BOMBAY HIGH COURT
S.S. Shinde and K.K. Sonawane, JJ.
Abhay Shantilal Jain and Ors. —Applicants
versus
State of Maharashtra and Anr. —Respondents
Criminal Application No.4744 and 4907 of 2016
Decided on 27.3.2017

IMPORTANT POINT
Offences involving banking and loan transactions are the offences of serious nature, where the FIR can not be quashed only on the ground that the loan is repaid.

Headnote:Indian Penal Code, 1860—Sections 420, 406, 408, 409, 120B r/w 34—Criminal Procedure Code, 1973—Section 482—Petition for quashing FIR registered for offences—Applicants were members of Urban Credit Cooperative Society and awaited financial assistance for their business—Audit of accounts of credit society revealed that financial assistance provided to applicants were contrary to model bye-laws of society and loans were granted without obtaining proper security—Merely that applicants repaid entire loan amount could not be a ground for quashing FIR—It could not be described a mere defect in loan transactions but a serious financial offence under criminal law—FIR was not liable to be quashed.

       Held: At this juncture, it is to be noted that the applicants did not put in question the factual aspects that they are members of the society and being members, they availed the loan facilities as alleged in the FIR. However, the applicants came forward with a specific contention that they have already repaid the amount to the credit society and discharged the financial liability. Therefore, they cannot be held responsible for any misdeeds or irregularities in the affairs of the society. The learned counsel for the applicants harped on the circumstances that the applicants have repaid the amount and, therefore, the FIR be quashed.

       In view of attending circumstances and nature of allegations nurtured on behalf of prosecution, we are not in agreement with the submissions propounded on behalf of applicants that as they repaid the entire loan amount, they cannot be blamed for any irregularities or misconduct in the affairs of the society. In the present case, the investigation of the impugned FIR is in progress and at a primitive stage. However, allegations of sanction and disbursement of huge amount of loan in favour of applicants by ignoring the fetters imposed by the bye-laws of the society, itself indicates the involvement of the applicants being conspirators in this crime. The applicants are borrowers, and without their active connivance and participation, the financial assistance contrary to the general rules under the bye-laws of the society could not have been processed further for its disbursement in their favour. The factual aspect as well as the documents produced on record are sufficient to draw adverse inference that the applicants are having strong clout and could be beneficiaries of the loan facility, owing to their nexus and proximity with the Directors and office bearers of the credit society.

       We would reiterate that at this juncture, the investigation is in progress and, therefore, in view of the guidelines delineated in Indar Mohan Goswami’s case referred supra, it would be unjust and improper to give prima facie findings as to essential ingredients of the offence of criminal conspiracy are fulfilled or not. But, the facts and circumstances available on record, if taken at their face value sufficiently indicate the commission of criminal conspiracy. The agreement for accomplishment of an illegal act itself constitute an offence. Therefore, merely because the applicants repaid the entire loan amount and no loss is caused to the credit society, would not enough to exonerate the applicants from the criminal liability. The refund of loan amount cannot be an effective substitution for a criminal prosecution when the disputed act is itself an offence under law.

       The applicants are the beneficiaries, who procured the finance without entitlement. They are equally responsible with the office bearers and Directors of the Credit Society for the offence of Criminal Breach of Trust and Cheating as well as defrauding the members and depositors of the Credit Society. Therefore, the provisions of section 82 of the Maharashtra Cooperative Societies Act, 1960 would not render any assistance to absolve the applicants from the criminal liability as alleged against the them. The applicants cannot use the provisions of Maharashtra Co-operative Societies Act, 1960 as a shield to evade the prosecution under IPC in the case. The account holders and depositors used to keep their hard earned money in the hands of strangers of Credit Society. But the borrowers like applicants, now a days, are utilizing the banking institution for making money over and above the money of the depositors.

       We reiterate that, without active participation and indulgence of the applicant, there would not have been any misdeeds or misappropriation of funds of the credit society to disburse it in favour of applicants for their business purpose. In case, at this initial stage of investigation, if the applicants are exonerated from the criminal liability on the ground that they have repaid the loan amount, it may result in cynical disregard of law, which would have its impact on the society and people may lose faith from the judicial system. We are of the opinion that the investigating agency should avail the freedom to go into the whole gamut of the allegation to find out the truth to book the culprits of the crime. In such circumstances, we are not inclined to nod in favour of applicants to exercise the inherent powers under Section 482 of Cr.P.C. to quash and set aside the FIR. (Paras 11, 12, 14, 15 and 16)

       Result: Petition dismissed.