This petition under Section 482 Cr.P.C. sought quashing of an FIR alleging cheating and fraudulent disposal of mortgaged assets by partners of a loan-defaulting firm. The Court dismissed the petition, holding that the allegations disclosed a cognizable offence requiring investigation.
Petition for quashing of FIR No.12 dated 22.1.2007 dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Crl. Misc. No. M-16109 of 2008
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Crl. Misc. No. M-16109 of 2008 Date of Decision: August 17, 2010
Amrinder Singh
........Petitioner
Versus
State of Punjab .......Respondent
CORAM : HON'BLE MRS. JUSTICE SABINA
Present: Mr. Vikas Kumar, Advocate, for the petitioner.
Mr. Amandeep Singh Rai, AAG, Punjab.
Mr. G.S. Gill, Advocate, for respondent No.2.
Mr. Hemant Saini, Advocate, for respondent No.3.
SABINA, J.
Petitioner has filed this petition under Section 482 of the Code of Criminal Procedure (in short 'Cr.P.C.') for quashing of the FIR No.12 dated 22.1.2007, under Sections 420/406 of Indian Penal Code (in short 'IPC'), Police Station City Abohar, District- Ferozepur.
The contents of the FIR (Annexure P-1) read as under :-
“Punjab Financial Corporation District office Ferozepur. D.I.C. Building Malwal Road Ferozepur city, Ph. 01632-220060, 225753 Ref : PFC/F.D.O./legal/200607/1720, the Senior Superintendent of Police Ferozepur. Reg: Request for registration of F.I.R. under sections 406,417,418,420,421,422
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and 424 of the Indian Penal Code against S/Sh. Amrinder Singh S/o Balbir Singh R/o V.P.O. Dodewala, Tehsil Abohar District Ferozepur and Karambir Singh S/o Mukhtiar Singh R/o V.P.O. Sarwan Bodla, Tehsil Malout, District Muktsar. Sir, Punjab Financial Corporation is a body corporate established in the state of Punjab under the State Financial Corporations Act 1951. The main function of the corporation are to grant loans for establishment of industries in the state of Punjab against the security of land building and machinery. That the accused whose names have been mentioned above were partners of M/S City Agro Fuel industry. Hanumangarh Road village Azimgarh Abohar, District were advanced a loan to the tune of Rs.26.30 lacs in terms of the mortgage deed duly executed by them on 18th September, 2001. The said loan was advanced for constructions of building and purchase of machinery and MFA items. The following items of machinery were purchased with the assistance of the loan from the corporation and were hypothecated with the corporation. In terms of the said mortgage Deed details of plants machinery and M.F.A. a) complete Briquette plant with electricals comprising of two number of Briquetting press, one number of material handling, one number of flash drier, two number of Handling Bins, One number of ubrating Screen, one number of Hammer mill Grinder, Electric. Motors 30 H.P. of three numbers, 7.5 H.P. of one number of 3 H.P. of three numbers 2 H.P. of one number and 1 H.P. of eight numbers. b) Furniture and fixtures, platform
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type weighing scale weigh Bridge and fire fighting. Equipments one of the terms and condition of the said mortgage Deed was that the partners shall not remove, transfer or otherwise part with the said plant and machinery and other assets mortgaged with the Corporation without previous permission in writing of the corporation. That the said property was kept at the premises of factory situated at Hanuman Garh Road, Azimgarh Abohar district Ferozepur. Thus, the accused had the dominion over the property under a valid agreement with the corporation. That in view of the default in the repayment of loan, the corporation in exercise of power under section 29 of the State Financial Act 1951 through its officers namely S/Sh. V.K. Aggarwal District Manager, Ferozepur Inderjit Taneja Dy. Manager (Financial) Ludhiana, Harjeeet Singh Dy. Manager (legal) Ludhiana and Sanjeev Dua, Sr. Asst. Bathinda took possession of the mortgaged assets on 24th August 2006 and at that time it was found that the accrued had removed the above said entire machinery and other assets without previous consent of the corporation with an intention to cheat and defraud the corporation and also with dishonest fraudulent intention to prevent the corporation to recover its loan. In other words the accused had with dishonest and fraudulent intention removed the property so that the corporation is prevented to recover its loan by sale of the said properties. Thus the accused had removed the machinery with an intention to prevent the corporation from recovering its loan
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and has misappropriated and dishonestly disposed off the same in violation of the terms and conditions of the legal contract with the corporation and therefore, have committed an offence punishable under section 406,417,418,420,421,422 and 424 of the Indian penal Code. It is, therefore, prayed that a criminal case under appropriate sections of the Indian Penal Code and other relevant sections may kindly be registered at police station having jurisdiction over the place where the aforesaid factory is situated i.e. Hanuman Garh Road Azimgarh, Abohar District Ferozepur. Thanking you, Yours faithfully Sd/- Harjeet Singh Dy. Manager (Legal) Sd/- V.K. Aggarwal, District Manager. Note: In connection with the above said FIR, I would like to inform you that the one of the partner of this concern Sh. Karamber Singh vide his letter dated 10.8.2006 received by this office on 18.8.2006, a copy of this letter which is enclosed herewith for ready reference has alleged that the entire plant and machinery of this concern has been disposed off/sold alongwith other equipments by the other partner of the concern namely Sh. Amrinder Sigh to M/S Surjit singh, Darshan Singh proprietor, Sh. Nahar Sighh V.P.O. Lehra, Police Station Dehlon District Jagraon. Sd/- V.K. Aggarwal. D.S.P. Abohar for enquiry and report Sd/- S.S.P, Ferozepur, No. 3843-PC Dated 30.8.2006.”
Learned counsel for the petitioner has submitted that no offence under Sections 420/406 IPC was made out in this case. The dispute involved in the present case was purely civil in nature. The auction
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proceedings qua the land belonging to the petitioner were pending.
Learned counsel for the respondents, on the other hand, have submitted that it was a case which involved criminal as well as civil liability and hence the FIR against the petitioner was not liable to be quashed.
After hearing the learned counsel for the parties, I am of the opinion that the instant petition deserves dismissal.
In the case of State of Haryana vs. Bhajan Lal , , 1992 Supp(1) Supreme Court Cases 335 , the Apex Court has held as under:-
“The following categories of cases can be stated by way of illustration wherein the extraordinary power under Article 226 or the inherent powers under Section 482, Cr.P.C. Can be exercised by the High Court either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently chennelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised:-
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order of a Magistrate within the purview of Section 155(2) of the Code.
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personal grudge.
We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.”
In the case of State of Karnataka Vs. Satish, (1998) 8 SCC
493, the Apex Court in para 4 has held as under :-
“4. Merely because the truck was being driven at a “high speed” does not bespeak of either “negligence” or “rashness” by itself. None of the witnesses examined by the prosecution could give any indication, even approximately, as to what they meant by “high speed”. “High speed” is a relative term. It was for the prosecution to bring on record material to establish as to what it meant by “high speed” in the facts and circumstances of the case. In a criminal trial, the burden by providing everything essential to te establishment of the charge against an accused always rests on the prosecution and there is a presumption of innocence in favour of the accused until the contrary is proved. Criminality is not to be presumed, subject of course to some statutory exceptions. There is no such statutory exception
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pleaded in the present case. In the absence of any material on the record, no presumption of “rashness” or “negligence” could be drawn by invoking the maximum “res ipsa loquitur”. There is evidence to show that immediately before the truck turned turtle, there was a big jerk. It is not explained as to whether the jerk was because of the uneven road or mechanical failure. The Motor Vehicle Inspector who inspected the vehicle had submitted his report. That report is not forthcoming from the record and the Inspector was not examined for reasons best known to the prosecution. This is a serious infirmity and lacuna in the prosecution case.”
The respondents, no doubt, have stated that they had no intention to cheat or dishonestly divert or misappropriate the hypothecated aircraft or any parts thereof. They have taken pains to point out that the aircrafts are continued to be stationed at Chennai and Coimbatore Airports; that the two engines of VT-NEK though removed from the aircraft, are still lying at Madras Airport; that the two DART 552 TR engines of VT-NEJ were dismantled for the purpose of overhauling/repairing; that they were fitted to another Airfraft (VT-NEH) which had been taken on lease from 'M/s. Aircraft Financing and Trading BV' and that the said Aircraft (VT-NEH) has been detained by the lessor for its dues; that the two engines which were meant to be fitted to
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VT-NEJ (in places of the removed engines), when sent for overhauling to M/s. Haunting Aeromotive, U.K., were detained by them on account of a dispute relating to their bills; and that in these peculiar circumstances beyond their control, no dishonest intent cold be attributed to them. But these are defences that will have to be put forth and considered during the trial. Defences that may be available, or facts/aspects when established during the trial, may led to acquittal, are not grounds for quashing the complaint at the threshold. At this stage, we are only concerned with the question whether the averments in the complaint spell out the ingredients of a criminal offence or not.
In the case of Trisuns Chemical Industry vs. Rajesh Agarwal and others, (1999) 8 Supreme Court Cases 686, the Apex Court in para 9 has held as under :-
“9. We are unable to appreciate the reasoning that the provision incorporated in the agreement for rendering the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom
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to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana v. Bhajan Lal, 1992 Supp(1) Supreme Court Cases 335.”
In the present case there are specific allegations against the petitioner in the FIR that they had sold the machinery and the mortgaged assets with a view to cheat and defraud the Corporation. In these circumstances, it would not be in the interest of justice to quash the criminal proceedings at the very threshold.
Accordingly, this petition is dismissed.
August 17, 2010 Anand
(SABINA) JUDGE
2 issues framed by the court
Whether the High Court should quash the FIR alleging cheating and fraudulent removal of mortgaged assets under Section 482 Cr.P.C.
Whether the dispute involving the disposal of hypothecated machinery is purely civil or involves criminal liability.
Colour shows how this judgement treated each authority
State of Haryana vs. Bhajan LalExplained¶34
State of Haryana vs. Bhajan Lal, 1992 Supp(1) Supreme Court Cases 335
State of Karnataka versus SatishExplained¶50
State of Karnataka Vs. Satish, (1998) 8 SCC 493 · Who else cites this
Trisuns Chemical Industry versus Rajesh Agarwal and othersExplained¶60
Trisuns Chemical Industry vs. Rajesh Agarwal and others, (1999) 8 Supreme Court Cases 686
2 provisions across 2 enactments
Amrinder Singh
State of Punjab
Sabina
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
