented on 16.3.91 by them although civil suit was pending and they had not misappropriated the bank money.

Chief Judicial Magistrate, Bhiwani after recording preliminary evidence felt that there was prima facie case against D.P. Garg and P.L. Chitra accused and he accordingly summoned them for trial under Section 500 IPC. Quashing of order Annexure P3 and complaint Annexure P2 is being claimed by D.P. Garg and P.L, Chitra on grounds that the FIR was lodged by them bona fide. Investigating agency was in league with them. Investigation was going on for the last 11/2 years when abruptly on 9.3.91, they moved application for reinvestigation under Section 173(8) Cr.P.C. Magistrate granted them permission to reinvestigate on 12.3.91. On 13.3.91, the matter was reinvestigated and on 16.3.91 discharge report was submitted saying that the dispute between the parties was of civil nature. Discharge report was obtained by the accused in connivance with the police. Before accepting discharge report, bank was not heard. It has been further averred that they had nothing to do with the news being published, in the wake of registration of case or in the wake of their police remand. If they were handcuffed, that was an act of the police. They were handcuffed and they were produced in the Court. There was no intention on their part to defame Lalit Kumar Aggarwal and others i.e., the Managing Director and other directors of the company. Their intention was only to vindicate the object of the terms on which loan was granted to them.

This Crl. Misc. Petition has been opposed by Mohan Lal Aggarwal urging that D.P. Garg and P.L. Chitra have been justifiably summoned as the FIR lodged by them suffered from bad faith. Baseless allegations were made against them regarding misappropriation of hypothecated/pledged goods lying in the premises of the factory of one of the accused. Mohan Lal Aggarwal had nothing to do with the hypothecated goods and the same were lying in the factory of one of the accused. He was handcuffed by the police at the instigation of the petitioners in order to defame him. The petitioners got the news published in the newspapers like Jansatta etc. It was denied that complaint Annexure P2 was mala fide filed in order to create scare in the banking circle and to deter the bank officials from doing their duty without fear and favour.

Both these Crl. Misc. Petitions shall be disposed of through this common judgment as they are the offshoot of the case FIR No. 139 dated 22.10.89 of PS Civil Lines, Bhiwani.

Section 173(8) of the Code of Criminal Procedure lays down that nothing in this section shall be deemed to preclude further investigation in respect of an offence after a report under subsection (2) has been forwarded to the Magistrate and where upon such investigation, the officer incharge of the police station obtains further evidence, oral or documentary, he shall forward to the Magistrate a further report or reports regarding such evidence in the form prescribed and the provisions of subsections (2) to (6), as far as may be, apply in relation to such report or reports as they apply in relation to report forwarded under subsection (2).

As per Section 173(8) Cr.P.C. the police can ask for permission to re investigate after challan has been put in court and the court can order reinvestigation of the case. Officerincharge of the police station shall forward to the Magistrate a further report or reports after he has collected further evidence, oral or documentary, in the wake of reinvestigation and that report can be a report asking for discharge of all the accused or such of the accused as the reinvestigation warrants. An order passed by the Magistrate discharging the accused on acceptance of the report of discharge submitted by the police shall fall within the ambit of Section 239 Cr.P.C. Section 239 Cr.P.C. lays down that, if upon considering the police report and the documents sent with it under Section 173 and making such examination, if any, of the accused as the Magistrate thinks necessary and after giving the prosecution and the accused an opportunity of being heard, the Magistrate considers the charge against the accused to be groundless, he shall discharge the accused and record his reasons for so doing.

It was submitted by the learned counsel for the Punjab National Bank petitioner in Crl. Misc. No. 10306M of 1993 through Shri P.K. Aggarwal that Chief Judicial Magistrate should not have accepted the report filed by the police praying for the discharge of the accused without calling upon the Senior Manager, PNB, Bhiwani and hearing him as he was the lodger of the FIR No. 139 (ibid). In support of this submission, he drew my attention to Bhagwant Singh v. Commissioner of Police and another, AIR 1985 SC 1285 where their Lordships of the Hon''ble Supreme Court observed in para 5 of the report that "we cannot spell out either from the provisions of the Cr.P.C. 1973 or from the principles of natural justice any obligation on the Magistrate to issue notice to the injured person or to a relative of the deceased for providing such person an opportunity to be heard at the time of consideration of the report unless such person is the informant who has lodged the FIR but even if such person is not entitled to notice from the Magistrate, he can appear before the Magistrate and make his submissions when the report is considered by the Magistrate for the purpose of deciding what action he should take on the report. The injured person or any relative of the deceased, though not entitled to the notice from the Magistrate, has locus to appear before the Magistrate at the time of consideration of the report, if otherwise he comes to know that the report is going to be considered by the Magistrate and if he wants to make his submissions in regard to the report, the Magistrate is bound to hear him. We may also observe that even though Magistrate is not bound to give notice of the hearing fixed for consideration of the report to the injured person or to any relative of the deceased, he may, in the exercise of his discretion if he so thinks fit, give notice to the injured person or to any particular relative or relatives of the deceased. But not giving of such notice will not have any invalidating effect on the order which may be made by the Magistrate on consideration of the report." It is thus clear that the Magistrate is bound to hear him if he appears before the Magistrate on his own and makes submissions against the prayer of the police claiming discharge of the accused. Magistrate may, in the exercise of his discretion, if he so thinks fit, give notice to him or any particular relative or relatives of the deceased before passing any order in regard to that report. In para 4 of the report, their Lordships have observed that "in a case where the Magistrate to whom a report is forwarded under subsection (2)(i) of Section 173 decides not to take cognizance of the offence and drop the proceedings or takes the view that there is no sufficient ground for proceeding against some of the persons mentioned in the FIR, the Magistrate must give notice to the informant and provide him opportunity to be heard at the time of consideration of the report."

In Bhagwant Singh''s case (supra) one Gurinder Kaur had died as a result of burns received by her allegedly at the hands of her husband and his parents whose demand for dowry Gurinder Kaur''s parents could not satisfy. The circumstances in which Gurinder Kaur met with her unnatural death were investigated by the CBI and a report was submitted by the CBI in the court of the Chief Metropolitan Magistrate stating that in their opinion in respect of the unnatural death of Gurinder Kaur, no offence appears to have been committed. Gurinder Kaur''s father was, however, not aware of the submission of such report by the CBI. He, therefore, brought an application for initiating proceedings for contempt against the CBI on the ground that CBI had not completed their investigation and submitted their report within the period stipulated by the court by its order dated 6th May, 1983. It was in reply to this application for initiation of contempt proceedings that the CBI intimated that they had already submitted their report in the court of the Chief Metropolitan Magistrate on 11th August, 1982 and the report was pending consideration by the Magistrate. When this fact was brought to the notice of the Hon''ble Supreme Court, the Hon''ble Supreme Court passed an order dated 28th November, 1983 directing that Gurinder Kaur''s father should be heard before any final order was passed on the report. There was no objection on the part of the respondents to the making of this order but the Hon''ble Supreme Court proceeded to determine this question whether in cases of this kind the first informant or any relative of the deceased or any other aggrieved person was entitled to be heard at the time of consideration of the report by the Magistrate and whether the Magistrate is bound to issue notice to any such person because this question was thought to be of general importance likely to arise frequently in criminal proceedings. Hon''ble Supreme Court has laid down that the Magistrate is not bound to give notice of the hearing fixed for consideration of the report to the injured person or to any relative of the deceased and if the Magistrate passes an order, the nongiving of such notice will not have any invalidating effect on the order. In a case where the Magistrate, to whom a report is forwarded under section (2)(i) of Section 173 decides not to take cognizance of the offence and to drop the proceedings or takes the view that there is no sufficient ground for proceeding, the Magistrate must give notice to the informant and provide him opportunity to be heard at the time of consideration of the report. In this case, thus, the Magistrate should have given an opportunity to the Punjab National Bank of being heard before deciding upon to accept the report of discharge submitted by the police.

Faced this situation, Shri Baldev Singh, learned counsel for the respondents submitted that it is not a case where this court should exercise the power vesting in it under section 482 Cr.P.C. Punjab National Bank had the remedy to go in revision against the order of the Magistrate accepting the report submitted to him praying for the discharge of the accused. In support of this submission, he drew my attention to Krishan Lal v. Kanhaya Ram, 1977 Crl. Law Journal 1361 where it was held that in view of specific provision as contained in Section 398 of the Code of Criminal Procedure, it is not open for the complainant to invoke the inherent powers of the court under section 482 Cr.P.C. for a direction to be issued as contemplated under section 188 to the Magistrate concerned to make further inquiry into the matter. The only course open for the complainant is to file a revision petition.

It was submitted by learned counsel for the respondents 2 to 5 that the Magistrate passed order of discharge on 16.3.91. Proceedings under section 482 Cr.P.C. were instituted in the year 1993 i.e. after an inordinate delay. Suffice it to say, the limitation does not stand in the way of the court doing away with injustice in the case. Where the court feels that there has been injury to one''s substantive right, limitation should not be allowed to defeat that substantive right. Punjab National Bank, Bhiwani had a right to be heard before the Magistrate accepted the report submitted by the police praying that accused be discharged. Section 482 Cr.P.C. intended to prevent abuse of the process of any court or otherwise to secure the ends of justice by vesting inherent powers in the High Court. High Court is authorised to make such orders as may be necessary to give effect to any order under the Code of Criminal Procedure or to prevent abuse of the process of any court or otherwise to secure the ends of justice. At the cost of repetition, I must say that in this case, the Magistrate''s order had done injustice to the Punjab National Bank because it discharged the accused without hearing the Bank at whose instance criminal law was set in motion against the respondents. In this view of the matter, Crl. Misc. No. 10306M of 1993 is accepted and the order Annexure P1 dated 16.3.91 passed by the Magistrate is set aside. Magistrate will pass fresh order in the case after hearing the Public Prosecutor for the State, the bank and all the accused/their counsel. Magistrate is free to pass any order whether discharging the accused or chargesheeting them after hearing all the parties concerned.

As far as Crl. Misc. 9813M of 1993 is concerned, suffice it to say, the continuance of complaint Annexure P2 under section 500 IPC filed by Mohan Lal against Shri D.P. Garg, Senior Manager, Punjab National Bank, Bhiwani and others is not dependent upon whether Mohan Lal and others are discharged or they are chargesheeted in case FIR No. 139 (ibid) as Mohan Lal has alleged in the complaint that FIR was actuated by bad faith inasmuch as the same was got registered with the intention of causing harm to the goodwill, respect and business of M/s. Anurag Tubes Pvt. Ltd. It is further alleged that ASI/SHO of PS Civil Lines, Bhiwani in connivance with D.P. Garg, P.L. Chitra and D.B. Arora, Senior Manager, Assistant Managers of the Bank after 2 months of the registration of the case arrested Mohan Lal and Lalit Kumar and after handcuffing them, paraded them through the bazar before they were produced before the court. ASI Bal Kishan took two days'' police remand mala fide in connivance with accused D.P. Garg and P.L. Chitra and thereafter on 25.12.1989, they were released on bail by the court. They, with the intention of causing harm to the reputation, respect and goodwill of M/s. Anurag Tubes Pvt. Ltd. got the news published in newspapers like Jansatta etc. that they had misappropriated the bank money and as such had been arrested. It is further alleged that in spite of their discharge by the CJM, Bhiwani, they are being looked down upon with suspicion. They are viewed as cheats. It is for the accused in complaint Annexure P2 to plead and prove any exception which might take the case out of the purview of Section 499 IPC punishable under Section 500 IPC. So, Crl. Misc. 9813M of 1993 fails and is dismissed. It will be for the Magistrate to attach weight, if any, if Mohan Lal and others are charged and convicted in the FIR case so far as complaint Annexure P2 goes.