N VAGHUL Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) This petition, under Art. 227 and S.482, Criminal P.C. 1973, is aimed at an order directing the issue of process against petitioners for the alleged commission of various offences punishable under the Penal Code.

(2.) Respondent 2, complainant before the Magistrate, initiated a prosecution against the petitioners and two others for the alleged commission of offences punishable under Ss. 406, 420, 468 and 471 read with 109/120B, Penal Code. This complaint, briefly stated, is to the following effect : - Complainant was a businessman trading in the name and style of M/s. Navinchandra and Co. In his capacity as a businessman, he and his concerns were dealing with the processing of industrial diamonds, export of cut and polished diamonds, building construction, transport and quarrying. Despite these extensive and varied interests, complainant and his concerns were ignorant of the export business and never had had anything to do with letters of Credit, hereinafter to be described as "L/Cs." Complainant's concerns had accounts with the Bank of India's branch at Khand Bazar. In fact, that branch's premises were located in a building constructed by Somaiya Construction Co. The branch at Khand Bazar knew of complainant never being involved in transactions involving L/Cs. Accused 1 to 6 were high officials of the Bank of India. Accused No. 7 succeeded accused No. 8 as the Manager of the Khand Bazar branch. At the period figuring in this complaint, accused 8 and 7 were the Managers of the Khand Bazar branch with which complainant had dealings. Accused 9 and 10 were partners of a firm doing business in the name and style of Parikh Brothers. This firm was in the 'Export-Import' business. Mayur Exports of India had entered into a contract with Kuwait Supply Co. of Kuwait to sell to the latter 8,000 metric tonnes of barley. Mayur Exports assigned the contract undertaken by it to M/s. Parikh Brothers with the concurrence of Kuwait Supply Co. To facilitate the execution of the contract, Kuwait Supply Co. had to open a L/C and for that purpose utilised the serviced of a banking " house doing business in the style of M/s. Kuwait Finance House. For the opening of the L/C through their bankers, the Kuwait Supply Co. wanted Parikh Brothers to furnish a 5% performance guarantee. The total value of the consignment was placed in the neighbourhood of Rs. 1,60,00,000/-. The 5% performance guarantee sought covered a total sum of about Rs. 8,00,000/-. Parikh Brothers approached the Khand Bazar branch to provide the 5% guarantee on their behalf. The said branch was willing, but only if the suppliers could find a guarantor to cover the risk which the branch was to face. At that time, accused 8 was the Manager of the Khand Bazar branch. This gentleman was known to the complainant since January 1981. On February 1, 1982 accused 8 called the complainant to the bank's premises with an offer to put some business his way. Complainant responded and reached the office of accused 8. Accused 8 introduced him to the Parikh Brothers, viz., accused 9 and 10. Prior to this date, complainant was not acquainted with Parikh Brothers, though in the year 1972 they had acquired some office premises in Navjivan Building from his construction company. Complainant was informed that Parikh Brothers had entered into a big deal for supply of barley to Kuwait Supply Co; that this was a profitable transaction; that the Khand Bazar branch was willing to furnish the 5% performance guarantee, provided complainant guaranteed performance on behalf of Parikh Brothers; that Parikh Brothers had a highly rated creditworthiness; that the contract was to be performed shortly and swiftly, that for a small risk of Rs. 8,00,000/-, complainant would be getting commission at rate 2% covering the value of the entire consignment thus fetching him an attractive profit of Rs. 3,20,000/-. In other words the transaction was "100% safe". Complainant made it clear to accused 8 that he could not understand much of the nature of the business he was being invited to participate in. However, so great was his faith in accused 8, that if that person recommended the transaction, complainant would blindly go through with it. One more meeting took place in the office of M/s. Parikh Brothers, accused 8 again being in attendance. The commission promised to him was paid in two instalments of Rs. 30,000/- and Rs. 2,00,000/- respectively on 8-3-1982 and 27-4-1982. On 4-2-1982, in pursuance of the inducement offered by accused 8 to 10, complainant executed a document titled "General Counter Guarantee". This document recorded complainant's undertaking to indemnify the Bank of India against loss incurred by the neglect or failure of the Parikh Brothers to perform the contract. The indemnity was however not to exceed a sum of Rs. 8,00,000.00. Pursuant to the execution of the counter-guarantee, the Kuwait Finance House communicated the terms of the L/C to Parikh Brothers as also the complainant. Later on, it transpired that Parikh Brothers were not as credit-worthy as touted to be. This however was a later discovery for complainant. On about 9-2-1982, accused 8 to 10 visited the complainant and explained that Parikh Brothers were encountering some difficulty in financing the purchase and despatch of some part of the barley. To allay, his fears, it was made clear to complainant that the money would eventually come from Kuwait, but that the shipment was likely to be delayed because of the paucity of ready cash with the Parikh Brothers. He was asked to aid Parikh Brothers with a short term advance and it was pointed out that this was necessary to guarantee some part of the commission still due to him. Complainant was made aware that getting of finance would not be difficult for him. He was entitled to receive Rs. 27,00,000/- vis-a-vis the Andheri property leased out and delivered to the Bank of India in January 1982. The sum had been withheld because a "No Objection Certificate" had not been tendered by the complainant. Accused 8 gave an assurance that the inability to tender the NOC would no longer be a real hurdle as he would see to it that the bank released the amount advanced. Accused 8 had a letter drafted which he got typed on the letterhead of the complainant. This letter purported to show a request made by complainant for the advance of a sum of Rs.15,00,000/- to him, the money being urgently required by him as he was executing an export order. The truth was that this was done to facilitate the advance of money by the complainant to the Parikh Brothers, at the behest and insistence of Officers of the bank. Taking advantage of the letter addressed by him, a sum of Rs. 13,50,000/- credited to his account was made available to the Parikh Brothers. The credit in favour of Parikh Brothers was made even before the final sanction of the advance to complainant. 6,000 metric tonnes of barley were shipped by Parikh Brothers to the Kuwait Supply Co. and disbursements under the L/C, were made to Parikh Brothers. The suppliers also received the money meant for the remaining shipment of the remaining 2,000 metric tonnes of barley. But the documents in respect of the remaining consignment were found to be defective. As a result of this flaw, the Kuwait Finance House rejected the said documents and intimated the rejection to the Khand Bazar branch. This branch for the first time on 2-7-1982, called upon the complainant to pay the amount advanced against the negotiation of documents together with interest. In this manner, complainant was called upon to make good a sum of Rs. 41,00,000/-. This was unwarranted, for the guarantee given by him did not make him liable for any sum in excess of Rs. 8,00,000/-. Complainant pointed out the true position to the Officers of the bank, but to no avail. At the end of August 1982, accused 5 to 8 made "an attempt to get three documents signed by the complainant and his father. They refused to comply as by this time their suspicions of the motivations and bona fides of the bank's Officers had been thoroughly, roused. With a view to get a loan against the lease of Andheri premises, complainant at the insistence of accused 5 and 6, handed over four letters of appropriation signed by him and three of his relations. It was understood that the letters gave the Khand Bazar branch a lien on the fixed deposits made by the executants of the letters. In some vital parts, the four letters were left blank. These four letters had nothing to do with the transaction between Parikh Brothers and the complainant or them and the bank, etc. Therefore, it was a great surprise for the complainant to be informed in, the first 10 days of October 1982, that the fixed deposits would be appropriated against the sum of Rs. 41,00,000/- which the Parikh Brothers had failed to pay the bank to reimburse it for the loss pursuant to the non-shipment of the last consignment of barley to Kuwait. Complainant's advocates in a letter addressed to accused 7 made it clear that the appropriation of the fixed deposits by the bank was wrongful, illegal and mala fide. The bank did not pay heed to the protest and appropriated Rs. 38,00,000/- belonging to the complainant and his relations which monies were subject to the control of the bank. When an attempt was made to seek redress, accused 4 declined to come to the aid of the complainant, making it clear that he would not do so as the bank was well protected with the appropriations aforementioned. A request to meet accused 3 was turned down by that Officer, the rejection being conveyed through accused 4. It was complainant's case that all the accused had perpetrated a serious fraud upon him so as to deprive him of a sum of Rs. 38,00,000/- by the commission of serious offences such as cheating, criminal breach of trust and forgeries of valuable securities and documents. At a later stage, a document bearing the title OD174 was sought to be made the king-pin of the liability fastened upon him. As the document stood, it gave the impression of having been executed by the complainant and his father on 17-2-1982. As a matter of fact, OD174 was not executed on 17-2-1982 and came into existence quite some time after December 1982. The document relied upon had been touched up to support a fraudulent claim. Accused 1 to 8 were guilty of the offence of forgery with intention to cheat, the document being OD174, 17 reasons were given in support of the contention that OD 174 was a forgery. The circumstances in which the signed OD174 came to be in possession of the bank were explained in para 25 of the complaint. The blank, but signed paper, had been furnished to the bank by the complainant and his father as guarantors M/s. Navinchandra and Co. It had nothing to do with the advances made or transactions in which the Parikh Brothers were interested. For the reasons mentioned in para 24 and the circumstances set out in para 25 (being paras of the complaint), it was averred that accused 1 to 8 were patently guilty of an offence of forgery with intention to cheat under S. 468, I.P.C. Next, accused 1 to 8 were seeking to utilise OD174 to fasten upon the complainant the liability to pay Rs. 41,00,000/-. OD174 had been dishonestly converted and the fixed deposits had been misappropriated. This rendered accused 1 to 8 liable for the commission of an offence punishable under S.406, I.P.C. The advance of Rs.13,50,000/- by the complainant to Parikh Brothers was at the instance of accused 8. It was aided by deception practised upon him by accused 5 to 8. Six reasons have been cited to bear out this contention. Accused 1 to 8 with knowledge of the true position had been parties to the forgery and misuse of the documents. This was done with a view to benefit accused 9 and 10. An overall view of the transaction, indicated that accused 1 to 10 had acted in concert and conspiracy with each other. They had by their gross fraud caused a serious loss to the Bank of India. To cover up this loss they had sought to pass on the liability to complainant and his father.

(3.) After presentation of the complaint, the preliminary statement of complainant was recorded. Complainant in his verification stated that OD174 had not been signed by him and his father on 17-2-1982. In this connection, he referred to the report given by the Chief Vigilance Officer (C.V.O.) of the bank. Next, complainant spoke of accused 8 introducing Parikh Brothers to him and the striking of the deal whereupon he executed the Counter Performance Guarantee rendering him liable to the extent of Rs. 8,00,000/- vis-a-vis the execution of the barley contract by Parikh Brothers. He complained of being kept in ignorance about the Parikh Brothers' poor reputation for credit-worthiness. It was clarified that the advance of Rs. 13,50,000/- was only to enable the Parikh Brothers to despatch the last lot of 2,000 tonnes. Accused 8 had induced him to enter into this part of the transaction, giving him to understand, that he would persuade accused 5 and 6 to release the money required for that purpose. The Bills of Lading which had been rejected by the Kuwait party were per se bogus. Despite that, the bank had released Rs. 41,00,000/- in favour of Parikh Brothers. The grant of Rs. 27,00,000/- was made to hustle him into obliging Parikh Brothers. The fixed deposits made by him and his relations were not to be used for the transaction figuring in this case. Each accused had used a forged document to recover Rs. 41,00,000/- from him. Accused 1 to 7 had relied upon those documents despite full knowledge of the true position.