@JUDGMENTTAG-ORDER
C. Praveen Kumar, J.@mdashRegistration of a crime at Begumpet Police Station, Hyderabad, for the offences punishable under sections 120-B, 403 and 420 IPC is subject matter of challenge in the present applications filed u/s 482 Cr.P.C..
2. The facts in issue are as under: A private complaint filed u/s 200 Cr.P.C., was referred to the police u/s 156(3) Cr.P.C., which led to registration of the above crime. Crl.P. No. 1720/2014 is filed by A-2 to 4 who are the Managing Director and CEO of ICICI Bank Ltd., Senior General Manager-Head South Zone of ICICI Bank Ltd., and General Manager-Home and Vehicle Loans of ICICI Bank Ltd., respectively. While Crl.P. No. 1719/2014 is filed by A-5 who is the Branch Manager of Begumpet Branch of ICICI Bank Ltd.
3. The allegations in the report refer to two transactions in respect of two properties said to have been purchased by the second respondent herein. Insofar as first property which was mortgaged with ICICI Bank Ltd., under home loan bearing account No. NWHYD00000726979 is concerned, there is no dispute as the entire sale consideration of Rs. 7,85,00,000/- was paid and the original title deed was released in favour of the second respondent. The entire dispute is with regard to the second property situated in S. No. 403/1 (old) 120 (new) at Shaikpet village and S. No. 102/1 of Hakeempet village, Road No. 37, Jubilee Hills, Hyderabad, admeasuring 1564 sq.yards belonging to one T. Venkatram Reddy. The averments, in the report would show that during the course of sale negotiations, T. Venkatram Reddy brought to the notice of the second respondent that the said property which he intends to purchase was mortgaged with ICICI Bank Ltd., under home loan Account No. NHHYD00000726978. As the second respondent was interested in purchasing the same, though it was mortgaged, he along with his wife D. Sucharitha Reddy approached A-4 and A-5 for the purpose of verifying the details of the home loan account. A-5 in consultation with A-2 to A-4 is alleged to have informed the second respondent that if the amount due under the home loan account is repaid the bank would not have any objection in transferring the property to the second respondent or his wife by T. Venkatram Reddy and that the original document shall also be released. Pursuant thereto, T.Venkatram Reddy addressed a letter dt. 10-1-2013 to the ICICI Bank Ltd., intending to pre-close the home loan account by paying Rs. 4,95,89,791/- subject to condition that ICICI Bank (A-1) gives no objection certificate along with the original property documents. The said letter was acknowledged by A-5 with the following endorsement: "We will release the original land papers and no objection certificate after the payment is received for the home loan". Acting on the representation made by A-5, the second respondent paid total sale consideration of Rs. 7,72,60,862/-. Subsequent thereto a registered sale deed vide document No. 1107 dt. 7-3-2013 was also executed by T. Venkatram Reddy in favour of the minor son of the second respondent. It is stated that the sale consideration was paid by the second respondent directly to the accused bank. The accused Bank acknowledged the payment, closed the loan account and also communicated the same through an e-mail to T. Venkatram Reddy on 7-3-2013. In spite of several requests made by the second respondent to handover the original documents relating to the said property, the accused failed to return the same. It is alleged that the second respondent acted upon the assurance and representation made by the accused and their conduct in not returning the original document in spite of receiving the entire loan amount would disclose their dishonest intention to cheat the second respondent. Basing on these allegations, a private complaint was filed which was referred to the police u/s 156(3) Cr.P.C. On reference, a case in Cr. No. 411/2013 of Begumpet Police Station was registered for the offences punishable u/s 120-B, 403 and 420 IPC.
4. Sri C.B. Ram Mohan Reddy, the learned counsel for the petitioners mainly submits that even accepting the allegations in the report to be true, no offence is made out against any of the petitioners. He further submits that in view of section 171 of the Indian Contract Act and Cl.20 of the Deed of Guarantee, the bank has complete lien over the property as T. Venkatram Reddy is still due a sum of Rs. 500 crores to the Bank. He further submits that there is no privity of contract between the accused and the second respondent and as such initiation of proceedings by the second respondent is untenable. He would further submit that various Finance loans obtained by M/s. Deccan Chronicle Holdings Ltd., were declared as NPA and ICICI Bank approached the Debt Recovery Tribunal, Hyderabad, by filing OA Nos. 772 and 773 of 2012 which are still pending. The documents pertaining to the home loan were also subject matter of the proceedings before the Debt Recovery Tribunal, Hyderabad. He thus submits that as the bank has lien over the property and since the property involved herein is subject matter of the proceedings in OA Nos. 772 and 773 of 2012 on the file of Debt Recovery Tribunal, Hyderabad, continuation of proceedings against the petitioners would be an abuse of process of law.
5. Per contra, Sri D. Prakash Reddy, the learned Senior Counsel. appearing for the second respondent would submit that dishonest inducement made by A-5 on the instructions of A-2 to A-4 that the original sale documents would be released knowing that there was a lien over the said property would definitely constitute offences punishable under sections 403 and 420 IPC. He would further submit that the argument of the learned counsel for the petitioners that the documents would not be released as CBI has seized the said documents cannot be accepted for the reason that the said seizure took place much after issuance of letter dt. 10-1-2013. He would further submit that the complaint is silent as to when M/s. Deccan Chronicle Holdings Ltd., was declared as NPA and if the said letter dt. 10-1-2013 was issued after declaring the company as NPA, the said act was definitely constitute an offence of cheating. He thus submits that in a case of this nature, this court shall not invoke its inherent power and interdict the investigation which is at its threshold.
6. The power to interdict a proceeding either at the threshold or at an intermediate stage of the trial is inherent in High Court on a broad principle that in case the allegations made in the FIR or the criminal complaint, as may be, prima facie do not disclose a triable offence there can be reason as to why the accused should be made to suffer the agony of a legal proceeding that more often than not gets protracted. A prosecution which is bound to become lame or a sham ought to be interdicted in the interest of justice as continuance thereof will amount to an abuse of the process of the law. This is the core basis on which the power to interfere with a pending criminal proceeding has been recognized to be inherent in every High Court. The power, though available, being extra ordinary in nature has to be exercised sparingly and only if the attending facts and circumstances satisfies the narrow test indicated above, namely, that even accepting all the allegations levelled by the prosecution, no offence is disclosed. However, if so warranted, such power would be available for exercise not only at the threshold of a criminal proceeding but also at a relatively advanced stage thereof, namely, after framing of the charge against the accused. In fact the power to quash a proceeding after framing of charge would appear to be somewhat wider as, at that stage, the materials revealed by the investigation carried out usually comes on record and such materials can be looked into, not for the purpose of determining the guilt or innocence of the accused but for the purpose of drawing satisfaction that such materials, even if accepted in its entirety, do not, in any manner, disclose the commission of the offence alleged against the accused. (See:
7. The entire issue revolves around the representation made by A-5 to the second respondent informing him about the return of original documents if the entire loan amount is repaid and the endorsement made by A-5 on the letter dt. 10-1-2013 given by Mr. T. Venkatram Reddy to the ICICI Bank Ltd., leading to repayment of loan amount by the second respondent.
8. The material placed before the court would disclose that T. Venkatram Reddy representing M/s. Deccan Chronicle Holdings Ltd., obtained corporate financial assistance over and above Rs. 500 crores from ICICI Bank Ltd., and is still due to pay the said amount. Agreement has been entered into between ICIC Bank Ltd., and M/s. Deccan Chronicle Holdings Ltd., wherein Mr. T. Venkatram Reddy stood as personal guarantor to the corporate funding extended by ICICI Bank Ltd., to M/s. Deccan Chronicle Holding Ltd. It is not in dispute that the property which is subject matter of challenge in the present case originally belongs to T. Venkatram Reddy and was mortgaged to ICICI Bank while taking home loan.
9. Section 171 of the Indian Contract Act reads as under:
171. General lien of bankers, factors, wharfingers, attorneys and policy brokers.--
Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain, as a security for a general balance of account any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to the effect."
Cl.20 of the Deed of Personal Guarantee executed by T. Venkatram Reddy, Mr. Vinayak Ravi Reddy and Mr. P.K. Iyer in favour of ICICI Bank Limited on 23-9-2011 reads as under:
"20. The Bank and its group companies shall have the paramount right of set-off and lien, irrespective of any other lien or charge, present as well as future, on the deposits of any kind and nature (including fixed deposits) held/balances lying in any accounts of the Guarantors, whether in single name or joint name(s), and on any monies, securities, bonds and all other assets, documents and properties held by/under the control of the Bank and/or its group companies (whether by way of security or otherwise pursuant to any contract entered/to be entered into by the Guarantors in any capacity), to the extent of all outstanding dues, whatsoever, arising as a result of any of the Bank''s and/or its group companies'' services extended to and/or used by the Guarantors and/or as a result of any other facilities that may be granted by the Bank and/or its group companies to the Guarantors. The Bank and/or its group companies are entitled without any notice to the Guarantors to settle any indebtedness whatsoever owed by the Guarantors to the Bank and/or its group companies, (whether actual or contingent, or whether primary or collateral, or whether joint and/or several) hereunder or under any other document/agreement, by adjusting, setting-off any deposit(s) and/or transferring monies lying to the balance of any accounts(s) held by the Guarantors with the Bank and/or its group companies notwithstanding that the deposit(s)/balance lying in such account(s) may not be expressed in the same currency as such indebtedness. The Bank''s and its group companies'' rights hereunder shall not be affected to the Guarantors'' bankruptcy, death or winding-up. It shall be the Guarantors'' sole responsibility and liability to settle all disputes/objections with any such joint account holders.
In addition to the above mentioned right or any other right which the Bank and its group companies may at any time be entitled whether by operation of law, contract or otherwise, the Guarantors authorize the Bank: (a) to combine or consolidate at any time all or any of the accounts and liabilities of the Guarantors with or to any breach of the Bank and/or its group companies; (b) to sell any of the Guarantors'' securities or properties held by the Bank by way of public or private sale without having to institute any judicial proceeding whatsoever and retain/appropriate from the proceeds derived there from the total amounts outstanding to the Ban and/or it group companies from the Guarantors, including costs and expenses in connection with such sale; and (c) in case of cross currency set-off, to convert an obligation in one currency to another currency at a rate determined at the sole discretion of the Bank and/or its group companies."
10. One of the argument raised by the learned counsel for the petitioners is that the Bank will have lien over the property in spite of discharge of home loan amount as the borrower of home loan account is still due to the bank a sum of Rs. 500 crores.
11. The issue as to whether the bank will get lien over the property in spite of discharge of the loan amount is no more res integra in view of the judgment of the Apex Court in
12. Therefore, in view of Clause 20 of Deed of Guarantee, section 171 of the Indian Contract Act and the judgments referred to above, I am of the opinion that the bank has lien over the property as the original borrower/guarantor of the loan is still due.
13. The next question that would fall for consideration would be the effect of the endorsement made by A-5 on the letter dt. 10-1-2013 written by Sri T. Venkatram Reddy to the Bank, wherein he sought pre-closure of home loan account provided the bank returns original property documents along with No Objection Certificate. It is not in dispute that the said endorsement on the letter dt. 10-1-2013 was made by A-5 expressing willingness to return the original documents. It may also be noticed here that though the original document was not released in favour of the second respondent the property was transferred in the name of the minor son of the second respondent. The privity of contract was between the ICICI Bank and Sri T. Venkatram Reddy who wrote the letter dt. 10-1-2013 which led to the endorsement on the said letter. But Mr. T. Venkatram Reddy did not lodge any complaint questioning the in action of the bank authorities in refusing to return the original documents. On the other hand, a complaint came to be filed against the bank officials by the second respondent herein stating that when he along with his wife went to the Bank, A-5 is alleged to have informed them that the original documents would be released if the entire loan amount is repaid. As the bank failed to return the original documents in spite of repayment of loan amount by the second respondent, the present complaint is filed. Even accepting that the bank has lien over the property, the effect of endorsement made by A-5 assumes importance to decide the issue as to whether the said act constitutes an offence punishable u/s 420 or 403 IPC.
14. As observed earlier, there was no privity of contract between the second respondent and the ICICI bank. No communication either by way of any letter or intimation was given by the Bank to the second respondent. It is nowhere alleged in the complaint that the second respondent had at any point of time met A-2 to A-4 and that they promised to release the documents if the loan amount was repaid. It was specifically alleged in the complaint that when the second respondent and his wife met A-5, he is alleged to have orally represented on the instructions of A-2 to A-4 that if the loan amount is repaid the original documents would be released.
15. The question is whether such a representation made by A-5 constitutes the offences punishable under sections 403 and 420 IPC and if so whether against all or against A-5 only?
16. As stated earlier, the second respondent never met A-2 to A-4 nor A-2 to A-4 promised to return the documents if the entire loan amount was repaid. Vicarious liability of the Managing Director, General Manager and Regional Manager would arise provided any express provision exists in that behalf in the statute. Definitely there cannot be any constructive liability or vicarious liability while dealing with penal offences. The complaint/report/charge sheet should specifically allege the role played by each of the accused so as to connect them with the crime.
17. In
"5. It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private second respondent as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta."
18. In
"13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the second respondent to make requisite allegations which would attract the provisions constituting vicarious liability."
19. In
"20. Though Respondent No. 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant-Company by initiating the criminal prosecution, it is pointed out that appellant Nos. 2 to 8 are the Ex-Chairperson, Ex-Directors and Senior Managerial Personnel of appellant No. 1 - Company, who do not have any personal role in the allegations and claims of Respondent No. 1. There is also no specific allegation with regard to their role.
21. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of ''vicarious liability'' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant-Company."
20. After referring to the judgments referred to above i.e., Surendra Prasad Sinha (supra), Maksud Saiyed (supra) and Thermax Ltd. (supra), the Apex Court in
21. As stated earlier, the complaint is silent as to the role played by A-2 to A-4 in inducing the second respondent to part with money on a promise that the original land documents would be returned. The allegation made in the complaint that A-5 on the instructions of A-2 to A-4 promised the second respondent to return the original documents if the entire loan amount is repaid is quite bald, omni bus and vague in nature. No specific date and time is mentioned as to when A-5 contacted A-2 to A-5. Further the endorsement made on the letter dt. 10-1-2013 does not refer to the alleged instructions given by A-2 to A-4. Such being the position, this court is of the view that continuation of proceedings against the A-2 to A-4 would be an abuse of process of law and the same is liable to be quashed against A-2 to A-4.
22. Insofar as A-5 is concerned, the second respondent who was not having any contract with the Bank was induced to part with the money on a promise that the original documents would be returned if the loan amount is repaid. But for the promise made by A-5, the second respondent would not have parted with such a huge amount. The learned counsel for the petitioners contended that since anyone can discharge the loan amount, no liability can be fastened on A-5 for non-returning of the document I am afraid the said argument cannot be accepted.
23. It may be true that any third party can discharge the loan amount. But here is a case where the second respondent was assured by A-5 in returning the document if the entire loan amount is cleared. Knowing the reason for repayment of loan amount, A-5 induced the second respondent to repay the due amount and having received the entire loan amount of Rs. 7,72,60,862/- from the second respondent failed to return the original documents. The said act of A-5 in inducing the second respondent to part with money caused wrongful loss to him, thereby, prima facie, constituting an offence punishable u/s 420 IPC. When the Bank has lien over the property, A-5 ought not to have made such an endorsement on the letter and induce second respondent to repay the loan amount. The argument that A-5 may not be knowing about the other loans obtained by Mr. T. Venkatram Reddy and the lien over the property are issues which have to be investigated by the police. The reasons which are now sought to be given for non return of original documents are that M/s. Deccan Chronicle Holdings Limited was declared as a NPA and that the said documents were seized by CBI. No material is placed to show as to when M/s. Deccan Chronicle Holdings Limited was declared as a NPA. Further, the document which is the subject matter of dispute in the present case was seized by CBI much after the issuance of the letter. Therefore, at this stage, it cannot be said that the act of A-5 do not, prima facie, constitute an offence punishable u/s 420 IPC.
24. Insofar as the offence punishable u/s 403 IPC is concerned, an offence of criminal breach of trust would arise only when there is entrustment of property and misuse of property so entrusted. Here is a case where Mr. T. Venkatram Reddy mortgaged the property and obtained housing loan. Section 405 IPC does not make the owner of the property, who enters into a deed of mortgage or deed of guarantee with the financier as a person entrusted with property or person entrusted with dominion over the property. In case of mortgage, there is no entrustment of property or dominion over the property to the mortgagor-owner. The person in whose favour the mortgage is made does not get possession of the property. As stated above, it is only a lien or charge is created over the said property. Except an averment in the complaint that A-5 made an endorsement on the instructions of A-2 to A-4, there is no material to show that there was any criminal conspiracy between A-2 to A-5. Therefore, it can be said that offences punishable u/s 403 and 120B IPC are not made out against A-2 to A-5. However, the endorsement and the representation made by A-5 to the second respondent which resulted in parting of a considerable amount thereby causing wrongful loss would, prima facie, make out an offence punishable u/s 420 IPC. Truthfulness or otherwise of the allegations have to be investigated by the police. Since the case is still at the stage of investigation, this court is of the view that the inherent power u/s 482 Cr.P.C., cannot be invoked to interdict the investigation against A-5, which is at its threshold.
25. For the aforesaid reasons, Crl.P. No. 1720/2014 filed by A-2 to A-4 is allowed, whereas Crl.P. No. 1719/2014 filed by A-5 is allowed in part by quashing the proceedings in so far as the offences punishable u/s 403 and 120-B IPC only. Miscellaneous petitions, if any, shall stand closed.
