Supreme Court Reinstates Cheating Case Against Bank Officials, Emphasizes Limits of High Court's Quashing Powers.


[ Court Doc ]   Cheating and dishonestly inducing delivery of property >> Criminal Law   |   Criminal Appeals & Suspension of Sentence >> Criminal Law  

The Supreme Court of India has overturned a Patna High Court order that had quashed a First Information Report (FIR) alleging cheating and criminal breach of trust against bank officials. The apex court's decision underscores the limited scope of a High Court's power to quash criminal proceedings, emphasizing that it should not conduct a "mini-trial" or delve into the merits of the allegations at an early stage.

The case involves Abhishek Singh, a businessman who secured a loan of Rs. 7,70,000 from the Bank of India in July 2020 by pledging 254 grams of 22-carat gold ornaments. The dispute arose when, according to Singh, he repaid the entire loan amount, including interest, by March 31, 2023, after receiving a demand notice from the bank. However, the bank, unbeknownst to him, revalued the pledged gold and subsequently declared it counterfeit, alleging it was merely gold-plated.

 

 

This led to a complex legal battle:

Bank's FIR: The bank initially registered an FIR against Abhishek Singh on May 22, 2023, under Sections 420 (cheating) and 379 (theft) of the IPC.
Abhishek Singh's FIR: In response, Singh filed an application under Section 156(3) CrPC, leading to the registration of an FIR (Mithanpura P.S. Case No. 393 of 2023) against the bank's Branch and Credit Manager (Respondent No. 1) under Sections 420, 406 (criminal breach of trust), and 34 (common intention) of the IPC. This is the FIR that was ultimately quashed by the High Court.

High Court's Decision and Supreme Court's Rejection:

The High Court had quashed Abhishek Singh's FIR, concluding that it was a "mere counterblast" to the bank's FIR, lodged with malicious intent, and that no offense was made out even if the complaint's contents were taken at face value. The High Court also cited a procedural lapse, stating that Singh had not affixed an affidavit as mandated by a previous Supreme Court judgment (Priyanka Srivastava v. State of UP).

The Supreme Court, after hearing both parties, found the High Court's reasoning flawed. The apex court highlighted several critical points:

  • Improper Evaluation of Evidence: The High Court went beyond its jurisdiction by considering the bank's internal policies and the de-empanelment of the initial gold valuer to conclude a lack of malafides on the bank's part. The Supreme Court reiterated that determining intention requires evidence, which can only be assessed during a trial.
  • Premature Findings on Motive: The High Court's conclusion that Singh had an "ulterior motive" or "ill intention" in securing the loan was deemed unclear and without proper basis at the quashing stage.
  • Loan Repayment Anomaly: The Supreme Court noted that while Singh did delay his payment, the loan was eventually settled. It questioned why the gold was revalued and auctioned after the loan was fully repaid.
  • Custody of Gold: Crucially, the Supreme Court emphasized that the pledged gold was always in the bank's safe custody, and Singh had no access to it after its initial valuation. This raises questions about the possibility of "misappropriation" or "tampering" by bank personnel or valuers, a matter that can only be unearthed through a trial.
  • Affidavit Requirement: The Supreme Court found that the High Court's assertion regarding the missing affidavit was erroneous, as Singh's application under Section 156(3) CrPC did, in fact, have an affidavit attached.

Limits of Quashing Powers:

The Supreme Court reiterated the well-established legal principle that the High Court's power to quash criminal proceedings under Section 482 CrPC is limited. It is meant to prevent abuse of the court's process or to secure the ends of justice, not to conduct a "mini-trial" or weigh evidence at the initial stage. The High Court's task is merely to ascertain whether, prima facie, an offense is made out from the allegations in the FIR or complaint.

Conclusion and Revival of Proceedings:

The Supreme Court concluded that the High Court had "improperly quashed" the proceedings initiated by Abhishek Singh. The apex court clarified that it was not expressing any opinion on the guilt or innocence of the respondents, which must be established during the trial based on evidence.

Accordingly, the appeal was allowed, the High Court's impugned order was set aside, and the proceedings arising from Abhishek Singh's FIR (Mithanpura P.S. Case No. 393 of 2023) were revived and restored to the file of the concerned trial court. The Registry has been directed to communicate the order to the Patna High Court for necessary action.


Section 34., Indian Penal Code - 1860  

Section 406., Indian Penal Code - 1860  

Section 420., Indian Penal Code - 1860  

Indian Penal Code, 1860  

Section 156., Code of Criminal Procedure - 1973  

Section 482., Code of Criminal Procedure - 1973  

Code of Criminal Procedure, 1973