Point of Law: Criminal conspiracy in terms of Section 120-B of the Code is an independent offence. It is punishable separately.

ORDER :

The petitioners in these petitions call in question First Information Report registered on 17-02-022 by the Central Bureau Investigation in No. RC0782022E0001 for offences punishable under Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 (hereinafter referred to as ‘the Act’ for short) and Section 120B read with Section 420 of the IPC.

2. The petitioner in Criminal Petition No.7325 of 2022 is the company/accused No.1. Petitioners in Criminal Petition No.7345 of 2022 who are accused 2 to 5 are Directors of the Company/accused No.1. Since all the petitioners challenge the very same crime registered against them, these cases are taken up together and considered by this common order.

3. The petitioner in Criminal Petition No.7325 of 2022 is ‘Associate Lumbers Private Limited’ (hereinafter referred to as ‘the Company’ for short). The Company, one incorporated under the Companies Act, 1956, is engaged in the business of trading timber, teakwood, packing cases, plywood and other wood products. It is the claim of the Company that the Company had been a customer of the then Corporation Bank (‘the Bank’ for short) presently merged with the 2nd respondent/Union Bank of India since 1988. On 05-03-2003, on an application made by the Company, a loan facility was extended by Poonja Arcade Branch, Mangalore of the Bank. The same was sanctioned and a credit limit of Rs.23/-crores was granted on 05-03-2003. The credit limit was extended/enhanced from time to time at the request of the petitioner and on 21-09-2015 loan account was renewed and enhanced to Rs.60/-crores. The date 21-09-2015 was the last of the renewal made for a credit limit of Rs.60/-crores. It is the claim of the petitioner/Company that due to economic slowdown in the domestic market there was severe cash crunch generated and the Company was not in a position to pay the debt in time.

4. On account of the account becoming a non-performing asset, the Bank took several actions against the petitioner/Company by initiating proceedings under the SARFAESI Act, through which a portion of the outstanding dues to the credit facility was recovered. Not stopping at that, the Bank in terms of Reserve Bank of India guidelines declared the account of the Company to be a fraud, and account holders to be willful defaulters and initiated several proceedings to recover the amount. Those proceedings are not the one that is the issue in the case at hand. After initiation of proceedings under the SARFAESI Act and also getting in possession of the recovery certificate from, the hands of the competent for a, the Bank registered a complaint against the petitioner/Company on 15-02-2022 terming the account to be a fraud and alleging offences of cheating, criminal conspiracy by the petitioner and its Directors.

5. On the basis of the said complaint, the Central Bureau of Investigation (‘CBI’ for short) registered FIR in Crime No. RC0782022E0001 for offences punishable under Section 13(2) r/w Section 13(1)(d) of the Act and Section 120B r/w 420 of the IPC. The petitioners in both these petitions called in question the action of the Bank in declaring the account of the petitioner to be a fraud in terms of the Master Circular issued by the RBI before this Court in Writ Petition No.5223 of 2022. A Division Bench of this Court directed that no coercive action shall be taken against the petitioners pursuant to the fraud classification. After passing of the aforesaid interim order, the present petitions are preferred by the petitioners calling in question the very registration of crime. This Court by an order dated 12-08-2022 following, what the Division Bench had directed i.e., not to take coercive steps, directed that no coercive steps shall be taken against the petitioners.

6. Heard Sri Ashok Haranahalli, Sri Hashmath Pasha and Sri C.V.Nagesh, learned senior counsel appearing f