Case BriefsHigh Courts

Orissa High Court: S. K. Sahoo, J. rejected bail being devoid of merits.

The facts of the case are such that one Roop Lal Meena, Deputy General Manager, Union Bank of India, Bhubaneswar lodged a written complaint before the Superintendent of Police, CBI, Bhubaneswar stating therein that the accused bank officials of Union Bank of India, entered into a criminal conspiracy with three private builders, seven borrowers of housing loan and some unknown bank officials in the year 2017 and by abusing their respective official positions, housing loans were sanctioned in favour of the borrowers on the basis of false/ fictitious documents by violating the guidelines of the Bank. The petitioner along with other accused Bank officials without obtaining approved plan released the entire loan amounts which were allegedly diverted by the accused builders for other purposes which caused undue wrongful loss to the Bank. On receipt of the written complaint and prima facie finding the petitioner was charged for offences punishable under Sections 120-B, 420, 467, 468 and 471 of Penal Code, 1860 i.e. IPC  and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 i.e. PCA. In course of investigation, the investigating officer recorded the statements and arrested the petitioner for the commission of offences under Sections 409, 420 and 471 read with section 120-B IPC Section 13(2) read with Section 13(1)(d) PCA. The instant petition was filed under Section 439 of Criminal Procedure Code i.e. CrPC for grant of bail.

Counsel for the petitioners Mr. Devashis Panda submitted that the petitioner is in judicial custody since December 2020 and he being the then Assistant Marketing Manager of the Bank has never misused the public money in any manner.

Counsel for the respondents Mr. Sarthak Nayak vehemently opposed the prayer for bail and argued that the petitioner had sourced, processed and recommended the housing loan accounts in the names of ten borrowers on the basis of fake documents being in conspiracy with other co-accused persons.

The Court relied on judgment Y.S. Jagan Mohan Reddy v. C.B.I., (2013) 7 SCC 439 wherein it was held

“34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deeprooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

  1. While granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of public/State and other similar considerations.”

The Court observed that the accusation against the petitioner relates to commission of economic offences which are considered to be grave offences and are to be viewed seriously. Such offences affect the economy of the country as a whole and it involves deep-rooted conspiracy and huge loss of public fund. It was further observed that in such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of public and State.

The Court relied on judgment Sanjay Chandra v. CBI, (2012) 1 SCC 40 wherein it was held that

“25………It is, no doubt, true that the nature of the charge may be relevant, but at the same time, the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. The grant or refusal to grant bail lies within the discretion of the Court. The grant or denial is regulated, to a large extent, by the facts and circumstances of each particular case. But at the same time, right to bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the Court, whether before or after conviction, to assure that he will submit to the jurisdiction of the Court and be in attendance thereon whenever his presence is required”.

The Court observed that it appears that the crime was committed in a cool, calculated and organized manner causing wrongful loss of crores to the Bank. There are prima facie materials showing involvement of the petitioner in the deep-rooted conspiracy with other co-accused persons to cause such a huge loss to the Bank.

The Court thus held “granting bail to the petitioner in economic offences of this nature would be against the larger interest of public and State as it involves criminal misappropriation and cheating of huge amount of public money and there is also reasonable apprehension of tampering with the witnesses.”

 In view of the above, bail was rejected and petition was dismissed.[Ashwini Kumar Patra v. Republic of India, 2021 SCC OnLine Ori 438, decided on 26-04-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities and Exchange Board of India (SEBI): K Saravanan, Adjudicating authority, imposed a penalty of Rs 2 crore on Reliance Industries Ltd. (RIL), while making the noticees responsible not only on their own behalf but also on behalf of the minor noticees, being their natural guardians.

The issue herein was that, 12 crore equity shares of Rs 10/- each were allotted by RIL to 38 allottee entities on January 07, 2000. The allotment was made consequent to the exercise of the option on warrants attached with 6,00,00,000 – 14% NCD of Rs. 50/- each aggregating to Rs. 300,00,00,000 (PPD IV) issued in the year 1994.  Therefore, the allegation against the Noticees was to the effect that 6.83% shares that were acquired by RIL promoters together with Persons Acting in Concert (PACs) in exercise of option on warrants attached with Non-Convertible Secured Redeemable Debentures (NCD), which was in excess of ceiling of 5% prescribed in Regulation 11(1) of Takeover Regulations, without making any public announcement for acquiring shares.  Moreover, since the promoters and PACs did not make any public announcement for acquiring shares, it was alleged that they had violated the provisions of regulation 11(1) of Takeover Regulations. Resultantly, adjudication proceedings were initiated under Section 15H of the SEBI Act, 1992 against 36 promoters and PACs, which includes the 34 Noticees and 2 other entities.

Subsequently, certain preliminary issues were made pertaining to the jurisdiction, power of SEBI, which the Noticees believed should be adjudicated upon. And the adjudicating authority dealt with all the preliminary issues substantively one by one. While dealing with one of the preliminary issue to initiate proceedings after an inordinate delay, it was of the opinion “…In any event, even the delay, as argued, is not relevant to the present proceeding as the violation is a substantive violation in the nature of an “economic offence”…”.

Issues

  1. Whether the Noticees have violated the provisions of Regulation 11(1) of Takeover Regulations?
  1. Does the violations, if established, attract monetary penalty under Section 15H of SEBI Act, 1992? If yes, then what would be the monetary penalty that can be imposed upon the Noticees, taking into consideration the factors mentioned in Section 15J of the SEBI Act, 1992 read with Rule 5(2) of the Rules?

 The adjudicating authority while acting in affirmation stated, “Noticees have acquired 6.83% shares of RIL consequent to exercise of option on warrants attached with Non-Convertible Secured Redeemable Debentures (NCD), which was in excess of ceiling of 5% prescribed in Regulation 11(1) of Takeover Regulations, without making any public announcement for acquiring shares and, thus, have violated the provisions of Regulation 11(1) of Takeover Regulations. Further remarked, “…In the instant case, the violation was not one which was committed once and for all but that which continues till date. The violation is a disobedience…”.

The adjudicating authority while holding the RIL in default stated, “…I note that the Hon’ble Supreme Court of India in the matter of SEBI v. Shri Ram Mutual Fund (2006) 68 SCL 216 held thatonce the violation of statutory regulations is established, imposition of penalty becomes sine qua non of violation and the intention of parties committing such violation becomes totally irrelevant. Once the contravention is established, then the penalty is to follow.“…It is an admitted fact that the Noticees did not make the public announcement as per the mandatory requirement of Regulation 11 of the Takeover Regulations and the open offer being a consequential and necessary part thereof, which was absolute in nature. Such a failure is a continuing violation till discharge…”.

“…the warrants were issued in the year 1994 much before their coming into existence of the Takeover Regulations. At the same time, I note that the entire scheme of Takeover Regulations rest on the pedestal of ‘control’.  “…In effect, I note that the Noticees have neither complied with in obtaining the approval of shareholders supplying them with the prescribed details nor have they come out with a public announcement till date. Thus, I note that the Noticees have been enjoying all rights attached to the impugned acquisition without complying with the relevant law…”.

Thus, the violation of Regulations 11(1) of the Takeover Regulations made the Noticees liable for penalty under Section 15H of the SEBI Act, 1992.

While deciding on the penalty, the adjudicating authority was of the opinion that, “…With regard to the above factors to be considered while determining the quantum of penalty, I note that no quantifiable figures or data are available on record to assess the disproportionate gain or unfair advantage and amount of loss caused to an investor or group of investors as a result of the default committed by the Noticee. However, the fact remains that the Noticees by their failure to make public announcement, deprived the shareholders of their statutory rights/ opportunity to exit from the company…”

Therefore imposed Rs 25,00,00,000 penalty, to be paid jointly and severally, under Section 15H of SEBI Act, 1992 for violation of Regulation 11(1) of Takeover Regulations.[Reliance Industries Ltd., In re, Order/KS/AE/2021-22/11266-11299, decided on 07-04-2021]

Case BriefsHigh Courts

Punjab and Haryana High Court: Sudhir Mittal, J., while addressing an issue with regard to the dishonour of cheque held that,

“Offence under Section 138 NI Act is quasi-criminal in nature and it is not an offence against society, hence an accused can escape punishment by settling with the complainant.”

Revision petitioner issued a cheque to the complainant–respondent 1 which was dishonored. 

On the dishonour of cheque, the complainant sent a notice demanding payment of the cheque amount but no response was received.

In view of the above, he filed a complaint under Section 138 of the Negotiable Instruments Act, 1881.

Revision petitioner was acquitted and later he filed an appeal against the said Judgment and the case was remanded for a fresh decision.

Appeal against the aforementioned judgment of conviction was dismissed which lead to the filing of the present revision petition.

In the present appeal, the revision petitioner prayed for a reduction in the quantum of sentence.

Question for adjudication is — Whether the petitioner is entitled to reduction of his sentence?

When can a Revisional Court exercise its powers to alter the nature or the extent or the nature and extent of the sentence?

Do sympathetic consideration have any role to play in the matter of sentencing?

Sentencing is primarily a matter of discretion as there are no statutory provisions governing the matter.

Bench citing the decision of the Supreme Court in State of Himachal Pardesh v. Nirmala Devi, 2017 (2) RCR (Criminal) 613, stated that the sentence imposed must be commensurate with the crime committed and in accordance with jurisprudential justification such as deterrence, retribution or restoration. Mitigating and aggravating circumstances, both should be kept in mind.

Court added that the provisions inserted for inculcating greater faith in banking transactions needed more teeth so that cases involving dishonour of cheques reduced.

Therefore, it is apparent that deterrence and restoration are the principles to be kept in mind for sentencing.

In the present matter, the order of sentence for 2 years has been imposed on the grounds that the offence is a socio-economic offence.

Award of compensation is also justified and reflects a judicious exercise of mind.

In view of the above, the revision petition was dismissed and maintained. [Rakesh Kumar v. Jasbir Singh, 2020 SCC OnLine P&H 1197, decided on 11-08-2020]


Also Read:

Dishonour of Cheque [S. 138 NI Act and allied sections]

Case BriefsHigh Courts

Patna High Court: The Division Bench comprising of A. P. Sahi, CJ and Anjana Mishra, J. allowed a civil writ petition seeking direction for release of gratuity to an employee who was accused of an economic offence.

Petitioner was accused of acquiring of assets disproportionate to his income. In a departmental proceeding initiated against him, a final order was passed whereby it was ordered that ten per cent of his pension amount shall be permanently deducted and he would be paid only subsistence allowance during the period of suspension. Even after three and a half years from lodging of the criminal case, neither any sanction was accorded by the department against him nor was any chargesheet submitted by the prosecution – Economic Offence Unit. Thus, the petitioner filed an instant petition seeking the release of full amount of gratuity payable to him and a direction for release of the full amount due to him by way of unutilized leave.

The Court noted that despite the fact that charges of disproportionate income were not established against the petitioner in the departmental enquiry, ten percent of his pension was withheld as per Bihar Pension Rules, 1950. It was opined that no order of punishment had been imposed in relation to gratuity, and therefore withholding of gratuity had no rationale. Relying on Rule 43(b) of the Pension Rules and Full Bench judgment of the Patna High Court in Arvind Kumar Singh v. State of Bihar, 2018 SCC OnLine Pat 749, the present Court directed the amount of gratuity payable to the petitioner to be released forthwith along with interest on the same from the date that amount became payable till the date of payment. [Lakshmi Kant Patel v. State of Bihar, 2018 SCC OnLine Pat 2250, decided on 17-12-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of R.K. Gauba, J. dismissed a petition filed under Section 482 CrPC invoking the inherent powers of the Court, seeking the quashing of FIR filed against the petitioner, on the ground of compromise entered into between the parties.

The petitioner was facing prosecution for offences punishable under Section 420 read with Section 511, and Sections 471, 474, 419 and 381 IPC. The allegation against the petitioner was that he was an employee of Kundan Edible Oil Mills. It was stated that the petitioner, in his capacity as the said employee, dishonestly removed a cheque leaf of the said entity against its bank account with HDFC bank. The said cheque was forged and fabricated purporting it to be a cheque issued for the sum of Rs 6 lakhs and was presented to the bank for obtaining payment thereagainst. The cheque, on scrutiny by the Bank, was found to be forged and fabricated. Consequently, an FIR was registered. The petitioner prayed for quashing of FIR and consequent proceedings on the basis of compromise entered into between the petitioner and the respondents.

The High Court noted that during the investigation, the petitioner was unable to account for possession of the cheque which was forged, grave suspicion arising that he knew fully well that it was a forged instrument. Even then, he attempted to use it to commit the offence of cheating by presenting it dishonestly. The Court relied on the Supreme Court decision in Parbatbhai Aahir v. State of Gujarat, (2017) 9 SCC 641 and held that the facts of the case rendered it beyond a dispute that is private in nature. It involved serious economic offence which concerns not only the entity against the account of which the forged cheque was attempted to be encashed but also the bank where the account was maintained. The Court was of the view that this was not a case meriting exercise of inherent powers to bring an end to the prosecution. The petition was, thus, dismissed. [Pawan Gupta v. State (NCT of Delhi), 2018 SCC OnLine Del 11121, dated 23-08-2018]