# " '- •• [2011) 8 S.C.R. 1 SUSHIL SURI v. C.8.1. & ANR

- **Citation:** [2011] 8 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2011-05-06
- **Case number:** Criminal Appeal No. 1109 of 2011
- **Bench:** D.K. Jain, H.L. Datiu
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2011-8-s-c-r-1-sushil-suri-v-c-8-1-anr-27899
- **Pages:** 24

## Headnote

Code of Criminal Procedure, 1973:
s.482 - Inherent powers of the High Court- Scope and c
ambit of - Held: Section 482 of Cr.P.C. envisages three
circumstances under which the inherent jurisdiction may be
exercised by the High Court, namely: (i) to give effect to an
order under the Cr. P. C.; (ii) to prevent an abuse of the process
of Court; and (iii) to otherwise secure the ends of justice -
D
Although the power possessed by the High Court under the
said provision is very wide but it is not unbridled - It has to
be exercised sparingly, carefully and cautiously, ex debito
justitiae to do real and substantial justice for which alone the
Court exists - The inherent powers should not be exercised E
to stifle a legitimate prosecution - The High Court should
normally refrain from giving a prima facie decision in a case
where all the facts are incomplete and hazy, more so, when
the evidence has not been collected and produced before the
Court and the issues involved, whether factual or legal, are
F
of such magnitude that they cannot be seen in their true
perspective without sufficient material.
s. 482 - Criminal proceedings for forgery/fabrication of
documents with the intention of defrauding the bank as well
as the exchequer - Charge-sheet against appellant and other G
directors of a company for offences punishable under ss.
1208, 420, 409, 468 and 471 of /PC - Allegation that they
forged documents/vouchers to show purchase of machinery,
a pre-condition for release of instalments of loan, and thus not
1
H
2
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A only duped the bank (PSB) but also defrauded the revenue
by claiming depreciation on non-existent machinery and in
the process cheated the public exchequer -
Chief
Metropolitan Magistrate took cognizance of the offences and
summoned the appellant to stand trial - Appellant filed
B petition under s. 482 CrPC - High Court declined to quash the
chargesheet - Justification of - Held: Justified - On a
conspectus of the factual scenario, prima facie, the
chargesheet does disclose commission of offences by the
appellant under ss. 1208, 420, 409, 468 and 471 of /PC -
c More than sufficient circumstances exist suggesting the
hatching of criminal conspiracy and forgery of several
documents leading to commission of the aforementioned
offences - Having regard to the modus operandi adopted by
the accused, as projected in the chargesheet, it is clear that
0
it is not a fit case for exercise of jurisdiction by the High Court
under s.482 Cr.P.C. as also by this Court under Article 142
of the Constitution - The accused had not only duped PSB,
they had also availed of depreciation on the machinery, which
was never purchased and used by them, causing loss to the
E exchequer, a serious economic offence against the society
- Merely because the dues of the bank have been paid up,
the accused-appellant cannot be exonerated from the criminal
liability - Therefore, the chargesheet against him cannot be
quashed - Trial Court directed to proceed with the case -
Penal Code, 1860 - ss. 1208, 420, 409, 468 and 471.
F
Penal Code, 1860 - ss. 120A and 1208 - Offence of
"criminal conspiracy" - Essential ingredients of, discussed.
Penal Code, 1860 - s. 463 - Forgery - Definition of -
G Held: Is very wide - Basic elements of forgery stated.
Precedent - Ratio decidendi -:- Held: While applying
ratio, the Court may not pick out a word or sentence from the
judgment divorced from the context in which the said question
arose for consideration - Even one additional or different fact
H may make a world of difference between the conclusions in
•
•
SUSHIL SURI v. C.B.I. & ANR.
3
two cases and blindly placing re!iance on a decision is never A
proper.
The Company in question and its directors, including
the appellant, and other persons allegedly had conspired
to forge, fabricate and use documents in order to avail B
loan from the Punjab and Sind Bank (PSB) and had
opened or caused to be opened fictitious bank accounts
in the names of m

## Text

_Characters 0–39,996 of 45,757. This is a partial read: ask again with offset=39996 for what follows._

" '-
••
[2011) 8 S.C.R. 1
SUSHIL SURI
A
v.
C.8.1. & ANR.
(Criminal Appeal No. 1109 of 2011)
MAY 6, 2011
B
[D.K. JAIN AND H.L. DATIU, JJ.]
Code of Criminal Procedure, 1973:
s.482 - Inherent powers of the High Court- Scope and c
ambit of - Held: Section 482 of Cr.P.C. envisages three
circumstances under which the inherent jurisdiction may be
exercised by the High Court, namely: (i) to give effect to an
order under the Cr. P. C.; (ii) to prevent an abuse of the process
of Court; and (iii) to otherwise secure the ends of justice -
D
Although the power possessed by the High Court under the
said provision is very wide but it is not unbridled - It has to
be exercised sparingly, carefully and cautiously, ex debito
justitiae to do real and substantial justice for which alone the
Court exists - The inherent powers should not be exercised E
to stifle a legitimate prosecution - The High Court should
normally refrain from giving a prima facie decision in a case
where all the facts are incomplete and hazy, more so, when
the evidence has not been collected and produced before the
Court and the issues involved, whether factual or legal, are
F
of such magnitude that they cannot be seen in their true
perspective without sufficient material.
s. 482 - Criminal proceedings for forgery/fabrication of
documents with the intention of defrauding the bank as well
as the exchequer - Charge-sheet against appellant and other G
directors of a company for offences punishable under ss.
1208, 420, 409, 468 and 471 of /PC - Allegation that they
forged documents/vouchers to show purchase of machinery,
a pre-condition for release of instalments of loan, and thus not
1
H
2
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A only duped the bank (PSB) but also defrauded the revenue
by claiming depreciation on non-existent machinery and in
the process cheated the public exchequer -
Chief
Metropolitan Magistrate took cognizance of the offences and
summoned the appellant to stand trial - Appellant filed
B petition under s. 482 CrPC - High Court declined to quash the
chargesheet - Justification of - Held: Justified - On a
conspectus of the factual scenario, prima facie, the
chargesheet does disclose commission of offences by the
appellant under ss. 1208, 420, 409, 468 and 471 of /PC -
c More than sufficient circumstances exist suggesting the
hatching of criminal conspiracy and forgery of several
documents leading to commission of the aforementioned
offences - Having regard to the modus operandi adopted by
the accused, as projected in the chargesheet, it is clear that
0
it is not a fit case for exercise of jurisdiction by the High Court
under s.482 Cr.P.C. as also by this Court under Article 142
of the Constitution - The accused had not only duped PSB,
they had also availed of depreciation on the machinery, which
was never purchased and used by them, causing loss to the
E exchequer, a serious economic offence against the society
- Merely because the dues of the bank have been paid up,
the accused-appellant cannot be exonerated from the criminal
liability - Therefore, the chargesheet against him cannot be
quashed - Trial Court directed to proceed with the case -
Penal Code, 1860 - ss. 1208, 420, 409, 468 and 471.
F
Penal Code, 1860 - ss. 120A and 1208 - Offence of
"criminal conspiracy" - Essential ingredients of, discussed.
Penal Code, 1860 - s. 463 - Forgery - Definition of -
G Held: Is very wide - Basic elements of forgery stated.
Precedent - Ratio decidendi -:- Held: While applying
ratio, the Court may not pick out a word or sentence from the
judgment divorced from the context in which the said question
arose for consideration - Even one additional or different fact
H may make a world of difference between the conclusions in
•
•
SUSHIL SURI v. C.B.I. & ANR.
3
two cases and blindly placing re!iance on a decision is never A
proper.
The Company in question and its directors, including
the appellant, and other persons allegedly had conspired
to forge, fabricate and use documents in order to avail B
loan from the Punjab and Sind Bank (PSB) and had
opened or caused to be opened fictitious bank accounts
in the names of machinery suppliers to encash the pay
orders/demand drafts issued by PSB and played fraud
with PSB as also on the public exchequer by claiming
depreciation on the machinery, which was never C
purchased, ·and obtained pecuniary advantage for
themselves.
Chargesheet was accordingly filed by the CBI in the
Court of Chief Metropolitan Magistrate for offences D
punishable under Sections 1208, 420, 409, 468 and 471
of IPC. The. Chief Metropolitan Magistrate took
cognizance of the offences and summoned the accused
to stand trial. On being so summoned, the appellant filed
petition under Section 482 of Cr.P.C., praying for E
quashing of the Chargesheet mainly on the ground that
once the Company had repaid the loan to PSB along with
interest, no loss was caused to PSB and, therefore, they
had not committed any offence for which Chargesheet
had been filed. The High Court declined to quash the
F
Chargesheet filed against the appellant and other
directors of the Company holding that merely because
the Company and its directors had repaid the loan to PSB
they could not be exonerated of the offences committed
by forging/fabricating the documents with the intention
of defrauding the bank as well as the exchequer. G
Accordingly, the petition filed by the appellant was
dismissed and he was directed to appear before the trial
court.
The question which therefore arose for consideration H
4
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A in the instant appeal was whether bearing in mind the
object, scope and width of power of the High Court under
Section 482 of the Cr.P.C., on the facts in hand, the High
Court was correct in law in declining to exercise its
B
jurisdiction under the said Section.
Dismissing the appeal, the Court
HELD:1.1. Section 482 of the Cr.P.C. itself envisages
three circumstances under which the inherent
jurisdiction may be exercised by the High Court, namely:
C (i) to give effect to an order under the Cr.P.C.; (ii) to
prevent an abuse of the process of Court; and (iii) to
otherwise secure the ends of justice. It is trite that
although the power possessed by the High Court under
the said provision is very wide but it is not unbridled. It
D has to be e.xercised sparingly, carefully and cautiously,
ex debito justitiae to do real and substantial justice for
which alone the Court exists. Nevertheless, it is neither
feasible nor desirable to lay down any inflexible rule
which would govern the exercise of inherent jurisdiction
E of the Court. Though exercise of inherent powers would
depend on the facts and circumstances of each case, but,
the Court would be justified in invoking its inherent
jurisdiction where the allegations made in the Complaint
or Chargesheet, as the case may be, taken at their face
F value and accepted in their entirety do not constitute the
offence alleged. [Para 11] [16-0-G]
1.2. The exercise of inherent powers would entirely
depend on the facts and circumstances of each case. The
inherent powers should not be exercised to stifle a
G legitimate prosecution. The High Court should normally
refrain from giving a prima facie decision in a case where
all the facts are incomplete and hazy, more so, when the
evidence has not been collected and produced before the
Court and the issues involved, whether factual or legal,
H · are of such magnitude that they cannot be seen in their
•
••
SUSHIL SURI v. C.B.I. & ANR.
5
true perspective without sufficient material. [Para 14] [18A
A·D]
R.P. Kapur v. State of Punjab AIR 1960 SC 866: 1960
SCR 388; Dinesh Dutt Joshi v. State of Rajasthan and Anr.
(2001) 8 SCC 570: 2001 (3) Suppl. SCR 465; Central B
Bureau of Investigation v. A. Ravisharikar Prasad and Ors.
(2009) 6 sec 351 - relied on.
State of Haryana and Ors. v. Bhajan Lal and Ors. 1992
Supp (1) SCC 335: 1991 (1) Suppl. SCR 387; Janata Dal
v. H.S. Chowdhary and Ors. (1992) 4 SCC 305: 1992 (1) C
Suppl. SCR 226 - referred to.
2.1. In the instant case, in light of the allegations in
the Chargesheet, the view taken by the High Court in the
matter cannot be flawed and deserves to be affirmed~ It 0
is manifest from a bare reading of the Chargesheet, placed
on record, that the gravamen of the allegations against
the appellant as also the co-accused is that the co·mpany,
acting through its directors in concert with the Chartered
Accountants and some other persons: (i) conceived a E
criminal conspiracy and executed it by forging and
fabricating a number of documents, like photographs of
old machines, purchase orders and invoices showing
I
purchase of machinery in order to support their claim to
avail hire purchase loan from PSB; (ii) on the strength of
these false documents, PSB parted with the money by
F
issuing pay orders & demand drafts in favour of the
Company and (iii) the accused opened six fictitious
accounts in the banks (four accounts in Bank of
Rajasthan and two in Bank of Madura) to encash the pay
orders/bank drafts issued by PSB in favour of the G
suppliers of machines, thereby directly rotating back the
loan amount to the borrower from these fictitious
accounts, and in the process committed a systematic
fraud on the Bank (PSB) and obtained pecuniary
advantage for themselves. Precise details of all the H
6
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A fictitious accounts as also the further flow of money
realised on encashment of demand drafts/pay orders
have been incorporated in the Chargesheet. Additionally,
by allegedly claiming depreciation on the new
machinery, whfoh was never purchased, on the basis of
B forged invoices etc.; the accused cheated the public
exchequer as well. [Para 16) [18-F-H; 19-A-D]
2.2. In the chargesheet, the accused are alleged to
have committed offences punishable under Section
1208, read with Sections 420, 409, 468 and 471 IPC. At
C this preliminary stage of proceedings, it would neither be
desirable nor proper to return a final finding as to whether
the essential ingredients of the said Sections are
satisfied. On a conspectus of the factual scenario, prima
facie, the Chargesheet does disclose the commission of
D offences by the appellant under the afore-noted Sections.
[Para 17] [19-D~FJ
3. The essential ingredient of the offence of "criminal
conspiracy", defined in Section 120A IPC, is the
E agreement to commit an offence. In a case where the
agreement is for accomplishment of an act which by
itself constitutes an offence, then in that event, unless the
Statute so requires, no overt act is necessary to be
proved by the prosecution because in such a factF situation criminal conspiracy is established by proving
such an agreement. In other words, where the
conspiracy alleged is with regard to commission of a
serious crime of the nature as contemplated in Section
1208 read with the proviso to sub-section (2) of Section
G 120A IPC, then in that event mere proof of an agreement
between the accused for commission of such crime
alone is enough to bring about a conviction under
Section 1208 and the proof of any overt act by the
accused or by any one of them would not be necessary.
[Para 17) [19-F-H; 20-A-8]
H
•
•
SUSHIL SURI v. C.B.I. & ANR.
7
Suresh Chandra Bahri v. State of Bihar 1995 Supp (1)
A
sec 80 - relied on.
4. The definition of "forgery" in Section 463 IPC is
also very wide. The basic elements of forgery are: (I) the
making of a false document or part of it and (ii) such
making should be with such intention as is specified in
the Section viz. (a) to cause damage or injury to (i) the
public, or (ii) any person; or (b) to support any claim or
title; or (c) to cause any person to part with property; or
B
(d) to cause any person to enter into an express or
implied contract; or (e) to commit fraud or that fraud may C
be committed. In the instant case more than sufficient
circumstances exist suggesting the hatching of criminal
conspiracy and forgery of several documents leading to
comm!ssion of the aforementioned Sections. [Para.18)
(20-C-E]
D
5.1. The judgments relied upon on behalf of the
appellant are clearly distinguishable on facts. Even one
additional or different fact may make a world of difference
between the conclusions in two cases and blindly placing
reliance on a decision is never proper. It is trite that while
applying ratio, the Court may not pick out a word or
sentence from the judgment divorced from the context in
which the said.question arose for consideration. [Para 20)
(22-F-G]
5.2. In the present case, having regard to the modus
operandi adopted by the accused, as projected in the
Chargesheet, it is clear that it is not a fit case for exercise
E
F
of jurisdiction by the High Court under Section 482
Cr.P.C. as also by this Court under Article 142 of the G
Constitution. The accused had not only duped PSB, they
had also availed of depreciation on the machinery, which
was never purchased and used by them, causing loss to
the exchequer, a serious economic offence against the
society. Merely because the dues of the bank have been
H
8
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A paid up, the appellant cannot be ·exonerated from the
criminal liability. Therefore, the Chargesheet against him
cannot be quashed. The Trial Court is directed to proceed
with the case as expeditiously as possible without being
influenced by any observations made by the High Court
B or in this judgment on the merits of the Chargesheet.
[Paras 21, 23] [23-D-E; 24-B-C]
Nikhil Merchant v. Central Bureau of Investigation and
Anr. (2008) 9 SCC 677: 2008 (12) SCR 236; Madan Mohan
Abbot v. State of Punjab (2008) 4 SCC 582: 2008 (5) SCR
C 526 and B.S. Joshi and Ors. v. State of Haryana and Anr.
(2003) 4 SCC 675: 2003 (2) SCR 1104 - distinguished.
Zee Telefilms Ltd. and Anr. v. Union of India and Anr.
(2005) 4 SCC 649: 2005 (1) SCR 913 and Haryana Financial
· o Corporation and Anr. v. Jagdamba Oil Mills and Anr. (2002)
3 SCC 496: 2002 (1) SCR 621 and Rumi Dhar (Smt) v. State
· of West Bengal and Anr. (2009) 6 SCC 364: 2009 (5)
SCR 553 - relied on.
E
Sajjan Kumar v.Central Bureau of Investigation (2010)
9 SCC 368: 2010 (11) SCR 669 - referred to.
F
G
H
Case Law Reference:
2008 (12) SCR 236
Distinguished.
2009 (5) SCR 553
Relied on.
2003 (2) SCR 1104
Distinguished.
2008 (5) SCR 526
Distinguished.
(2009) 6 sec 351
Relied on.
2010 (11) SCR 669
Referred to ..
1960 SCR 388
Relied on.
2001 (3) Suppl. SCR 465 Relied on.
Para 6
Para 7
Para 8
Para 8
Para 9
Para 9
Para 12
Para 13
•
•
SUSHIL SURI v. C.B.I. & ANR.
9
1991 (1) Suppl. SCR 387 Referred to.
1992 (1) Suppl. SCR 226 Referred to.
Para 13
A
1995 Supp (1) SCC 80
Relied on.
2005 (1) SCR 913
2002 (1) SCR 621
Relied on.
Relied on.
Para 14
Para 18
Para 20
Para 21
CRIMINAL APPELLATE JURISDICTION: Cirminal Appeal
No. 1109 of 2011.
B
From the Judgment & Order daed 21.5.2009 of the High
C
Court of Delhi at New Delhi in Criminal Miscellaneous Case
No. 3842 of 2008.
H.P. Rawal, ASG, Vijay Aggarwal, Rajneesh Chopra,
Sachin Midha, Priyanka Gupta, Rishabh Maheswari, Saurabh
D
Seth, Yash Pal Dhingra, Vijay Aggarwal, Gurpeet Si,ngh,
Shekhar Kumar, Shweta Verma, Mukesh Verma, Arvind Kumar
Sharma, Jayant K. Sud, Harendra Singh, Anil Katiyar for the
appearing parties.
The Judgment of the Court was delivered by
E
D.K. JAIN, J. 1. Leave granted.
2. This appeal, by special leave, is directed against
judgment dated 21st May 2009 delivered by the High Court of
F
Delhi in Criminal Misc. Case No.3842 of 2008, in a petition filed
by the appellant herein under Section 482 of the Code of
Criminal Procedure, 1973 (for short "the Cr.P.C."). By the
impugned judgment, a learned Single Judge of the High Court
has declined to quash the Chargesheet filed against the
G
appellant and other directors of a Company, namely, Mis
Morpen Laboratories Ltd. (for short "the Company") for offences
punishable under Sections 1208, 420, 409, 468 and 471 of the
Indian Penal Code, 1860 (for short "the IPC").
H
10
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A
3. Briefly stated, the facts, material for adjudication of the I
issue, arising in this appeal, are as follows:
A source information was received by the Central Bureau
of Investigation (for short "the. CBI") that in the year 1999 two
8 Chartered Accountants, namely, Sanjay Malik and Bipin
Kakkar, had dishonestly and fraudulently opened/caused to be
opened several fictitious accounts in some banks in the names
of certain concerns, with an intention and object to facilitate the
diversion of bank finance availed by various public limited
companies for the purpose other than what had been stated in
C the loan application. On the basis of the said information, a First
Information Report (FIR) was registered against the aforementioned Company and its directors. The relevant portion of
the FIR reads thus:
D
''That in June 1999, S/Sh. K.B. Suri, Sushil Suri and Smt.
·Kanta Suri, the Executive Directors of M/s. Morepen Labs
Ltd. having their office at 416-418, Antriksh Bhawan (sic),
22, K.G. Marg, New Delhi, conspired together and in
furtherance of the said criminal conspiracy they, dishonestly
E
and fraudulently made an application to Punjab & Sind
Bank, Connaught Place, New Delhi for Hire-Purchase
Finance to the tune of Rs. 300 Lacs, by submitting fake
and forged purchase orders, invoices and bills relating to
supply sf machineries and equipments to be installed in
F
their factory/works situated in Distt. Solan (HP).
That the above Executive Directors of the company,
dishonestly, fraudulently and in conspiracy with other
accused persons submitted to the bank, fake and forged
invoices of fictitious/non-existent supplier i.e. M/s. R.K.
G
Engineers, M/s. Teem Metals Pvt. Ltd. and M/s. Malson
lmpex, made accommodation payments representing as
genuine advance payments to suppliers and thereby
caused the bank to release funds to the tune of '300 lacs
towards cost of machineries and equipments and pay
H
orders in various amounts issued by the bank for the
SUSHIL SURI v. C.B.I. & ANR. [D.K. JAIN, J.]
11
purpose of making payments to suppliers. These amounts
A
were then· fraudulently deposited in several fictitious
accounts of SISh. Sanjay Malik and Bipin Kakkar at
Corporation Bank and Canara Bank and encashed. The
bank finance raised by the company on the pretext of
procurement of machineries and equipments were not
B
used for the purpose stated in the application for loan,
instead the bank loan was diverted by the above Executive
Directors, in collusion with SISh. Sanjay Malik and Bipin
Kakkar, for other undisclosed non-business purposes .
. That during the year 1998 also the above Executive C
Directors of Mis. Morepen Labs Ltd. had adopted a
similar modus-operandi in collusio.n with some other
unknown persons/Chartered Accountants and applied for
bank finance to the tune of Rs. 200 lacs for purchase of /
machineries and equipments with an object to divert bank o
finance for undisclosed non-business orders, invoices and
bills of fictitious suppliers, i.e. Mis. B.K. Chemi-Plant
Industries and M/s~ Flexon Hose and Engineering Co. Pvt.
Ltd. and caused the bank to release loan of Rs. 200 lacs
for the purpose of procurement of machineries and
equipments to be installed in their factory works situated
in Distt. Solan (HP). The bank loan thus released by
Punjab & Sind Bank (Hire-Purchase Branch), Connaught
Circus, New Delhi was not actually used for the purpose
stated in the loan proposal rather the pay orders issued
by the bank in the name of fictitious suppliers Mis. ChemiPlant Industries and Mis. Flexon Hose and Engineering
Co. Pvt. Ltd. were deposited in fictitious accounts opened
E
F
in the above name and style at Bank of Rajasthan, Kamla
Nagar Branch, Delhi and encashed. No suppliers of
machineries and equipments were made by Mis. B.K.
G
Chemi-Plant Industries and Mis. Flexon Hose and
Engineering Co. Pvt. Ltd. to Mis. Morepen Labs. Ltd. and
bank finance availed by the company for the said purpose
were again used for some undisclosed non-business
purposes.
H
12
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A
The above facts and circumstances disclose the
commission of offences uls 120-B, IPC r/w 420, 409, 468
and 471 IPC and substantive offences thereunder against
Chartered Accountants S/Sh. Sanjay Malik and Bipin
Kakkar and S/Sh. K.B. Suri, Sushil Suri and Smt. Kanta
B
Suri, Executive Directors of M/s. Morepen Labs. Ltd., New
Delhi and other unknown persons. Therefore, a regular
case is registered and entrusted to Sh. A.K. Singh, Dy.
SP/SIU-VII, for investigation."
4. The Company is a public limited company, engaged in
C the manufacturing of pharmaceutical products. In order to run
its affairs, from time to time, the Company had been raising
funds from different sources, like loans from different banks/
financial institutions as also from the open market by way of
'public issues', 'rights issues' and 'bonds' etc. Investigations
D revealed that in the year 1998, the Company, through its
directors, including the appellant in this appeal, applied for a
hire purchase advance of Rs. 2 crores from Punjab and Sind
Bank (for short "PSB"), Hire Purchase Branch, New Delhi, for
purchase of various machinery items to be installed at their
E manufacturing units at different places. It transpired that the
machinery for which the loan was raised from PSB was never
purchased by the Company and, in fact, to defraud PSB,
photographs of the existing/some other machinery were taken
by affixing labels of PSB and the same were filed with PSB,
F as confirmation for having purchased the machinery, for which
the loan was raised under the hire purchase limit. It was
discovered that although the loan taken by the Company from
PSB had been repaid, but the Company never purchased any
machinery, utilising the funds disbursed by PSB against the
G purchase of machinery. Furthermore, the value of the machinery,
purportedly purchased with these funds, was reflected in the
balance-sheet of the Company and even depreciation on the
said machinery, amounting to Rs. 52,33,066/-, was also
claimed in the Income Tax Return/Minimum Alternate Tax (MAD
H for the assessment year 1998-1999, without any such
•
SUSHIL SURI v. C.B.I. & ANR. [D.K. JAIN, J.]
13
machinery having been actually acquired.
5. In the year 1999, the Company and its directors again
cipplied for hire purchase advance of Rs. 3 crores from PSB
A
for purchase of more machines. In their balance-sheet for the
assessment year 1999-2000, the Company again claimed the
B
benefit of depreciation in the Income Tax/Minimum Alternate Tax
amounting to Rs. 1,44,88,605/- although no such machinery
was purchased by the Company. It further transpired that loan
proposals were supported by forged proforma invoices .•
purportedly issued by some suppliers in whose name fictitious
C
bank accounts were opened to encash the Demand Drafts/Pay
Orders issued by PSB in favour of these firms. The
investigations thus, revealed that the appellant and a number
of other persons had committed the afore-mentioned offences.
Accordingly, a Chargesheet was filed by the CBI on 13th
October, 2004 in the Court of Chief Metropolitan Magistrate,
D
Delhi.
6. The Chief Metropolitan Magistrate took cognizance of .
the offences and summoned the accused to stand trial. On
being so summoned, the appellant filed the afore-stated petition
E
under Section 482 of the Cr.P.C., praying for quashing of the
Chargesheet mainly on the ground that once the Company had
repaid the loan to PSB along with interest, no loss was caused
to PSB and, therefore, they had not committed any offence for
which Chargesheet had been filed. In support of the said plea,
F
decision of this Court in Nikhil Merchant Vs. Central Bureau
of Investigation. & Anr1• was pressed into service. On behalf
of the CBI, it was pleaded that the appellant and others, by
forging documents/vouchers to show purchase of machinery,
a pre-condition for release of instalments of loan, had not only
G
duped PSB but also defrauded the revenue ,by claiming
depreciation on non-existent machinery and in the process
cheated the public exchequer of crores of rupees.
1.
(2008) g sec 677
H
14
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A
7. As already stated, the High Court has come to the
conclusion that merely because the Company and its directors
had repaid the loan to PSB they could not be exonerated of
the offences committed by forging/fabricating the documents
with the intention of defrauding the bank as well as the
B exchequer. The High Court was of the view that the ratio of the
decision of this Court in Rumi Dhar (Smt) Vs. State of West
Bengal & Anr. ,2 was applicable on the facts of the present case
and the decision of this Court in Nikhil Merchant (supra) was
clearly distinguishable on facts. Thus, the High Court held that
c on the peculiar facts of the case, the appellant was not entitled
to any relief. Accordingly, the petition filed by the appellant was
dismissed with costs. He was directed to appear before the
trial court. Aggrieved thereby, the appellant is before us in this
appeal.
D
8. Mr. Vijay Aggarwal, learned counsel appearing on
behalf of the appellant assailed the judgment of the High Court
on the ground that all the dues, as claimed by PSB having been
paid by the debtor Company without demur, more so, when the
Bank had not initiated any action for the recovery of money, the
E case of the appellant is on a much stronger footing as
compared to the case of Nikhil Merchant (supra), wherein this
Court had quashed the criminal proceedings initiated against
the borrower in view of their compromise with the Bank. It was
contended that since in the present case, there is no allegation
F that the appellant had committed any offence under the
Prevention of Corruption Act 1988, at best, the allegation in the
Chargesheet may attract Section 420 of the IPC, which offence
is otherwise compoundable under Section 320 of the Cr.P.C.
It was asserted that full amount in question having been paid
G to the Bank, there was no monetary loss to the Bank and,
therefore, continuation of criminal proceedings against all the ·
accused, including the appellant, would not only be an exercise
In futility but an abuse of the process of law as well. It was thus,
pleaded that it was a fit case where the High Court should have
H 2.
(2009) a sec 364
•
•
SUSHIL SURI v. C.B.I. & ANR. [D.K. JAIN, J.]
15
exercised itsjurisdiction under Section 482 of the Cr.P.C. and
A
quashed the Chargesheet. In support, while relying heavily on
the decision in Nikhil Merchant (supra), learned counsel al~o
commended us to the decisions of this Court in B.S. Joshi &
Ors. Vs. State of Haryana & Anr.3 and Madan Mohan Abbot
Vs.· State of Punjab4• The decision in Rumi Dhar (supra) relied
B .
upon by the High Court, was sought to be distinguished by
submitting that in that case the provisions of the Prevention of
Corruption Act, 1988 had been invoked; the BaAk had to file a
suit for recovery of the amount due to it and the Revision Petition
filed against framing of charge against the accused in that case
C
had also been dismissed, which is not the case here.
9. Per contra, Mr. H.P. Rawal, learned Additional Solicitor
General of India, appearing for the CBI, supporting the
impugned judgment, strenuously urged that having regard to the
nature of. the allegations against the appellant, based on the
D
evidence collected during the course of investigations, the High
Court has rightly refused to exercise its jurisdiction under
Section 482 of the Cr.P.C. Relying on a decision of this Court
in Central Bureau of Investigation Vs. A. Ravishankar Prasad
& Ors. 5, learned counsel contended that overwhelming material
E
is available on record which clearly shows that the Company
and its directors, including the appellant, and other persons had
conspired to forge, fabricate and use documents in order to
avail loan from the bank and had opened or caused to be
opened fictitious bank accounts in the names of the suppliers
F
to encash the pay orders/demand drafts issued by PSB and
played fraud with PSB as also on the public exchequer by
claiming depreciation on the machinery, which was never
purchased. It was argued that the offences for which the
appellant has been Chargesheeted would survive irrespective
G
of discharge of debt of PSB by the Company. Relying on the
decision of this Court in Sajjan Kumar Vs. Central Bureau of
3.
(2003) g sec 677.
4.
(2008) 4 sec 582
5.
(2009) s sec 351,
H
16
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A lnvestigation6, learned counsel asserted that when the material
on record is per se sufficient for the Court to form an opinion
that the accused have committed the offences alleged against
them and frame the said charges, there is no reason why the
Chargesheet against the appellant should be quashed at such
B a preliminary stage when he has only been summoned to stand
trial.
10. Before embarking on an evaluation of the rival
submis~ions, it would be instructive to briefly notice the scope
and ambit of the inherent powers of the High Court under
C Section 482 of the Cr.P.C.
11. Section 482 of the Cr.P.C. itself envisages three
circumstances under which the inherent jurisdiction may be
exercised by the High Court, namely: (i) to give effect to an order
o under the Cr.P.C.; (ii) to prevent an abuse of the process of
Court; and (iii) to otherwise secure the ends of justice. It is trite
that although the power possessed by the High Court under the
said provision is very wide but it is not unbridled. It has to be
exercised sparingly, carefully and cautiously, ex debito justitiae
E to do real and substantial justice for which alone the Court
exists. Nevertheless, it is neither feasible nor desirable to lay
down any inflexible rule which would govern the exercise of
inherent jurisdiction of the Court. Yet, in numerous cases, this
Court has laid down certain broad principles which may be
F borne in mind while exercising jurisdiction under Section 482
of the Cr.P.C. Though it is emphasised that exercise of inherent
powers would depend on the facts and circumstances of each
case, but, the common thread which runs through all the
decisions on the subject is that the Court would be justified in
G invoking its inherent jurisdiction where the allegations made in
the Complaint or Chargesheet, as the case may be, taken at
their face value and accepted in their entirety do not constitute
the offence alleged.
12. In one of the earlier cases in R.P. Kapur Vs. State of
H a.
c2010) 9 sec 368.
•
SUSHIL SURI v. C.8.1. & ANR. [O.K. JAIN, J.]
17
Punjab7 this Court had culled out some of the categories of
A
cases where the inherent powers under Section 482 of the
Cr.P.C. could be exercised by the High Court to quash criminal
proceedings against the accused. These are:
"(i) where it manifestly appears that there is a legal bar · 8
against the institution or continuance of the proceedings
e.g. want of sanction;
(ii) where the allegations in the first information report or
the complaint taken at their face value and accepted in their
entirety do not constitute the offence alleged;
C
(iii) where the allegations constitute an offence, but there
is no legal evidence adduced or the evidence adduced
clearly or manifestly fails to prove the charge."
D
13. In Dinesh Dutt Joshi Vs. State of Rajasthan & Anr., 8
while explaining the object and purpose of Section 482 of the
Cr.P.C., this Court had observed thus:
"6 ....... The principle embodied in the section is based
upon the maxim: quando lex aliquid alicui concedit,
E
concedere videtur et id sine quo res ipsae esse non
potest i.e. when the law gives anything to anyone, it gives
also all those things without which the thing itself would be
unavailable. The section does not confer any new power,
but only declares that the High Court possesses inherent
F
powers for the purposes specified in the section. As
lacunae are sometimes found in procedural law, the
section has been embodied to cover such lacunae
wherever they are discovered. The use of extraordinary
powers conferred upon the High Court under this section
G
are however required to be reserved, as far as possible,
for extraordinary cases."
7.
AIR 1960 SC 866.
a.
(2011) s sec s10.
H
A
18
SUPREME COURT REPORTS
[2011] 8 S.C.R.
14. Recently, this Court in A. Ravishankar Prasad & Ors.
(supra), relied upon by learned counsel for the CBI, ret,erring
to several earlier decisions on the point, including R.P. Kapur
(supra); State of Haryana & Ors. Vs. Bhajan Lal & Ors. 9; Janata
· Dal Vs. H.S. Chowdhary & Ors. 10; B.S. Joshi & Ors. (supra);
B Nikhil Merchant (supra) etc. has reiterated that the exercise
of inherent powers would entirely depend on the facts and
circumstances of each case. It has been further observed that
the inherent powers should not be exercised to stifle a legitimate
prosecution. The High Court should normally refrain from giving
C a prima facie decision in a case where all the facts are
incomplete and hazy, more so, when the evidence has not been
collected and produced before the Court and the issues
involved, whether factual or legal, are of such magnitude that
, D
they cannot be seen in their true perspective without sufficient
material.
15. Bearing in mind the object, scope and width of power
of the High Court under Section 482 of the Cr.P.C., enunciated
above, the question for consideration is whether on facts in ·
E hand, the High Court was correct in law in declining to exercise
its jurisdiction under the said Section"'?
16. Having examined the case in light of the allegations in
the Chargesheet, we are of the opinion that the view taken by
the High Court in the matter cannot be flawed and deserves to
F be affirmed. It is manifest from a bare reading of the
Chargesheet, placed on record, that the gravamen of the
allegations against the appellant as also the co-accused is that
the Company, acting through its directors in concert with the
Chartered Accountants and some other persons: (i) conceived
G a criminal conspiracy and executed it by forging and fabricating
a number of documents, like photographs of old machines,
purchase orders and invoices showing purchase of machinery
in order to support their claim to avail hire purchase loan from
9.
1002 supp (1) sec 335.
H 10. (1992) 4 sec 305.
•
SUSHIL SURI v. C.B.I. & ANR. (D.K. JAIN, J.]
19
PSB; (ii) on the strength of these false documents, PSB parted
A
with the money by issuing pay orders & demand drafts in favour
of the Company and (iii) the accused opened six fictitious
accounts in the banks (four accounts in Bank of Rajasthan and
two in Bank of Madura) to encash the pay orders/bank drafts
issued by PSB in favour of the suppliers of machines, thereby
B
directly rotating back the loan amount to the borrower from
these fictitious accounts, and in the process committed a
systematic fraud on the Bank· (PSB) and obtained pecuniary
advantage for themselves. Precise details of all the fictitious
accounts as also the further flow of money realised on c
encashment of demand drafts/pay orders have been
incorporated in the Chargesheet. Additionally, by allegedly
claiming depreciation on the new machinery, which was never
purchased, on the basis of forged invoices etc.; the accused
cheated the.public exchequer as well.
17. As afore·stated, in the Chargesheet, the accused are
alleged to have committed offences punishable under Section
120B, read with Sections 420, 409, 468 and 471 IPC. We feel
that at this preliminary stage of proceedings, it would neither
D
be desirable nor proper to return a final finding as to whether
E
the essential ingredients of the said Sections are satisfied. For
the purpose of the present appeal, it will suffice to observe that
on a conspectus of the factual scenario, noted above, prima
facie, the Chargesheet does disclose the commission of
offences by the appellant under the afore·noted Sections. The
F
essential ingredient of the offence of "criminal conspiracy",
defined in Section 120A IPC, is the agreement to commit an
offence. In a case where the agreement is for accomplishment
of an act which by itself constitutes an offence, then in that
event, unless the Statute so requires, no overt act is necessary
G
to be proved by the pros~cution because in such a fact·
situation criminal conspiracy is established by proving such an
agreement. In other words, where the conspiracy alleged is with
regard to commission of a serious crime of the nature as .
contemplated in Section 1209 read with the proviso to sub·
H
20
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A section (2) of Section 120A IPC, then in that event mere proof
of an agreement between the accused for commission of such
crime alone is enough to bring about a conviction under Section
120B and the proof of any overt act by the accused or by any
one of them would not be necessary. (See: Suresh Chandra
B Bahri Vs. State of Bihar11 ).
18. Similarly, the definition of "forgery" in Section 463 IPC
is very wide. The basic elements of forgery are: (i) the making
of a false document or part of it and (ii) such making should
C be with such intention as is specified in the Section viz. (a) to
cause damage or injury to (i) the public, or (ii) any person; or
(b) to support any claim or title; or (c) to cause any person to
part with property; or (d) to cause any person to enter into an
express or implied contract; or (e) to commit fraud or that fraud
may be committed. As stated above, in the instant case more
D than sufficient circumstances exist suggesting the hatching of
criminal conspiracy and forgery of several documents leading
to commission of the aforementioned Sections. We refrain from
saying more on the subject at this juncture, lest it may cause
prejudice to the appellant or the prosecution.
E
19. We may now advert to the decision of this Court in the
case of Nikhil Merchant (supra), on which great emphasis was
laid, on behalf of the appellant. In that case a Chargesheet was
filed by the CBI against the accused under Section 120B read
F with Sections 420, 467, 468, 471 IPC read with Sections 5(2)
and 5(1)(d) of the Prevention of Corruption Act, 1947 and
Section 13(2) read with Section 13(1 )(d) of the Prevention of
Corruption Act, 1988. The allegation under the Chargesheet
was that the accused persons had conspired with each other
G in fraudulently diverting the funds of the Bank. Offence alleging
forgery was also included in the Chargesheet. In the meantime,
the suit for recovery of money filed by the Bank against the
Company, to which the appellant in that case was also a party,
was disposed of on a written compromise arrived at between
H 11. 1995 Supp (1) sec ao.
•
•
SUSHIL SURI v. C.B.I. & ANR. [D.K. JAIN, J.]
21
the parties. Consequent upon the compromise of the suit and
A
having regard .to the contents of clause 11 of the consent terms,
which stipulated that neither party had any claim against the
other and parties were withdrawing all allegatior:is and counter
allegations made against each other, the said appellant filed
an application for discharge. The application was rejected by
B
the trial court. A petition preferred under Section 482 of the
Cr.P.C. was also dismissed by the High Court. In further appeal
to this Court, accepting the contention of the appellant that this
Court could transcend the limitation imposed under Section 320
of the Cr.P .C. and pass orders quashing criminal proceedings
C
even where non compoundable offences were involved,
quashing the criminal proceedings the Court observed thus:
"30. In the instant case, the disputes between the Company .
and the Bank have been set at rest on the basis of the
compromise arrived at by them whereunder the dues of D
the Bank have been cleared and the Bank does not appear
to have any further claim against the Company. What,
however, remains is the fact that certain documents were
alleged to have been created by the appellant herein in
order to avail of credit facilities beyond the limit to which
E
the Company was entitled.