Read Order: RATAN EXPORTS & INDUSTRIES LTD v. THE CENTRAL BUREAU OF INVESTIGATION 

Mansimran Kaur

New Delhi, June 15,2022: The Delhi High Court has opined that inherent powers of the High Court defined under Section 482 of the CrPC, can only be exercised to make such orders as may be necessary to give effect to any order under this Code, to prevent abuse of the process of any Court or otherwise to secure the ends of justice.

By making an observation that if the trial is allowed to go, in the present case,  it will amount to gross miscarriage of the justice, the Bench of Justice Chandra Dhari Singh allowed the present petition moved by the petitioner under Section 482 read with Section 397 of the Code of Criminal Procedure, 1973 in order to set aside the impugned order dated November 29, 2012 passed by the Special Judge. 

Factual background of the case was such that the petitioner M/s Ratan Exports Industries Ltd.,   started its business in the 1979, having the current account with the United Bank of India. The petitioner- company was engaged in the export of tea, coffee, fruit juice concentrate etc in the erstwhile USSR and CIS countries.  The company being proprietorship concern was subsequently converted into a Private Limited Company at the instance of the bank and later to a Public Limited Company with effect from April 4, 1984 and enjoyed the status of government recognized trade house. 

The petitioner company was given an overall limit of Rs. 1250 lakhs by the bank which was further enhanced by the Board of Directors to Rs. 1672 lakhs. Request was made for enhancement of the credit limit from Rs. 1672 lakhs. The Head Office of the bank recommended enhancement of overall credit limit from existing Rs. 1672 lakhs to Rs. 4442 lakhs by way of a board note and also mentioned that in view of urgent need of fund by the company for export commitment, the management committee of Board of Directors in the meeting had approved ad hoc export credit limit of Rs.700 lakhs within the aforesaid recommended credit limit of Rs. 4442 lakhs, subject to approval from Reserve Bank of India in respect of letter of credit (Inland & Foreign) facility for Rs. 400 lakhs.

The petitioner delayed in making payments to the bank and the case got more complicated due to investigation undertaken against the Company in April, 1995 post which charges of money laundering, FERA violations as also willfully employing other suppliers in the process were framed.  Subsequently, the account became NPA as on March 31, 1996.Thereafter, the petitioner company made payments worth Rs 11 Crores during 1996.

Seeing the above circumstances, an FIR was lodged with the CBI, Delhi against the petitioner of the company, its directors and few officials of the bank for causing wrongful loss to the United Bank of India.  However, the parties arrived at settlement and on the settlement the DRT proceedings were dropped, though the bank had given no due certificate to the petitioner Company. Consequently, the petitioner- company filed an application for discharge under Section 227 of the Cr.P.C. before the Trial Court. The CBI also moved an application before the Trial Court, stating therein the bank had entered into a onetime settlement with the Company and received the full and final settlement amount and hence, the investigation in respect of the foreign buyers was not necessary as no useful purpose would be served by making further investigation in respect of the aforesaid foreign companies. Thereafter, the Special Judge framed charges against the company; however its application under Section 227 of the Cr.P.C. was not decided. Hence, the instant petition was filed on behalf of the petitioner company. 

After hearing the submissions of the parties, the Court observed that the petitioner assailed the order of charge dated November 29, 2012, seeking quashing of the criminal proceedings on the ground that a company cannot be sentenced to imprisonment.  To deal with the same the Court placed its reliance on the judgment in Standard Chartered Bank vs. Directorate of Enforcement where it was observed that the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment, the court can impose the punishment of fine which could be enforced against the company.

However, in the present case the Court discovered through the factsheet that the in the present case the petitioner had already settled the claim of the bank by Rs. 8 crores as full and final payment to the satisfaction of the bank and the Bank has issued no dues certificate by specifically stating that, as per the schedule, all the inter-se grievances, disputes, claims and complaints before any forum and/or authority shall be deemed to be fully and finally settled and compromised. It was also noted by the Court that a  bare reading of Section 357(1)(b) of the Cr.P.C. clearly shows that a fine at best can be imposed to undo the pecuniary loss, which in the present case had already been settled by way of full and final payment. Therefore, even if the petitioner is prosecuted, it would not result in any further punishment on the petitioner, who is a juristic person.

With respect to the scope of Section 482 of the Cr.P.C, the Court noted that it is not permissible for the High Court to appreciate the evidence as it can only evaluate material documents on record to the extent of its prima facie satisfaction about the existence of sufficient ground for proceedings against the accused and the Court cannot look into the materials, the acceptability of which is essentially a matter of trial, the Court remarked. Reliance was placed on the judgments in Rajiv Thapar & Ors vs. Madan Lal Kapoor, State of Maharashtra vs. Salman Salim Khan, M.Mohan vs. The State. 

Thus the Court concluded the instant matter by observing thatif the trial is allowed to go, it will amount to gross miscarriage of the justice, since, the petitioner Company, being a juristic person, cannot be punished/sentenced after being held guilty of committing an offence .  Accordingly, the High Court accepted the present case to be extraordinary and by exercising its inherent powers by virtue of Section 482 of Cr.P.C., criminal proceedings initiated against the petitioner were quashed.

0 CommentsClose Comments

Leave a comment