Mrs. Azara Ismail Vs State of Karnataka

MRS. AZARA ISMAIL W/O P ISMAIL AGED 57 YEARS PROPRIETOR OF M/S PLANET CASHEW INDUSTRIES SY NO 187/1B2, KANIYOOR VILLAGE BELTHANGADY TQ DAKSHINA KANNADA DISTRICT

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Digitally signed by REKHA R Location: High Court of Karnataka

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PERMANENTY R/AT NO :P4-38-2 ADREPERAL, KAYYUR PO AND VILLAGE BELTHANGADY, DAKSHINA KANNDA DISTRICT KARNATAKA-574214

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MR. MOHAMMED ANSARI S/O P ISMAIL AGED 35 YEARS PRESENTLY R/AT FLAT NO 713 RESIDENCE 1000 AL-MANKOOL KARAMA, DUBAI PERMANENTLY R/AT NO :94-38-2 ADREPERAL, KAYYUR PO AND VILALGE BELTHANGADY, DAKSHINA KANNADA KARNATAKA-574214

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…PETITIONERS

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(BY SRI. MALLAHAR RAO, ADVOCATE)

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AND:

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STATE OF KARNATAKA CENTRAL BUREAU OF INVESTIGATION ANTI CORRUPTION BRANCH NO 36, BELLARY ROAD GANGANAGAR, BENGALURU-560032

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THE DEPUTY GENERAL MANAGER UNION BANK OF INDIA REGIONAL OFFICE, MANGALORE 2^ND FLOOR, CENTRAL OFFICE ANNEXE, MANGALADEVI TEMPLE ROAD, PANDESHWAR, MANGALURU-575001.

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…RESPONDENTS

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(BY SRI. PRASANNA KUMAR P, SPP FOR R1; SRI.SATYANARAYANA, ADVOCATE FOR R2)

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THIS CRL.P IS FILED U/S.482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO ORDER IN FAVOUR OF PETITIONERS, BY QUASHING THE CASE REGISTERED BY THE RESPONDENT NO.1, IN RC.03(A)/2022, VIDE FIR NO.RC0372022A0003, DATED 28.02.2022, FOR THE OFFENCE P/U/S 120B R/W SECTION 420, 406, 477A OF IPC AND 13(2) R/W 13(1)(d) OF THE PREVENTION OF CORRUPTION ACT, 1988 PENDING ON THE FILE OF LEARNED XXXII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI CASES, BENGALURU (CCH-34), VIDE ANNEXURE-A.

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THIS PETITION, COMING ON FOR DICTATING ORDERS,

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THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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NC: 2025:KHC:22823 CRL.P No. 5906 of 2022

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HC-KAR

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CORAM: HON'BLE MS JUSTICE J.M.KHAZI

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ORAL ORDER

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Petitioners who are arraigned as accused Nos.1 and

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2 have filed this petition under Section 482 Cr.P.C, with a prayer to quash the criminal proceedings pending against them in R.C.03(A)/2022 vide FIR No.RC.0372022A003 dated 28.02.2022 of respondent No.1 for the offences punishable under sections 120-B r/w 420, 406, 477-A I.P.C and Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, pending on the file of XXII Addl.City Civil and Sessions Judge and Spl.Judge for CBI cases.

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In support of the petition, the petitioners have

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contended that petitioners are Indian citizens. Petitioner No.1 is the father of petitioner No.2. With a good intention to improve their financial status, petitioner No.2 started cashew processing unit business. Petitioner No.1 supported him. Petitioner No.1 borrowed Rs.2.5 Crores from the then

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E-Corporation Bank, Puttur Brnach, for establishing cashew processing unit. The machineries were hypothecated to the Bank. They carried out business in a good condition. However, the raw material was spoilt resulting in severe losses to the tune of Crores. Therefore, they were not able to repay the loan instalments.

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2.1 In the meanwhile, Bank initiated recovery proceedings and unit became non-performing asset as on 30.09.2017. The Bank filed PCR 20/2017 before the Addl.Civil Judge and JMFC, Puttur, D.K.Mangaluru alleging that petitioners have committed offences punishable under Sections 420, 405, 406, 120, 120-B, 415, 417, 424 r/w Section 34 IPC. After taking cognizance, it was referred for investigation. Petitioners secured anticipatory bail. Proceedings under SERFAESI Act were also initiated before Debt Recovery Tribunal in O.A.No.1714/2018. Petitioners also filed S.A.33/2019. They have also filed IR.NO.353/2018, wherein all the cases pending before DRT, Bengaluru were stayed.

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2.2 The dispute between the parties is civil in

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nature. In fact the concerned police have filed 'B' report. In the meanwhile, E-Corporation Bank was merged with Union Bank of India on 01.04.2020. After the merger, the Deputy

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General Manager of Union Bank of India filed a complaint dated 24.02.2022 before respondent No.1 on the same cause of action. When already 'B' report is filed, in respect of the same allegations, a fresh complaint is not sustainable. The petitioners have already repaid Rs.1,12,00,000/-. Five years after filing the 'B' report, one more complaint is filed. Petitioners are innocent of the allegations made. In the above facts and circumstances, the criminal proceedings are liable to be quashed and hence, the petition.

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On the other hand learned Special Public

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Prosecutor representing respondent No.2 - Investigating agency i.e., CBI would submit that loan was availed for establishing cashew processing unit and machineries

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purchased out of the loan amount were also pledged as a security for the loan. However, when the Bank officials inspected the premises, they found all the machineries missing and the accused persons have sold the machineries without the knowledge of the Bank. The loan repayment was also defaulted. It is a clear case of fraud.

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Having regard to the amount due, as per the Master directions on frauds issued by the Reserve Bank of India, the investigation was required to be conducted by the CBI. However, for reasons best known, the official of E- Corporation Bank choose to file a private complaint which on reference was investigated by the local police and a 'B' report was filed. However, on merger of E-commercial Bank with Union Bank of India, the complaint was referred to CBI. However, on account of the stay granted by this Court, the investigation could not be proceeded with. The involvement

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if any of the Bank officials is required to be investigated. He would further submitted that it is the modus operendi adopted by the family members of petitioners and in all four

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FIRs are registered against the family members of petitioners and in fact already three charge sheets have been filed. The filing of 'B' report would not come in the way of respondent No.1 investigating the allegations and pray to dismiss the petition.

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In support of his arguments, learned counsel for respondent has relied upon by the decision in Associate Lumbers Private Ltd Vs. State by CBI and Anr. ( Associate

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Lumbers )¹ .

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Heard arguments and perused the record.

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The undisputed facts are that petitioners availed

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loan of Rs.2.5 Crores from the then E-Corporation Bank for establishing cashew processing unit. They have also defaulted in repaying the instalments and also all the machineries purchased through the loan amount are sold. While accused claim that they were sold with the permission

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1 Crl.P.Nos.7325/2022 c/w 7345/2022 Dt: 30.09.2022

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of the Bank, it is specifically alleged that the sale was

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without the knowledge and consent of the Bank.

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It is pertinent to note that in respect of the alleged fraud committed by petitioners, Smt.Surekha, Manager of the E-corporation Bank choose to file a private complaint alleging that the concerned police refused to receive the complaint on the ground that it is beyond the limit of their jurisdiction. However, as required by the directions given by the Hon'ble Supreme Court in Priyanka Srivastava Vs. State of UP and Ors. ( Priyanka Srivastava )² , along with the complaint, she has not produced the copy of first information given to the concerned police. She has also not approached the higher police officer with her complaint.

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It is submitted by learned Special Public

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Prosecutor representing respondent No.2 that as per the Master Directions on Fraud Risk Management Circular dated

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2 (2015) 6 SCC 287

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15.07.2024, any fraud to the tune of Rs.6 Crores and above is required to be referred to Central Bureau of Investigation. The earlier Master Directions on Frauds dated 01.07.2016 (updated as on 03.07.2017), also, any fraud exceeding Rs.3

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Crores was required to be complained to CBI. In the private complaint, it is stated that the loan due as on 30.09.2017 is Rs.7,08,95,051/-. Therefore, as per earlier Master Directions on Frauds dated 01.07.2016 (updated as on 03.07.2017), also, the complaint was required to be given to the CBI.

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However, for the reasons best known to then

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Manager, she has chosen to file a private complaint. The Court has referred it for investigation to the local police. However, it has filed 'B' report. It appears the complainant E-Corporation Bank has not challenged the 'B' report. However, in the 'B' report, except stating that in response to the notice, the accused have appeared before the investigating officer and submitted that recovery proceedings are pending and the matter is civil in nature and therefore,

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he is filing 'B' report, no reasons are forthcoming. As noted earlier the complainant has not challenged the 'B' report. The learned Magistrate also without any application of mind to the allegations made in the complaint and enormity of the offences involved, has mechanically closed the 'B' report.

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Having regard to the fact that serious allegations are made to the effect that the accused have played fraud on the Bank by selling the machineries and defaulting the repayment of the loan, which as on the date of filing the private complaint has increased to Rs.7,08,95,051/-. It is also alleged that the family members of petitioners have also committed similar offences and the modus operendi followed by them is same and in fact four FIRs were registered against petitioners and their family members and out of it already charges sheets have been filed in three cases and on account of stay granted in the present case, investigation could not be proceeded with. The offences registered against the petitioners and other unkown

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public servants and private persons also involve offences punishable under Section 13(2) r/w 13(1)(d) of PC Act. Therefore, respondent No.1 is not only required to examine the allegations against petitioners, but also to examine whether any public servants and private persons including the bank officials are involved.

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The immunity provided under Article 20 (2) of the Constitution of India and Section 300 of Cr.P.C is against prosecution and punishment for the same offence twice. In the present case, the petitioners are neither prosecuted nor punished. Only on the basis of the complaint by the bank official, a farce of an investigation was conducted and 'B' report is filed. Consequently, the petitioners are not entitled for quashing the criminal proceedings initiated against them accordingly the following:

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ORDER

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(i) Petition filed by the petitioners/accused

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Nos.1 and 2 under Section 482 Cr.P.C is

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hereby rejected.

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