Surinder Mohan Dhir vs State of Punjab

R.L. Anand, J.

This order of mine shall dispose of the bail application under Section 438 Cr.P.C. filed by Surinder Mohan Dhir son of Om Parkash Dhir resident of Tagore Nagar, Ludhiana in case FIR No. 74 dated 27.7.1998 registered with Police Station Kotwali Ludhiana under Section 408 IPC.

The F.I.R. in this case was registered against the petitioner and others at the instance of Shri J.S. Kharay, Bank Manager, Union Bank of India, Kesar Ganj Chowk, Ludhiana when he wrote a letter to the SSP, Ludhiana by making the following averments :

"That the complainant is a Branch Manager of Union Bank of India. Mandi Kesar Ganj Chowk, Ludhiana. M/s Swiss Diamond B71, Clock Tower, Chaura Bazar, Ludhiana is a proprietory concern with Sh. Surinder Mohan Dhir son of Shri Om Parkash Dhir accused as its proprietor.

That Sh. Surinder Mohan Dhir being proprietor of the above concern approached the complainant Bank for availment of the financial assistance in the nature of CC Hyp. F.D.B.P. (Foreign Documentary Bill Purchase) w/w FUDBP (Foreign Usance Documentary Bills Purchase) and packing Credit Limit jointly and severally on execution of various documents by him and deed of guarantee by Mrs. Kiran Dhir, Sh. Kirpal Chand Vinayak, Sh. Ashok Kumar and Sh. Prem Kumar. After completion of all the formalities the complainant Bank allowed the following facilities to Sh. Surinder Mohan Dhir as proprietor of M/s Swiss Diamond a) Cash Credit Gold Bullion business Rs. 1.0 crore b) FDBP (w/w FUDBP) Rs. 1.0 crore c) Packing Credit Rs. 1.0 crore.

That the said financial assistance was availed by Sh. Surinder Mohan Dhir being the Proprietor of M/s Swiss Diamond against the hypothecation of stocks comprising of Gold Bullion and Gold Jewellary. The said facilities were to be repaid alongwith interest which was to vary from time to time as per Reserve Bank of India directives and instructions of Head Office of the Bank. As per the terms and conditions of deed hypothecation dated 17.2.1998 Sh. Surinder Mohan Dhir became the trustee of the hypothecated good on behalf of the Bank. The borrower also undertook to follow the norms of the Bank and the terms and conditions so agreed upon as per the documents executed by him as coaccused and one of the conditions of the aforesaid financial assistance was that he shall deposit the sale proceeds with the Bank after the sale of the goods to liquidate the financial liabilities.

That under the terms and conditions of the deed of the hypothecation. a beneficiary interest was clearly created in favour of complainant bank and it was stipulated that the borrower shall with the prior consent of the Bank be at liberty from time to time to sell or dispose of in any manner the hypothecated goods or any part thereof provided the advance value of such good was paid to the Bank towards production of borrower''s liability of goods of similar nature to them or any of those mentioned in the schedule thereto and at last equal value was substituted or the goods so sold or disposed of after the approval of the Bank obtained in writing. The borrower contrary to this undertaking contained in the agreement in which complainant Bank had beneficial interest disposed of the goods without depositing any advance value (Not legible).

That as per the condition, the borrower was to allow inspection of the hypothecated goods as and when desired by the Bank from time to time. The physical inspection and verification of the hypothecated goods was carried out by the complainant bank till April, 1998. The accused submitted stock statement of hypothecated goods till May, 1998 but did not allow the physical verification of the stock from May, 1998 onwards.

That the terms and conditions of packing and credit agreement clearly envisage that the borrower was to act as a trustee of the complainant bank and the goods covered under the terms and conditions of the packing credit facility.

That it has been a practice of the complainant Bank that in case of financial assistance above Rs. one crore inspection is to be carried. The chartered accountant duly approved by the bank M/s Pawan Kumar Gupta and Company (Chartered Accountants) 64/R Model Town, Ludhiana was appointed to make the physical inspection into the account books and the hypothecated stocks who submitted its report dated 7.6.1998 showing that M/s Swiss Diamond had a stock of Rs. 94.48 lacs as against the cash credit hypothecated limit and Rs. 134.89 lacs against the Packing Credit Limit while he was not allowed the physical verification of the stocks. Thus on 28.7.98 Shri G.C. Miglani official of the Bank posted at Mandi Kesar Ganj, Ludhiana alongwith Shri G.S. Sandhu, Manager, Regional Office, Jalandhar visited the shop of Shri Surinder Mohan Dhir for physical verification of the stocks hypothecated with the bank. On their visit Sh. Surinder Mohan Dhir asked them to call at him on the next date/day for the purpose and accordingly on 24.7.98 Sh. G.C. Miglani alongwith Sh. H.S. Bedi, Deputy Manager, Regional Office, Jalandhar again visited the commercial premises of Sh. Surinder Mohan Dhir for physical verification of hypothecated stock of the firm M/s Swiss Diamond. Sh. Surinder Mohan Dhir did not allow the physical verification of the hypothecated stocks and (not legible) conceded and confessed about his having disposed of the stock in a (not legible) manner. Thereby committing offence of breach of trust by misappropriating amount running into crores and that Sh. Surinder Mohan Dhir evidently submitted the false statement of stock position and he intentionally fudged with the entries in the books of accounts maintained by him so as to make the same correspond with each other whereas actually no such stock were available with him. This was done by him with the dishonest intention of cheating the complainant and he thereby committed the offence punishable under Section 468 of Indian Penal Code.

That the disposal of the stock by Sh. Surinder Mohan Dhir in which complainant had the beneficial interest was done by him in connivance with and in conspiracy with Mrs. Kiran Dhir. Sh. Kirpal Chand Vinayak. Sh. Ashok Kumar and Sh. Prem Nath without depositing any amount of sale proceeds in the loan account towards its liquidation in clear contravention of the terms and conditions which made Sh. Surinder Mohan Dhir to be a trustee of the complainant bank. The accused have thus caused enormous and huge financial loss to the complainant bank running into crores and have made wrongful gain for themselves. While Sh. Surinder Mohan Dhir has forged the entries in the statement of account and the stock register with a view to cheating the complainant bank. Thus Sh. Surinder Mohan Dhir accused has committed offence punishable under Sections 406, 468 of Indian Penal Code while his coaccused committed the offences punishable under Section 406 read with Section 120B of Indian Penal Code. It is, therefore, requested that a case be registered against the accused and the same may be investigated and the accused be got punished according to law for the commission of the aforesaid offences.

Submitted by Sd/ J.S. Kharav, Branch Manager, Union Bank of India, Kesar Ganj Chowk, Ludhiana."

The petitioner earlier applied for bail under Section 438 Cr.P.C. in the Court of Session which rejected that bail application on 12.8.1998 and the grounds of rejection are contained in subsequent paras which read as under :

"In this case, the said applicant Surinder Mohan Dhir has moved this application for anticipatory bail. Kirandeep, Kirpal Chand, Ashok Kumar and Prem Nath are the guarantors for Surinder Mohan Dhir, but presently, the applicant is only Surinder Mohan Dhir. It is contended by the Ld. counsel for the accused/applicant that as per the terms of the agreement entered into between the accused and the Bank, copy of which he has placed with the bail application, it is a civil case and in fact, the Bank has filed a suit for the recovery of the money pending in the competent court at Jaipur. It is argued that no criminal offence is made out against the accused on the allegations made in the complaint and it is the Bank officers, who are exploiting the situation of the complainant. I find that there is involved heavy amount of Rs. 3 crores and a huge amount has been taken by the accused/applicant for which sufficient investigation is required by the police. It is a serious economic offence and in view of the judgment recently pronounced by our own High Court in criminal miscellaneous No. 855M/1998 decided on 27.1.1998 by Mrs. Sarojnei Saxena, Hon''ble Judge in such like serious cases, the applicant should not be granted bail. It we held "the police is yet to hold the investigation, collect the evidence, seize the documents and submit the challan. At the threshold of the investigation under the circumstances of the case, the petitioner has no right to be enlarged on anticipatory bail." In this case, there was involvement of Rs. 60 lacs and the allegations were also of misappropriation and cheating.

The Ld. counsel for the applicant has referred to the case of CBI v. Duncans Agro Industries Ltd., 1996(3) Recent Criminal Reports 61. The reading of this judgment shows that the facts were clearly different than in the present case and in this judgment in para No. 28, the Hon''ble Supreme Court had agreed with the contention of Ld. counsel for the petitioner CBI that "a particular act may constitute both civil wrong as well as criminal wrong and merely because a civil action is also perused, it does not render the criminal action impermissible in the facts of the case. It appears to us that long after the completion of civil suits the further investigation in connection with the complaints may not be expedient." It is also important that the case law referred by the Ld. counsel for the CBI before the Apex Court was not disagreed by the Hon''ble Supreme Court but it was held that in the special facts of this case, it appears that the decision of the Hon''ble High Court does not warrant any inference. The facts mentioned in this reported judgment may be seen from paras Nos. 15, 16, 17 thereof.

The facts in the present case are distinguishable from the facts mentioned in this judgment and considered as a whole, this judgment does not help the applicant, reported case was for quashing the FIR.

The Ld. counsel for the applicant has also referred to the agreement between the bank and the applicant and he referred to the terms thereof and argued that all that is made out is a civil case out of the allegations but in view of this reported judgment quoted by the Ld. counsel for the applicant himself, the Hon''ble Supreme Court has also held and agreed that civil action does not render the criminal action impermissible. The matter is still to be investigated. The evidence is yet to be collected by the prosecution. From a photo placed on police file also shows applicant even has changed the name of his business.

In view of the above discussion, I think that at this stage releasing the applicant on anticipatory bail would hamper the investigation and the applicant may also temper with evidence. I, therefore, dismiss the application."

Not satisfied with the order of the learned Addl. Sessions Judge dated 12.8.1998, the petitioner had again repeated the present bail application in the High Court.

Notice of the bail application was given to the State. The complainant in this case also intervened through senior counsel Shri R.S. Ghai, who has been granted permission by this Court to participate in the proceedings.

I have heard Shri R.S. Cheema, Senior Advocate on behalf of the petitioner, Shri J.S. Brar, DAG on behalf of the State assisted by Shri R.S. Ghai, Senior Advocate and with their assistance I have gone through the record of this case.

The learned counsel for the petitioner made several fold submissions in order to secure the anticipatory bail for his client. His primary submission was that it is a case of relationship between the creditor and debtor and as such is purely a case of civil liability and in order to cover their own mis deeds, the bank officials have lodged this F.I.R. against the petitioner. It was also pointed out by the learned counsel for the petitioner that in order to recover the debt against the petitioner, the bank has even filed the proceedings before the Debt Recovery Tribunal, Jaipur and in para No. 5.5 of the application it has been averred by the bank authorities that as a token of acceptance and security of loans, defendant No. 2 has executed various loan documents for valuable consideration on 7.10.1989 in the bank. The counsel wanted to submit that there is not an iota of allegation made in those proceedings by the bank that petitioner had devoured the security which was hypothecated to the bank. So much so a civil suit has also been filed with regard to these very loans making a pure case of civil liability and it was also submitted by the learned counsel for the petitioner that the petitioner is ready to go to the negotiating table with the bank and is even ready to sell his residential house, the cost of which is about Rs. one crore, in order to make the payment. The counsel submitted that the petitioner has since suffered losses in the business and for that reason he was not in a position to meet his debt and the bank has taken the advantage of the situation of the petitioner and has lodged the present F.I.R.

The bail application has been opposed by the State and by the learned senior counsel appearing on behalf of the bank by submitting that right from the very beginning the intention of the petitioner was to cheat the bank. The petitioner had availed a loan running into Rs. 3 crores in connivance with the staff of the bank and so much so even the auditors and chartered accountants, who had earlier certified about the existence of security are in league with the petitioner. The petitioner has embezzled the public money. The custodial interrogation of the petitioner is very necessary in order to hunt out where the truth lies and if security is provided to the petitioner in the shape of anticipatory bail, his interrogation might become a ritual. The learned DAG submitted that where huge public money is involved and when the case is at the investigation stage, the petitioner should not be extended the benefit of the provisions of Section 438 Cr.P.C.

From the side of the petitioner reliance was also placed on a judgment of this Court Sunita Bajaj v. Punjab and Sind Bank, 1998(1) RCR (Criminal) 129 and it was submitted that when the petitioner got a loan from the bank against the hypothecation of goods and those goods are sold by the petitioner, no criminal offence under Section 406 or 408 IPC is made out because the ownership of the goods remains with the loanee. The beneficial interest was never transferred in favour of the bank and in these circumstances the offence under Section 406 or 408 IPC was not made out. The only right of the bank in these circumstances is to file proceedings for the recovery of the debt. This judgment was based on CBI, New Delhi v. Duncan Agro Industries Ltd., Calcutta, 1996(3) Recent Criminal Reports 60 where the Hon''ble Supreme Court in para No. 27 of the judgment was pleased to lay down as follows :

"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 allegations, 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, that is, 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 contexts. 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 relationships 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 in trust for such other person on 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 to 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 respondents moved the High Court only in 1991 although the first FIR was filed in 1987 and the second was filed in 1989. The CBI, therefore, got sufficient time to complete the investigation for the purpose of framing the charge."

After considering all the submissions raised by the respective parties, this Court is of the considered opinion that the petitioner is not entitled to anticipatory bail. It is prima facie not proved on the record that with the loan taken up by the petitioner at any stage property was purchased, which was supposed to be hypothecated or mortgaged with the bank. Right from the very beginning the intention of the petitioner perhaps was not clear. He connives with the bank officials working at the relevant time and managed a huge loan of more than crores. There is merit in the contention of the learned State counsel when he submitted that starling revelation will come up on interrogation of the petitioner and the other accused as to how they managed the loan and under what circumstances they managed false verification with regard to the socalled mortgaged/hypothecated properties in favour of the bank when those securities were never in existence. The investigation in this case is at the earlier stage and the huge public money is involved. The pendency of the recovery proceedings before the Tribunal at Jaipur does not detract or debar the bank from lodging of the F.I.R. It is well settled that civil and criminal liability can go parallel with each other. The civil suit allegedly filed by the petitioner perhaps has been filed just to make the issue subjective in a civil Court. In these circumstances, I am not inclined to extend the benefit of anticipatory bail to the petitioner. Such relief can only be granted in extraordinary circumstances. The extending of the discretion by way of anticipatory bail in favour of the petitioner would certainly make the ongoing investigation a ritual affair. Custodial interrogation in this case is necessary in the public interest. Hence I do not see any merit in this bail application and dismiss the same.