(Prayer: Criminal Original Petition filed under Section 528 of the BNSS, 2023, to call for the records in C.C.No.1323 of 2020 pending on the file of the Judicial Magistrate No.VII, Coimbatore and quash the same as against the petitioner.)

1. This criminal original petition is filed for quashment of the proceedings in C.C.No.1323 of 2020 pending on the file of the Judicial Magistrate No.VII, Coimbatore(for brevity “the Trial Court”).

2. The facts in brief leading to the filing of this criminal original petition can be given in a nutshell as follows:

                     2.1 Prosecution case:

                     The petitioner, during his tenure as Assistant General Manager of the second respondent bank between 01.03.2018 and 31.12.2019, by entering into a criminal conspiracy with certain independent borrowers, empanelled Engineers and Expert Valuers of the second respondent bank and also some building and construction companies, sanctioned Agricultural Small Scale Industries Loans to 11 beneficiaries for establishment of 11 poultry farms, thereby, causing a loss to the tune of Rs.33,89,39,480/-, by projecting non-existent poultry farms, deliberately inflating the market value of the lands offered as security, fabricating and submitting false account statements, forging documents and fabricating completion reports of buildings which were never built and producing false invoices and fictitious records qua purchase of machinery and equipment for poultry farms.

                     2.2 Hence, on the complaint dated 25.01.2020 lodged by the second respondent bank, an FIR was registered on the same day in Cr.No.3 of 2020 on the file of the first respondent police for the offences under Sections 120-B, 409, 420, 467, 468 and 471 of IPC against 33 accused, arraying the petitioner as A1.

                     2.3 The first respondent police, after completing the investigation, filed a final report on the file of the Trial Court for the aforesaid offences and also Section 109 IPC, which was taken cognizance as C.C. No.1323 of 2020.

                     2.4 Seeking quashment of the aforesaid proceedings in C.C.No.1323 of 2020 on the file of the Trial Court, this criminal original petition has been filed.

3. Mr. R. Vivekananthan, learned counsel for the petitioner, inter alia, made the following submissions:

                     3.1. Even considering the averments in the charge sheet at their face value, the alleged offences cannot be made out as against the petitioner, who, in his capacity as Assistant General Manager of the second respondent bank, has merely recommended sanction of 11 loans and it was Sivachandran (L.W.5) and Sermakani (L.W.6), Appraisers, who processed the loan documents and recommended sanction of loans by issuing appraisal reports, which were eventually sanctioned by the higher officials, viz., Subramanian (L.W.3) and Narendran (L.W.4) – Regional Managers, and surprisingly, these four officials were not arrayed as accused.

                     3.2. During his tenure as Assistant General Manager of the second respondent bank, the petitioner has recommended over 40 loans, out of which, only 11 loans were declared as NPAs, in pursuance whereof, proceedings under the SARFAESI Act were initiated and properties offered as collateral security by the borrowers were proceeded against and the second respondent bank has recovered the loans advanced from the borrowers.

                     3.3. In the light the Periodical Report dated 31.07.2020 submitted by the second respondent bank to the Reserve Bank of India which is a statutory declaration qua 11 borrowers aftermath the registration of the FIR on 25.01.2020, wherein, it has been unequivocally stated that no fraudulent activity has occurred in the accounts of the 11 borrowers, the allegations levelled in the complaint become baseless and expose the mala fides on the part of the second respondent bank in launching the criminal prosecution against the petitioner alone and letting the other bank officials scot-free.

                     3.4. Though Subramanian (L.W.3) and Narendran (L.W.4), Regional Managers, who sanctioned loans, and Sivachandran (L.W.5) and Sermakani (L.W.6) who were Appraisers who verified the properties, based on whose appraisal reports, the petitioner recommended sanction of loans, are similarly placed as that of the petitioner, no penal action has been initiated against them and they have all been cited only as witnesses in this case.

                     3.5. There was no independent investigation done by the first respondent police before filing the charge sheet and the charge sheet was predicated only on the 7 page Scrutiny Report dated 01.02.2020 prepared by one Alwar, Assistant General Manager of the second respondent bank (who is no more now) which merely highlights the deviations and procedural deficiencies in the loan sanctioning process and in the absence of any independent investigation done by the second respondent police by examining independent witnesses and without scrutinizing the documents through forensic evidence that the documents submitted by the borrowers were forged and that the borrowers committed acts of forgery for the purpose of cheating, the petitioner cannot be mulcted with criminal liability and at the most, only a case of dereliction of duty can be made out against the petitioner.

                     3.6. The offences of cheating and criminal breach of trust cannot coexist; further, the second respondent bank had initiated SARFAESI proceedings and the properties mortgaged by the borrowers had been brought to sale through auction and the second respondent bank has recovered the amounts from the borrowers and in such circumstances, the allegation of non-availability of properties and forgery of documents cannot be made out as against the borrowers.

4. In support of his submission that at the most only the charge of dereliction of duty can be made out against the petitioner and the concept of vicarious liability cannot be applied in criminal law, the learned counsel for the petitioner placed reliance on the following decisions of Coordinate Benches of this Court:

                     i. Saravanan vs. Deputy Superintendent of Police and 2 others(Crl.O.P. (MD) No.13210 of 2017 decided on 15.11.2019);

                     ii. E. Kalpana and 3 others vs. State(Crl.O.P. No.27616 of 2016 decided on 23.07.2019); and

                     iii.M. Kaleel Rahuman vs. State(Crl.O.P. (MD) No.1357 of 2015 decided on 07.08.2019).

5. Per contra, Mr. S. Santosh, learned Government Advocate (Crl. Side), while reiterating the case of the prosecution, contended that only based on the recommendation made by the petitioner on the basis of fabricated and forged documents, 11 loans were sanctioned which were eventually declared as NPAs and the Investigating Officer, only after a thorough examination of ten witnesses, out of whom, eight were officials of the second respondent bank, filed the impugned charge sheet and was not swayed by the Scrutiny Report made by Alwar in his capacity as Enquiry Officer, as contended by the learned counsel for the petitioner. By garnering support from the judgment in State of Karnakata vs. M. Devendrappa((2002) 3 SCC 89), he contended that when the materials collected during investigation disclose a prima facie case, the High Court, invoking its powers under Section 482 Cr.P.C., cannot quash the proceedings or interdict trial at the threshold.

6. For her part, Ms. V. Ambika, learned counsel for the second respondent bank/de facto complainant, inter alia, made the following submissions:

                     6.1. The case in hand is not one of a simple assault or theft of a trivial or paltry amount but one of economic offence involving large scale public impact resulting in loss to public exchequer, which was committed for personal enrichment of the accused and hence, this Court, while exercising its powers under Section 482 Cr.P.C.. should be circumspect and loath in quashing the impugned proceedings.

                     6.2. The offences in question, viz., fabrication of documents, criminal conspiracy, fraud and forgery, are serious non-compoundable offences and hence, the impugned proceedings does not deserve quashment and the petitioner should be directed to face the trial.

                     6.3. The contention of the learned counsel for the petitioner that out of ten witnesses examined by the prosecution, eight who were bank officials were examined by the Investigating Officer only to substantiate the findings arrived at in the departmental enquiry, has no legs to stand, for, the entire transaction revolves around the bank staff, officials, Panel Valuers and empanelled Engineers, who are the fittest persons to speak about the entire episode and third parties cannot be examined to speak about the sanctioning and dispersal of loans to customers.

                     6.4. The Periodical Report dated 31.07.2020 submitted to the Reserve Bank of India cannot come to the rescue of the petitioner because at the time of submission of the said report, the matter was pending investigation and hence, the Periodical Report can, by no stretch of imagination, be construed as having given a clean chit to the petitioner and other accused.

7. In support of her contention that cheating bank exposits fiscal impurity and such financial fraud is an offence against the society at large and therefore, the impugned proceedings should not be quashed, the learned counsel relied on the judgment of the Supreme Court in Central Bureau of Investigation vs. Maninder Singh((2016) 1 SCC 389).

8. This Court gave its anxious consideration to the rival submissions and also perused the materials placed on record.

9. The facts, viz., that a gargantuan sum of Rs.33.89 crores was advanced as loans by the second respondent bank to 11 customers, the petitioner recommended for sanction of the said loans, the second respondent bank submitted a Periodical Report dated 31.07.2020 to the Reserve Bank of India stating that no fraudulent activity has occurred in the accounts of 11 borrowers, Subramanian (L.W.3) and Narendran (L.W.4), Regional Managers, sanctioned the loans and Sivachandran (L.W.5) and Sermakani (L.W.6) were the Appraisers of the properties and they also processed the papers and issued appraisal reports, are beyond cavil.

10. The seminal point that falls for consideration of this Court in this case is whether the Investigating Officer conducted an independent investigation dehors the Scrutiny Report submitted by Alwar before filing the charge sheet or simply proceeded to file the charge sheet predicating the investigation on the said Scrutiny Report.

11. Firstly, from a perusal of the available records, this Court cannot find a shred or iota of material, much less a document of unimpeachable and sterling quality which indicates that the Investigating Officer has conducted an independent and impartial investigation.

12. Secondly, the Periodical Report submitted by the second respondent bank aftermath the registration of the FIR gives a clean chit to the 11 customers by an emphatic “NO”. In this regard, the argument advanced by the learned counsel for the second respondent bank is that it was stated so in the Periodical Report owing to the pendency of investigation. This reply does not cut ice with this Court, for, if that be the case, nothing prevented the second respondent bank from stating that it cannot be said that no fraud has been played in respect of 11 borrowers owing to pendency of investigation. Miserably, the second respondent bank has failed to state so in the Periodical Report which is not a mere piece of paper but a statutory document submitted to the Reserve Bank of India having its own credibility.

13. Thirdly, there has been no explanation from the prosecution as to why Subramanian (L.W.3) and Narendran (L.W.4), Regional Managers, who sanctioned the loans, and Sivachandran (L.W.5) and Sermakani (L.W.6) who were the Appraisers of the properties and who processed the loan papers and gave the appraisal reports, who were placed like the petitioner, were not arrayed as accused alongside the petitioner but were left scot-free.

14. Fourthly, as contended by the learned counsel for the second respondent bank, it is true that since the entire set of transactions revolves around bank officials, the bank officials will be the apt persons to be examined as witnesses. But, that, by itself, does not mean that Investigating Officer need not examine any other person(s) outside the purview of departmental proceedings or to subject the documents for forensic audit to see whether any forgery had been committed.

15. Fifthly, from a perusal of the Vigilance Report, it is as clear as daylight that the entire allegations are levelled against the borrowers, guarantors, empanelled valuers and suppliers and such being the case, just because of the fact that the petitioner has recommended sanction of loans, it cannot be said that he is an abettor to the crime.

16. Sixthly, coming to the reliance placed on the judgment in Maninder Singh, supra, by the learned counsel for the second respondent bank in support of her contention that the case in hand involving an economic offence and also having a societal impact should not be quashed, to be noted, the said judgment was rendered in the background of settlement of dispute arrived at between the parties. But, distinguishably and concededly, in the instant case, no settlement has been arrived at between the parties and hence, the ratio laid down in Maninder Singh, supra, is not applicable to the instant case. In this context, it will not be out of place to advert to the oft-quoted and celebrated Constitution Bench judgment of the Supreme Court in Padma Sundara Rao (dead) vs. State of Tamil Nadu((2002) 3 SCC 533), wherein, it was candidly held that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed.

17. Next, as rightly contended by the learned counsel for the petitioner, the alleged lapses on the part of the petitioner can, at the most, be brought within the scope dereliction of duty and as such, the petitioner cannot be mulcted with criminal liability.

18. Lastly, it is befitting to point out that the properties which were offered as collateral securities were available for auction by which the second respondent bank has recovered the loans advanced to borrowers by initiation of proceedings under the SARFAESI Act. In this factual backdrop, it cannot be said that any loss, much less a whopping loss has been caused to the second respondent bank.

19. In view of the above discussion, the point for consideration at paragraph 10, supra, is answered against the prosecution and as a sequitur, the impugned proceedings in C.C. No.1323 of 2020 on the file of the Trial Court is liable to be quashed qua the petitioner and is accordingly quashed qua the petitioner alone.

20. Resultantly, this criminal original petition stands allowed. Connected miscellaneous petitions stand closed.