Judgment:
Monoj Kumar Mukherjee, J.
1. On a First Information Report ('FIR' for short) lodged by an Inspector of Police attached to the Central Bureau of Investigation ('CBI' for short), Special Police Establishment, Calcutta Branch on May 23, 1990, a case Under Sections 120B and 420 of the Indian Penal Code and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 ('Act' for short) has been registered against Sri K. L. Ramanathan, General Manager (Administration), Indian Bank Head Office, Madras (hereinafter referred to as 'A-1'), Sri T. Jothipandian, Deputy General Manager, Indian Bank Zonal Office, Calcutta ('A-2' for short), the petitioner ('A-3' for short), M/s. Hemraj Mahavir Prosad ('A-4' for short) and others and investigation taken up. Aggrieved thereby the petitioner filed an application Under Sections 401 and 482 of the Code of Criminal Procedure praying for quashing of the investigation and obtained the present Rule.
2. To appreciate the points raised by Mr. Bhola Nath Sen, the learned Advocate appearing in support of the Rule, the contents of the FIR are required to be stated. It has been alleged therein that during 1989, A-1 and A-2 entered into a criminal conspiracy with A-3, A-4 and others to cheat the Indian Bank and in furtherance of their such criminal intent, A-1 and A-2 by wilful abuse of their official position arranged to issue at Calcutta to A-3 a demand draft for Rs. 4 crores towards Term Loan deliberately violating the mandatory guidelines issued by Reserve Bank of India ('RBF for short) and that A-3 dishonestly siphoned off the money by transferring Rs. 2 crores and odd in favour of A.C.C. and withdrawing Rs. 1.90 crores in cash in November, 1989 instead of utilising the money for the purpose for which the said Term Loan was granted and thus pecuniary advantage was obtained for the said A-3 against public interest. The detail of the above accusation, as disclosed in the FIR, are as under.
3. On September 1, 1989, A-3 which belongs to the holding Company A-4, applied to the Indian Bank, Strand Road Branch, Calcutta for a Term Loan/DPG (Deferred Payment Guarantee) Package of Rs. 680 Lakhs towards modernisation and expansion programme of their Chini Mills. As per the guidelines issued by RBI, vide its Circular dated June 29, 1988 to all scheduled Commercial Banks, projects exceeding Rs. 3 crores were required to be appraised and financed by Term Lending Institutions and funding by Banks in projects exceeding Rs. 3 crores without participation of Term Loan Lending Institutions was not permssible. The request of A-3 for the above Loan was forwarded by the Branch to its Head Office and it was mentioned by the Branch that A-3's repayment to IRBI (Industrial Reconstruction Bank of India) was irregular and overdue. It has next been stated in the FIR that despite bad track record and unsatisfactory/irregular operations in the accounts of A-3 and its allied companies (on the basis of which IRBI had already rejected the loan proposal of A-3 and which fact was known to A-1 and A-2), the Indian Bank sanctioned in September, 1989 Term Loan of Rs. 4 crores and DPG of Rs. 2.8 crores in favour of A-3. When the matter was referred to RBI, its Industrial and Export Credit Department advised Indian Bank not to go in for the said funding of A-3 without proper appraisal and without participation of Term Loan Lending Institution. The above advice of the RBI against the said funding of A-3 was received in the Office of A-2 on 7.11.89 and it was also known to A-1. Despite such refusal of RBI for grant of loan facilities to A-3 by Indian Bank and withholding by IRBI of issuance of No Objection Certificate for such funding of A-3, which was received by the Strand Road Branch of Indian Bank, Calcutta on 11.11.89, the Branch issued a demand draft in favour of A-3 on the same day for Rs. 4 crores on Indian Bank, Service Branch, Bombay towards Term Loan. It has lastly been stated in the FIR, that though as per terms and conditions of the Term Loan the facilities sanctioned were to be utilised only for the purpose for which they were sanctioned, all payments were to be made direct to the suppliers of the machineries/materials and disbursement of Term Loan was to be made only in stages after obtaining satisfactory report of completion of the earlier stages and/or against Industrial Development Officer's report, a sum of Rs. 2 crores and odd was transferred in favour of Associated Cement Company by A-3 and another sum of Rs. 1.90 crores was withdrawn by it in cash in November, 1989 and thus the loan amount was misutilised.
4. Mr. Sen first contended that the grant of a loan, which a loanee had to repay did not and could not amount to 'obtaining of a pecuniary advantage' so as to attract the mischief of Section 13(1)(d) of the Act. In support of his contention, Mr. Sen relied upon the judgment of the Supreme Court in the case of Delhi Administration v. S. N. Khosla reported in : 1971CriLJ1151 . In that case, an Income-Tax Officer was arraigned for an offence punishable Under Section 5(2) of the Prevention of Corruption Act, 1947 ('1947 Act' for short)-which corresponds to Section 13(2) of the Act -for purchasing goods on credit and not paying the bills. According to the prosecution, such acts of the accused amounted to obtaining valuable things without consideration or for consideration, which he knew to be inadequate. The trial Court found that the accused had means to pay during relevant period and he did not deliberatedly pay. From that the Court drew the inference that the accused never intended to make the payment and recorded an order of conviction and sentence. On appeal the High Court set aside the said order and acquitted the accused. Aggrieved thereby, the Delhi Administration preferred an appeal in the Supreme Court. In dismissing the appeal, the Supreme Court observed, inter alia, as under :-
'(i) Where there was consideration for the obtaining of goods on credit, and it cannot be said that an official who obtains goods on credit, even if he does not intend to pay, is obtaining a valuable thing without consideration. No offence would be committed Under Section 5(1)(b) of the Act.
(ii) The words 'pecuniary advantage' are of wide amplitude but even so in the context of Section 5(1) (d) obtaining goods on credit cannot be held to amount obtaining pecuniary advantage. If there is an agreement between the officer and the trader that the officer is not expected to pay for the goods then there is no doubt that this would amount to obtaining pecuniary advantage, but if there is no such agreement and the officer does not pay it cannot be said that he had obtained any pecuniary advantage.'
5. The above decision of the Supreme Court has no manner of application in this case. From the FIR, we get that the Term Loan was obtained for A-3 by A-1 and A-2 not only by disregarding and violating the general guidelines issued by RBI in respect of all Term Loans but also by ignoring the specific instructions given by it and in spite of withholding of No Objection Certificate by IRBI in respect of the transaction in question. Thereby, in our considered view, A-1 and A-2 obtained for A-3 a 'pecuniary advantage'. As has been held by the Supreme Court in the case of S. N. Khosla (Supra), the above quoted words are of wide amplitude. 'Advantage' is anything that places one in an improved position, especially in coping with competition or difficulties. In the instant case, the difficulties which A-3 had to face in getting the loans owing to its past record and the embargoes imposed by the RBI and IRBI were surmounted by A-1 and A-2 by granting the loan and that necessary means that they obtained a 'pecuniary advantage' for A-3. The first contention of Mr. Sen must, therefore, be rejected.
6. Mr. Sen next contended that from the allegation that A-1 and A-2 did not comply with the guidelines of RBI in sanctioning the loan, it did not necessarily follow that they were actuated by a criminal intent so as to make them liable for an offence punishable Under Section 13(2) of the Act. To bring home his contention, Mr. Sen relied upon the judgment of the Supreme Court in the case of Union of India v. J. S. Khanna reported in 1972 Cr. LJ 849. In that case, two Army Officers made some purchases without complying with the rules prescribed for such purchases and also paid prices higher than those quoted by certain firms, for which charges were framed against them Under Section 5(2) read with Section 5(1)(d) of the 1947 Act and 120B, 420 and 468/109 of the Indian Penal Code. In upholding the order of the High Court quashing the charges, the Supreme Court observed that the fact that the procedure adopted by the Officer was not strictly in accordance with the rules prescribed for purchases would not by itself lead to the inference of fraud or any other criminality on his part. It next observed that even if gross negligence on his part was proved, it could not be said that he was actuated with criminal intent. It lastly observed that the fact that in some cases prices higher than those quoted by certain firms were paid, could not, without anything more lead to be conclusion of any fraudulent intent or conspiracy. The above observations were made by the Supreme Court in the context of the material collected during investigation and the fact that the period during which the orders in question were placed was an emergency period when-according to it-'procedure laid down for such orders could not perhaps be strictly adhered to.
7. In this case, where our attention has to be confined to the FIR only, the allegation is not only of not acting in accordance with prescribed rules relating to sanction of Term Loans in general but also of acting in express breach of directions issued forbidding grant of the loan to A-3. Besides, FIR does not speak of any material justifying such breach. It must, therefore, be held that the judgment of the Supreme Court in the case of J. S. Khanna (Supra) is of no assistance to the petitioner.
8. Mr. Sen next relied upon the decision of the Supreme Court in the case of State of U. P. v. R. K. Srivastava reported in : 1989CriLJ2301 to contend that the FIR did not disclose any offence. In that case, two employees of the State Bank of India and one of its clients holding a current account were charged Under Sections 120B, 420, 468 and 471 of the Indian Penal Code and Section 5(2) read with Section 5(1)(d) of the 1947 Act. Considering the allegations contained in the FIR and the chargesheet that was submitted in that case, the Supreme Court held that they did not show that the Bank employees or the client of the Bank had acted dishonestly, that is to say, acted with a deliberate intention to cause wrongful gain or wrongful loss nor did the allegations constitute any offence of cheating or forgery. The Supreme Court observed that at the most there was some delay in making relevant entries. With the above observations, the Supreme Court quashed the proceeding after reiterating the well-settled principle of law that if the allegations made in the FIR taken at their face value and accepted in their entirety, do not constitute an offence, the criminal proceeding instituted on the basis of such FIR should be quashed. In the ultimate analysis, therefore, the allegations contained in a FIR have to be looked into and, after accepting them to be true, it has to be found out whether they constitute a cognizable offence or not when the question of its quashing is raised.
9. In the instant case, on an analysis of the averments made in the FIR, we first get that the case of the CBl is that though A-1 and A-2 were fully aware (i) that IRBI had rejected the loan proposal of A-3 owing to bad track record and unsatisfactory/irregular operations in its accounts and those of its allied companies, (ii) that RBI had issued guidelines in 1988 intimating scheduled Banks that funding by Banks in projects exceeding Rs. 3 crores without participation of Term Loan Lending Institutions was impermissible, (iii) that RBI had specifically asked Indian Bank not to give the Term Loan to A-3, and (iv) that IRBI had withheld no objection certificate to such funding of A-3, they, pursuant to a criminal conspiracy, granted the loan to A-3 against public interest.
10. The next question is whether the above allegations constitute an offence punishable Under Section 13(2) of the Act. To answer this question, it will be profitable at this stage to refer to Section 13(1)(d) and 13(2) of the Act, which read as under :-
'13(1) A public servant is said to commit an offence of criminal misconduct-
(a) ............
(b) ......:.....
(c) ............
(d) if he,-
(i) by corrupt or illegal means obtains for himself or for any other person any valuable thing or pecuniary advantage ; or
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage ; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or
(e) ............
Explanation.-............
(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than one year but which may extend to seven years and shall also be liable to fine.'
11. We have already found that the granting of the loan by A-1 and A-2 amounted to obtaining for A-3 a 'pecuniary advantage'. Considering the dishonest manner in which A-1 and A-2, who are admittedly public servants, granted loan it must be held that both Clauses (ii) and (iii) of Section 13(1)(d) of the Act are attracted so as to make out an offence punishable Under Section 13(2) thereof.
12. When read with other allegations contained in the FIR, the above allegation also constitute an offence punishable Under Section 420 of the Indian Penal Code as the Bank authorities were induced to part with the loan on the representation made by A-3, which necessarily, must have been through persons acting on its behalf whose names can be ascertained only during investigation, that money was required for modernisation and expansion programme of its Chini Mills and the said representation was false as, the money immediately after it was received was used by A-3, for completely different purpose. The elements of criminal conspiracy are also writ large in the FIR. Conclusion is, therefore, inescapable that the FIR discloses the offences referred to therein and the CBI is legally entitled to investigate into the case instituted thereupon.
13. Mr. Sen last relied upon the judgment of the Madras High Court in the case of Public Prosecutor v. T. K. Viswanathan reported in 1971 Cr. LJ 573, wherein it was held, relying upon the words 'by corrupt or illegal means or by otherwise abusing his position as public servant', as appearing in Clause 5(1) (d) of the Prevention of Corruption Act, 1947 that dishonest intention on the part of the public servant while obtaining a valuable thing was the essential requisite for punishment to be imposed on him for the said offence, to contend that there was nothing to indicate that A-1 and A-2 acted with dishonest intention. We are unable to accept the contention of Mr. Sen : firstly, because dishonest intention has to be inferred depending upon the facts of each case and we are at this stage, only concerned with the disclosure, and not proof, of the offence and secondly, because we have already found that the allegations contained in the FIR make out not only an offence under Clause (iii) of Section 13(1)(d) of the Act but also under Clause (ii) thereof, which speaks of abuse of position as a public servant. It is pertinent to point out here that Section 13(1)(d) of the Act which corresponds to Section 5(1) (d) of the 1947 Act has widened the definition of criminal misconduct by incorporating Clause (iii), which has been quoted earlier.
14. For the foregoing discussion, we reject the revisional application and discharge the Rule.