Allowed

Mohana Raj Nair v. Central Bureau of Investigation and Ors.

Bombay HC24 Sept 2013WP/727/2012

Case brief

AI extract

What is this about?

High Court of Bombay Criminal Bench quashed a CBI charge-sheet against an advocate accused of cheating and forgery in bank loan fraud. The court held the allegations were based on mere suspicion, lacked prima facie evidence, and distinguished the accused from others similarly involved who were not prosecuted.

What did the court decide?

Charge-sheet against the Petitioner in CBI Case No. RC/B1/2008/A0016 CC Case No.458 of 2011 is quashed.

Mohana Raj Nair Vs Central Bureau of Investigation and Ors. — Cheque Dishonour | Bombay HC (2013)

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CRWP727-12-F

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Shephali

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION

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CRIMINAL WRIT PETITION NO.727 OF 2012

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Smt. Mohana Raj Nair,
Aged 60 years, of Mumbai, Indian
Inhabitant, occupation Advocate,
previously residing at 21-22,
Heena, 1st Road, Khar (W),
Mumbai 400 052, presently
residing at C-2203, Ashok Towers,
Dr. S.S. Rao Road, Parel, Mumbai
400 012, and having her office at
20, Sheila Mahal, 1st Pasta Lane,
Colaba, Mumbai 400 005

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…Petitioner

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versus

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1.Central Bureau of
Investigation,
Anti Corruption Branch,
having its office at Tanna
House, 11-A, Nathalal Parekh
Marg, Colaba, Mumbai 400
039
2.Union of India,
acting through the Central
Bureau of Investigation,
Anti Corruption Branch,
having its office at Tanna
House, 11-A, Nathalal Parekh
Marg, Colaba, Mumbai 400
039
3.State of Maharashtra…Respondents

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________

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Mr. R.A. Dada, Senior Advocate, along with Ms. Snehal Paranjape,
Advocate, i/b Mr. Subodh Desai, Advocate, for the Petitioners.
Mr. J. R. Solanki, Advocate, for the Respondents Nos. 1 and 2, CBI
and Union of India.

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Mrs. A.S. Pai, APP, for Respondent No. 3, State of Maharashtra.

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________

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CORAM:S.C. Dharmadhikari
& G.S. Patel, JJ.

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JUDGEMENT RESERVED ON:27th August 2013
JUDGMENT PRONOUNCED ON:24th September 2013

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JUDGMENT : (Per G.S. Patel, J.)

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1.The Petitioner (“Mrs. Nair”) is an Advocate enrolled with
the Bar Council of Maharashtra and Goa. She practices in the name
of her firm, M/s JMB Partners, formerly M/s Mohana Nair
Associates. Till the events occasioning this Writ Petition under
Article 226 of the Constitution of India overtook her, she was
among the lawyers empanelled with the Indian Bank, Mumbai.
Through her firm, she provided various legal services to Indian
Bank, including giving legal opinions on titles to immovable
property. It is the context of one such set of transactions, involving a
group of constituents or borrowers from Indian Bank, that Mrs. Nair
finds herself accused of various criminal offences by the 1st
Respondent, the Central Bureau of Investigation (“CBI”). The CBI

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acted suo-motu in filing a First Information Report on 30th June
2008. This was initially filed only against the then Chief Manager of
the Indian Bank, one C. Sakhtivel, and others but not Mrs. Nair,
alleging, inter alia, cheating and forgery. A few months later, on
22nd November 2008, the CBI recorded the statements of Indian
Bank’s Senior Manager, Audit Inspections & Marketing, Harshad
Vinod Chandra Shah, and of another bank employee, one D.A.
Xavier. Further statements were recorded later that year and again
in 2009. On 3rd December 2009, the Indian Bank refused sanction
to prosecute Sakhtivel, the Chief Manager of its King’s Circle
Branch. On 31st May 2011, a charge-sheet was filed against various
persons. Mrs. Nair was named Accused No.8, but the charge-sheet
excluded some of those against whom the FIR was first filed. Mrs.
Nair says she has been wrongly accused, that she is innocent of all
wrong-doing. and seeks an order quashing this charge-sheet as
against her.

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2.From 1988, when Mrs. Nair was appointed to the Indian
Bank’s panel of Advocates, she was entrusted with diverse matters.
These included matters in this Court, in the Debt Recovery
Tribunal at Mumbai and in other courts. When asked, she also gave
the Indian Bank legal opinions, prepared drafts of documents
relating to the bank’s lending transactions, investigated immovable
property titles, issued title certificates and so on. Her client list
includes several other banks and corporations. She says there has
never been a complaint about the quality of her work.

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3.In 2003–2004, she was asked by Indian Bank’s King’s Circle
Branch, Mumbai, to give her legal opinion in relation to the title
documents for five row houses in Friends Co-operative Housing
Society, Airoli, Navi Mumbai. These row houses were said to have
been purchased by five different individuals, who had approached
Indian Bank’s King’s Circle Branch for housing loans. The five
individuals submitted separate title documents. The Chief Manager
of the branch concerned sought Mrs. Nair’s legal opinion on each of
the five sets of title documents sent on to her. She was not required
to cause a search to be taken in the land records, but was only asked
to opine on the documents forwarded to her. On examining the
documents, Mrs. Nair found that additional documents, common to
all five cases, were required. She called for these. Some were sent to
her. She gave five separate opinions. In these she out the documents
placed before her and also listed those not provided. Her opinions
were stated to be based on the documents provided (notably, the
builders’ letter that the properties involved were encumbrance-free)
and contained caveats, being said to be subject to the documents not
provided, on which she rightly declined to express any opinion. Her
opinions also said that valid mortgages could be created “if the
original of the Agreement for Sale” and certain other documents
were deposited with the Bank.

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4.It seems that the borrowers also submitted the same title
documents to four other banks – State Bank of India, Allahabad
Bank, Dena Bank and Corporation Bank – to obtain loans. Four of

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the five banks were defrauded by the borrowers. The CBI launched
prosecutions.1 Among those involved at various stages in the
transactions between the Indian Bank and the borrowers were
valuers on that bank’s panel, and its own officers. Indian Bank
refused sanction to prosecute its own officers, and there was no
prosecution against the empanelled valuers. The CBI also did not
proceed against the lawyers who acted for the other defrauded
banks.

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5.We are not here concerned with the details of this fraud or the
various transactions, but only with the case sought to be made out
by the CBI against Mrs. Nair. We must note here that the panel
Advocates for the other banks gave statements to the CBI explaining
the procedure they followed. Briefly, these explanations or
statements are to the effect that Advocates are not required to make
‘site visits’, nor to meet builders/developers; that their opinions as
to title are always only ever based on the documents furnished to
them, and, further, that land records are only checked if specifically
required by their clients (viz., the banks). The CBI seems to have
accepted these statements and chosen not to proceed against those
advocates. Mrs. Nair’s opinions, appended to the petition,2
demonstrate that she, too, followed the same procedure. We have
not been shown anything to distinguish Mrs. Nair’s work from that
of the other lawyers. She alone stands accused.

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1 There is a separate charge-sheet filed in regard to the loans taken from the other banks.

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2 Pages 70 to 92, including the request letters from Indian Bank.

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6.What is the CBI’s case against Mrs. Nair? She has been
accused of various acts of “omission and commission” and of
conspiring with the borrowers. That portion of the charge-sheet that
is against Mrs. Nair lists the following six heads of charge, viz.,
that:3

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(i) She failed to establish the identity of the property;

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(ii) She failed to establish the links in the chain of the title;

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(iii) She failed to obtain all consents, permissions, no objection certificate for transfer of the property;

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(iv) She failed to confirm whether encumbrance certificate was obtained by accused borrower from Land Registration authorities for the last 13 years;

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(v) She failed to confirm the municipal and property tax paid by accused borrower;

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(vi) The legal scrutiny report give on prescribed format of the bank are not completed in all respects.

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A seventh ‘charge’, not in the charge-sheet, but listed in the
Affidavit in Reply 1st June 2012 in a manner that suggests it is a
charge, says this:

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(vii) The Petitioner failed to search with SubRegistrar office and has also not verified from the copies of the deeds available with Registrar as there is no such practice is not tenable.

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This is not even in the original complaint by Harshad Vinod
Chandra Shah, the Senior Manager, Audit, Inspection & Marketing
of Indian Bank.

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3Charge-sheet dated 31.5.2011, Ex. “A” to the Petition, p. 49; at p. 53L.

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7.It is on this basis that the CBI proposes to prosecute Mrs.
Nair for criminal conspiracy, cheating and forgery under the Indian
Penal Code, 1860.4 We must note that Mrs. Nair stands accused in
four of the five transactions in question. For the fifth, she has been
cited only as a witness.

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8.We have, with the assistance of Mr. Dada, Learned Senior
Counsel for the Petitioner, seen the opinions given by Mrs. Nair. In
each of these, she clearly states that the originals of the documents
are required for creating any security against a loan. The opinions
are also said to be specifically “subject to what is stated
hereinabove”, a reference to the preceding paragraph or paragraphs,
in which she sets out that essential documents were not given to her.
Mr. Solanki, Learned Advocate appearing for the CBI, insisted that
Mrs. Nair’s ‘omissions’, as he called them, were deliberate and
intentional, and indicated sufficient criminality in intent, design and
execution to warrant prosecution. He attempted to establish a link
between the borrowers, the errant officer of Indian Bank (for whose
prosecution the bank refused sanction) and the borrowers.

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9.Unfortunately for Mr. Solanki, the CBI’s reach exceeds its
grasp. Mrs. Nair’s opinions were sufficiently caveated. They were
based on documents given to her by her clients. She could not be
expected to conjure up new and additional material not sought or
given to her by Indian Bank. There is nothing to show that she ever

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4 The charge-sheet mentions Sections 120-B, 420, 468 and 471 of the IPC.

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had any form of contact, direct, indirect, express or implied, with a
single one of the borrowers. The bank did not once ask her to certify
or vouch for the authenticity of the title documents given to her.
Indian Bank did not commission her to cause a search to be taken in
the land registries. Had it done so, the scope of her work might have
been very different. She was only asked if, in her professional
opinion, the documents supplied to her were sufficient for the
creation of equitable mortgages as security and the advancement of
loans to the borrowers. It is not possible to conclude that she was
wanting – and criminally wanting – in her professional work by
stretching the contours of the brief to her to include items and
matters not specifically sought as Mr. Solanki would have us do.
None of the six ‘charges’ formed any part of her brief.

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10.The CBI’s case against Mrs. Nair is riddled with more holes
than a colander. It has not proceeded against any of the other
lawyers who too were engaged by other banks and which, too, were
similarly defrauded, though those lawyers did exactly the same work
in the same manner as Mrs. Nair. Statements taken by the CBI show
that the bank’s personnel’s own view was that the errant officers
acted contrary to Mrs.Nair’s opinion in disbursing loans.5 The bank’s
officers do not allege criminality by Mrs. Nair. They say that there
should have been a 30-year search report, overlooking that no such
report had been sought, but there is still no allegation that Mrs. Nair

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5 Statements of Indian Bank’s Senior Manager, Audit Inspections & Marketing (Mr. Harshad Shah), para 6, petition page 63; and its Chief Manager (Mr. D. A. Xavier), internal pages 16, 20, 21.

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conspired or colluded with the borrowers. This is the foundation of
the CBI’s case. Therefore, even the CBI did not itself initially
contemplate action against Mrs. Nair – the CBI’s request for
sanction to prosecute Indian Bank’s Chief Manager only says that
he and other officials of the bank did not follow her legal opinion.6
What seems to have completely escaped the CBI is that Mrs. Nair’s
opinion clearly recommended the delivery of original documents to
the bank as a precondition for the disbursement of any loan. If the
bank’s officer chose to advance loans on photocopies, Mrs. Nair
cannot be pilloried for this. Crucially, Mrs. Nair was not among
those against whom the FIR was filed; she was introduced as an
accused only later. Nowhere in the charge-sheet or, for that matter,
in the Affidavit in Reply, do we find the slightest hint of any cogent
material indicating any mens rea on the part of Mrs. Nair.

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11.Relying on the decision of the Supreme Court in Hardeo
Singh v State of Bihar,7 Mr Solanki suggested that, at least for the
purposes of Section 120-B of the Indian Penal Code, it is sufficient if
there is some connecting link or factor between the accused and the
fellow conspirators. It need not be iron-clad. That Mrs. Nair gave an
opinion is, in his submission, sufficient. We disagree. The link must
be one that connects the various persons accused in the conspiracy.
It must be shown that the fraudsters had some nexus or dealings,

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6 Paperbook, p . 167. The Chief Manager of Indian Bank, C. Sakhtivel, was punished in departmental proceedings with a reduction of pay by two stages in the time scale of pay for a period of two years, etc. This is said to be a major penalty.

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72000 Cri L J 2978

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perhaps even an indirect connection, with Mrs. Nair. Of this there is
simply no evidence, and Mr. Solanki could show none apart from
pointing out that she had given a set of opinions when requested.
We understood his submission to mean, essentially, that “she could
not have given the opinion that she did but for her having some
connection with the accused borrowers”. This is clutching at straws.
It proceeds on the assumption that Mrs. Nair’s opinions are legally
wrong or infirm. The CBI’s own material shows to the contrary, for
its case was, at first, based on recorded statements, that the bank’s
officer did not act in conformity with her opinion, a statement that
posits that her opinion was, in fact, correct. The Supreme Court
later dealt with precisely the issue of Section 120-B in a case against
an advocate, and held that a criminal conspiracy is not established
on mere suspicion, surmise or inference unsupported by cogent and
acceptable evidence.8 In this case, the entire argument is based not
on any material but on extrapolation, surmise, and conjecture. Such
fevered imaginations have no place in criminal law.

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12.Mr. Solanki’s reliance on State of MP v S. B. Johari9 is
similarly misplaced. That decision only says that at the time of
framing of charges, only a prima-facie view is necessary to determine
whether there is sufficient ground to proceed; an appreciation of
evidence is not required. In this case, there is not even a hint of
anything remotely resembling a prima-facie case against Mrs. Nair;
nor can Johari be mis-read to suggest that every and any allegation,

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8 CBI v K. Narayana Rao , (2012) 9 SCC 512

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9 2000 Cr L J 944

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no matter how wayward or fanciful, must be investigated; or that the
moment an allegation is made, a prima-facie case must be held to
have been made out. Were that so, Section 482 would be rendered
entirely otiose.

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13.This argument is, in fact, defeated by the Mr. Solanki’s next
submission, which is based on the decision of the Supreme Court in
State of Andhra Pradesh v Vangaveeti Nagaiah.10 That decision in
terms held that a complaint that does not disclose any offence or is
frivolous, vexatious or oppressive may be quashed in exercise of a
High Court’s discretion under Section 482 of the Code of Criminal
Procedure, 1973. The case against Mrs. Nair fits all three
descriptions: it is entirely frivolous, thoroughly vexatious and
undeniably oppressive.

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14.Mr. Dada is, in our view, completely justified in contending
that if ever there was a case that demanded the exercise of discretion
under both Article 226 of the Constitution of India and Section 482
of the Code of Criminal Procedure, 1973, this is it. The principles
underlying the exercise of such a discretion are now well settled by a
long line of decisions of the Supreme Court. Of the list of
illustrative categories of cases set out in State of Haryana v Bhajan
Lal11where such discretion can properly be exercised, the first, third
and fifth apply squarely to this case. Even if taken at their face, and
accepted in their entirety, the allegations against Mrs. Nair do not

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10 2009 All MR (Cri) 2466 (S.C.)

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11 (1992) Supp (1) SCC 335

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prima-facie constitute any offence or make out even a vestige of a
case against her.12 No material discloses the commission of any
offence by her. To the contrary: the allegations against her are both
absurd and inherently improbable. There is no ground whatever for
proceeding against her. The Affidavit in Reply does not help. It only
makes preposterous that which was, in its inception, absurd. It is, in
our view, very likely that Mrs. Nair is being victimized and that the
entire criminal proceeding against her is actuated by mala fides and
malice. Nothing else explains her being singled out for such special
treatment when other lawyers who did exactly the same work
following precisely the same protocols were excluded, their
explanations being found to be adequate.

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15.Our powers to quash such proceedings are wide, albeit
guided. We must endeavour to secure the ends of justice and
prevent the abuse of the process of any court.13 Where there is no
possibility of a trial resulting in a conviction–and in this case, there
is not even the remotest possibility of a conviction–then forcing a
person to withstand a trial whose outcome is foregone conclusion is
not only an exercise in futility, but amounts to a misuse of the
criminal law to oppress the innocent.14 That can never be permitted.

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12 Madhavrao Jiwajirao Scindia v Sambhajirao Chandrojirao Angre , (1988) 1 SCC 692

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13 Gian Singh v State of Punjab , (2012) 10 SCC 303

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14 Shiji v Radhika , (2011) 10 SCC 705

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16.The entire matter can be concluded simply by following the
principles in Narayana Rao,15 cited by Mr. Dada. There, as here, an
Advocate was sought to be prosecuted. There, as here, the case
against the advocate was on “mere suspicion and surmises … not
supported by cogent and acceptable evidence.” In that case, too, the
advocate was not named in the FIR, and there was no specific
referene to his role with the other accused. The Supreme Court held
that it is the duty of the Court to ascertain whether there is any
prima-facie material; and this, and nothing more, has been our
endeavour as well. Unless we find that there is at least a prima-facie
case against an advocate who gave an opinion–a ‘best judgment
assessment’, as it were, based on her knowledge of the law, her
appreciation of the facts and her reading of the documents–that he
played an active role in the fraud alleged, we cannot but conclude
that there is no case to be made out against that advocate.

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17.It seems to us unlikely that the CBI was unaware of the
Supreme Court’s decision in Narayana Rao.16 That it chose to ignore
that decision defies comprehension. The Narayana Rao decision was
delivered on 21st September 2012. A year later, before us, the CBI
persisted in arguing to the contrary though the matter before us
appears to be on all fours with the Supreme Court decision. We
expected rather more fairness in approach from a premier
investigative agency. A factor that differentiates this case from
Narayana Rao is that here there were other banks involved, as were

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16 Supra

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15 Supra

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their lawyers. Those lawyers did no more and no less than Mrs.
Nair. Yet she alone was singled out. The CBI does not explain why
this should have been so, or whether the other advocates acted
differently, or Mrs. Nair failed to do something they did, or why
their statements to the CBI as to their professional conduct were
found sufficiently exculpatory but hers were not.

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18.We believe that this is a fit case for the award of costs against
the CBI and in favour of the Petitioner, and that these costs should
not be illusory. For three long years, the Petitioner has had her till
then unsullied professional reputation besmirched, and for no good
reason. That they have done so is plain. It stares us in the face. For
no fault of her own, the Petitioner has lost a client (perhaps all to the
good, given the Indian Bank’s equally deplorable conduct). But she
has also had to suffer the slings and arrows of a truly outrageous
fortune at the hands of the CBI. However, since in the very similar
case of Narayana Rao, the Supreme Court did not impose costs, we
follow suit and stay our hands. We do so just this once. Should
happenstance bring another such case before us, the CBI will not
find us quite so accomodating.

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19.The Writ Petition succeeds and is made absolute in terms of
prayer clause (b). The Charge Sheet No.2 in CBI Case No.
RC/B1/2008/A0016 CC Case No.458 of 2011 pending on the file of
the Additional Chief Metropolitan Magistrate, 19th Court,

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Esplanade, Mumbai is quashed but only as against the Petitioner.
The matter to proceed against the other accused.

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20. All concerned to act on an authenticated copy of this order.

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(G.S. Patel, J.)

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 (S.C. Dharmadhikari, J.)

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Mohana Raj Nair v. Central Bureau of Investigation and Ors.

Case brief

What is this about?

What did the court decide?

Mohana Raj Nair v. Central Bureau of Investigation and Ors.

Case brief

What is this about?

What did the court decide?

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