Judgment:
V.R. Kingaonkar, J.
1. This group of petitions is being decided together in as much as the petitioners seek quashing of First Information Reports (FIRs), registered against them at Chalisgaon Police Station, for offences punishable under Section 406, 408, 409, 420, 465, 468, 471, 120 read with Section 34 of the I.P. Code.
2. The Chalisgaon Peoples Cooperative Bank Limited (for short, CPCO Bank) is a Cooperative Bank. A large number of depositors invested their amounts by way of deposits in the CPCO Bank. The CPCO Bank was under management of a Board of Directors. Indisputably, an Liquidator is now appointed and is managing the affairs of the CPCO Bank. It is undisputed that a Special Auditor carried out audit of the CPCO Bank for the period between 1991-92 to 2005-06. He prepared audit inspection notes. He noticed a large number of misdeeds committed by the Directors and borrowers of the CPCO Bank during the period under the audit inspection. He noticed that some of the Directors and the borrowers were handinglove. They had duped the Bank in connivance with each other. Huge loans were disbursed to the kiths and kins, friends and close associates of the Directors without obtaining proper securities and without following regular norms. Resultantly, the recoveries of such loans became highly improbable. The depositors of the CPCO Bank were defrauded due to such malpractices adopted by the Directors and some of the borrowers. The CPCO Bank has been put to great financial loss. Thus, the hard earned money of the depositors became unsafe and they were unable to get back the deposited amounts. The borrowers had no intention to repay nor the amounts were lent after taking proper precaution. The Directors and the borrowers conspired to misappropriate the amounts of the CPCO Bank. They doctored various documents in order to prepare record regarding disbursement of the loans, though such amounts were embezzled and misappropriated in connivance with each other by the borrowers and some of the Directors. The borrowers were found in arrears of the amounts to the extent of Rs. 3,93,02,538/as on 31st March, 2006. The Special Auditor was directed to lodge a report. He, therefore, filed First Information Reports at Chalisgaon Police Station, which were registered vide crime Nos. 250/2008, 252/2008, 256/2008 and 259/2008, against as many as twenty (20) Ex-Directors, one (1) Ex-Chairman, five (5) borrowers and one (1) Ex-Manager of the CPCO Bank.
3. Briefly stated, case of petitioner Kishanlal in Criminal Writ Petition No. 922/2008 is that he availed loan facility of the CPCO Bank in the year 1998. He repaid the loan amount from time to time in accordance with the rules and regulations of the Bank. He was again and again given loan facility since ha had cleared the earlier debt. He executed necessary documents from time to time by way of security for repayment of the loan. The CPCO Bank initiated proceedings against him under Section 101 of the Maharashtra Cooperative Societies Act, 1960 (for short, the MCS Act) for recovery of the loan amount. The learned Assistant Registrar (Cooperative Societies) rejected the application for issuance of such certificate and, therefore, the CPCO Bank had preferred revision application No. 65/2008 under Section 154 of the MCS Act. The revisional authority remanded the proceedings to the Assistant Registrar with direction to conduct de novo inquiry. The Assistant Registrar, Cooperative Societies again refused to issue the certificate and the said order is now sub judice before the Divisional Joint Registrar in revision application No. 19/2008. The FIR is lodged with ulterior motive to coax him to shell out the disputed amount as desired by the CPCO Bank. He has filed Dispute No. 1163/2008 in the Cooperative Court, Jalgaon for declaration that the amount claimed by the CPCO Bank is incorrect and improper and the CPCO Bank cannot charge compound interest. The Cooperative Court has directed the Special Auditor and the Bank to maintain status quo as regards the recovery proceedings. He is not a member of the Managing Committee or the Loan Committee. He has not misappropriated any amount as such. Consequently, he seeks quashing of the FIR registered vide Crime No. 250/2008 against him.
4. In Criminal Writ Petition No. 332/2009, petitioner Padmakar has come out with a case that he is borrower of loan obtained from the CPCO Bank after executing the necessary documents. The loan has been duly secured as he gave guarantors for the repayment of the loan alongwith the necessary documents. The loan was sanctioned after following due procedure. He obtained loan as per higher purchase scheme for purpose of purchasing of a jeep vehicle. The recovery certificate under Section 101 of the MCS Act has been issued by the competent authority. The FIR filed by the Special Auditor and registered vide Crime No. 252/2008 against him and eleven (11) other borrowers alongwith members of the Managing Committee is liable to be quashed against him because he is neither Managing Committee member nor availed the loan facility by illegal means. He alleges that no criminal offence has been made out on basis of the averments in the FIR. He further alleges that the FIR is outcome of only the civil dispute. His case is that the continuation of such FIR would amount to abuse of the process of the Court because the only intention of the informant is to illegally pressurize him to pay the amount which is under dispute.
5. Similarly, case of petitioner Madhav in Criminal Writ Petition No. 65/2009, is that he runs a business in the name and style as M/s Varun Agencies at Chalisgaon. He borrowed loan from the CPCO Bank. As per his application, loan of rupees four (4) lacs was granted to him on basis of hypothication of the goods. He mortgaged his immovable property in favour of the Bank and also hypothicated the goods stored at his business place. He suffered loss in the business and, therefore, was unable to repay the entire amount. The CPCO Bank filed recovery proceedings under Section 101 of the MCS Act against him. He asserted that excessive interest was being charged and the dues were inflated by the Bank. The Assistant Registrar, Cooperative Societies was pleased to reject the application for issuance of the recovery certificate. The CPCO Bank had preferred a revision application bearing No. 22/2008 which was partly allowed and the matter is remanded for fresh decision. The FIR lodged against him is outcome of civil dispute. He has not cheated the Bank in any manner. The averments in the FIR do not constitute any offence against him. Consequently, he seeks quashing of the FIR registered vide Crime No. 252/2008.
6. In his Criminal Writ Petition No. 87/2009, petitioner Iqbal Khan seeks quashing of the FIR registered vide crime No. 256/2008 against him on basis of the report lodged by the Special Auditor. He alleges that he had obtained vehicle loan from the CPCO Bank to the tune of rupees five (5) lacs. He executed the required documents alongwith mortgage deed. His open plot is mortgaged in favour of the Bank by way of security for repayment of the loan. He had no intention to defraud the Bank nor has committed misappropriation of any amount. He purchased the vehicle by utilising the loan amount and the Bank is at liberty to sell out the property for the recovery purpose. The FIR instituted against him is unsustainable because it is only a civil dispute raised by the Bank which is tried to be converted into criminal action. The FIR is unsustainable because the CPCO Bank has not complied with provisions of the MCS Act. Hence, he seeks quashing of the said FIR.
7. In Criminal Writ Petition No. 328/2009, petitioner Purushottam alleges that he availed hypothecation loan of rupees fifteen (15) lacs. He alleges that he executed necessary documents in favour of the CPCO Bank. The Bank has also filed Dispute vide Dispute No. 613/2005 in the Cooperative Court at Jalgaon for recovery of the unpaid amount of loan. The FIR lodged against him is outcome of illintention to convert the civil dispute into criminal action. The allegations in the FIR do not constitute any offence against him. Hence, he seeks quashing of the FIR registered vide crime No. 259/2008.
8. In Criminal Writ Petition No. 113/2009, petitioner Vijaykumar is also a borrower. He too obtained loan of rupees fifteen (15) lacs for his business purposes. His case is that the CPCO Bank has already filed Dispute in the Cooperative Court for recovery of the loan amount vide Dispute No. 614/2005. He too alleges that the averments in the FIR do not constitute any offence against him. According to him, the civil dispute raised by the Bank for recovery of the loan amount is being tried to be converted into criminal action with a view to harass him. Consequently, he seeks quashing of the FIR registered vide crime No. 259/2008 against him.
9. Mr. V.D. Hon and Mr. Vinod Patil, learned Counsel, would submit that the petitioners have been shown as accused persons in the First Information Reports (FIRs) without any foundation. They would submit that mere money dispute raised by the parties do not involve element of criminality. They contended that loans were sanctioned by the CPCO Bank after due consideration of the proposals. They would submit that when the dispute is raised regarding the alleged amount due, the FIRs were filed only with a view to trouble and pressurize the petitioners. It is argued that when the alternate mode of recovery is permissible, the criminal action would be improper. They invited my attention to provisions of Sections 81, 82, 83 and 88 of the MCS Act. They would submit that the MCS Act is a self-sufficient Code and, therefore, no separate criminal action is maintainable in the shape of the FIRs lodged by the Special Auditor. They further pointed out that the Cooperative Court has directed to maintain status quo as regards recovery proceedings in one of the cases as mentioned above. Therefore, they urged to quash the impugned FIRs. Per contra, Mr. Chavan and learned APP resisted the petitions on various grounds. It is argued that there were no actual payments made by the petitioners and their loan cases were shady deals entered into as a result of conspiracy with the Chairman and Directors of the CPCO Bank. They would submit that the petitioners and the Directors have entered into joint concert so as to defraud the CPCO Bank and to commit misappropriation of huge funds in tune of more than Rs. 66 crores. Mr. Chavan took me through the relevant record in order to show that there was no actual payment made by either of the borrowers, but it was only the paper transactions undertaken from time to time to show that earlier loan amount was cleared and the loan was transferred to the new account. Hence, they urged for dismissal of the petitions.
10. There cannot be two opinion about the legal proposition that when the FIR does not indicate any material about complicity of the petitioners, then the same may be quashed in the exercise of writ jurisdiction under Article 227 of the Constitution. The civil dispute cannot be ordinarily allowed to be converted into criminal action. At the same time, it is well settled that if on same set of facts, civil wrong as well as criminal wrong is shown to have been committed, then the mere existence of civil remedy is not a ground for quashing the FIR.
11. Mr. Hon seeks to rely on Madhavrao Jiwaji Rao Scindia and Anr. etc. v. Sambhajirao Chandrojirao Angre and Ors. etc. : AIR 1988 SC 709 The Apex Court held that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is as to whether the uncontroverted allegations as made, prima facie establish the offence. The Apex Court further observed that the forum of the criminal Court cannot be utilized for any oblique purpose and where, in the opinion of the Court, chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the Court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage. In the given case, the criminal proceeding were quashed by the High Court in respect of the two persons which were allowed to be continued against the remaining accused. The Apex Court held that where the ingredients of the criminal offences are wanting, the criminal proceedings had to be quashed.
12. In R. Kalyani v. Janak C. Mehta and Ors. : (2009) 1 SCC 516 the Apex Court held that where the allegations do not show that the property was entrusted with the appellant or otherwise had dominion over it, or any criminal breach of trust was committed, the quashing of the FIR would be proper and need not be interfered with.
13. In Sharon Michael and Ors. v. State of Tamil Nadu and Anr. : (2009) 3 SCC 375, the question before the Honble Supreme Court was whether the FIR could be quashed where the complaint was liable to be quashed because the dispute between the parties was of civil nature. In that case, the allegations made against the accused persons were in relation to execution of a contract. The Apex Court held that the petitioners therein could not be made vicariously liable only because they were employees of the Company. In the present context, it is argued that the petitioners are not the employees of the CPCO Bank. Mr. Hon further seeks to rely on Dhariwal Tobaco Products Ltd. and Ors. v. State of Maharashtra and Anr. : 2009 AIR (SC) 1032 : 2009 (2) SCC 370. The question for consideration before the Apex Court was altogether different in case of Dhariwal Tobaco Products Ltd. The petition filed under Section 482 of the Criminal Procedure Code was dismissed on the ground of availability of alternate remedy by way of revision application under Section 397 of the Criminal Procedure Code. The Apex Court held that inherent powers are not conferred by the statutes but they are merely saved. The Apex Court held that V.K. Jain and Ors. v. Pratap V. Padode and Anr. 2005 (30) Mh.L.J. 778 is not a good law and, therefore, has been overruled.
In the present case, however, there is no question of dismissal of the petitions due to availability of alternate remedy and hence, with due respect, the case of Dhariwal Tobaco Products Ltd. (supra) has no application to the fact situation.
14. In my humble opinion, the question to be asked in such a case is whether the petitioners are able to demonstrate total absence of material to make out a charge for any offence against them. The FIRs may be sustainable even if there is some prima facie material to infer probability of the petitioners being criminally liable to answer the charge/s. Ordinarily, the prosecution cannot be scuttled at such a peremptory stage when the investigation is yet in progress. The powers under Section 482 of the Criminal Procedure Code or under Article 227 of the Constitution are required to be sparingly exercised. It is well settled that such extraordinary jurisdiction is required to be exercised sparingly and with circumspection. The remedy is not available just for the reason that there is some possibility of failure of the criminal charge afterwards.
15. What emerges from the material brought on surface of the record, and the tenor of the reply affidavits, is that various loans were sanctioned by the Bank without obtaining appropriate securities. It is true that the petitioners are not members of the Loan Committee of the CPCO Bank. However, from their conduct, it may be prima facie inferred that they were having strong pull power and could be beneficiaries of the loan facilities due to nexus with the powerful Directors or the Chairman of the CPCO Bank. Though loan facility to the tune of one (1) lac was availed by the petitioner Kishanlal (Cri.W.P. No. 922/2008) in 1996, yet, he did not repay the loan. The loan amount was shown to have been repaid on paper when he was granted new loan of rupees six (6) lacs in 1998. The earlier loan amount was merged with new loan account in 2000 when it was shown that he availed loan facility of rupees four (4) lacs. It appears that he did not pay the said amount and subsequently availed loan of Rs. 10.20 lacs. At that time, the earlier loan account was deemed as closed as it was transferred to the new loan account. The process was carried on further without actual payment. It is not necessary to consider the other irregularities. However, it transpires that the Assistant Registrar of Cooperative Societies has now held that the amount of Rs. 27,29,902.14 paise is due from him. A copy of the judgement rendered by the Assistant Registrar, Cooperative Societies, Parola on 17-04-2009 is placed on record. It also appears that the petitioner Kishanlal did not execute the adequate securities nor mortgaged immovable properties so as to facilitate the recovery without hassles. The very fact that from time to time, the earlier loan amount was shown to have been paid, though it was not paid at all, and the new loan account was opened in his name, would indicate his prima facie connivance with the Directors of the CPCO Bank.
16. The cases of other petitioners are also not on better footings than that of petitioner Kishanlal. Though petitioner Padmakar (Cri.W.P. No. 332/2009) is said to have availed loan for purchasing a jeep vehicle, yet, it appears that he did not utilize the loan facility for purchasing the jeep vehicle. The quotation was submitted by him as issued by M/s Ratnaprabha Motors. But the purchase bill was never produced. The vehicle was not hypothicated with the CPCO Bank. Likewise, petitioner Iqbal Khan (Cri.W.P. No. 87/2009) availed loan facility to the tune of rupees five (5) lacs for purchasing of a vehicle. No vehicle was actually purchased by utilizing the loan amount. The so called vehicle was never hypothicated with the CPCO Bank. Thus, the grant of vehicle loan to him was only a paper transaction. It appears from the record that the disbursements of the loan amounts were shown but the repayments or utilisation of the loan amounts were shown only on the papers. Needless to say, all the transactions were stage managed farces, brought about by the petitioners in connivance with the influential Directors and the employees of the CPCO Bank. This can be the only prima facie inference available in view of the conduct of the petitioners. The investigation may unravel the truth.
17. It is true that the Maharashtra Cooperative Societies Act, 1960 (MCS Act) is a self-sufficient Code. There cannot be duality of opinion about the legal position that the Cooperative Bank can take necessary action on the report of the Special Auditor as provided under Section 81, 83 and 86 of the MCS Act.
18. In Ramrao and Anr. v. Narayan and Anr. (Criminal Appeal No. 51/1967) AIR 1969 724, the Apex Court held that sanction of the Registrar of Cooperatives was not necessary for maintainability of complaint whereby the President and the Secretary of the Bank were charged for offences punishable under Section 465 and 471 of the I.P. Code. The Apex Court held that Section 146(P) of the Maharashtra Cooperative Societies Act, 1960 and Sections 463 and 464 of the I.P. Code are two distinct offences which are capable of being committed with different intentions by different sets of persons and it could not be contemplated that the Legislature of the State of Maharashtra intended to repeal pro tanto the provisions of Section 465 of the I.P. Code by enactment of Section 146 of the Maharashtra Cooperative Societies Act. The availability of alternate remedies under provisions of the MCS Act would not imply that the criminal remedy cannot be availed in such cases. The petitioners have attempted to show that dispute is raised regarding the amount due against them and mainly because of excessive compound interest charged by the CPCO Bank. There is prima facie material to infer that the petitioners have not been granted loans in regular manner. Nor the repayments were properly secured. Some of them could manage mere paper transactions to indicate the payments which were not actually made.
19. In State of M.P. v. Rameshwar and Ors. : 2009 CRI.L.J. 2415, the Apex Court repelled the argument that the M.P. Cooperative Societies Act, 1961 is a self-contained Code by itself and provide for different eventuality relating to the administration of the Cooperative Societies and, therefore, criminal charges could not have been levelled against the Chairman and the Directors of the Cooperative Bank for the alleged defrauding of the Bank. The FIR was registered against them for offences punishable under Section 409, 420 and 120 of the I.P. Code. The Apex Court held that quashing of the charges on ground that the accused as members of Loan Committee were only required to consider the loan case put up by the Bank Manager and it was regarding entitlement of grant of loan, was not proper. It was noticed that loans were sanctioned in favour of 35 persons without verifying their eligibility to receive such loans or the enduse of such loans and the Chairman and the Directors of the Cooperative Bank had intentionally acted in an illegal manner to enable the said borrowers to avail the loans. Somewhat similar fact situation is projected through the FIRs lodged against the petitioners. Though they are borrowers, yet, without their active connivance, the bogus loan cases could not have been pushed ahead.
20. In Prashant Jhunjhunwala s/o Late Shri Rajkumar Jhunjhunwala v. Union Territory of Daman & Diu, through its Secretary and Ors. 2009 ALL MR (Cri) 1964, a Division Bench of this Court held that whether complaint discloses criminal offence or it involves only a civil dispute would depend upon facts and circumstances of each case. It is observed that a complaint may have civil profile but it may also have overwhelming criminal overtones. In such case, a criminal Court cannot shut its doors to it.
21. In Central Bureau of Investigation v. A. Ravishankar Prasad and Ors. 2009 (4) Supreme 557, the Apex Court held that the Court should refrain from interfering when the FIR discloses commission of a cognizable offence. It is held that the test is to examine whether the allegations in the complaint and charge sheet taken at their face value constitute the offences alleged. In Inspector of Police, CBI v. B. Raja Gopal and Ors. : (2002) 9 SCC 533, the Apex Court held that quashing of the proceedings for offences punishable under Section 420, 468 and 471 of the I.P. Code for defrauding a Bank was not justified merely for the reason that a compromise has been reached between the Bank officials and the accused and the latter had paid the disputed amount to the Bank.
22. In Mahesh Chaudhary v. State of Rajasthan and Anr. : (2009) 4 SCC 439, the Apex Court held that dispute being primarily of a civil nature by itself is not a ground to quash the proceedings because in cases of forgery and fraud, there would always be some element of civil nature. The evidence pertaining to charge of conspiracy is yet to be collected.
23. For the reasons stated hereinabove, I am of the opinion that there is some material, which may not be sufficient enough to immediately reach conclusion of the guilt, but has some potentiality to indicate connivance of the petitioners with the Directors and officials of the CPCO Bank for creating the loan documents with oblique intention to misappropriate the amounts. It cannot be overlooked that the financial bunglings of the concerned Directors, officials and such borrowers have ultimately brought severe financial crisis to the discredit of the CPCO Bank. Considering these aspects, I do not find any substantial reason to interfere with the FIRs at the premature stage.
24. In the result, all the writ petitions are dismissed. Consequently, all the criminal applications stand disposed of.