Reliant Credits (India) Ltd. v. Sajeena T.K. and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **WEDNESDAY,THE 21ST DAY OF NOVEMBER 2018 / 30TH KARTHIKA, 1940** **Crl.MC.No. 3925 of 2018** **CC NO.811/2017 ON THE FILES OF THE J.M.F.C.-II, ALUVA** **PETITIONERS/ACCUSED NOS.4 TO 11:** - **1 M/S.RELIANT CREDITS (INDIA) LTD., REPRESENTED BY ASSISTANT MANAGER AND POWER OF ATTORNEY HOLDER SUNIL KUMAR M.P., AGED 41 YEARS, S/O.PRABHAKARAN NAIR, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM.PERMANENTLY RESIDING AT MECHERYKUDY HOUSE, PINDIMANA P.O. KOTHAMANGALAM ERNAKULAM DISTRICT - 686692** **2 ALIAS ABRAHAM, AGED 68 YEARS, S/O.M.P.ABRAHAM, DIRECTOR, M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT MELETH HOUSE, KOTHAMANGALAM, ERNAKULAM DISTRICT- 686691.** - **3 ROBIN XAVIER, AGED 65 YEARS, S/O.P.A.XAVIER, DIRECTOR, M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT PULICKAL HOUSE, KOTHAMANGALAM, ERNAKULAM DISTRICT- 686691.** **4 BABU P.KURIAKOSE, AGED 60 YEARS, S/O.LATE P.P.KURIAKOSE,DIRECTOR, M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT PEECHAKARA HOUSE, KOTHAMANGALAM, ERNAKULAM DISTRICT- 686691.** **5 JOSEKUTTY XAVIER, AGED 57 YEARS, S/O.XAVIER, DIRECTOR, M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT KANNATTUMADOM HOUSE, KOZHIPALLY, KOTHAMANGALAM ERNAKULAM DISTRICT- 686691.** Crl.MC.No. 3925 of 2018 2 **6 JAMES JOSEPH, AGED 64 YEARS, S/O.JOSEPH,DIRECTOR, M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT ARAMBANKUDIYIL HOUSE, KOZHIPALLY KOTHAMANGALAM, ERNAKULAM DISTRICT- 686691. 7 UNNI S.KAPPEN, AGED 33 YEARS, S/O.SEBASTIAN, DIRECTOR,M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT 2A,ACE NIMBUS, NIVYA NAGAR LFC ROAD, KALOOR, ERNAKULAM-682017. 8 RENCHI VARGHESE, AGED 68 YEARS, S/O.VARGHESE, DIRECTOR, M/S.RELIANT CREDITS (INDIA ) LTD, XV/1B-5 KJK ESTATE, A.M.ROAD, KOTHAMANGALAM. PERMANENTLY RESIDING AT THENINGAL HOUSE, PINDIMANA P.O., KOTHAMANGALAM, ERNAKULAM DISTRICT- 686692.** **BY ADV. SRI.M.REVIKRISHNAN** ## **RESPONDENTS/DE FACTO COMPLAINANT AND STATE:** **1 SAJEENA T.K., AGED 36 YEARS, W/O.P.M.KAMALUDHEEN, PATHUPPILLI HOUSE, PONEKKARA AIMS P.O., EDAPPALLY NORTH VILLAGE KANAYANNUR TALUK,KOCHI 682024.** - **2 STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA ERNAKULAM- 682031.** **BY ADVS. SRI.P.MARTIN JOSE SRI.M.A.MOHAMMED SIRAJ SRI.P.PRIJITH SRI.S.SREEKUMAR (SR.) SRI.THOMAS P.KURUVILLA** Crl.MC.No. 3925 of 2018 3 **PP. SRI.C.K.PRASAD** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 21.11.2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** Crl.MC.No. 3925 of 2018 4 ## **ORDER** The 1[st] petitioner is a non-banking finance company and the petitioners 2 to 8 are its officers. They have been arrayed as accused Nos.4 to 11 in C.C. No.811 of 2017 on the file of the Judicial First Class Magistrate Court - II, Aluva. In the said case, they stand indicted under Sections 120B and 420 r/w. Section 34 of the IPC. By this petition filed under Section 482 of the Code of Criminal Procedure ('the Code” for brevity), their prayer is to quash the criminal proceedings pending against them. 2. The above calender case arose on the strength of a complaint filed by the 1[st] respondent before the learned Magistrate. In her complaint, the 1[st] respondent alleges that she was the owner of an item of property having an extent of about 2.02 Ares. The said property was mortgaged with the UCO Bank, Broadway, and a loan for Rs.25 lakhs was availed. She defaulted in paying the equated monthly installments and the secured asset was categorized as non performing by the bank. Proceedings were initiated under the Securitization and Reconstruction of Financial Assets and Crl.MC.No. 3925 of 2018 5 Enforcement of Security Interest Act, 2002 and notice under Section 13(2) of the Act was issued. The 1[st] accused in the complaint was having acquaintance with the husband of the de facto complainant. On receiving information about the initiation of proceedings by the bank, she approached the de facto complainant and her husband and offered to arrange a loan in order to enable the de facto complainant to tide over the financial crisis. It is alleged that the 1[st] respondent was induced to execute and register a sale deed on 12.07.2016 in respect of the above property without paying even a single paise towards sale consideration. After obtaining the rights over the property, accused Nos.1 to 3 are alleged to have conspired with the petitioners herein and they obtained a business loan for a sum of Rs.75 lakhs on the strength of the said property. The specific allegation is that the petitioners as the financial institution and its officers had conspired with accused Nos.1 to 4 to cause wrongful loss to the de facto complainant by persuading her to part with her valuable property for no consideration whatsoever. 3. The learned counsel appearing for the petitioners would point that the 1[st] petitioner is a non banking finance company, which was incorporated in the year 1989. As per the regulations, the 1[st] Crl.MC.No. 3925 of 2018 6 petitioner is legally licensed to accept deposits and advance amounts to their customers after accepting proper security by creating equitable mortgage of immovable properties. It is urged that the 1[st] accused and others had approached the petitioners and applied for a business loan. After verifying the title deeds and other documents, Annexure-E agreement was entered into on 12.08.2016 and a sum of Rs.75 lakhs was sanctioned. The said amount was immediately transferred to the account of the loanees. Later, the 1[st] accused defaulted and arbitration proceedings were initiated. Annexure-F award was passed by the Arbitral Tribunal on 25.10.2017 and proceedings are still pending. According to the learned counsel, the petitioners cannot be attributed with any dishonest intent as they were approached by the 1[st] accused and others with original documents and a valid loan arrangement was entered into. As on the date of execution of the loan agreement, no disability was attached to the title deed and hence, the petitioners were justified in advancing amounts on the strength of the said deed, is the contention. 4. The learned Senior counsel appearing for the 1[st] respondent, on the other hand opposed the prayer. It is submitted Crl.MC.No. 3925 of 2018 7 that the prosecution has a specific case that the petitioners had conspired with the accused Nos.1 to 4 and knowing fully well that the sale deed was a sham document, they had advanced money. 5. I have considered the submissions advanced and have perused the materials on record. The records show that the property owned by the de facto complainant was assigned by her by executing a registered sale deed on 12.07.2016. The 1[st] accused was the absolute owner of the property when she had approached the petitioners herein for a business loan. The loan was advanced on 12.08.2016, after executing Annexure-E agreement. Annexure-E would show that the original title deed was deposited with a finance company on 12.08.2016 with intent to create a mortgage by deposit of title deeds. There is only a vague allegation in the complaint that the petitioners herein had conspired with the accused Nos.1 to 4 while disbursing the loan of Rs.75 lakhs. 6. In the circumstances of the case in hand, conclusion is inescapable that invoking the jurisdiction of criminal court against the petitioners for allegedly having committed offences under Section 120B r/w Section 420 of the IPC is certainly an abuse of the Crl.MC.No. 3925 of 2018 8 process of law. Apart from a general statement that the petitioners had also conspired with the accused Nos.1 to 4, there are no materials to show that the petitioners have, in any manner, entered into the loan transaction with the accused Nos.1 to 4 with intent to defraud the de facto complainant. As on the date of execution of the loan agreement, the 1[st] accused was having absolute title and enjoyment of the property. Even according to the de facto complainant, a sale deed was executed and registered and her allegation is that the same is a sham document. The petitioners are entitled under law to advance loans on the strength of security and that has been done in the instant case. ## 7. In **State of Karnataka** v. **L. Muniswamy and others** [(1977) 2 SCC 699], a three-Judge Bench of the Apex Court Court referred to Section 482 of the Code and in paragraph 7 (pg. 703) of the Report held as under : “7. …….. In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil Crl.MC.No. 3925 of 2018 9 and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature. The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction.” ## 8. In **G. Sagar Suri and another** v. **State of U.P. and others** [(2000) 2 SCC 636], the Apex Court held as under: “8. Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid Crl.MC.No. 3925 of 2018 10 certain principles on the basis of which the High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice.” 9. Having considered the facts and after perusing the records, allowing the instant proceedings to continue against the petitioners would be nothing, but an abuse of the process of the Court. I am of the view that this is a fit case, wherein this Court will be justified in exercising its inherent powers under Section 482 to quash the proceedings against the petitioners. In the result, this petition will stand allowed. Annexure-A complaint and all proceedings pursuant thereto against the petitioners in CC No.811/2017 of Judicial First Class Magistrate Court-II, Aluva are quashed. ## **Sd/-** **RAJA VIJAYARAGHAVAN V., JUDGE** IAP Crl.MC.No. 3925 of 2018 11 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE -A** **TRUE COPY OF THE PRIVATE COMPLAINT PREFERRED BY THE 1ST RESPONDENT AGAINST THE ACCUSED BEFORE THE COURT OF THE JUDICIAL FIRST CLASS MAGISTRATE-II, ALUVA, ERNAKULAM DISTRICT.** - **ANNEXURE -B TRUE COPY OF THE SWORN STATEMENT OF THE COMPLAINANT RECORDED BY THE COURT OF THE JUDICIAL FIRST CLASS MAGISTRATE-II ALUVA, ERNAKULAM DISTRICT.** - **ANNEXURE - C TRUE COPY OF THE SWORN STATEMENT OF THE HUSBAND OF THE COMPLAINANT EXAMINED AS CW2 BEFORE THE COURT OF THE JUDICIAL FIRST CLASS MAGISTRATE-II ALUVA ERNAKULAM DISTRICT.** **ANNEXURE -D TRUE COPY OF THE CERTIFICATE OF REGISTRATION PERTAINING TO 1ST PETITIONER.** **ANNEXURE -E TRUE COPY OF THE LOAN AGREEMENT ENTERED INTO BETWEEN THE 1ST ACCUSED AND THE 1ST PETITIONER HEREIN/COMPANY DATED 12.08.2016.** **ANNEXURE- F TRUE COPY OF THE AWARD PASSED BY THE ARBITRAL TRIBUNAL, KOTHAMANGALAM IN AR.NO 39/2017 DATED 25.10.2017.** ## **RESPONDENTS' EXHIBITS:** **NIL**