M.P. Chinnappa, J.
1. The petitioners herein are the accused before the Chief Metropolitan Magistrate, Bangalore, in C.C. No. 8206 of 1996, for the alleged offence under section 409 of the Indian Penal Code, 1860. The chief manager, chairman, managing director and directors of Bank of Baroda are the accused persons. They have preferred these petitions against the order passed by the learned magistrate directing to issue process to these petitioners.
Heard.
2. Learned counsel for the petitioners contended that the complaint was without any bona fide reasons. If the complaint is taken as a whole, no offence is made out as against these petitioners. There is no dishonest intention on the part of these petitioners to constitute an offence under section 409 of the Indian Penal Code, 1860. These petitioners were not concerned with the transaction as on the date of the alleged incident. Therefore, he submitted that the learned magistrate has not applied his judicial mind in taking cognizance of the offence. Therefore, the petitioners are entitled to be discharged.
3. Per contra, learned counsel for the respondent submitted that all these contentions can be raised only before the learned magistrate. The questions involved are on factual aspects which cannot be decided by this court. He also submitted that it is for the complainant to establish the necessary ingredients to constitute an offence. As such, the petition is not maintainable.
4. To answer this argument, it is now necessary to refer to the facts which are not in dispute. The petitioner had advanced a loan to Rainbow Granites wherein the complainant was a guarantor. The said Rainbow Granites committed default in payment of the amount. Therefore, the bank debited a sum of Rs. 82,799 to the account of the respondent being a guarantor. The debit was notified to the respondent. The respondent by his letter dated August 24, 1992, requested for crediting back the amount to his account although he admitted his liability as guarantor. Thereafter, the petitioner-bank considering the request of the respondent credited his account with the amount that has been debited to his account. The respondent became a defaulter in respect of the amount due by him to the bank. Therefore, the petitioner-bank filed an application before the Debt Recovery Tribunal for recovery of a sum of Rs. 1,15,59,183.74 and the same was nominated (sic) to the proprietor of respondent No. 1 when he had been to the bank. It is further alleged by the petitioner that because of the filing of the application in Debt Recovery Tribunal, the respondent appeared to have decided to harass the bank and its officials on absolutely false and frivolous grounds. With this view in mind, according to the petitioner, the respondent presented the criminal complaint in the court of the IV Addl. C.M.M., Bangalore, alleging that by debiting a sum of Rs. 82,799 to his account, the bank has committed an offence of criminal breach of trust punishable under section 409 of the IPC. This complaint was presented on October 6, 1995. The amount was adjusted on February 13, 1991. In the meantime, the application before the Debt Recovery Tribunal was also made. Therefore, though the respondent came to know that the amount was debited to its account in the month of August, 1992, no complaint was filed against the bank.
5. Learned counsel for the petitioners submitted that on the other hand, the respondent had written letters to the bank requesting the bank to proceed against Rainbow Granites to recover the amount or to take possession of the goods belonging to Rainbow Granites. Therefore, it is clear that this complaint came to be filed as rightly pointed out by learned counsel for the petitioners belatedly, obviously due to the fact that an application was filed before the Debt Recovery Tribunal. With this background, it is now necessary to find out as to whether the main ingredient of dishonest intention has been made out in the complaint.
6. Learned counsel for the petitioners submitted that admittedly this respondent was the guarantor and the bank had a lien on all the assets which are available in the bank in the account of the respondent and the bank has every right to credit it to the account due towards the loan either as a principal borrower or as a guarantor. Hence no offence was made out against the petitioner. That being the case, the entire proceedings are liable to be quashed. To substantiate this argument he placed reliance on a decision in Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre, : 1988CriLJ853 , wherein it is held (headnote) :
'The legal position is well-settled 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. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised 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.'
7. With this principle in mind, it is now necessary to consider whether any useful purpose would be served by continuing these criminal proceedings. From a reading of the entire complaint, it cannot be inferred that the requirement of section 409 of the IPC is satisfied. The allegations are that the petitioners herein had debited a sum of Rs. 82,779 to the credit of the bank for the amount due from Rainbow Granites. The complainant's grievance is that the bank should have proceeded against the principal borrower and without proceeding against the principal borrower it should not have debited the amount to the account of the complainant. Whether that act on the part of the bank would constitute an offence is the question.
8. To substantiate the argument that it does not amount to an offence, learned counsel for the petitioners placed reliance on a decision in Punjab National Bank v. Surendra Prasad Sinha : 1992CriLJ2916 , wherein their Lordships have held that adjustment of fixed deposit receipt securities deposited by a guarantor thereafter by the bank on maturity of the said deposits is not a criminal breach of trust. Their Lordships have observed that the creditor has right of adjustment in view of the liability still subsisting and there is no dishonest intention in adjusting the amount.
9. In State Bank of India v. Indexport Registered : AIR1992SC1740 , a decree was obtained and executed. The said order was challenged before their Lordships on the ground that the decree-holder should have first exhausted the remedy by way of executing a mortgage decree loan and then proceeded against the guarantor. Negativing this contention their Lordships overruled the decision in Union Bank of India v. Manku Narayana : AIR1987SC1078 and held :
'The decree for money is a simple decree against the judgment-debtors including the guarantor and in no way subject to the execution of the mortgage decree against judgment-debtor No. 2. If on principle a guarantor could be sued without even suing the principal debtor there is no reason, even if the decretal amount is covered by the mortgage decree, to force the decree-holder to proceed against the mortgaged property first and then to proceed against the guarantor. It appears the above-quoted observations in Union Bank of India v. Manku Narayana : AIR1987SC1078 , are not based on any established principle of law and/or reasons, and in fact, are contrary to law. It, of course, depends on the facts of each case how the composite decree is drawn up. But if the composite decree is a decree which is both a personal decree as well as a mortgage decree, without any limitation on its execution, the decree-holder, in principle, cannot be forced to first exhaust the remedy by way of execution of the mortgage decree alone and told that only if the amount recovered is insufficient, he can be permitted to take recourse to the execution of the personal decree.'
10. In this case also as stated earlier, the respondent was the guarantor of the bank and he has been debited with the amount and subsequently, after the case was filed before the Debt Recovery Tribunal, the said amount was remitted back to the account of the respondent. It may be true that subsequent conduct of the petitioner in remitting back the amount may not be a mitigating circumstance to proceed against the petitioners, but the fact clearly discloses that there was no dishonest intention on the part of the petitioners to misappropriate this amount for itself.
11. The Madras High Court in N. Mohamed Hussain Sahib v. Chartered Bank, : AIR1965Mad266 , has held :
'The general lien of bankers over any goods bailed to them is embodied in section 171 of the Contract Act. The question is whether any such lien may be over money deposited by the customers .... Whether the right of the bank is called a lien or set off, the said right can be exercised only by the bank by getting the funds deposited in its branch by the customer transferred to it with the consent of the customer.'
12. It is held that it is not open to the customer to call upon the bank to exercise any such lien or set off.
13. In Canara Bank v. Taraka Prabhu Publishers Pvt. Ltd., : AIR1991AP258 , the Andhra Pradesh High Court has held that in a case of recovery of loan by a bank, the bank can transfer the amount deposited in current account to its loan account for set off. The bank has right of set off in terms of contract to recover the debt due to it.
14. From the above decisions and also the averments made in the complaint, it is abundantly clear that there existed a relationship of creditor and debtor and the demands are mutual and between the same parties. Therefore, the bank has a lien or right of set-off. That right was exercised by the bank in this case. Therefore, there is no dishonest intention on the part of the bank to misappropriate the amount to constitute an offence under section 409 of the IPC.
15. The circumstances under which this complaint came to be filed also is a relevant factor to be noted. As stated earlier, after the bank approached the Debt Recovery Tribunal to recover the amount from the complainant after a lapse of about three years from the date of adjustment, the complainant filed this case. Therefore, learned counsel for the petitioners is right in his submission that this case was filed only to counterblast the claim of the petitioners herein.
16. Learned counsel for the petitioners further argued that the entire reading of the complaint discloses that all the accused persons are the office-bearers of the bank. It is relevant to mention here that the complaint came to be filed on November 6, 1995, whereas the amount was adjusted on February 13, 1991. On the basis of this he submitted that these accused persons were never office-bearers of the bank, during the relevant time, i.e., as on December 13, 1991. This has not been controverted by the respondent.
17. However, learned counsel for the respondent submitted that it is purely a question of fact to be established before the court below. but there must be at least an averment to the effect that these accused persons were office-bearers as indicated in the cause title as on the dated of the commission of the offence. On the other hand, the complainant has chosen to file a complaint as against the persons who were then office-bearers on the date of filing of the complaint and not on the date the debit entry was made in the account of the bank. Learned counsel has also made a statement at the Bar that the second accused was not the chief manager as on that date. So also the third accused was not the chairman and managing director of the bank and all the directors, i.e., accused Nos. 4 to 14 became directors much after this incident. Therefore, the complaint filed against them also is not maintainable. It is also necessary to mention that for the reasons best known to the complainant, he has not made the persons who were responsible for debiting the account of this complainant as accused. It is true that this is a question of fact to be agitated before the learned magistrate but there is nothing to indicate that these are the persons who were responsible for the alleged commission of the offence and no material was placed before the court below to show that all these accused person were holding the post as stated in the cause title. However bearing in mind the principle enunciated by their Lordships in State of H. P. v. Pirthi Chand : 1996CriLJ1354 , that the High Court can exercise its jurisdiction under section 482 of the Criminal Procedure Code, 1973, only in the rarest of rare cases without going into the pros and cons of the case, I have considered the entire case to find out as to whether the allegations constitute an offence.
18. For the reasons stated above, I hold that this is a rarest of rare cases wherein it calls for interference by this court as the complaint came to be filed with a mala fide motive for the purpose of harassing the petitioner and its board of directors just because the petitioner-bank filed the case against the respondent. The issue of process amounts to clear abuse of the process of the court resulting in failure of justice. Hence, the petition deserves to be allowed.
19. Accordingly, I proceed to pass the following :
ORDER
20. Both the petitions are allowed. The entire proceedings in C.C. No. 8206 of 1995, directing issue of process against the accused persons are set aside. The complaint stands dismissed.