Allowed

Smt. Peravali Balarani,(A_10) v. State - Represented by Spl. Pp CBI

Telangana HC4 Jan 2012CRLP/1981/2008

Case brief

AI extract

What is this about?

The Court exercised its inherent power under Section 482 Cr.P.C. to quash criminal proceedings against a legal practitioner (petitioner) who issued a false legal opinion regarding collateral property. Held that an advocate's duty is limited to scrutinizing submitted documents, not investigating their genuineness, and absent evidence of conspiracy, no criminal offense was made out.

What did the court decide?

Quashed the criminal proceedings in C.C.No.3 of 2008 against the petitioner/A.10.

Smt. Peravali Balarani,(A_10) Vs State - Represented by… — Cheque Dishonour | Telangana HC (2012)

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THE HON’BLE SRI JUSTICE R.SUBHASH REDDY

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CRIMINAL PETITION No.1981 of 2008

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ORDER:

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This Criminal Petition is filed under Section 482 Cr.P.C. by A.10 in C.C.No.3 of 2008 on the file of the learned Special Judge for C.B.I. Cases, Hyderabad, seeking to quash the proceedings initiated against her for the alleged offences punishable under Sections 120-B, 420, 468 and 471 IPC and Section 13(2) read with Section 13(1) (d) of the Prevention of Corruption Act, 1988.

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In the aforesaid C.C., final report is filed by the Inspector of Police, C.B.I., Hyderabad, against the petitioner herein and others. The contents of the final report are as under:

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A.1 worked as Chief Manager and A.2 worked as Senior Manager (Advances) in Indian Overseas Bank, Main Branch, Koti, Hyderabad and A.4 to A.6 floated a private limited company in the name of M/s.Sneha Creations Private Limited (A.7) and got it registered with the Registrar of Companies on 06.02.2001. A.4 is the Managing Director and A.5 and A.6 are the Directors of

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the Company. The Company is involved in manufacture of readymade garments. It is alleged that A.4 to A.7 availed a term loan of Rs.48.83 lakhs and got Cash Credit facility of Rs.20.00 lakhs from Indian Overseas Bank during July, 2003 by submitting false and fake documents as collateral security, false and fake proforma invoices and money receipts of a non-existing firm, namely, M/s.Master Equipments. It is further alleged that A.4 to A.7 conspired with A.3, a Tax Consultant, and submitted false information about the assets they owned and also about the assets owned by one Smt.Y.Satyavathi, the guarantor, to the Bank. It is further alleged that A.3 to A.7 also conspired with one late Sri R.Rakesh Kumar and he arranged false property documents in the name of Smt.Y.Satyavathi, and that A.1 got physical verification of the property done by Sri D.Subba Rao, the then Manager and A.2 filled the form F-337.

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So far as the petitioner/A.10 is concerned, she is the Advocate/Legal Practitioner. It is alleged that she has furnished a false legal opinion stating that Smt. Y.Satyavathi is having a clear marketable title on the property offered as collateral security. It is stated that A.4 to A.7 through A.3 conspired with A.8 and LIC Agent and forged the surrender value certificates and related LIC

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documents which were offered as additional collateral securities to the bank and the entire term loan of Rs.48.83 lakhs in the form of banker’s cheque was delivered to A.3 by A.2 by obtaining the signature of A.3 on the reverse of the voucher, instead of sending the same directly by post to M/s.Master Equipments. It is further stated that A.8 opened a current account in the name of M/s.Master Equipments with Bank of India, Malakpet and the banker’s cheque was deposited into the said account, by A.3 and the said amount was distributed among A.3 to A.8 by cheques, written by A.3 and signed by A.8. It is alleged that A.1 and A.2 conspired with A.3 to A.7, accepted false documents and without verification, processed, sanctioned and disbursed a term loan of Rs.48.83 lakhs and Cash Credit facility of Rs.20.00 lakhs, and caused wrongful loss to the bank.

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In the final report, so far as the petitioner/A.10 is concerned, it is alleged that she has conspired with A.1 to A.7 and furnished a false legal opinion stating that Smt. Y.Satyavathi is having a clear marketable title on the property offered as collateral security. Based on the same, the petitioner is sought to be prosecuted for the offences under Sections 120-B, 420, 468 and 471 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of

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Corruption Act, 1988.

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In this Criminal Petition, it is contended by Sri C.Padmanabha Reddy, learned Senior Counsel appearing for the petitioner that so far as the petitioner/A.10 is concerned, she is an Advocate and her name is in the panel of approved lawyers of Indian Overseas Bank and that when the registered documents were sent for opinion, she has scrutinized the same and gave her legal opinion thereon. Merely because those documents are alleged to be fabricated, she cannot be held liable for any of the offences, as alleged. It is submitted that even the allegations levelled against the petitioner are taken as correct, there is no case made out against her for the alleged offences under Sections 120-B, 420, 468 and 471 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. It is further contended that whenever documents are referred to the petitioner for opinion, her duty was to scrutinize and give opinion on the same and if such documents are fabricated, she cannot be held liable. It is submitted that in any event, in cases where opinion is wrong also, the lawyers/panel advocates cannot be held liable for any criminal act.

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On the other hand, it is submitted by Sri P.Keshava Rao, learned Special Public Prosecutor for C.B.I. cases, appearing for the first respondent that A.7 - M/s.Sneha Creations Private Limited was floated by A.4 to A.6 and a term loan of Rs.48.83 lakhs and Cash Credit facility of Rs.20.00 lakhs were availed from Indian Overseas Bank in July, 2003. It is further submitted that in support of the same, collateral security was given by one Smt. Y.Satyavathi and when the documents were sent for opinion, A.10 being the panel member of Indian Overseas Bank ought to have taken care to see that whether such documents are correct or not, before giving her legal opinion. It is further submitted that in view of the opinion given by the petitioner, who is an Advocate, the Bank had to accept the same for disbursement of loan. In this view of the matter, it can be said that she is the conspirator as such there are no grounds to quash the proceedings in C.C.No.3 of 2008 against her. It is further submitted that as per the instructions furnished by the bank authorities by way of Circulars, whenever documents are given for legal opinion, the panel advocate has to inspect the properties before giving such opinion. But, in the instant case, following the said Circular instructions, the petitioner, who was the panel advocate of the bank, has

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given false opinion, which caused substantial loss to the bank in view of conspiracy by all the accused in availing the term loan of Rs.48.83 lakhs and Rs.20.00 lakhs of Cash Credit facility.

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I have heard the learned counsel for the parties and carefully perused the final report filed against the petitioner and 9 others.

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From a perusal of the final report, it is clear that the allegations mentioned in it are serious but they are only against the other accused i.e. A.1 to A.9. So far as the petitioner/A.10 is concerned, it is alleged that she has conspired with A.1 to A.7 and furnished false legal opinion stating that Smt.Y.Satyavathi is having a clear marketable title on the property offered as collateral security. Except the said allegation, there is no other allegation against her.

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The learned Senior Counsel appearing for the petitioner relied on the judgment in the case of DEVENDRA AND OTHERS v. STATE OF UTTAR PRADESH AND ANOTHE R^[1] , in which, the Hon’ble Supreme Court has considered the distinction between criminal wrong and civil wrong and held that a wrong committed on the part of a person may be a civil wrong or a criminal wrong

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although an act of omission or commission on the part of a person may give rise to both civil action and criminal action. Further, it has held that a distinction must be made between civil and criminal wrongs and when a dispute constitutes a civil wrong and not a criminal wrong, the Courts would not permit a person to be harassed although no case for taking cognizance of the offence has been made out.

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Further, in the case of MOHAMMED IBRAHIM AND OTHERS v. STATE OF BIHAR AND ANOTHE R^[2] , the Hon’ble Supreme Court has held as under:

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“8. This Court has time and again drawn attention to the growing tendency of the complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurize parties to settle civil disputes. But at the same time, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes.”

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Further, the learned Senior Counsel appearing for the petitioner relied on the order, dated 23.11.2011

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passed by the learned Single Judge of this Court in the case of SRI P.VENKATESWARA RAO v. THE STATE C.B.I., HYDERABAD (Criminal Petition No.2608 of 2009), in which, an identical question fell for consideration. Even in the said case, a legal practitioner, who is the panel member of Bank of India, Saroornagar Branch, was sought to be prosecuted. The learned Single Judge of this Court has considered the instructions given by the bank authorities by way of internal circular and held that any circular issued by the Bank of India prescribing guidelines to panel advocates, would be nothing more than internal instructions between the bank and its panel advocates and such circulars are issued in a routine manner by the Head Office to all the branches of the bank and even any violation of such guidelines issued by the bank would not attract legal liability under any criminal law.

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The learned Senior Counsel appearing for the petitioner also relied on the order, dated 21.10.2010 passed in Criminal Petition No.471 of 2009 in the case of SRI K.KISHORE KUMAR REDDY v. THE STATE OF ANDHRA PRADESH, in which, the learned Single Judge of this Court, in identical circumstances, held that it is not the duty of the advocate to identify the borrowers and to accept the subject properties, while giving opinions on the

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documents sent by the bank. The learned Single Judge also held that even if it is considered that such advocate was not diligent while giving his legal opinion, he cannot be accused of committing any criminal offence.

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In this case, except stating that the petitioner has processed the documents, which were sent for opinion, there is nothing on record to connect her for the alleged conspiracy by the other accused. It is to be noticed that A.7 Company is floated by A.4 to A.6 and loan documents were released, when A.1 was Chief Manager and A.2 was Senior Manager (Advances). A reading of the final report makes it clear that A.3 to A.7 conspired with late Sri R.Rakesh Kumar and he arranged false property documents in the name of Smt. Y.Satyavathi. By looking at the contents of such documents sent by the bank authorities, the opinion was sent by the petitioner in discharge of her professional duty as such she cannot be held liable for any of the alleged offences in the absence of any other evidence to connect her to the alleged conspiracy.

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I fully agree with the findings recorded in the above referred to orders passed by the learned Single Judges of this Court that whenever a legal practitioner or advocate is

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asked to give his opinion on certain documents, it is not the duty of the advocate to investigate whether such documents are correctly obtained or not and whether the properties covered under such documents exist or not. It is unfortunate that such a job is alleged to be violated by the legal professionals. While giving legal opinion, the legal professionals are not expected to investigate into the genuineness of the documents or title deeds by making search of records or registers in the registration office, municipal office, revenue office etc. It is for the party, who seeks loan from the bank, to furnish all the relevant title deeds, encumbrance certificates, extracts of relevant registers of the offices concerned. There upon, it should be the duty of the bank officials, more particularly, the officers of the bank, to make search of such properties so as to know the genuineness of the documents.

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In this case, having failed to make such an attempt by the bank and its officers, it is not open for the respondents to allege that the opinion given by the petitioner/A.10, who is the legal practitioner, is false so as to prosecute her for committing the fraud in obtaining the loan amount and Cash Credit facility in the name of A.7 Company floated by A.4 to A.6.

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The above referred to judgments of the Supreme Court also makes a clear distinction between criminal wrong and civil wrong and in case an advocate or a legal professional is not diligent in giving the opinion, he/she may be held liable for a civil wrong but it cannot be held that he/she has committed any criminal wrong so as to prosecute him/her.

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Further, it is to be noticed that having regard to the allegations in the final report, there is no criminal offence made out against the petitioner and for no fault of her, she cannot be prosecuted for the alleged offences. If the contents of the final report are taken on their face value, no case is made out against the petitioner and allowing the trial against her for such offences is nothing but gross abuse of process and will result in miscarriage of justice.

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For the aforesaid reasons, this Court is of the view that this is evidently a fit case to exercise jurisdiction under Section 482 Cr.P.C. to quash the proceedings in C.C.No.3 of 2008 so far as the petitioner is concerned.

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In that view of the matter, this Criminal Petition is allowed and the proceedings in C.C.No.3 of 2008 on the file of the learned Special Judge for C.B.I. Cases,

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Hyderabad, are hereby quashed so far as the petitioner/A.10 is concerned.

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______________________ R.SUBHASH REDDY, J

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4^th JANUARY, 2012.

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kvni

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[1] (2009) 7 SCC 495

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[2] (2009) 8 SCC 751

Smt. Peravali Balarani,(A_10) v. State - Represented by Spl. Pp CBI

Case brief

What is this about?

What did the court decide?

Smt. Peravali Balarani,(A_10) v. State - Represented by Spl. Pp CBI

Case brief

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What did the court decide?

What the court decided

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