Crl.Rev.Pet.No.3092 of 2011 v. State of Kerala

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE SUNIL THOMAS** **MONDAY, THE 10TH DAY OF AUGUST 2020 / 19TH SRAVANA, 1942** **Crl.Rev.Pet.No.3092 OF 2011** **AGAINST THE FRAMING OF CHARGE IN CC 16/2007 PENDING IN THE COURT OF THE ENQUIRY COMMISSIONER & SPECIAL JUDGE,THIRUVANANTHAPURAM DATED 16-9-2011** ## **REVISION PETITIONER/ACCUSED NO.8:** **C.P.JOHN CHIEF PROMOTER (FORMER) KAZHAKOOTTAM CO-OPERATIVE SPINNING MILLS, KAZHAKOOTTAM, THIRUVANANTHAPURAM, RESIDING AT RAHATH, KUKKILIYAR LANE, HOUSE NO.41, JAGATHY, THIRUVANANTHAPURAM.** **BY ADV. SRI.B.S.SWATHY KUMAR** ## **RESPONDENT/COMPLAINANT:** **STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.** ## **SPL.GP SRI.A.RAJESH** **THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 02-06-2020, THE COURT ON 10-08-2020 PASSED THE FOLLOWING:** Crl.Rev.Pet.No.3092 OF 2011 2 ## **O R D E R** The 8[th] accused in CC No.16/2007 on the files of the Enquiry Commissioner and Special Judge, Thiruvananthapuram arising from Crime No.13/1999 of VACB, Thiruvananthapuram for offences punishable under section 13(1)(c) and Section 13 (1) (d) read with section 13(2) of the Prevention of Corruption Act and section 120B of IPC, is the revision petitioner. 2. The revision petitioner was the Chief Promoter of Kazhakoottam Cooperative Spinning Mills Ltd. Crux of the allegation of the prosecution was that, on the request of the revision petitioner in his capacity as a Chief Promoter, the co-accused who were the members of the Board of Directors of Thiruvananthapuram Service Co-operative Bank, resolved to deposit a sum of Rs. 5 Lakhs in Kazhakoottam Co-operative Spinning Mill Ltd, for six months and accordingly on 17/121994, a cheque was handed over to the petitioner. A surprise check was conducted in the head office of Thiruvananthapurm Service Co-operative bank on 15/5/1999 which revealed the above deposit of Rs. 5 Lakhs. Alleging that the President and the Crl.Rev.Pet.No.3092 OF 2011 3 members of the Service C-operative Bank had abused their official position and gave Rs. 5 Lakhs to the Chief Promoter of the Kazhakoottam Co-operative Spinning Mill Ltd, without conducting proper enquiry about the bona fides of the applicant and thereby caused loss to the Co-operative Bank and pecuniary advantage to the revision petitioner, Crime was registered as VC No.13/1999/SIU dated 19/7/1999 by the VACB, Thiruvananthapuram. This was pursuant to the sanction accorded by the VACB to register a case under section 13(2) read with section 13(1)(d) of the PC Act. 3. According to the prosecution, the investigation revealed that, on 16/12/1994 the revision petitioner requested the Thiruvananthapuram Service Co-operative Bank to make arrangement to take share in the Spinning Mills Ltd, to a minimum of Rs. 5 Lakhs by way of deposit. On 17/12/1994, the Director Board of the Thiruvananthapuaram Service Co-operative Bank resolved to deposit a sum of Rs. 5 Lakhs with Kazhakoottam Cooperative Spinning Mill Ltd. and addressed the joint registrar for permission to deposit the amount. But, no permission was given by the joint registrar of Co-operative Crl.Rev.Pet.No.3092 OF 2011 4 Societies(General). On 27/12/1996, the Joint Registrar asked the President to report whether any action was taken to recover the amount given to the Kazhakoottam Cooperative Spinning Mill Ltd, even though it was resolved to deposit on 17/12/1994. It was alleged that the period of deposit, terms and conditions, etc. were not specified. VACB alleged that the amount was given to the revision petitioner without conducting any enquiry, on the bona fides of Kazhakoottam Co-operative Spinning Mill Ltd. Members of the Director Board have acted in an irresponsible manner without observing any norms or rules and with undue haste. In the course of investigation several witnesses were questioned and their statements were recorded. Relevant files and documents were also seized. The factual report of the case was submitted to the Director of the Vigilance and Anti Corruption Bureau for obtaining sanction under the relevant provisions of the PC Act, 1988. It disclosed that the investigation revealed that during 1994, the president and members of the Director Board of the Thiruvananthapurm Service Co-operative Bank abused their official position and entered into a criminal conspiracy with the revision petitioner herein. By order dated 4/3/2006, the Director Crl.Rev.Pet.No.3092 OF 2011 5 of Vigilance and Anti- Corruption Bureau gave sanction to charge sheet the above accused, for offences punishable under section 120B IPC only, before the local court having jurisdiction. In the light of the above opinion of the Director, Vigilance and Anti- Corruption Bureau, final report was submitted seeking sanction of the court to treat the case as 'further action dropped' and requested sanction to delete the case from the list. 4. Learned Special Judge by Annexure B order dated 19/5/2007 rejected the above request and took cognizance of the offence under section 13(1)(c) and 13(1)(d) read with section 13 (2) of the PC Act and section 120B of IPC . The accused were arrayed as A1 to A10. Accused appeared and after hearing both sides, charge was framed on 16[th] September 2011. It was read over and denied by the accused. The order directing framing of charges is under challenge in the present revision petition at the instance of the 8[th] accused. 5. Heard the learned counsel for the revision petitioner and the learned Public Prosecutor. 6. The crux of the charge framed against the accused was that accused A1, A2, A3,A4, A6 along with the deceased Crl.Rev.Pet.No.3092 OF 2011 6 accused Nos.A5 and A7, being public servants employed as the President and members of the Thiruvananthapuram Service Co-operative Bank resolved to deposit Rs. 5 Lakhs for a period of six months in Kazhakoottam Co-operative Spinning Mill Ltd.on 17/12/1994 and handed over a cheque for the above sum without observing the rules and procedures and without conducting enquiry about the bona fides, and dishonestly or fraudulently misappropriated the above sum of Rs. 5 Lakhs and thereby committed offence under section 13 (1)(c) of the PC Act,1988 punishable under section 13 (2) of the Act. Further allegation was that the above accused obtained pecuniary advantage to the extent of Rs. 5 Lakhs and thereby committed offence under section 13(1)(d) of the PC Act punishable under section 13 (2). It was further charged that during the same period, accused agreed to do the illegal act by depositing a sum of Rs.5 Lakhs in Kazhakoottam Co-operative Spinning Mill Ltd, dishonestly and fraudulently misappropriated the above amount by corrupt and illegal means, obtained pecuniary advantage and thereby committed offences punishable under section 120-B of IPC read with section 13 (1) (c) and 13 (1) (d) of PC Act. Crl.Rev.Pet.No.3092 OF 2011 7 7. Prosecution and the proceedings against the revision petitioner are challenged by the revision petitioner on the ground that there was considerable delay in registration of the crime, conduct of investigation and prosecution of the Case. It was contended that, the petitioner herein has been facing the prosecution for the acts done during the year 1994 and the delay in the investigation and the prosecution has considerably affected the life of the revision petitioner. It was further contended that neither the petitioner nor the co-accused has obtained any pecuniary advantage. It was further contended that the entire amount deposited with interest were recovered by the Bank. Yet another contention advanced by the revision petitioner was that the acts done by the co-accused were in good faith that they are protected under section 106 of the Cooperative Societies Act read with Rule 180 of the Relevant Rules and thereby the act done by them is not cognizable. Another contention was that even on the admitted facts, ingredients of section 13 (1) (e) and Section 13 (1) (d) are not made out and in the absence of any such materials, there is no chance of successful prosecution and thereby revision petitioner is entitled for quashing the Crl.Rev.Pet.No.3092 OF 2011 8 ## proceedings as against him. 8. The amount was deposited by the Service Cooperative Bank on 17/12/1994 by delivering the cheque to the Kazhakoottam Co-operative Spinning Mill Ltd. The period was for six months. It is also on record that amount was not returned for long time. Hence, ARC No.79/1999 was filed in which an award was granted in favour of the Service Co-operative Bank. The land and assets of the spinning mill Ltd, were taken over by the official liquidator and liquidation proceedings were launched. In the meanwhile, sum of Rs.19,46,000/- was recovered from the assets of the spinning mill by the Service Co-operative Bank evidenced by Annexure D dated 30/11/2018. It is true that the entire amount with interest was recovered after considerable delay. However, the question of recovery of the amount may not be of much consequence in this petition when the question of the legality of the act done or the alleged mala fides therein as on the date of the deposit are under challenge in the present proceedings. 9. Learned counsel for the revision petitioner relied on the decision reported in **Mahendra Lal Das v. State of Bihar and Others[2002 KHC 1086]** to contend that, Crl.Rev.Pet.No.3092 OF 2011 9 undue delay in the prosecution and trial was detrimental to the accused and consequently, he is entitled for relief in appropriate case. In the above case, sanction for prosecution was not granted by the Govt. despite expiry of over 12 years after the registration of the FIR. Emphasizing the need for speedy trial, the Supreme Court held that in view of peculiar circumstances of the case, further prosecution of the accused would be mere formality and unnecessary burden on the accused. Accordingly, the proceedings against the accused were quashed. 10. The revision petitioner further relied on the decision reported in **Vakil Prasad Singh v. State of Bihar [2009 (3) SCC 355],** wherein Supreme Court reiterated the right of speedy trial and the right of the accused to seek quashing of the criminal proceedings, if there is undue delay in the prosecution and trial, even in serious cases. 11. It is pertinent to note that, though the Supreme Court had emphasized the need for speedy investigation and trial as embedded in the provisions of the Cr.P.C. and under Article 21 of the Constitution, that does not mean that in every case, even in serious cases, the court is bound to Crl.Rev.Pet.No.3092 OF 2011 10 quash the proceedings. This was reminded by the Supreme Court in the decision in **Niranjan Hemchandra Sashittal and Anr. v. State of Maharashtra [ 2013 Crl.J.2143]** . In that it was held that delay in investigation in criminal cases by itself was not a ground to quash the proceedings in offences against the society. 12. It seems that the above principle does not apply to the facts of this case. It is true that there was delay. However, the initial delay was in relation to the lodging of the FIR since the incident came to light only on a surprise check conducted in the head office of Thiruvananthapuram Service Co-operative Bank in 1995, five years after the deposit. Hence, I do not feel that the delay as such is fatal to the prosecution in the present case. 13. The next contention advanced by the learned counsel for the petitioner was that the President and the Board of Directors were entitled to immunity from prosecution under section 106 of the Co-operative Societies Act. To buttress this contention, the learned counsel for the petitioner relied on the decision reported in **Rekha and** **Others v. Vinodan T.S.And Another [2009 (3) KHC 477].** It was contended that by virtue of section 106 of the Crl.Rev.Pet.No.3092 OF 2011 11 Co-operative Societies Act, officers of the society are immune from prosecution for any act done in good faith. 14. It was pointed out by the learned Public Prosecutor , relying on the above decision as well as on the decision in **Sivadasan Pillai and Others v. State of Kerala and Others [2019 (4) KHC 529]** that,the immunity so provided under the Service Co-operative Act has no overriding effect over the criminal offences especially offence under the Prevention of Corruption Act. It is seen that in Sivadasan Pillai's case(supra), it was held that immunity granted under section 106 of the Co-operative Societies Act will have no overriding effect over provisions of PC Act and immunity under section 106 was not a total immunity. It was held that amounting to criminal misappropriation or breach of trust or acts of corruption or misconduct, will never get protection or immunity under section 106 of the said Act. It was also held that immunity granted under section 106 will have no overriding effect over the provisions of the PC Act. It was held that under the guise of such immunity, a public servant cannot resist or defeat prosecution under the PC Act. 15. In the light of the above settled position, I feel that Crl.Rev.Pet.No.3092 OF 2011 12 the above contention of the learned counsel for the revision petitioner cannot be accepted. 16. Learned counsel for the revision petitioner relied on several decisions to contend that the jurisdiction of the court under section 397 or 482 of Cr.P.C is wider. In **Amit** **Kapoor v.Ramesh Chander and Another[2012 KHC 4516],** the Hon'ble Supreme Court laid down the para meters to be considered for the exercise of the jurisdiction for quashing the charge either under section 397 or under section 482 Cr.P.C. or together. It was held that, though there are no limits to the powers of the Court under Section 482 of the Code but more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection, and that too, in the rarest of rare cases. 17. Answering the above, learned Public Prosecutor relied on the decision reported in **State through Central Bureau of investigation v. Dr.Anup Kumar Srivastava [2017 (2) KLD 349 (SC)]** and the decision reported in **State of Rajasthan v. Fatehkaran Mehdu [2017 LHC** Crl.Rev.Pet.No.3092 OF 2011 13 **6080].** In the former case, it was held that the Court should not interfere with the order unless there are strong reasons to hold that in the interest of justice, and to avoid abuse of the process of the Court, a charge framed against the accused needs to be quashed. Such an order can be passed only in exceptional cases and on rare occasions. The Court is required to consider the records of the case and documents submitted therewith and, after hearing the parties, may either discharge the accused or where it appears to the Court and in its opinion there is ground for presuming that the accused has committed an offence, it shall frame the charge. It was further held that when there was no material on record, in order to bring home the charge of conspiracy and when there was no direct or circumstantial evidence to prove that the accused has demanded any illegal gratification and has accepted or obtained any such illegal gratification, court will be justified in quashing the charges. 18. In State of Rajasthan v.. Fatehkaran Mehdu's case(cited supra), considering the powers of the court in interfering under section 397 Cr.P.C., at a stage when charge had been framed, it was reminded by the court that Crl.Rev.Pet.No.3092 OF 2011 14 the power should be exercised very sparingly and with circumspection, in rarest of rare cases. The object of Section 397 Cr.P.C. was to set right a patent defect or an error of jurisdiction or law, or a perversity which has crept in the proceeding. 19. In the case at hand, it is pertinent to note that the request for deposit and the subsequent proceedings are all borne by records. The letter dated 16/12/1994 by the Chief Promoter of Kazhakuttam Co-operative Spinning Mills Ltd. to the Thiruvananthapuram Service Co-operative Bank was a request to deposit a sum of Rs. 5 Lakhs. The board of directors, after due consideration of above, resolved to deposit money. The cheque was released on the same day addressed to the Joint Registrar and approval was sought. Evidently, the entire transactions are evidenced by records and nothing is available at present to show that any act was done clandestinely or secretly or any undue influence or malice was involved in the decision making process to cast suspicion on the conduct of the accused. 20. Prosecution seems to rely on the recorded statements of few witnesses, who were questioned. CW-1 is the Assistant Registrar in the office of the Joint Registrar of Crl.Rev.Pet.No.3092 OF 2011 15 the Co-operative Societies. He had stated that the Board decided to deposit Rs.5 Lakhs in breach of section 57(b) of the Kerala Co-operative Societies Act. It was stated that the permission of the Joint Registrar was not sought. There was no agreement regarding the deposit. There was no security and it was deposited without conducting any enquiry. The amount was not returned even after the expiry of the deposit period. He asserted that this act was done by the Director Board to cause pecuniary advantage to the revision petitioner and the Board of Directors abused their position. 21. CW2, CW3 and CW4 are the other witnesses whose statements indicate that they are officers of the Thiruvananthapuram Service Co-operative Bank. Their uniform version was regarding the procedure that was followed in depositing the amount. None of them has referred the act as a fraudulent one or done dishonestly. 22. Virtually, it seems that none of the witnesses including CW1 have asserted that the act was done fraudulently or dishonestly or by abusing the position to cause pecuniary advantage to bring the act within the campus of mis-conduct under Cl:(1) and (ii) of Section 13(1) Crl.Rev.Pet.No.3092 OF 2011 16 (d). There is nothing to show that any person derived any pecuniary advantage under Section 13 (1) (d) (iii) of the Act. It is seen that one of the ground urged by CW1 was that there was no agreement, no security was given and the amount was deposited without proper enquiry. It is to be noted that it was in the form of a fixed deposit in a registered establishment. Normally, in such deposit, the assets of the establishment will be charge over the property and the deposit will be evidenced by deposit receipt disclosing the terms and conditions of the deposit. The question as to whether security or agreement was required or whether the amount was deposited without proper enquiry about the spinning mill Ltd etc., depends on the subjective satisfaction of the Board of Directors, and depends on whether they have done the act bona fide and with diligence and not in violation of any of the Rules. Having considered this, the version of CW1, in the absence of any material disclosing element of corruption or pecuniary loss, can, at the most indicate a procedural irregularity. 23. As mentioned above, the transaction was done openly pursuant to the decision of the Director Board. The Crl.Rev.Pet.No.3092 OF 2011 17 cheque was not given individually to the revision petitioner. It was given to the Spinning Mills Society. Only CW1 has stated that the procedure was not in accordance with Section 57(b) of the Co-operative Societies Act. Section 57(b) of the Act deals with the investment of funds by Society in the various establishment referred to, in the Act. Section 57(b) provides that Society may invest or deposit the funds in any of the securities specified in Section 20 of the Indian Trusts Act 1882. There is nothing on record to show that the amounts so invested was not in any of the security specified in section 20 of the Indian Trusts Act. Section 57 also permits deposit in the shares or securities of any other society approved for the purposes by the Registrar by general or special order. It also permits deposit of its funds in any other prescribed manner. Nothing is available on record to show the deposit was contrary to section 57(c) of the Act or not in accordance with any other prescribed manner provided under section 57 (e) of the Act. It is incumbent on the prosecution to establish that the investment of funds was not in accordance with section 57 of the Act. Merely because the matter was intimated to the joint registrar and the approval was Crl.Rev.Pet.No.3092 OF 2011 18 sought, there is nothing on record to show that prior permission of the Registrar was mandatory. It is a different question whether approval was not granted later. It is pertinent to note that CW1 in his statement has not stated that the act of any of the accused was fraudulent or dishonest. Section 3(1)(c) and 3(1)(d) of the P.C.Act pre-supposes an act done in a dishonest or fraudulent manner or conversion for his own case of property or commission of misconduct in a corrupt and illegal means by abusing position or obtaining pecuniary advantage to any person without any public interest. Even though CW1 stated that the act was intended to cause pecuniary advantage to 8[th] accused, there is nothing to substantiate it. To constitute a criminal or fraudulent act, there must be specific material or reason to indicate that the act was done with mala fide or criminal intent. The versions of the witnesses and none of the materials or the circumstances available on records indicate such ingredients. Merely because the amount was not re-paid or adoption of an irregular procedure in depositing the amount by itself may not indicate the criminal offence. It requires criminal intention of a higher degree. Further there is absolutely Crl.Rev.Pet.No.3092 OF 2011 19 nothing to show that the amount was personally used by the 8[th] accused or that he has converted it for his personal use. 24. In **Purushothaman v. State of Kerala [2005 KHC 1856]** , the Hon'ble Supreme Court held that to constitute an offence of corruption, it is necessary to prove that the accused has dishonestly or fraudulently misappropriated any property entrusted to him or under his control as a public servant or allows any other person to do so. The above ingredients are also not available. Further it appears that there is absolutely no evidence to indicate that the accused have entered into any conspiracy. To constitute offence of conspiracy under section 120B of IPC, there must be clear evidence of meeting of minds. Having considered the above facts, I feel that there are no sufficient grounds to proceed against A8. Necessarily, the order framing the charge against A8 has to be set aside. Consequently, the accused No.8 stands discharged. Crl.R.P is allowed. Sd/- ## **SUNIL THOMAS** **JUDGE** dpk Crl.Rev.Pet.No.3092 OF 2011 20 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** ## **ANNEXURE-A:** **TRUE COPY OF THE FINAL REPORT IN VC.13/99/SIU OF VIGILANCE & ANTI CORRUPTION BUREAU, SPECIAL INVESTIGATION UNIT, THIRUVANANTHAPURAM DATED 24.2.2007.** **ANNEXURE-B:** **TRUE COPY OF THE ORDER IN VC.13/99/VACB, SIU DATED 19.5.2007 OF THE ENQUIRY COMMISSIONER & SPECIAL JUDGE.** **ANNEXURE-C:** **TRUE COPY OF THE ORDER IN CC.16/2007 DATED 16.9.2011 OF THE ENQUIRY COMMISSIONER & SPECIAL JUDGE.** **RESPONDENT'S/S EXHIBITS NIL**