‘Accused liable even if loan obtained by fraud is repaid'

Merely because the loan dues of a bank or a financial institution have been repaid, the accused cannot be exonerated from criminal liability if the charge against them is that they obtained the loan by fraud or forged documents, the Supreme Court has said.A Bench of Justices D.K. Jain and H.L. Dattu rejected the contention that the full amount in question having been re-paid to the bank, there was no monetary loss to the bank and, therefore, continuation of criminal proceedings against all the accused, including the appellant, would not only be an exercise in futility but an abuse of the process of law as well.

Justice Jain writing the judgment did not agree with the contention that since the loan amount had been repaid, the charge sheet against the appellant, Sushil Suri, should be quashed at a preliminary stage when he had only been summoned to stand trial.

On the contention that the High Court should exercise its inherent powers under Section 482 Cr.P.C. to quash criminal proceedings at the preliminary stage, the Bench said inherent powers should not be exercised to stifle a legitimate prosecution. 

The Bench said: “Although the power possessed by the High Court under the said provision is very wide it is not unbridled. It has to be exercised sparingly, carefully and cautiously, ex debito justitiae to do real and substantial justice for which alone the court exists.

“The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material.”

In the instant case, the Bench said the accused not only duped a bank but also availed himself of depreciation on the machinery, which was never purchased and used by them, causing loss to the exchequer, a serious economic offence against society.

“In the present case, having regard to the modus operandi adopted by the accused, as projected in the charge sheet, we have no hesitation in holding that it is not a fit case for exercise of jurisdiction by the High Court under Section 482 of the Cr.P.C. as also by this Court under Article 142 [to do substantive justice] of the Constitution. In the instant case more than sufficient circumstances exist suggesting the hatching of criminal conspiracy and forgery of several documents leading to commission of the offence. We refrain from saying more on the subject at this juncture, lest it cause prejudice to the appellant or the prosecution. 

“The gravamen of the allegations against the appellant, as also the co-accused is that the company hatched a conspiracy by forging and fabricating a number of documents, like photographs of old machines, purchase orders and invoices showing purchase of machinery in order to support their claim to avail hire purchase loan.”

Dismissing the appeal against the Delhi High Court judgment, the Bench asked the trial court to proceed with the case registered in 1999 as expeditiously as possible without being influenced by any observation made by the High Court or in this judgment on the merits of the charge sheet.

Courtesy : The Hindu