AXIS BANK Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) By this application dated 3rd December, 2008 prayer has been made by the nine petitioners who are accused persons in connection with G. R. Case No. 1170 of 2007 corresponding to Sheakespeare Sarani P.S.Case No.124 dated 24.5.2007 under Sections 120B/403/406/409/418/468/471/ 477 of the Indian Penal Code now pending before the learned Chief Judicial Magistrate, Calcutta for quashing of the proceedings on certain grounds which shall appear in the body of the judgment. Of the nine petitioners the first petitioner is the Axis Bank Ltd. (formerly UTI), while the rest eight are its officials.

(2.) The opposite party No.2 Sushil Mehra filed a petition under Section 156(3) of the Cr.P. C. before the learned Chief Metropolitan Magistrate, Calcutta against the petitioners alleging the following facts:

(3.) One Naurang Rai Lohia executed a will bequeathing his FCNR(B) fixed deposits to the tune of U$ 37,45,220.59 in favour of N. R. Lohia Charitable Trust and Kesori Devi Naurang Rat Lohia Foundation (for short,the Trust and the Foundation) which are managed by the complainant and seven other trustees for the purpose of carrying out the charitable activities as per the objectives of the trust deeds. The probate of the will was obtained from the High Court, Calcutta on 8th September, 2003 and the amount goes to approximately Rs. 66,70 crores in Indian Currency. The trustees were entitled to receive the said sum from the UTI Bank on, 12th September, 1996. The late N. R. Lohia, a non-resident Indian entrusted in his NRE Account an amount of Rs. 7,83,88,779/- in favour of the UTI Bank Limited having its office at "Lords", 7/1, Lord Sinha Road, Calcutta-700 071 and instructed the bank to make sixteen fixed deposits for a period of thirty-six months and accordingly the officers of the Bank who are the other accused persons made NRE fixed deposits to the tune of Rs.7,83,88,779/- which would fetch upon the maturity a total sum of Rs.13,48,58,895/-. Mr. Lohia's sons Anil Prakash Lohia,Ajoy Prokash Lohia and Pawan Kr. Lohia were having current accounts of their companies named Woolworth (India) Limited, now called Unitworth Limited, having its business premises at 70/1 Sheakespeare Sarani, Calcutta-17 and Texprint Overseas Limited having its business premises at 11/1 Sarojini Naidu Sarani, Calcutta-17 and some other accounts with the UTI but not to the knowledge of N.R. Lohia. On 10th September, 1999 and 12th September, 1999 the said NRE fixed deposits got matured and one Mr. S. Khandelwal of Woolworth (India) Limited and the accused Nos.2 and 3, the officers of the bank approached Mr. N.R.Lohia to keep his funds with them. N.R. Lohia expressed his desire to convert the maturity value of U$ 37,45,220.59 to FCNR(B); accordingly the accused Nos.2 after obtaining his signatures on certain printed forms in the presence of the complainant and other officers of Unitworth Limited converted the said NRE fixed deposits after discharge to the FCNR(B) to the tune of the said U$ 37,45,00220.59. Now the maturity value would come to U$ 39,56,758/-. The deposit receipts issued by the bank bore a specific mention therein that they were not transferable or negotiable and value was repayable to self on maturity. The late N. R. Lohia had expressed his desire to get the fund back in his overseas account on maturity. He gave accused No.2 the some overseas account number and the accused Nos. 2 and 3 assured him accordingly of transfer of the fund upon maturity as instructed by him. Further, the accused Nos. 2 and 3 did not hand over the original FCNR(B) receipts to late N.R.Lohia despite repeated requests made on 12.9.1999 by N. R. Lohia himself on the pretext that some more papers were required to be signed with regard to Bank's Adhoc.Export Packing Credit Limited of Rs.10 crores granted to Woolworth (India) Limited, (now Uniworth Limited) on 25th April, 1998 for six months. Mr. Khandenwal and Mr. S.K.Chowdhury the accused No. 2 who is the Senior Vice President of UTI Bank Limited further said that the said amount of Rs.10 crores had been paid off but the formality of signing the papers were not completed by Woolworth India Limited of recording pledgment of old NRE fixed deposits as per terms of sanction dated 25.4.1998 N.R. Lohia protested as he never consented to the pledgement for grant of any such credit facility of Rs.10 crores against his NRE fixed deposits, nor gave any consent verbally or in writing for giving such credit of Rs. 10 crores, but since the Uniworth Limited confirmed by giving details of payments and the said accused No.1 (bank) also confirmed that the said credit of Rs. 10 crores was paid off there was no justification for accused Nos. 1 and 2 to withhold the original FCNR(B) fixed deposit receipts with them to the tune of Rs. U$ 37,45,220.59 which got matured already. The accused No. 2 told Mr. N.R. Lohia and the complainant that Texprint Overseas Limited which is the company of Pawan Kr. Lohia son of Mr. N.R. Lohia had already been granted facility of bank guarantee to the tune of Rs. 6.58 crores. Thus the signing of a letter and agreement of pledgment of FCNR{B) for the amount of Rs. 10 crores Adhoc Export Packing Credit of Woolworth (India) Limited and bank guarantee of Rs. 6.58 crores for Texprint Overseas Limited and keeping funds of FCNR(B) upto 12.9,1999 was necessary. He assured to release the original FCNR fixed deposit receipts as soon as N.R. Lohia would sign a letter in respect of Rs. 10 crores Adhoc Export Packing Credit for M/s. Woolwith and of Rs. 6.58 crores on account of Texprint Overseas Limited bank guarantee of Rs. 6.58 crores securing the said amount called pledgment agreement. Mr. Khandenwal and the accused No. 2 approached N. R. Lohia for his signature on the required papers with regard to the said amounts only for the purpose of completion of the record and told him that it was merely a formality and gave inducement that he would release the original FCNR(B) receipts to late N. R. Lohia forthwith on signing the document. Under the said inducement and representation to the effect that the original receipts would be delivered,.the said N. R. Lohia and the complainant avoided conflict with the bank and its officers regarding grant of the facilities awarded without his consent which were later paid off and trusted them that they would deliver the fixed deposit receipts of the said U$ 37,45,220.59 as per the assurance given. Thus, N. R. Lohia signed undated letter over the credit facility of Rs.10 crores for Woolworth and bank guarantee of Rs. 6.58 crores of Texprint Overseas Limited and signed the papers prepared by the accused No.2 relating to those amounts as pledge agreement for securing the said amounts only. On such undated letter the amount of FCNR{B) of the said U$ 37,45,220.59 Was mentioned for pledgment of the fixed deposit. The accused bank after obtaining the papers handed over the FCNR(B) receipt No. 455373 for U$ 13,31,038.44 (rupees 6 crores approximately in Indian Currency) to N. R. Lohia in the presence of the complainant. The accused persons promised that they would release all the balance FCNR(B) fixed deposit receipts to the tune of U$ 24,14,182.15 held by them. Complainant repeatedly approached them for delivery of the bank deposit receipts but the accused persons went on gaining time. Further, for a certain period of time the accused No. 2 started insisting on Mr, Ajoy Prokash Lohia to meet the other accused persons for his accounts and started threatening N.R. Lohia and the complainant that they would not release the FCNR(B) receipts on maturity if Mr. Lohia would not compel Uniworth Limited to pay the entire dues of all accounts. The Uniworth Limited gave details of 37 number of invoices valued at Rs.10 crores for which they had availed themselves of Adhoc Export Packing Credit facility accorded to them under sanction letter dated 25.4.1998. They also provided a copy of the bank's statement of accused No. 1 confirming that the amounts of Rs. 10 crores had been repaid to the accused No. 1 with interest. This fact was confirmed by the accused Nos. 2 to 7 to the effect that the bank's statements were correct. Thus, there was no justification for withholding the original FCNR(B) fixed deposit receipts. In the second week of April, 2000 the Uniworth Limited informed the complainant that accused No.1 and its officers have given them short notice of few hours for deposit Rs. 8.20 crores in the current account of their company and thereafter the bank had adjusted the proceeds of FCNR(B) fixed deposits of N.R. Lohia to the realisation of the said Rs. 8.20 crores against overdraft in their current account. Despite the protest of appropriation in the account of the Uniworth Ltd., by the said Uniworth Ltd. Officers in writing the accused Nos, 2 to 7 dishonestly removed the accounts of FCNR(B) to the extent of Rs.8.20 crores belonging to N. R. Lohia and dishonestly credit was given to Uniworth Limited but the amounts were removed for their own use and advantage. This was protested by Ajoy Prokash Lohia also. Since personal guarantee was furnished by Ajoy Prokash Lohia and assets of the company were available the accused persons had no right to stretch their hands on the FCNR(B) fixed deposits belonging to N. R. Lohia. The Uniworth Limited communicated to the bank in writing that the said appropriation of the amount of Rs. 8.20 crores belonging to N.R. Lohia in their current accounts towards overdraft was not correct but the bank did not pay any heed and maintained that this was done so that the account does not become NP A (non-performing asset). N.R. Lohia by letter dated 19.4.2000 requested the bank to give premature encashment of U$ 13,31,038.44/- (rupees 6 crores in Indian Currency) pertaining to FCNR(B) deposit receipt No.27109 (455373). The bank refused to remit any amount in respect of the said FCNR(B) deposit on the ground that the bank had lien for the facility availed of by both Uniworth Limited and Texprint Overseas Limited as per the letter dated 12.10.1999. On 19.4.2000 the liabilities covered by the letter which was stamped on 12,10.1999 dishonestly were fully paid off and nothing was due but the bank mentioned that the account of Uniworth Limited was irregular and they had right to apply the proceeds towards the arrear of Uniworth Limited. N. R. Lohia complained that the undated letter given to the accused No.2 was dishonestly stamped as a letter dated 12.10.1999 and the related pledge agreement was dishonestly stamped as dated 12.10.1999 which was given only with regard to Adhoc Export Packing Credit of Rs.10 crores bank guarantee to Uniworth Limited on 25.4.1998 and the bank guarantee of Rs. 6.58 crores to Texprint Overseas Limited. Unitworth Limited on 30.3,1998 had demanded regular export packing credit Limited of Rs.10 crores but the UTI Bank Limited disbursed the amount of Rs.10 crores only on 31.3.1998 even without any formal sanction or condition of repayment of the said facility of the amount disbursed by the accused persons. The accused persons on 25.4.1998 issued a formal sanction for the said amount whereby they had subsequently granted only Adhoc Export Packing Credit of Rs.10 crores for a period of six months as is revealed from the documents. The original NRE fixed deposits to the tune of Rs.13,48,58,895/- maturity value which was held by the bank's officers were handed over to the accused persons through the authorised signatories of Woolwoth India Limited on 31.3.1998 . It was given only for a period of six months for the said amount of Rs.10 crores Adhoc Export Credit as would be revealed from the correspondences. Despite the fact that entire amount of Rs. 10 crores Adhoc Export Packing Credit stood paid off with interest the Bank did not release the NRE fixed deposits to Uniworth Limited and still went on threatening them that the profits on maturity will be appropriated against outstanding dues of Uniworth Limited if they would not pay the dues in the current account and other various accounts. This was not known to N.R. Lohia and the complainant or to the officers of the Woolworth India Limited. There Was no liability on account of Texprint Overseas Limited in April, 2000 for bank guarantee given by the accused persons to the extent of Rs. 6.58 crores and the bank guarantee was discharged in January, 2000. In spite of the bank having confirmed payment of Rs. 10 crores they in their tetter dated 24.4.2000 made false statement referring to the letter dated 12.10.1999 that it was placed on lien for these facilities and claimed dishonestly that since the account of Uniworth Limited was irregular and payment was in arrears they had right to retain the amount and apply the profits. The bank falsely alleged that the FCNR fixed deposit No. 455373 to the tune of US 13,31,038.44 was handed over to N.R. Lohia in good faith and then he threatened to take action against the bank. N.R. Lohia by his letter dated 8.5.2000 clearly stated that the appropriation of Rs. 8.20 crores from his FCNR(B) deposit in the account of Uniworth Limited amounted to criminal breach of trust and criminal mis-appropriation . The FCNR(B) deposits worth crores of rupees were entrusted to the accused persons in the capacity as Bankers with accountability as per the norms of the Trust to be discharged as bankers but the accused Nos. 2, 3 and 10 indulged in various manipulations at their end and sent letter bearing No.CR/DKG/1142 dated 10.05.2000 through UTI Bank Ltd., Central Office , Mumbai at Maker Tower, 13th Floor, Cuffe Parade, Mumbai under the signature of accused No.10 Mr. D. Rao, Senior Vice President (credit) to Late Mr. N. R. Lohia. By this letter they replied to the letter dated 8th May, 2000 of Late N, R. Lohia and claimed that the letter dated 12.10.1999 and the pledge agreement authorised them to adjust FCNR(B) Fixed Deposit in case of any irregularity in loan account of the company and that the tone of the letter issued by late N .R. Lohia was distressing. The officers of bank it their Central Office, Mumbai falsely alleged that they have lent certain sum of money to the captioned company on the specific request of Late N. R. Lohia. The accused bank through its officers fraudulently obtained signature of Late N. R. Lohia on undated letter and undated pledge agreement for amounts granted by them of their own, misrepresenting to Late N. R. Lohia and the complainant as well as to other officers of Uniworth Ltd. that it was with regard to limited amount of Rs.10 crores Adhoc Export Packing Credit and Rs. 6.58 crores Bank Guarantee of Texprint Overseas Ltd. as mentioned in a letter signed by N.R.Lohia alongwith the pledge agreement which was subsequently fraudulently stamped by the Bank officers as of 12.10.1999 with ulterior motive to dishonestly use the said agreement for settling their entire account with Unitworth Ltd. It was clear now from the entire conduct of the bank and its said officials accused Nos. 2 to 7 & 10 that on 12.09.1999 the accused persons issued the said FCNR(B) receipts of U$ 37,45,220.59 of the maturity value credited to him with dishonest plans and intentions in their mind. They had dishonest intention not to pay the said FCNR (B) value of U$ 37,45,220.59 right from the beginning of issuing the said FCNR (B) Fixed Deposits which were issued only wrongfully and dishonestly misrepresenting to Late N. R. Lohia that the maturity amounts had been credited to his NRE Fixed deposits and shall be paid in Foreign Currency on maturity dates of FCNR(B), but the accused persons, as is evident from their conduct, dishonestly did not part with the original FCNR(B) receipts to Late N. R. Lohia on 12.09.1999 or thereafter and soon after preparing these 26 number of FCNR(B) receipts and providing photo copies to the complainant started insisting on signing the papers as mentioned above for Rs. 10 crores Adhoc Export Packing Credit granted to Uniworth Ltd. and Bank Guarantee of Texprint Overseas Ltd. worth RS.6.58 crores on the ground that it was mere formality. The Accused No.2 in criminal conspiracy with other accused persons fraudulently obtained undated letter, later dishonestly stamped it as dated 12.10.1999 along with pledge agreement and other papers also dishonestly stamped dated 12.10.1999 mentioning the said FCNR(B) to the tune of US $ 37,45,220.59 as pledged for other amounts then indicated in the said undated letter which only pertains to Rs.10 crores Adhoc Export Packing Credit of Uniworth Ltd. and Bank Guarantee of Rs. 6.58 crores of Texprint Overseas Ltd. The said letter clearly speaks that the FCNR(B) of US $ 37,45,220.59 were specifically intended to be under the lien of the Bank only for the said two amounts of Rs,10 crores Adhoc Export Packing Credit of Uniworth Ltd. and particularly the Bank Guarantee of Rs.6.58 crores of Texprint Overseas Ltd. which was to be discharged in January, 2000. But as is now revealed from the false documents i.e. pledge agreement that the accused persons dishonestly mentioned general facilities given to Uniworth Ltd. for which late N.R.Lohia had no reasons to pledge his FCNR(B) nor he was under any legal obligation to keep the account of Uniworth Ltd. regular as demanded by Bank. The letter clearly discloses the limited liability of Rs.10 crores Adhoc Export Packing Credit and Texprint Overseas Ltd. Bank Guarantee of Rs.6.58 crores which was to be covered by the said FCNR(B) to file tune of US $ 37,45,220.59 and other amount could not be adjusted. The Trusts has been provided a Certificate of the Chartered Accountant that the entire payment of Rs. 10 crores Adhoc Export Packing Credit had been made by Uniworth Ltd. till 23.09.2000 and Texprint Overseas Ltd. Bank Guarantee has been discharged in January, 2000. The Accused No.1 viz. UTI Bank Ltd. therefore dishonestly kept the original FCNR(B) with them after issuing the same on 12.09.1999 and kept on insisting Late N. R. Lohia to sign the said undated letter and connected pledge agreement which the Late N. R. Lohia would not have signed if the accused persons would have parted with the original FCNR(B) issued by them on 12,09.2000. The persons would not have indulged into illegal acts of withholding the said 25 Nos. FCNR(B) instruments issued by them to Late N. R. Lohia and only one original FCNR(B) receipt No.455373 was handed over to the tune of US$ 13,31,038.44. The accused persons also dishonestly.denied handing over of the said receipt to Late N. R. Lohia and threatened that the same should be returned back.......The accused persons also interestingly took a stand that Late N R. Lohia was holding the said FCNR(B) receipt in Trust for them. The said conduct of the accused Bank officials speaks how they had dealt with dishonestly with the amounts of USS13.31,038.44 approximately Rs. 6 crores) entrusted to them and appropriated the same for their own use and advantage. They are using said funds after misappropriation of Non-Resident Indian Late N. R. conia entrusted to them as Banker since 12th September, 1999 and similarly the other amount of US $24,14,182.15 entrusted to the accused persons pertaining to the above mentioned 25 FCNR(B) numbers had been dishonestly appropriated by the accused persons for their own use by illegal removal of the said funds in April, 2000 on strength of the said false and fabricated documents and forgery committed by them for the purpose of cheating and taking out the funds of the said FCNR(B) in their hands as bankers which they failed to do earlier in respect of NRE fixed deposits as there was no documents in their hands of Late N. R. Lohia on the strength of which they could lay hand on the said amounts belonging to Late N.R.Lohia, The correspondence between the parties shall reveal how they were dealing with transactions of crores of rupees. Thus by financial jugglery and manipulation and falsification of accounts done by the said Bank and its officials named Accused Nos. 2 to 7 & 10 have fraudulently obtained said substantial Foreign Exchange of US $ 37,45,220.59 from the account of Late N. R. Lohia.