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2023 Supreme(Online)(Tel) 26730
IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
CRIMINAL PETITION Nos.2370 AND 2371 OF 2021
Mr.Ramesh Kumar Bung and Others ...Petitioners
vs.
The State of Telangana, rep. By Station House Officer, Banjara Hills Police Station, Hyderabad, through Public Prosecutor, High Court For the State of Telangana and Another ... Respondents
Counsel for the Petitioners: Sri N.Naveen Kumar
Counsel for Respondents: Sri Herur Rajesh Kumar
THE HON’BLE SRI JUSTICE M.LAXMAN
JUDGMENT PRONOUNCED ON: 13.09.2023
The requirement for an affidavit in applications under Section 156(3) Cr.P.C. is a directory procedural rule. Non-compliance is a curable defect and not a ground for quashing criminal proceedings if the complaint prima facie discloses cognizable offences exceeding mere civil disputes.
Headnote:(A) Code of Criminal Procedure, 1973 - Section 156(3) - Requirement to file an affidavit for applications under Section 156(3) of Cr.P.C. is a procedural requirement, which is directory in nature and curable, rather than mandatory - Non-compliance with such requirement does not vitiate the entire proceedings or warrant quashing of the FIR. (Paras 28, 34)
(B) Code of Criminal Procedure, 1973 - Section 482 - Inherent powers of High Court - Quashing of criminal proceedings - Court must restrict itself to whether allegations prima facie constitute a cognizable offence - Where a complaint discloses strong evidence of financial mismanagement and criminal breach of trust, the existence of malice or a pending civil dispute does not justify quashing the prosecution, as investigations are meant to test the veracity of such allegations. (Paras 49, 56, 58)
Facts of the case:
The petitioners filed petitions to quash criminal proceedings initiated against them for offences relating to financial mismanagement, unauthorized induction of new members to manipulate elections, and fraudulent disbursement of loans within a financial institution. The petitioners contended that the complaints were filed with mala fide intentions by a rival candidate, lacked proper affidavit verification as per procedural precedents, and were essentially civil in nature.
Findings of Court:
The court held that the procedural requirement for an affidavit in applications seeking police investigation is directory and can be rectified. Finding the allegations of financial fraud and misappropriation to be substantive and supported by external audit inputs, the court refused to quash the investigations, ruling that such matters require thorough examination by the investigating agency rather than early termination.
Issues: The central issues were whether the failure to submit a verified affidavit with a complaint under Section 156(3) of the Cr.P.C. renders the resulting criminal proceedings void and whether allegations of criminal offences in a business context should be quashed due to the complainant's alleged ulterior motives or the existence of parallel civil remedies.
Ratio Decidendi: Procedural instructions intended to prevent the abuse of the legal system serve a directory purpose and do not supersede the primary constitutional objective of ensuring justice. Therefore, minor procedural irregularities are curable, and if a complaint establishes a prima facie case involving serious financial crimes, it must be permitted to proceed regardless of the perceived animosity of the informant or the nature of overlapping civil disputes.
Result: One petition was partly allowed, and the other was dismissed.
Cases referred:
2. MANU/SC/0214/2022
3. MANU/TL/0569/2022
4. MANU/TL/0646/2022
5. 2023 SCC OnLine AP 995
6. 1992 AIR 604
7. (2010) 11 SCC 374
8. AIR 2005 SC 2441
9. (2022) 10 SCC 1
10. 2023 SCC OnLine SC 515
11. 2022 LiveLaw (SC) 986
12. (2017) 1 ALT 79
13. (2002) 4 SCC 638
14. (2005) 2 SCC 673
15. MANU/SC/0115/1992
16. MANU/SC/3152/2006
17. MANU/SC/1012/2021
18. (2013) 10 SCC 591
19. (2005) 1 SCC 122
20. (2004) 6 SCC 522
21. (2019) 6 SCC 107
1. Whether Reporters of Local newspapers may be allowed to see the Judgments? :
2. Whether the copies of judgment may be Marked to Law Reporters/Journals? :
3. Whether His Lordship wishes to see the fair copy of the Judgment? :
COMMON ORDER:
1. Since the issue involved in both the petitions is almost one and the same, they are being disposed of by way of this common order.
2. Crl.P.Nos.2370 and 2371 of 2021 are filed under Section 482 of Code of Criminal Procedure (for short ‘Cr.P.C’) by the petitioners/accused Nos.1 to 3 to quash proceedings in Crime Nos.218 and 222 of 2021 respectively on the file of Banjara Hills Police Station, Hyderabad. Crime No.218 of 2021 was registered for the offences punishable under Sections 120-B , 409, 420, 467, 468, 471 and 477-A of the Indian Penal Code, 1870 (for short ‘IPC’) and Crime No.222 of 2021 was registered for the offences punishable under Sections 120-B , 409, 420, 467, 468, 471 and 477-A of the IPC and Section 156 (3) of Cr.P.C.
3. The petitioners in both the criminal petitions are accused Nos.1 to 3 in the said crimes and respondent No.2 in both the criminal petitions is the complainant.
Facts in Crl.P.No.2370 of 2021:
4. The complainant filed an application under Section 156(3) of Cr.P.C before the III Additional Chief Metropolitan Magistrate, Hyderabad [for short ‘Court below’] seeking direction to the Station House Officer, Banjara Hills Police Station, Hyderabad, to register a case against the petitioners herein for the offences under Sections 120-B read with Sections 409, 420, 467, 468, 471 and 477-A of IPC and to conduct investigation. Upon the directions given by the Court below, an FIR was registered in Crime No.218 of 2021 for the said offences.
5. The contents of the said FIR would show that accused No.1 is the Chairman [erstwhile Senior Vice Chairman], accused No.2 is the Managing Director and CEO, accused No.3 is the Vice Chairman [erstwhile Chairman] of the A.P.Mahesh Cooperative Urban Bank (for short ‘the Bank’). The complainant is the Secretary of A.P.Mahesh Cooperative Urban Bank Shareholders’ Welfare Association. On 31.10.2020, the Board of management of the Bank had convened a General Body Meeting for conducting elections to the Bank wherein it has been resolved to conduct elections to the bank on 20.12.2020. The accused, who were then board of directors, fearing that if they lost in the elections, a newly elected Board would go into the forensic audit, which would bring to light the grave irregularities done during their tenure, conspired with accused No.4 [Returning Officer] and inducted gold loanees as Ordinary/’A’ class members in the Bank from 02.11.2020 to 13.11.2020 without following due process of law. The accused admitted 920 gold loanees as ‘A’ class members in the Bank.
The cut-off date of voters list was 17.11.2020. On 16.11.2020 another 243 gold loanees were made as ‘A’ class members and on the last date i.e., 17.11.2020 further 636 gold loanees were made as ‘A’ class members. In all, 1800 gold loanees were admitted as members from 02.11.2020 to 17.11.2020. The family members of bank employees were also admitted as ‘A’ class members by extending gold loans. This shows the complicity of the Board members with the employees of the bank. Such gold loans were extended to the members even without their physical presence before the bank and without furnishing any security and also without report from the gold appraiser. Further, they were all permitted to participate in the elections process, in c
