P.S. Jayakumar, S. Krishnakumar, S. Syamalakumari Amma, and G. Kesavan Nair v. Central Bureau of Investigation and Addl.R2 (State Bank of Travancore, Kollam Branch)

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE B.SUDHEENDRA KUMAR** **TUESDAY, THE 12TH DAY OF JUNE 2018 / 22ND JYAISHTA, 1940** **Crl.MC.No. 1692 of 2018** ## **AGAINST THE ORDER/JUDGMENT IN CC 30/2011 of SPE/CBI COURT, TRIVANDRUM** **PETITIONERS/ACCUSED NOS. 2 TO 5** ## **1 P.S.JAYAKUMAR,** **AGED 43 YEARS,S/O.G.PRABHAKARAN PILLAI, AISWARYA,PORUNTHAMAN,PULIMATH.P.O,KILIMANOOR, THIRUVANANTHAPURAM.** ## **2 S.KRISHNAKUMAR,** **AGED 60 YEARS,S/O.P.SREEDHARAN NAIR,LAKSHMI BHAVAN, THEKKEVILA,TRA 182,KOLLAM.** ## **3 S.SYAMALAKUMARI AMMA,** **AGED 67 YEARS,W/O.G.PRABAKARAN PILLAI,AISWARYA,** **PORUNTHAMAN,PULIMATH.P.O,KILIMANOOR,THIRUVANANTHAPURAM.** ## **4 G.KESAVAN NAIR,** **AGED 67 YEARS,S/O.N.GOPINATHAN NAIR, VIJAYASREE,HIGH SCHOOL JUNCTION,KOLLAM.** **BY ADVS.SRI.S.VIBHEESHANAN** **SRI.K.SUDHINKUMAR** **SRI.S.K.ADHITHYAN** **SRI.MUHAMMED IBRAHIM ABDUL SAMAD SRI.SABU PULLAN** **SRI.P.MOHANDAS (ERNAKULAM)** ## **RESPONDENTS/COMPLAINANT:** **CENTRAL BUREAU OF INVESTIGATION, REPRESENTED BY SUPERINTENDENT OF POLICE, SPE/CBI KERALA,KOCHI-682017.** *** ADDL.R2 :- THE MANAGER, STATE BANK OF INDIA, BEACH ROAD BRANCH, KOLLAM - 691001.** *** [ADDL.R2 IS IMPLEADED AS PER ORDER DTD.26.3.2018 IN CRL.M.A.3011/18.]** **R1 BY ADV. SRI.SASTHAMANGALAM S. AJITHKUMAR, SPL.P.P. FOR C.B.I. ADDL.R2 BY ADV. SRI.GILBERT GEORGE CORREYA, SC, STATE BANK OF TRAVANCORE** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 12-06-2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **Crl.MC.No. 1692 of 2018** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **ANNEXURE-I: CERTIFIED COPY OF THE FINAL REPORT FILED BY THE RESPONDENT IN C.C.NO.30/2011 PENDING BEFORE THE SPECIAL COURT(SPE/CBI), THIRUVANANTHAPURAM DATED 28.02.2006.** **ANNEXURE -II: TRUE COPY OF THE LETTER GIVEN BY THE CHIEF MANAGER,STATE BANK OF TRAVANCORE,KOLLAM BEACH ROAD BRANCH TO THE 1ST PETITIONER DATED 21.02.2008.** **ANNEXURE-III: TRUE COPY OF THE COUNTERFOIL DATED 17.04.2008 ISSUED BY THE STATE BANK OF TRAVANCORE,KOLLAM BEACH ROAD BRANCH.** **ANNEXURE-IV: TRUE COPY OF THE LETTER GIVEN BY THE CHIEF MANAGER,STATE BANK OF TRAVANCORE TO THE 1ST PETITIONER DATED 21.03.2008.** **ANNEXURE -V: TRUE COPY OF THE CERTIFICATE ISSUED BY THE CHIEF MANAGER,STATE BANK OF TRAVANCORE,BEACH ROAD BRANCH DATED 28.04.2009.** **TRUE COPY** **P.A. TO JUDGE** ## **B.SUDHEENDRA KUMAR, J. ------------------------------------Crl.M.C.No.1692 of 2018** ## **-------------------------------------Dated this the 12[th] day of June, 2018** ## **ORDER** The petitioners are accused Nos.2 to 5 in C.C.No.30/ 2011 on the files of the Special Court (SPE/CBI), Thiruvananthapuram. The offences alleged are punishable under Sections 420, 468 and 471 read with Section 120B IPC and Sections 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act. 2. The prosecution allegation can be briefly stated as follows:- During April, 2003, the 1[st] accused, while working as the Chief Manager of State Bank of Travancore, Beach Road Branch, Kollam, entered into a conspiracy with accused Nos.2 to 4 and 6 to cheat the State Bank of Travancore and to obtain undue pecuniary advantage to themselves by availing loan in the name of the 2[nd] , the 4[th] and the 6[th] accused. Accused No.5 also joined in the conspiracy and fabricated false documents and handed Crl.M.C.No.1692/2018 2 over the said documents to the 1[st] accused. In pursuance of the conspiracy, accused No.2 fabricated two certificates dated 30.11.2003 showing the debt balance in the account of accused Nos.2 and 4 in the Federal Bank, Kilimanoor Branch as Rs.11,80,000/- and Rs.10,80,000/respectively. In the said ceritificates, the signature in the place of Manager, Federal Bank, Kilimanoor was forged by the 2[nd] accused. In pursuance of the conspiracy, the 5[th] accused forged income tax returns in the name of the 2[nd] accused for the assessment year 2001-2002 and in the name of the 4[th] accused for the assessment year 20012002. The said forged income tax returns were submitted by the 2[nd] and the 4[th] accused through the 3[rd] accused and the said income tax returns were accepted by the 1[st] accused knowing fully well that the said documents were forged documents. The 1[st] accused, who was the Chief Manager of the SBT, knowing fully well that accused Nos.2 to 5 availed overdraft cash credit facility of Rs.9,00,000/- Crl.M.C.No.1692/2018 3 from the Federal Bank, Kilimanoor Branch vide account Nos.124 and 125, conducted pre-sanction inspection and advised the 4[th] accused to get forged letters purported to have been signed by the Federal Bank. Accordingly, accused Nos.2 and 3 prepared forged debt balance letter and two letters showing that account Nos.124 and 125 were regular and satisfactory, despite the fact that account No-124 was declared as NPA from 30 9.2000 and account No-125 was declared as NPA from 31.3.2001. Accused No.2 filled up passbook of Federal Bank. Accused No.3 arranged a forged seal of the Federal Bank and handed over the same to the 1[st] accused. On the basis of the above said forged and false documents, the 1[st] accused recommended for sanction of loan and the competent authority sanctioned an amount of Rs.30,00,000/- to accused No.2. The 1[st] accused sanctioned a loan of Rs.15,00,000/- to accused No.4. The property mortgaged as collateral security was acquired by Crl.M.C.No.1692/2018 4 KSTP and accused No.4 received compensation for the same. A housing loan was also sanctioned to the 6[th] accused on the strength of forged documents. Accused No.1 accepted pecuniary advantage to the tune of Rs.2.5 lakhs from the loan amount as bribe. Accused Nos.2 to 6 got pecuniary advantage to the tune of Rs.62.75 lakhs. The 2[nd] and the 4[th] accused submitted different loan applications on 27.7.2004, by suppressing the true facts and on the strength of false and forged documents, induced the Bank to sanction cash credit facility of Rs.37,00,000/- and Rs.15,00,000/- respectively. In pursuance of the conspiracy, accused No.2 and accused No.4 during the period 2003-2004 fraudulently and dishonestly used as genuine certain documents such as forged income tax returns in their names for the assessment year 2001-2002 and forged certificates and letters in the name of Federal Bank, Kilimanoor Branch showing that the debt balance in their account was Crl.M.C.No.1692/2018 5 regular and satisfactory. 3. The petitioners have filed this Crl.M.C. praying for quashing the final report and further proceedings against the petitioners in the above said case on the reason that the petitioners had repaid the entire amount to the Bank in view of the settlement between the petitioners and the Bank. 4. Heard. 5. Now the question to be considered is as to whether the petitioners are entitled to get the charge against them quashed on the reason that the matter had been settled between the petitioners and the Bank, and pursuant to the said settlement, the petitioners repaid the entire outstanding dues to the Bank. The learned counsel for the petitioners placed reliance on the decisions of the Apex Court in Nikhil Merchant v. CBI [(2008) 9 SCC 677] and Gian Singh v. State of Punjab [(2012) 10 SCC 303] and argued that in view of the settlement arrived at Crl.M.C.No.1692/2018 6 between the Bank and the petitioners/accused, this Court has to exercise its power under Section 482 of the Code of Criminal Procedure to quash the criminal proceedings against the petitioners/accused. Per contra, the learned counsel for the additional 2[nd] respondent and the learned counsel for the CBI have submitted that what had been approved in Gian Singh (supra) was merely the principle of law laid down in Nikhil Merchant that quashing a noncompoundable offence under Section 482 Cr.P.C., following a settlement between the parties, would not amount to circumvention of the provisions of Section 320 of the Code. 6. In Nikhil Merchant (supra), the charges framed against the accused were punishable under Sections 120B read with Section 5(2) and 5(1)(d) of the Prevention of Corruption Act, 1947 and Sections 420, 467, 468 and 471 of IPC. However, on a consideration of the totality of the facts and circumstances in which the charges were Crl.M.C.No.1692/2018 7 brought against the accused, the Apex Court in Nikhil Merchant (supra) had come to the following conclusion in paragraph 28:- _“28. The basic intention of the accused in this case appears to have been to misrepresent the financial status of the company, M/s.Neemuch Emballage Ltd., Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional amounts of credit to which the company was not otherwise entitled.”_ 7. The Apex Court thereafter, took into account the fact that the dispute between the parties had been settled/compromised and such compromise formed part of the decree passed in the suit filed by the Bank. After holding that the power under Section 482 Cr.P.C. to quash a criminal proceeding was not contingent on the provisions of Section 320 of the Cr.P.C., and taking into account the conclusion recorded in paragraph 28 of the Crl.M.C.No.1692/2018 8 judgment, the Apex Court ultimately concluded that on the facts of the case (Nikhil Merchant), it would be justified in quashing the criminal proceedings. The Apex Court in Nikhil Merchant (supra) had come to the conclusion that _the dispute involved therein had overtones of a civil dispute with certain criminal facets._ 8. The decision in Nikhil Merchant (supra) and other cases were referred to a larger Bench in Gian Singh for an authoritative pronouncement as to whether in the said cases the Apex Court had “indirectly permitted compounding of non-compoundable offences”. 9. The three-Judge Bench of the Apex Court in paragraph 57 of the judgment in Gian Singh (supra) held thus:- _“Quashing of offence or criminal proceedings on the ground of settlement between an offender and victim is not the same thing as compounding of offence. They are different and not interchangeable. Strictly speaking, the power of compounding of offences given to a_ Crl.M.C.No.1692/2018 9 _court under Section 320 of Cr.P.C. is materially different from the quashing of criminal proceedings by the High Court in exercise of its inherent jurisdiction.”_ ## 10. The Apex Court, however, gave a note of caution in paragraph 61, which is extracted hereunder:- “Inherent power is of wide plenitude with no statutory limitation but it has to be exercised in accord with the guideline engrafted in such power viz.: (i) to secure the ends of justice, or (ii) to prevent abuse of the process of any court. In what cases power to quash the criminal proceeding or complaint or FIR may be exercised where the offender and the victim have settled their dispute would depend on the facts and circumstances of each case and no category can be prescribed. However, before exercise of such power, the High Court must have due regard to the nature and gravity of the crime. Heinous and serious offences of mental depravity or offences like murder, rape, dacoity, etc., cannot be fittingly quashed even though the victim or victim’s family and the offender have settled the dispute. Such offences are not private in nature and have a serious impact on society. Similarly, any compromise between the victim and the offender in Crl.M.C.No.1692/2018 10 relation to the offences under special statutes like the Prevention of Corruption Act or the offences committed by public servants while working in that capacity, etc.; cannot provide for any basis for quashing criminal proceedings involving such offences.” 11. In fact, the reference was made to a larger Bench for a consideration of the principle of law on which the case had been decided and not the merits of the decision. The principle of law on which the decision is based is open to reconsideration by a larger Bench in an appropriate case. It is from the aforesaid perspective that the reference in Gian Singh has to be understood, namely, whether quashing of a non-compoundable offence on the basis of a compromise/settlement of the disputes between the parties would be permissible and would not amount to overriding the provisions of Section 320 Cr.P.C. The above question alone was referred to a larger Bench in Gian Singh (supra) and not the merits of the decision in Nikhil Merchant (supra). Crl.M.C.No.1692/2018 11 12. The three-Judge Bench of the Apex Court in Gopakumar B.Nair v. CBI [(2014) 5 SCC 800] held in paragraph 13 thus:- “The decision in Gian Singh holding the decision rendered in Nikhil Merchant and other cases to be correct is only an approval of the principle of law enunciated in the said decisions, i.e., that a non-compoundable offence can also be quashed under Section 482 of Cr.P.C. on the ground of a settlement between the offender and the victim. It is not an affirmation, for there can be none, that the facts in Nikhil Merchant justified/called for the due application of the aforesaid principle of law. Also, neither Nikhil Merchant nor Gian Singh can be understood to mean that in a case where charges are framed for commission of non-compoundable offences or for criminal conspiracy to commit offences under the PC Act, if the disputes between the parties are settled by payment of the amounts due, the criminal proceedings should invariably be quashed. What really follows from the decision in Gian Singh is that though quashing a non-compoundable offence under Section 482 Cr.P.C., following a settlement between the parties, would not amount Crl.M.C.No.1692/2018 12 to circumvention of the provisions of Section 320 of the Code, the exercise of the power under Section 482 will always depend on the facts of each case. Furthermore, in the exercise of such power, the note of caution sounded in Gian Singh (para 61) must be kept in mind. This, in our view, is the correct ratio of the decision in Gian Singh”. 13. In Gopakumar (supra), the offences charged were punishable under Sections 120B IPC read with Section 13(1)(d) read with Section 13(2) of the PC Act and Sections 420 and 471 IPC. The Apex Court declined to quash the charge against the accused therein and held thus:- _“A careful consideration of the facts of the case would indicate that unlike in Nikhil Merchant no conclusion can be reached that the substratum of the charges against the appellant/accused in the present case is one of cheating nor are the facts similar to those in Narendra Lal Jain where the accused was charged under Section 120B read with Section 420 IPC only. The offences are certainly more serious; they are not private in nature. The charge of conspiracy is to commit offences under_ Crl.M.C.No.1692/2018 13 _the Prevention of Corruption Act. The accused has also been charged for commission of the substantive offence under Section 471 IPC. Though the amounts due have been paid, the same is under a private settlement between the parties unlike in Nikhil Merchant and Narendra Lal Jain where the compromise was a part of the decree of the Court.”_ 14. In Central Bureau of Investigation v. Narendra Lal Jain [(2014) 5 SCC 364], the three Judge Bench of the Apex Court declined to interfere with the order of the High Court quashing the proceedings. In the said case, the offences alleged against the accused persons, who were non-public servants, were offences punishable under Sections 120B read with Section 420 of IPC. 15. The Apex Court in State of Maharashtra through CBI v. Vikram Anantrai Doshi and others [(2014) 15 SCC 29] after referring to the decision in Gian Singh held thus:- “On a studied scrutiny of the principles stated in Gian Singh (supra), it is limpid that the Crl.M.C.No.1692/2018 14 three-Judge Bench has ruled that proceeding in respect of heinous and serious offences and the offences under the prevention of corruption Act and all other offences committed by public servants while working in that capacity are not to be quashed. That apart, the Court has also emphasized on offences having a serious impact on society. It has been further laid down that criminal cases having overwhelmingly and predominantingly civil flavour stand on a different footing for the purposes of quashing, particularly the offences arising from commercial, financial, mercantile, civil partnership or such like transactions or the offences arising out of matrimony relating to dowry, etc. or the family disputes where the wrong is basically private or personal in nature. In Narendra Lal Jain (supra), the three-Judge Bench quashed the proceedings as the charges were framed under Sections 120B and 420 IPC in respect of the private respondents. In Gopakumar B.Nair's case, the Court distinguished the decision in Narendra Crl.M.C.No.1692/2018 15 Lal Jain (supra) and opined that the accused had also been charged for the commission of offence under S.471 of IPC and on that basis declined to interfere with the order passed by the High Court which had refused to quash the criminal proceeding.” 16. The Apex Court further observed in Vikram Anantrai Doshi (supra) in para 23 thus:- “The modus operandi as narrated in the chargesheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that whenever there is manipulation and cleverly conceived contrivance to avail of these kind of benefits, it cannot be regarded as a case having overwhelmingly and predominantingly of civil character. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the Nation. The cleverness which has been Crl.M.C.No.1692/2018 16 skillfully contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of offences which travel far ahead of personal or private wrong. It has the potentiality to usher in economic crisis. Its implications have its own seriousness, for it creates a concavity in the solemnity that is expected in financial transactions. It is not such a case where one can pay the amount and obtain a “no due certificate” and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Art.226 of the Constitution or under S.482 of the Code and quash the proceeding. It is not legally permissible.” 17. The offences alleged in this case are offences Crl.M.C.No.1692/2018 17 punishable under Sections 420, 468 and 471 read with Section 120B IPC and Sections 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act. 18. The learned counsel for the petitioners submitted that the Bank had requested the court to release the documents mortgaged by the petitioners as the amount had been already paid by the petitioners in settlement. That was only a private settlement. Annexure-A5 certificate produced before the court would show that there is no due to the State Bank of Travancore. In the said circumstances, the Bank requested the Sheristadar of the court to release the original documents to the petitioner. This was purely a private settlement. After the settlement of the dues to the Bank, Annexure-A5 letter was issued. However, the offences alleged in this case are grave offences affecting the economy of the Nation. The offences alleged would include the committing of fraud on the Bank. In this case, Crl.M.C.No.1692/2018 18 forged certificates and letters purported to have been signed by the Manager of the Federal Bank and forged seal of the Federal Bank were used to commit the fraud on the State Bank of Travancore. Even the income tax returns and other documents were fraudulently created to cheat the State Bank of Travancore. The dispute involved in this case has no overtones of civil dispute unlike in Nikhil Merchant (supra). The offences alleged are more serious. They are not private in nature. The charge of conspiracy in this case was to commit offences under the Prevention of Corruption Act. The accused persons have also been charged for the commission of the substantive offence under Section 471 IPC. Even though the amount due had been paid, the same was under a private settlement between the parties unlike in Nikhil Merchant (supra) and Narendra Lal Jain (supra), where the compromise was a part of the decree of the court. Even though fake and forged letters and certificates purported Crl.M.C.No.1692/2018 19 to have been issued from the Federal Bank and the fake seal of the Federal Bank had been also used for cheating the State Bank of Travancore, the Federal Bank has not so far settled the matter. So also, forged income tax returns were created and the said documents were also used to cheat the Bank. Thus, the allegations against the accused are purely criminal in nature having serious impact on the society. In such circumstances, if the parties are permitted to obtain a non-due certificate from the Bank and enjoy the benefit of quashing of the criminal proceedings, that is not conducive to justice and public interest, particularly when the offences alleged are offences affecting the society and the economy of the Nation. The offences alleged also include the offences under the Prevention of Corruption Act which cannot be quashed casually and mechanically as a matter of course. This being the situation, it will not be conducive to justice to quash the final report and further 20 Crl.M.C.No.1692/2018 ## proceedings against the petitioners in the above said case as sought for. In the result, this Crl.M.C. stands dismissed. Sd/- **B.SUDHEENDRA KUMAR, JUDGE** skj