Supreme Court Reinstates Criminal Proceedings in Suvarna Cooperative Bank Fraud Case (9 December 2021)

Introduction

Date of the Judgment: 9 December 2021

Citation: [Not Available in Source]

Judges: M.R. Shah, J. and B.V. Nagarathna, J.

Can a criminal case be dismissed against an accused person simply because other individuals who might be involved were not also charged? The Supreme Court of India recently addressed this crucial question in a case involving alleged fraud at the Suvarna Cooperative Bank. The court overturned a High Court decision that had quashed criminal proceedings against one of the accused, emphasizing that the absence of other potential co-accused is not a valid reason to halt a case against an individual who has been properly charged after investigation. The judgment was delivered by a bench of Justices M.R. Shah and B.V. Nagarathna.

Case Background

The case originated from a complaint filed by M/S Suvarna Cooperative Bank Ltd (the appellant) against several individuals, including the private respondent, alleging offences under Sections 120B, 408, 409, 420, and 149 of the Indian Penal Code (IPC). The bank alleged that the accused had committed fraud and misappropriation of funds. The initial complaint was filed under Section 200 of the Code of Criminal Procedure (Cr.P.C.) before the Additional Chief Metropolitan Magistrate in Bangalore, which was later registered as PCR 15250 of 2009 and subsequently re-numbered as CC 22308 of 2012. Following this, an FIR (Crime No. 127 of 2010) was registered at the Chickpet Police Station for the same offences. After investigation, a charge sheet was filed against the private respondent, who was accused no. 1.

Timeline

Course of Proceedings

The private respondent, accused no. 1, challenged the criminal proceedings by filing Criminal Petition No. 5763 of 2013 before the High Court of Karnataka, seeking to quash the proceedings under Section 482 of the Code of Criminal Procedure (Cr.P.C.). The High Court, through its judgment and order dated 17.07.2014, quashed the criminal proceedings against the private respondent. The High Court’s reasoning was that the charge sheet was incomplete because it did not include accused nos. 2 and 3 and that the officers of the drawee bank did not inform the payee’s bank of the dishonor of one of the cheques within the time stipulated by the Clearing House Rules. The High Court concluded that without all the alleged participants being charged, the prosecution against accused no. 1 alone could not proceed. The original complainant, M/S Suvarna Cooperative Bank Ltd, then appealed to the Supreme Court against this decision.

Legal Framework

The case involves several sections of the Indian Penal Code (IPC):

• Section 120B, IPC: This section deals with the punishment for criminal conspiracy. It states, “Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.”
• Section 408, IPC: This section pertains to criminal breach of trust by a clerk or servant. It states, “Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
• Section 409, IPC: This section deals with criminal breach of trust by a public servant, banker, merchant, or agent. It states, “Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”
• Section 420, IPC: This section addresses cheating and dishonestly inducing delivery of property. It states, “Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
• Section 149, IPC: This section deals with the concept of common intention of an unlawful assembly. It states, “If an offence is committed by any member of an unlawful assembly in prosecution of the common object of that assembly, or such as the members of that assembly knew to be likely to be committed in prosecution of that object, every person who, at the time of the committing of that offence, is a member of the same assembly, is guilty of that offence.”

Additionally, the case refers to Section 482 of the Code of Criminal Procedure (Cr.P.C.), which empowers the High Court to exercise its inherent powers to prevent abuse of the process of any court or otherwise to secure the ends of justice. The High Court had used this power to quash the proceedings against the private respondent. The Supreme Court has set aside the High Court’s order.

Arguments

Appellant’s Arguments (M/S Suvarna Cooperative Bank Ltd):

• The appellant argued that the High Court erred in quashing the criminal proceedings against the private respondent (accused no. 1) solely on the ground that other potential accused were not included in the charge sheet.
• The appellant contended that the investigation had established a prima facie case against the private respondent, and the absence of other accused individuals should not impede the prosecution of those who have been properly charged.
• The appellant submitted that the High Court’s observation that the charge sheet was incomplete without the presence of accused nos. 2 and 3 was not a valid ground to quash the proceedings.
• The appellant emphasized that the trial court has the power under Section 319 of the Cr.P.C. to array additional accused if evidence emerges during the trial indicating their involvement in the crime.

Respondent’s Arguments (State of Karnataka and Private Respondent):

• The respondent argued that the High Court’s decision was justified because the charge sheet was incomplete as it did not include all the individuals allegedly involved in the offences.
• The respondent contended that the absence of the officers of the drawee bank informing the payee’s banker about the dishonour of the cheque within the stipulated time under the Clearing House Rules indicated that the charge-sheet should not have been filed against accused no.1 alone.
• The respondent argued that prosecuting accused no. 1 alone, without the other alleged accomplices, would not lead to a logical conclusion of the case.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a dedicated section. However, the core issue addressed by the court was:

• Whether the High Court was justified in quashing the criminal proceedings against the private respondent (accused no. 1) solely on the ground that other potential co-accused were not included in the charge sheet.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court did not explicitly cite any specific cases or books in its judgment. However, it did refer to the following legal provisions:

• Section 120B of the Indian Penal Code (IPC): Pertaining to criminal conspiracy.
• Section 408 of the Indian Penal Code (IPC): Pertaining to criminal breach of trust by a clerk or servant.
• Section 409 of the Indian Penal Code (IPC): Pertaining to criminal breach of trust by a public servant, banker, merchant, or agent.
• Section 420 of the Indian Penal Code (IPC): Pertaining to cheating and dishonestly inducing delivery of property.
• Section 149 of the Indian Penal Code (IPC): Pertaining to common intention of an unlawful assembly.
• Section 200 of the Code of Criminal Procedure (Cr.P.C.): Pertaining to the procedure for filing a complaint before a Magistrate.
• Section 319 of the Code of Criminal Procedure (Cr.P.C.): Pertaining to the power of the court to proceed against other persons appearing to be guilty of an offence.
• Section 482 of the Code of Criminal Procedure (Cr.P.C.): Pertaining to the inherent powers of the High Court.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court acknowledged the relevance of Section 120B, Indian Penal Code, Section 408, Indian Penal Code, Section 409, Indian Penal Code, Section 420, Indian Penal Code and Section 149, Indian Penal Code as the sections under which the accused was charged.
• The Court acknowledged that the initial complaint was filed under Section 200, Code of Criminal Procedure.
• The Court relied on Section 319, Code of Criminal Procedure to state that the trial court has the power to add other accused during trial.
• The Court noted that the High Court had used Section 482, Code of Criminal Procedure to quash the proceedings, which was overturned by the Supreme Court.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that a criminal case should not be dismissed against an accused simply because other potential co-accused were not included in the charge sheet. The court emphasized that the focus should be on the evidence against the accused who has been charge-sheeted after investigation. The court also highlighted the power of the trial court under Section 319 of the Cr.P.C. to array additional accused if necessary during the trial. The court’s reasoning was based on the need to ensure that those who are prima facie found to have committed an offence are brought to trial, and the absence of other potential accused should not be a ground to halt the proceedings against them.

Fact:Law Ratio

Logical Reasoning:

The Supreme Court rejected the High Court’s interpretation that the charge sheet was incomplete and that the prosecution against accused no.1 could not proceed without the other alleged accomplices. The Supreme Court emphasized that the trial court has the power under Section 319 of the Cr.P.C. to array additional accused if evidence emerges during the trial indicating their involvement in the crime. The court stated, “Merely because some of the persons who might have committed the offences are not charge-sheeted, cannot be a ground to quash the proceedings against the accused charge-sheeted after having found prima facie case against him after investigation.” The court also observed, “During the trial if it is found that other accused persons who committed the offence are not charge-sheeted, the Court may array those persons as accused in exercise of powers under Section 319 Cr.P.C.” The Supreme Court concluded, “Under the circumstances the impugned judgment and order passed by the High Court quashing the criminal proceedings against the respondent no.2 herein – original accused no.1 deserves to be quashed and set aside.”

Key Takeaways

• A criminal case against an accused should not be quashed simply because other potential co-accused are not included in the charge sheet.
• The focus of the trial should be on the evidence against the accused who has been charge-sheeted after a thorough investigation.
• The trial court has the power under Section 319 of the Cr.P.C. to array additional accused if necessary during the trial.
• The Supreme Court’s decision ensures that those who are prima facie found to have committed an offence are brought to trial.
• This judgment reinforces the principle that criminal proceedings should not be halted on technical grounds if there is sufficient evidence against the accused.

Directions

The Supreme Court directed that the private respondent (accused no. 1) be further prosecuted for the offences for which he was charge-sheeted. The court also directed that the trial be conducted in accordance with the law and on its own merits.

Development of Law

The ratio decidendi of this case is that the absence of some accused in a charge sheet, who might have committed the offence, is not a valid ground to quash proceedings against the accused who has been charge-sheeted after a thorough investigation. The Supreme Court clarified that the trial court has the power under Section 319 Cr.P.C. to add other accused during the trial. This judgment reinforces the principle that criminal proceedings should not be halted on technical grounds if there is sufficient evidence against the accused. This ruling clarifies the scope of Section 482 of the Cr.P.C. and ensures that criminal trials proceed against those who are prima facie found to be involved in an offence.

Conclusion

The Supreme Court’s judgment in M/S Suvarna Cooperative Bank Ltd vs State of Karnataka and Anr. overturns the High Court’s decision to quash criminal proceedings against the private respondent. The Supreme Court emphasized that the absence of other potential co-accused is not a valid reason to halt a case against an individual who has been properly charged after investigation. This ruling ensures that individuals who are prima facie found to have committed an offence are brought to trial, and it reinforces the principle that criminal proceedings should not be halted on technical grounds if there is sufficient evidence against the accused. The case has been remanded back to the trial court for further proceedings.