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2019 SCC OnLine Pat 1962 : (2019) 4 PLJR 1140 : (2020) 1 BLJ 8
(PHC)
In the High Court of Patna
(BEFORE ASHWANI KUMAR SINGH, J.)
Bachchu Ram .…. Petitioner;
v.
State of Bihar through Principal Secretary, Deptt. of
Co-Operative, Govt. of Bihar and Others .….
Respondents.
Criminal Writ Jurisdiction Case No. 1010 of 2019†
Decided on November 6, 2019
Advocates who appeared in this case:
For the Petitioner : Mr. Sanjay Kumar Pandey, Advocate
For the Respondent-State : Mr. Raj Ballabh Prasad Yadav, AAG-XI
For the Bank : Mr. Bindhyachal Rai, Advocate
The Judgment of the Court was delivered by
ASHWANI KUMAR SINGH, J.:— Heard learned counsel for the
petitioner, learned counsel for the State and learned counsel appearing
for the Munger-Jamui Central Co-operative Bank Limited.
2. This application under Articles 226 and 227 of the Constitution of
India has been filed by the petitioner for quashing the first information
report (for short ‘FIR’) of Munger Kotwali P.S. Case No. 360 of 2018
dated 04.09.2018 registered under Sections 188, 406, 420 read with
34 of the Penal Code, 1860.
3. The FIR in Munger Kotwali P.S. Case No. 360 of 2018 has been
registered on the basis of the written report submitted by one
Balgovind Pandit, Branch Manager, Munger-Jamui Central Co-operative
Bank Limited, Munger to the officer-in-charge, Kotwali Police Station,
Munger on 04.09.2018.
4. In the written report, the informant has alleged that altogether 17
borrowers including the petitioner had taken loan from Munger Branch
of the Bank. The borrowers were required to return the loan amount
with interest. Since they failed to repay the loan amount, the matter
was taken to the Permanent Lok Adalat, Munger. The Permanent Lok
Adalat passed award in terms of compromise arrived at between the
parties. As per the award of the Permanent Lok Adalat, the borrowers
were required to deposit amount agreed upon by them. However, they
failed to comply the award in spite of repeated reminders given to
them.
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5. The informant has alleged that the borrowers have violated the
terms of the agreement and have cheated the Bank and
misappropriated the amount taken as loan.
6. Learned counsel appearing for the petitioner has submitted that
the allegations made in the FIR would not attract the ingredients of the
offences alleged. According to him, nonPatna payment of loan amount
by a borrower cannot be a subject matter of criminal prosecution unless
there is any element of cheating or fraud. It is not a case where the
informant has alleged any element of cheating or fraud on the part of
the borrowers rather the only allegation in the FIR is that the borrowers
failed to repay amount and when the matter was taken to Permanent
Lok Adalat, an award in terms of the compromise arrived at between
the parties was passed, but they failed to comply with the award
passed by the Permanent Lok Adalat. The said act, by no stretch of
imagination, can be viewed as an offence punishable under penal code.
7. Learned counsel appearing for the Bank has contested the matter.
He said that it is only out of fear of criminal prosecution the borrowers
are repaying some amount to the Bank. He contended that the Bank
had no other option but to institute an FIR as the borrowers were
adamant not to comply the award passed by the Permanent Lok Adalat.
8. On the other hand, learned counsel appearing for the State fairly
submitted that the award of Permanent Lok Adalat was executable as a
decree made by civil court in view of Section 22-E(5) of the Legal
Services Authorities Act, 1987 and the informant ought to have
resorted to the execution proceeding for execution of the award instead
of filing a criminal case.
9. Having heard learned counsel for the parties and perused the
materials on record, I find substance in the submissions made by the
learned counsel appearing for the petitioner and the State.
10. Along with the FIR, a chart showing name and address of
borrowers, date of issuance of loan, amount advanced as loan, demand
of loan, settlement amount, date of award by Lok Adalat and balance
deposit has been annexed.
11. On perusal of the chart, it would appear that the name of the
petitioner Bachchu Ram appears at serial 16. In the said chart, a total
sum of Rs. 1,92,425/- appears to be balance to be deposited by the
petitioner. It would further appear that the loan amount advanced to
the petitioner was Rs. 2,50,000/-. Apparently, certain amount was
deposited by the petitioner after taking loan from the Bank.
12. There is no allegation of fraud or dishonest inducement against
the petitioner. There is also no allegation that the petitioner had
dishonest intention right from the beginning.
13. A default to honour commitments to repay borrowed funds
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amounts to a breach of contract. Any breach to repay debt is not a
criminal offence. The only right to the aggrieved person is to approach
the civil court to attach and sell securities or other unencumbered
properties and recover the due amount.
14. Mere breach of contract can not give rise to criminal prosecution
either under Section 406 or Section 420 of the IPC unless fraudulent or
dishonest intention is shown right at the beginning when the offence is
alleged to have been committed.
15. Similarly, there cannot be any criminal prosecution for non-
compliance of the award passed by the Permanent Lok Adalat. I further
find that the ingredients of the offence punishable under Section 188 of
the IPC are completely wanting in the present case.
16. Learned counsel for the State has rightly submitted that the
remedy available to the petitioner was under Section 22-E(5) of the
Legal Service Authorities Act, 1987 under which the award could have
been executed as a decree of civil court. Instead of filing an execution
case before the civil court for recovery of the amount awarded by
Permanent Lok Adalat, the Bank has chosen to initiate criminal
prosecution as a short cut for recovery of the loan amount.
17. Simply because the respondents no. 2 and 3 feel that the
execution proceedings may not adequately protect the interest of the
Co-operative Bank, they can not be allowed to convert an essentially
civil dispute to a criminal proceeding with a motive to put pressure on
the borrowers.
18. In Indian Oil Corporation v. NEPC India Ltd. [(2006) 6 SCC 736 :
AIR 2006 SC 2780], the Supreme Court observed:—
“… There is also an impression that if a person could
somehow be entangled in a criminal prosecution, there is a
likelihood of imminent settlement. Any effort to settle civil
disputes and claims, which do not involve any criminal
offence, by applying pressure though criminal prosecution
should be deprecated and discouraged. ….”
(emphasis mine)
19. In G. Sagar Suri v. State of U.P. [(2000) 2 SCC 636], the
Supreme Court observed:—
“It is to be seen if a matter, which is essentially of civil
nature, has been given a cloak of criminal offence. Criminal
proceedings are not a short cut of other remedies available in
law. Before issuing process a criminal court has to exercise a
great deal of caution. For the accused it is a serious matter.
This Court has laid certain principles on the basis of which
High Court is to exercise its jurisdiction under Section 482 of
the Code. Jurisdiction under this Section has to be exercised
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to prevent abuse of the process of any court or otherwise to
secure the ends of justice.”
(emphasis mine)
20. Keeping in mind the ratio laid down by the Supreme Court in the
aforestated cases as also the discussions made hereinabove, this Court
is of the considered opinion that allowing the prosecution to continue in
the present case would amount to an abuse of the process of the court.
21. In State of Haryana v. Choudhary Bhajan Lal [(1993) 3 SCC
151 : AIR 1993 SC 1348], the Supreme Court held that the power
under Article 226 of the Constitution of India could be exercised either
to prevent abuse of the process of any Court or otherwise to secure the
ends of justice and cases where the allegations made in the first
information report or complaint, even if they are taken at their face
value and accepted in their entirety do not prima facie constitute any
offence to make out a case against the accused may be quashed.
22. The aforementioned principle laid down by the Supreme Court in
the State of Haryana v. Choudhary Bhajan Lal (supra) is squarely
applicable in the instant case.
23. Accordingly, the FIR of Munger Kotwali P.S. Case No. 360 of
2018 and the entire criminal prosecution arising therefrom are hereby
quashed.
24. The application stands allowed.
———
†
Arising Out of PS. Case No. - 360 Year - 2018 Thana - Kotwali District - Munger
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