The court upheld that serious allegations of fraud warranted ongoing investigation, as the petitioners were not subject to prosecution nor double jeopardy.

ORDER :

J. M. Khazi, J.

Petitioners who are arraigned as accused Nos.1 and 2 have filed this petition under Section 482 Cr.P.C, with a prayer to quash the criminal proceedings pending against them in R.C.03(A)/2022 vide FIR No.RC.0372022A003 dated 28.02.2022 of respondent No.1 for the offences punishable under sections 120-B r/w 420, 406, 477-A I.P.C and Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, pending on the file of XXII Addl.City Civil and Sessions Judge and Spl.Judge for CBI cases.

2. In support of the petition, the petitioners have contended that petitioners are Indian citizens. Petitioner No.1 is the father of petitioner No.2. With a good intention to improve their financial status, petitioner No.2 started cashew processing unit business. Petitioner No.1 supported him. Petitioner No.1 borrowed Rs.2.5 Crores from the then E-Corporation Bank, Puttur Brnach, for establishing cashew processing unit. The machineries were hypothecated to the Bank. They carried out business in a good condition. However, the raw material was spoilt resulting in severe losses to the tune of Crores. Therefore, they were not able to repay the loan instalments.

2.1 In the meanwhile, Bank initiated recovery proceedings and unit became non-performing asset as on 30.09.2017. The Bank filed PCR 20/2017 before the Addl.Civil Judge and JMFC, Puttur, D.K.Mangaluru alleging that petitioners have committed offences punishable under Sections 420 , 405, 406, 120, 120-B, 415, 417, 424 r/w Section 34 IPC. After taking cognizance, it was referred for investigation. Petitioners secured anticipatory bail. Proceedings under SERFAESI Act were also initiated before Debt Recovery Tribunal in O.A.No.1714/2018. Petitioners also filed S.A.33/2019. They have also filed IR.NO.353/2018, wherein all the cases pending before DRT, Bengaluru were stayed.

2.2 The dispute between the parties is civil in nature. In fact the concerned police have filed 'B' report. In the meanwhile, E-Corporation Bank was merged with Union Bank of India on 01.04.2020. After the merger, the Deputy General Manager of Union Bank of India filed a complaint dated 24.02.2022 before respondent No.1 on the same cause of action. When already 'B' report is filed, in respect of the same allegations, a fresh complaint is not sustainable. The petitioners have already repaid Rs.1,12,00,000/-. Five years after filing the 'B' report, one more complaint is filed. Petitioners are innocent of the allegations made. In the above facts and circumstances, the criminal proceedings are liable to be quashed and hence, the petition.

3. On the other hand learned Special Public Prosecutor representing respondent No.2 - Investigating agency i.e., CBI would submit that loan was availed for establishing cashew processing unit and machineries purchased out of the loan amount were also pledged as a security for the loan. However, when the Bank officials inspected the premises, they found all the machineries missing and the accused persons have sold the machineries without the knowledge of the Bank. The loan repayment was also defaulted. It is a clear case of fraud.

4. Having regard to the amount due, as per the Master directions on frauds issued by the Reserve Bank of India, the investigation was required to be conducted by the CBI. However, for reasons best known, the official of E- Corporation Bank choose to file a private complaint which on reference was investigated by the local police and a 'B' report was filed. However, on merger of E-commercial Bank with Union Bank of India, the complaint was referred to CBI. However, on account of the stay granted by this Court, the investigation could no