# CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v. K. NARAYANA RAO

- **Citation:** [2012] 9 S.C.R. 54
- **Court:** Supreme Court of India
- **Decided:** 2012-09-21
- **Case number:** Criminal Appeal No. 1460 of 2012
- **Bench:** P. Sathasivam, RANJAN GOGOi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/central-bureau-of-investigation-hyderabad-v-k-narayana-rao-28524
- **Pages:** 32

## Headnote

Code of Criminal Procedure, 1973:
c
s. 482 - Quashing of criminal prosecution - Scope -
A/legation that respondent, an advocate on the panel of a
Bank, submitted false legal opinion to the Bank in respect of
housing loans, and along with other conspirators defrauded
the Bank's money - High Court quashed charge sheet against
D the respondent - Propriety of - Held: Liability against the
respondent would have arisen had he been an active
participant in a plan to defraud the Bank - In the instant case,
no evidence to prove that respondent was abetting or aiding
the original conspirators - Merely because his legal opinion
may not be acceptable, he cannot be mulcted with criminal
E prosecution, particularly, in absence of tangible evidence that
he associated with other conspirators -At the most, respondent
may be liable for gross negligence or professional misconduct
if it is established by acceptable evidence - He cannot be
charged u/ss.420 and 109 /PC along with other conspirators
F without proper and acceptable link between them - No prima
facie case against him - High Court right in quashing criminal
proceedings against the respondent - Penal Code, 1860 -
s.120B rlw ss. 419, 420, 467, 468, 471 and 109 - Prevention
G
of Corruption Act, 1988 - s.13(2) rlw s.13(1)(d).
ss.227 and 228 - Framing of charges - Discharge of
accused - When warranted - Held: While exercising
jurisdiction u/s. 227, the Magistrate should not make a roving
enquiry into the pros and cons of the matter and weigh the
H
54
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v. 55
K. NARAYANA RAO
evidence as if he was conducting a trial - If the Magistrate A
finds that there is no prima facie evidence or the evidence
placed is totally unworthy of credit, it is his duty to discharge
the accused at once.
Penal Code, 1860 - ss. 120A and 1208 - Criminal 8
conspiracy - Essence of - Held: Is an agreement to do an
illegal act and such an agreement can be proved either by
direct evidence or by circumstantial evidence or by both -
However, it is a matter of common experience that direct
evidf?nce to prove conspiracy is rarely available - Accordingly, C
the circumstances proved before and after the occurrence
have to be considered to decide about the complicity of the
accused - Even if some acts are proved to have committed,
it must be clear that they were so committed in pursuance of
an agreement made between the accused persons who were
parties to the alleged conspiracy - Inferences from such D
proved circumstances regarding the guilt may be drawn only
when such circumstances are incapable of any other
reasonable explanation - An offence of conspiracy cannot be
deemed to have been established on mere suspicion and
surmises or inference which are not supported by cogent clnd E
acceptable evidence.
Negligence - Professionals - When may be held liable
for negligence - Held: A professional may be held liable for
negligence on one of the two findings, viz., either he was not F
possessed of the requisite skill which he professed to have
possessed, or, he did not exercise, with reasonable
competence in the given case, the skill which he did possess.
Advocates - Duty of - Held: A lawyer owes an "unremitting
loyalty" to the interests of the client - It is the lawyer's G
.responsibility to act in a manner that would best advance the
interest of the client.
The CBI registered an FIR against A-1 and A-2, the
then Branch Manager and the Assistant Manager, H
56
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A respectively of the Vijaya Bank, for the commission of
offence punishable under Sections 120-B, 419, 420, 467,
468 471 read with Section 109 of IPC and Section 13(2)
read with Section 13(1)(d) of the Prevention of Corruption
Act, 1988 for abusing their official position as public
B servants and for having conspired with private
individuals, viz., A-3 and A-4 and other unknown persons
for defrauding the bank by sanctioning and disbursement
of housing loans to 22 borrowers in violation of the
Bank's

## Text

_Characters 0–39,951 of 57,097. This is a partial read: ask again with offset=39951 for what follows._

[2012] 9 S.C.R. 54
A
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD
B
v.
K. NARAYANA RAO
(Criminal Appeal No. 1460 of 2012)
SEPTEMBER 21, 2012
[P. SATHASIVAM AND RANJAN GOGOi, JJ.]
Code of Criminal Procedure, 1973:
c
s. 482 - Quashing of criminal prosecution - Scope -
A/legation that respondent, an advocate on the panel of a
Bank, submitted false legal opinion to the Bank in respect of
housing loans, and along with other conspirators defrauded
the Bank's money - High Court quashed charge sheet against
D the respondent - Propriety of - Held: Liability against the
respondent would have arisen had he been an active
participant in a plan to defraud the Bank - In the instant case,
no evidence to prove that respondent was abetting or aiding
the original conspirators - Merely because his legal opinion
may not be acceptable, he cannot be mulcted with criminal
E prosecution, particularly, in absence of tangible evidence that
he associated with other conspirators -At the most, respondent
may be liable for gross negligence or professional misconduct
if it is established by acceptable evidence - He cannot be
charged u/ss.420 and 109 /PC along with other conspirators
F without proper and acceptable link between them - No prima
facie case against him - High Court right in quashing criminal
proceedings against the respondent - Penal Code, 1860 -
s.120B rlw ss. 419, 420, 467, 468, 471 and 109 - Prevention
G
of Corruption Act, 1988 - s.13(2) rlw s.13(1)(d).
ss.227 and 228 - Framing of charges - Discharge of
accused - When warranted - Held: While exercising
jurisdiction u/s. 227, the Magistrate should not make a roving
enquiry into the pros and cons of the matter and weigh the
H
54
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v. 55
K. NARAYANA RAO
evidence as if he was conducting a trial - If the Magistrate A
finds that there is no prima facie evidence or the evidence
placed is totally unworthy of credit, it is his duty to discharge
the accused at once.
Penal Code, 1860 - ss. 120A and 1208 - Criminal 8
conspiracy - Essence of - Held: Is an agreement to do an
illegal act and such an agreement can be proved either by
direct evidence or by circumstantial evidence or by both -
However, it is a matter of common experience that direct
evidf?nce to prove conspiracy is rarely available - Accordingly, C
the circumstances proved before and after the occurrence
have to be considered to decide about the complicity of the
accused - Even if some acts are proved to have committed,
it must be clear that they were so committed in pursuance of
an agreement made between the accused persons who were
parties to the alleged conspiracy - Inferences from such D
proved circumstances regarding the guilt may be drawn only
when such circumstances are incapable of any other
reasonable explanation - An offence of conspiracy cannot be
deemed to have been established on mere suspicion and
surmises or inference which are not supported by cogent clnd E
acceptable evidence.
Negligence - Professionals - When may be held liable
for negligence - Held: A professional may be held liable for
negligence on one of the two findings, viz., either he was not F
possessed of the requisite skill which he professed to have
possessed, or, he did not exercise, with reasonable
competence in the given case, the skill which he did possess.
Advocates - Duty of - Held: A lawyer owes an "unremitting
loyalty" to the interests of the client - It is the lawyer's G
.responsibility to act in a manner that would best advance the
interest of the client.
The CBI registered an FIR against A-1 and A-2, the
then Branch Manager and the Assistant Manager, H
56
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A respectively of the Vijaya Bank, for the commission of
offence punishable under Sections 120-B, 419, 420, 467,
468 471 read with Section 109 of IPC and Section 13(2)
read with Section 13(1)(d) of the Prevention of Corruption
Act, 1988 for abusing their official position as public
B servants and for having conspired with private
individuals, viz., A-3 and A-4 and other unknown persons
for defrauding the bank by sanctioning and disbursement
of housing loans to 22 borrowers in violation of the
Bank's rules and guidelines and thereby causing
c wrongful loss of Rs. 1.27 crores to the Bank and
corresponding gain for themselves. In the charge sheet
filed by CBI, the respondent, who is a legal practitioner
and a panel advocate for the Vijaya Bank, was also
arrayed as A-6. The allegation against him was that he
0
gave false legal opinion in respect of 10 housing loans.
Respondent (A-6) filed petition under Section 482
CrPC before the High Court for quashing of the criminal
proceedings pending against him on the file of the
Special CBI Judge. The High Court quashed the
E proceedings against respondent (A-6). Aggrieved, the
CBI filed the instant appeal.
Dismissing the appeal, the Court
HELD: 1. At the initial stage, if there is a strong
F suspicion which leads the Court to think that there is
ground for presuming that the accused has committed
an offence, in that event, it is not open to the Court to say
that there is no sufficient ground for proceeding against
the accused. A judicial magistrate enquiring into a case
G under Section 209 CrPC is not to act as a mere post
office and has to arrive at a conclusion whether the case
before him is fit for commitment of the accused to the
Court of Session. He is entitled to sift and weigh the
materials on record, but only for seeing whether there is
H
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
57
K. NARAYANA RAO
sufficient evidence for commitment, and not whether A
there is sufficient evidence for conviction. On the other
hand, if the Magistrate finds that there is no prima facie
evidence or the evidence placed is totally unworthy of
credit, it is his duty to discharge the accused at once. It
is also settled law that while exercising jurisdiction under B
Section 227 CrPC, the Magistrate should not make a
roving enquiry into the pros and cons of the matter and
weigh the evidence as if he was conducting a trial. This
provision was introduced in the Code of Criminal
Procedure to avoid wastage of public time and to save c
the accused from unavoidable harassment and
expenditure. [Para 12) (69-A-F; 71-G]
State of Bihar vs. Ramesh Singh (1977) 4 SCC 39; 1978
(1) SCR 257; P. Vijayan vs. State of Kera/a and Another
(2010) 2 SCC 398: 2010 (2) SCR 78 and Sajjan Kumar vs.
D
Central Bureau of Investigation, (2010) 9 SCC 368: 2010 (11)
SCR 669 - relied on.
2. Section 120A IPC defines criminal conspiracy
while Section 1208 IPC speaks about punishment of E
criminal conspiracy. The ingredients of the offence of
criminal conspiracy are that there should be an
agreement between the persons who are alleged to
conspire and the said agreement should be for doing of
an illegal act or for doing, by illegal means, an act which
F
by itself may not be illegal. In other words, the essence
of criminal conspiracy is an agreement to do an illegal act
and such an agreement can be proved either by direct
evidence or by circumstantial evidence or by both and it
is a matter of common experience that direct evidence to G
prove conspiracy is rarely available. Accordingly, the
circumstances proved before and after the occurrence
have to be considered to decide about the complicity of
the accused. Even if some acts are proved to have
committed, it must be clear that they were so committed H
58
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
in pursuance of an agreement made between the
accused persons who were parties to the alleged
conspiracy. Inferences from such proved circumstances ·
regarding the guilt may be drawn only when such
circumstances are incapable of any other reasonable
s explanation. In other words, an offence of conspiracy
cannot be deemed to have been established on mere
suspicion and surmises or inference which are not
supported by cogent and acceptable evidence. [Paras 19
and 20] [81-C-G; 82-C-F]
c
Shivnarayan Laxminarayan Joshi and Others vs. State
of Maharashtra (1980) 2 SCC 465 - referred to.
3.1. In the instant case, the legal opinion rendered Ly
the respondent in the form of Legal Scrutiny Reports
D show that the respondent, as a panel advocate, verified
the documents supplied by the Bank and rendered his
opinion. It also shows that he was furnished with Xerox
copies of the documents and very few original
documents as well as Xerox copies of Death Certificate,
E Legal heir-ship Certificate, Encumbrance Certificate for
his perusal and opinion. It is the definite claim of the
respondent that he perused those documents and only
after that he rendered his opinion. [Para 17] [80-F-G]
3.2. It is an admitted case of the prosecution that the
F
name of respondent was not mentioned in the FIR. Only
in the charge-sheet, the respondent was shown as
accused no. 6 stating that he submitted false legal
opinion to the Bank in respect of the housing loans in the
capacity of a panel advocate and did not point out actual
G ownership of the properties in question. The statements
of several witnesses enclosed along with the chargesheet speak volumes about others. However, there is no
specific reference to the role of the respondent along with
the main conspirators. [Paras 18, 21] [81-A-B; 82-H]
H
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
59
K. NARAYANA RAO
3.3. In the banking sector in particular, rendering of A
legal opinion for granting of loans has become an
important component of an advocate's work. In the law
of negligence, professionals such as lawyers, doctors,
architects and others are included in the category of
persons professing some special skills. A lawyer does not B
tell his client that he shall win the case in all
circumstances. Likewise a physician would not assure
the patient of full recovery in every case. A surgeon
cannot and does not guarantee that the result of surgery
would. invariably be beneficial, much less to the extent of c
100% for the person operated on. The only assurance
which such a professional can give or can be given by
implication is that he is possessed of the requisite skill
in that branch of profession which he is practising and
while undertaking the performance of the task entrusted 0
to him, he would be exercising his skill with reasonable
competence. This is what the person approaching the
professional can expect. Judged by this standard, a
professional may be held liable for negligence on one of
the two findings, viz., either he was not possessed of the E
requisite skill which he professed to have possessed, or,
he did not exercise, with reasonable competence in the
given case, the skill which he did possess. The liability
against an opining advocate arises only when the lawyer
was an active participant in a plan to defraud the Bank.
In the given case, there is no evidence to prove that A-6
F
was abetting or aiding the original conspirators. [Paras
22, 23 and 26) [83-D-G; 84-A-E]
3.4. A lawyer owes an "unremitting loyalty" to the
interests of the client and it is the lawyer's responsibility G
to act in a manner that would best advance the interest
of the client. However, merely because his opinion may
not be acceptable, he cannot be mulcted with the criminal
prosecution, particularly, in the absence of tangible
evidence that he associated with other conspirators. At H
60
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A the most, he may be liable for gross negligence or
professional misconduct if it is established by acceptable
evidence and cannot be charged for the offence under
Sections 420 and 109 of IPC along with other
conspirators without proper and acceptable link between
B them. If there is a link or evidence to connect him with
the other conspirators for causing loss to the institution,
undoubtedly, the prosecuting authorities are entitled to
proceed under criminal prosecution. Such tangible
materials are lacking in the case of the respondent. There
C is no prima facie case for proceeding in respect of the
charges alleged insofar as respondent is concerned. The
High Court was right in quashing the criminal
proceedings against Respondent (A-6). [Paras 27, 28] [84F-H; 85-A-B]
D
Jacob Mathew vs. State of Punjab & Anr. (2005) 6 SCC
1: 2005 (2) Suppl. SCR 307 and Pandurang Dattatraya
Khandekar vs. Bar Council of Maharashtra & Ors. (1984) 2
sec 556: 1984 (1) SCR 414 - relied on.
E
Rupan Deol Bajaj (Mrs.) and Another vs. Kanwar Pal
Singh Gill and Another (1995) 6 SCC 194: 1995 (4) Suppl.
SCR 237; Mahavir Prashad Gupta and Another vs. State of
National Capital Territory of Delhi and Others (2000) 8 SCC
115 and State of Haryana vs. Bhajan Lal 1992 Supp (1) SCC
F 335: 1990 (3) Suppl. SCR 259 - referred to.
Case Law Reference:
1978 (1) SCR 257
relied on
Para 9
2010 (2) SCR 78
relied on
Para 9
G
2010 (11) SCR 669
relied on
Para 9
1995 ,(4) Suppl. SCR 237 referred to
Para 13
1990 (3) Suppl. SCR 259 referred to
Para 13
H
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
61
K. NARAYANA RAO
(2000) 8 sec 115
referred to
Para 14
(1980) 2 sec 465
referred to
Para 15
2005 (2) Suppl. SCR 307 relied on
Para 24
1984 (1) SCR 414
relied on
Para 25
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 1460 of 2012.
A
B
From the Judgment & Order dated 09.07.2010 of the High
Court of Andhra Pradesh at Hyderabad in Crl. Petition No. 2347 c
of 2008.
H.P. Raval, ASG, Rajiv Nanda, Padmalakshmi Nigam,
Arvind Kumar Sharma for the Appellant.
R. Venkataramani, Ashok Panigrahi, Aljo Joseph, Surajit D
Bhaduri for the Respondent.
The Judgment of the Court was delivered by
P. SATHASIVAM, J. 1. Leave granted.
E
2. This appeal is directed against the final judgment and
order dated 09.07.2010 passed by the High Court of
Judicature, Andhra Pradesh at Hyderabad in Criminal Petition
No. 2347 of 2008 whereby the High Court allowed the petition
filed by the respondent herein under Section 482 of the Code
F
of Criminal Procedure, 1973 (in short "the Code") and quashed
the criminal proceedings pending against him in CC No. 44 of
2007 (Crime No. 36 of 2005) on the file of the Special Judge
for CBI cases, Hyderabad.
3. Brief facts:
G
(a) According to the prosecution, basing on an information,
on 30.11.2005, the CBI, Hyderabad registered an FIR being
RC 32(A)/2005 against Shri P. Radha Gopal Reddy (A-1) and
Shri Udaya Sankar (A-2), the then Branch Manager and the H
62
SUPREME COURT REPORTS
(2012] 9 S.C.R.
A
Assistant Manager, respectively of the Vijaya Bank,
Narayanaguda Branch, Hyderabad, for the commission of
offence punishable under Sections 120-B, 419, 420, 467, 468
471 read with Section 109 of the Indian Penal Code, 1860 (in
short 'the I PC') and Section 13(2) read with Section 13( 1 )( d)
B
of the Prevention of Corruption Act, 1988 for abusing their
official position as public servants and for having conspired with
private individuals, viz., Shri P.Y. Kondala Rao - the builder (A3) and Shri N.S. Sanjeeva Rao (A-4) and other unknown
persons for defrauding the bank by sanctioning and
C disbursement of housing loans to 22 borrowers in violation of
the Bank's rules and guidelines and thereby caused wrongful
loss of Rs. 1.27 crores to the Bank and corresponding gain for
themselves. In furtherance of the said conspiracy, A-2
conducted the pre-sanction inspection in respect of 22 housing
0
loans and A-1 sanctioned the same.
(b) After completion of the investigation, the CBI filed
charge sheet along with the list of witnesses and the list of
documents against all the accused persons. In the said charge
sheet, Shri K. Narayana Rao, the respondent herein, who is a
E
legal practitioner and a panel advocate for the Vijaya Bank, was
also arrayed as A-6. The duty of the respondent herein as a
panel advocate was to verify the documents and to give legal
opinion. The allegation against him is that he gave false legal
opinion in respect of 10 housing loans. It has been specifically
F
alleged in the charge sheet that the respondent herein (A-6)
and Mr. K.C. Ramdas (A-7)-the valuer have failed to point out
the actual ownership of the properties and to bring out the
ownership details and name of the apartments in their reports
and also the falsity in the permissions for construction issued
G by the Municipal Authorities.
H
(c) Being aggrieved, the respondent herein (A-6) filed a
petition being Criminal Petition No. 2347 of 2008 under Section
482 of the Code before the High Court of Andhra Pradesh at
Hyderabad for quashing of the criminal proceedings in CC No.
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
63
K. NARAYANA RAO [P. SATHASIVAM, J.]
44 of 2007 on the file of the Special Judge for CBI Cases, A
Hyderabad. By impugned judgment and order dated
09.07.2010, the High Court quashed the proceedings insofar
as the respondent herein (A-6) is concerned.
(d) Being aggrieved, the CBI, Hyderabad filed this appeal
B
by way of special leave.
4. Heard Mr. H.P. Raval, learned Additional Solicitor
General for the appella.nt-CBI and Mr. R. Venkataramani,
learned senior counsel for the respondent (A-6).
5. After taking us through the allegations in the charge
sheet presented before the special Court and all other relevant
materials, the learned ASG has raised the following
contentions:
c
(i) The High Court while entertaining the petition under D
Section 482 of the Code has exceeded its jurisdiction. The
powers under Section 482 are inherent which are to be
exercised in exceptional and extraordinary circumstances. The
power being extraordinary has to be exercised sparingly,
cautiously and in exceptional circumstances;
E
(ii) The High Court has committed an error in holding that
no material had been gathered by the investigating agency
against the respondent herein (A-6) that he had conspired with
the remaining accused for committing the offence; and
(iii) There is no material on record to show that the
respondent herein (A-6) did not verify the originals pertaining
to housing loans before giving legal opinion and intentionally
· changed the proforma and violated the Bank's circulars.
F
G
6. On the other hand, Mr. Venkataramani, learned senior
counsel for the respondent (A-6), after taking \JS through the
charge sheet and the materials placed before the respondent
seeking legal opinion, submitted that he has not committed any
offence much less an offence punishable under Section 120-B H
64
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
read with Sections 419, 420, 467, 468, 471 and 109 of IPC
and Section 13(2) read with Section 13(1 )(d) of the Prevention
of Corruption Act, 1988. He further submitted that based on the
documents placed, the respondent herein after perusing and
on satisfying himself, furnished his legal opinion for which he
B
cannot be implicated as one of the conspirators for the offence
punishable under Section 420 read with Section 109 IPC.
c
D
E
F
G
H
7. We have carefully perused all the relevant materials and
considered the rival submissions.
8. In order to appreciate the stand of the CBI and the
defence of the respondent, it is necessary to refer the specific
allegations in the charge sheet. The respondent herein has
been arrayed as accused No. 6 in the charge sheet and the
allegations against him are as under:
"Para 20: Investigation revealed that legal opinions in
respect of all these 10 loans have been given by Panel
Advocate - Sri K. Narayana Rao (A-6) and valuation
reports were given by Approved Valuer - Sri V.C.
Ramdas(A-7). Both, the advocate and the valuer, have
failed to point out the actual ownership of the property and
failed to bring out the ownership details and name of the
apartments in their reports. They have also fail1Sd to point
out the falsehood in the construction permission issued by
the municipal authorities.
Para ·2a: Investigation revealed that the municipal
permissions submitted to the bank were also fake.
Para 29: Expert of Finger Print Bureau confirmed that the
thumb impressions available on the questioned 22 title
deeds pertain to A-3, A-4 and A-5.
·Para 30: The above facts disclose that Sri P. Radha Gopal
Reddy (A-1) and Sri M. Udaya Sankar (A-2) entered into
criminal conspirary with A-3 and abused their official
position as public servants by violating the bank norms and
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
65
K. NARAYANA RAO [P. SATHASIVAM, J.]
in the process caused wrongful gain to A-3 to the extent
A
of Rs.1,00,68,050/- and corresponding wrongful loss to the
bank in sanctioning 22 housing loans. Sri P.Y. Kondal
Rao(A-3) registered false sale deeds in favour of
borrowers using impostors as site owners, produced false
municipal permissions and cheated the bank in getting the
B
housing loans. He is liable for conspiracy, cheating, forgery
for the purpose of cheating and for using forged documents
as genuine. Sri B. Ramanaji Rao(A-4) and Sri R. Sai Sita
Rama Rao(A-5) impersonated as site owners, executed
the false sale deeds. They are liable for impersonation, c
conspiracy, cheating, forging a valuable security and
forgery for the purpose of cheating. Sri K. Narayana Rao
(A-6) submitted false legal opinions and Sri K.C.
Ramdas(A-7) submitted false valuation reports about the
genuineness of the properties in collusion with A-3 for
D
sanction of the loans by Vijaya Bank, Narayanaguda
branch, Hyderabad and abetted the crime. Sri A.V. Subba
Rao(A-8) managed verification of salary slips of the
borrowers of 12 housing loans in collusion with A-3 and
abetted the crime.
E
Para 33: In view of the above, the accused A-1, A-2, A-3,
A-4, A-5, A-6, A-7 & A-8 are liable for offences punishable
under Section 120-B read with Sections 419, 420, 467,
468, 471 and 109 read with Section 420 IPC and Section
13(2) read with Section 13(1 )(d) of the Prevention of
F
Corruption Act and substantive offences thereof."
With the above details, let us consider whether there is prima
facie allegation(s) and material(s) in order to pursue the trial
against the respondent herein. In the same way, we have to see
G
whether the reasoning and the ultimate conclusion of the High
Court in quashing the charge sheet against the respondent
herein (A-6) is sustainable. We are conscious of the power and
jurisdiction of the High Court under Section 482 of the Code
for interfering with the criminal prosecution at the threshold.
H
66
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
9. Mr. Raval, learned ASG in support of his contentions
B
relied on the following decisions:
(i) State of Bihar vs. Ramesh Singh, (1977) 4 SCC 39;
(ii) P. Vijayan vs. State of Kera/a and Another, (2010) 2
sec 398; and
(iii) Sajjan Kumar vs. Central Bureau of Investigation,
(2010) 9 sec 368.
C
10. The first decision Ramesh Singh (supra) relates to
interpretation of Sections 227 and 228 of the Code for the
considerations as to discharge the accused or to proceed with
trial. Para 4 of the said judgment is pressed into service which
reads as under:
D
E
F
G
H
"4. Under Section 226 of the Code while opening the case
for the prosecution the Prosecutor has got to describe the
charge against the accused and state by what evidence
he proposes to prove the guilt of the accused. Thereafter
comes at the initial stage the duty of the Court to consider
the record of the case and the documents submitted
therewith and to hear the submissions of the accused and
the prosecution in that behalf. The Judge has to pass
thereafter an order either under Section 227 or Section
228 of the Code. If "the Judge considers that there is no
sufficient ground for proceeding against the accused, he
shall discharge the accused and record his reasons for so
doing", as enjoined by Section 227. If, on the other hand,
"the Judge is of opinion that there is ground for presuming
that the accused has committed an offence which- ... (b)
is exclusively triable by the Court, he shall frame in writing
a charge against the accused", as provided in Section 228.
Reading the two provisions together in juxtaposition, as
they have got to be, it would be clear that at the beginning
and the initial stage of the trial the truth, veracity and effect
of the evidence which the Prosecutor proposes to adduce
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
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K. NARAYANA RAO [P. SATHASIVAM, J.]
are not to be meticulously judged. Nor is any weight to be
A
attached to the probable defence of the accused. It is not
obligatory for the Judge at that stage of the trial to consider
in any detail and weigh in a sensitive balance whether the
facts, if proved, would be incompatible with the innocence
of the accused or not. The standard of test and judgment
B
which is to be finally applied before recording a finding
regarding the guilt or otherwise of the accused is not
exactly to be applied at the stage of deciding the matter
under Section 227 or Section 228 of the Code. At that
stage the Court is not to see whether there is sufficient c
ground for conviction of the accused or whether the trial is
sure to end in his conviction. Strong suspicion against the
accused, if the matter remains in the region of suspicion,
cannot take the place of proof of his guilt at the conclusion
of the trial. But at the initial stage if there is a strong
0
suspicion which leads the Court to think that there is
ground for presuming that the accused has committed an
offence then it is not open to the Court to say that there is
no sufficient ground for proceeding against the accused.
The presumption of the guilt of the accused which is to be
drawn at the initial stage is not in the sense of the law
E
governing the trial of criminal cases in France where the
accused is presumed to be guilty unless the contrary is
proved. But it is only for the purpose of deciding prima
facie whether the Court should proceed with the trial or not.
It the evidence which the Prosecutor proposes to adduce
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to prove the guilt of the accused even if fully accepted
before it is challenged in cross-examination or rebutted by
the defence evidence, if any, cannot show that the accused
committed the offence, then there will be no sufficient
ground for proceeding with the trial. An exhaustive list of G
the circumstances to indicate as to what will lead to one
conclusion or the other is neither possible nor advisable.
We may just illustrate the difference of the law by one more
example. If the scales of pan as to the guilt or innocence
of the accused are something like even, at the conclusion
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of the trial, then, on the theory of benefit of doubt the case
is to end in his acquittal. But if, on the other hand, it is so
at the initial stage of making an order under Section 227
or Section 228, then in such a situation ordinarily and
generally the order which will have to be made will be one
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under Section 228 and not under Section 227."
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11. Discharge of accused under Section 227 of the Code
was extensively considered by this Court in P. Vijayan (supra)
wherein it was held as under:
"10 ........ If two views are possible and one of them gives
rise to suspicion only, as distinguished from grave
suspicion, the trial Judge will be empowered to discharge
the accused and at this stage he is not to see whether the
trial will end in conviction or acquittal. Further, the words
"not sufficient ground for proceeding against the accused"
clearly show that the Judge is not a mere post office to
frame the charge at the behest of the prosecution, but has
to exercise his judicial mind to the facts of the case in
order to determine whether a case for trial has been made
out by the prosecution. In assessing this fact, it is not
necessary for the court to enter into the pros and cons of
the matter or into a weighing and balancing of evidence
and probabilities which is really the function of the court,
after the trial starts.
11. At the stage of Section 227, the Judge has merely to
sift the evidence in order to find out whether or not there
is sufficient ground for proceeding against the accused.
In other words, the sufficiency of ground would take within
its fold the nature of the evidence recorded by the police
or the documents produced before the court which ex facie
disclose that there are suspicious circumstances against
the accused so as to frame a charge against him."
12. While considering the very same provisions i.e.,
H framing of charges and discharge of accused, again in Sajjan
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
69
K. NARAYANA RAO [P. SATHASIVAM, J.]
Kumar (supra}, this Court held thus:
"19. It is clear that at the initial stage, if there is a strong
suspicion which leads the court to think t~at there is ground
A
for presuming that the accused has committed an offence,
then it is not open to the court to say that there is no
B
sufficient ground for proceeding against the accused. The
presumption of the guilt of the accused which is to be
drawn at the initial stage is only for the purpose of deciding
prima facie whether the court should proceed with the trial
or not. If the evidence which the prosecution proposes to
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adduce proves the guilt of the accused even if fully
accepted before it is challenged in cross-examination or
rebutted by the defence evidence, if any, cannot show that
the accused committed the offence, then there will be no
sufficient ground for proceeding with the trial.
20. A Magistrate enquiring into a case under Section 209
CrPC is not to act as a mere post office and has to come
to a conclusion whether the case before him is fit for
commitment of the accused to the Court of Session. He
D
is entitled to sift and weigh the materials on record, but only
E
for seeing whether there is sufficient evidence for
commitment, and not whether there is sufficient evidence
for conviction. If there is no prima facie evidence or the
evidence is totally unworthy of credit, it is the duty of the
Magistrate to discharge the accused, on the other hand,
F
if there is some evidence on which the conviction may
reasonably be based, he must commit the case. It is also
clear that in exercising jurisdiction under Section 227
CrPC, the Magistrate should not make a roving enquiry into
the pros and cons of the matter and weigh the evidence
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as if he was conducting a trial.
Exercise of jurisdiction under Sections 227 and 228
CrPC
21. On consideration of the authorities about the scope of
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Sections 227 and 228 of the Code, the following principles
emerge:
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(i) The Judge while considering the question of framing the
charges under Section 227 CrPC has the undoubted
power to sift and weigh the evidence for the limited
purpose of finding out whether or not a prima facie case
against the accused has been made out. The test to
determine prima facie case would depend upon the facts
of each case.
(ii) Where the materials placed before the court disclose
grave suspicion against the accused which has not been
properly explained, the court will be fully justified in framing
a charge and proceeding with the trial.
(iii) The court cannot act merely as a post office or a
mouthpiece of the prosecution but has to consider the
broad probabilities of the case, the total effect of the
evidence and the documents produced before the court,
any basic infirmities, etc. However, at this stage, there
cannot be a roving enquiry into the pros and cons of the
matter and weigh the evidence as if he was conducting a
trial.
(iv) If on the basis of the material on record, the court could
form an opinion that the accused might have committed
offence, it can frame the charge, though for conviction the
conclusion is required to be proved beyond reasonable
doubt that the accused has committed the offence.
(v) At the time of framing of the charges, the probative value
of the material on record cannot be gone into but before
framing a charge the court must apply its judicial mind on
the material placed on record and must be satisfied that
the commission of offence by the accused was possible.
(vi) At the stage of Sections 227 and 228, the court is
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
71
K. NARAYANA RAO [P. SATHASIVAM, J.]
required to evaluate the material and documents on record
A
with a view to find out if the facts emerging therefrom taken
at their face value disclose the existence of all the
ingredients constituting the alleged offence. For this limited
purpose, sift the evidence as it cannot be expected even
at that initial stage to accept all that the prosecution states
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as gospel truth even if it is opposed to common sense or
the broad probabilities of the case.
(vii) If two views are possible and one of them gives rise
to suspicion only, as distinguished from grave suspicion,
C
the trial Judge will be empowered to discharge the
accused and at this stage, he is not to see whether the
trial will end in conviction or acquittal."
From the above decisions, it is clear that at the initial stage, if
there is a strong suspicion which leads the Court to think that
D
there is ground for presuming that the accused has committed
an offence, in that event, it is not open to the Court to say that
there is no sufficient ground for proceeding against the
accused. A judicial magistrate enquiring into a case under
Section 209 of the Code is not to act as a mere post office
E
and has to arrive at a conclusion whether the case before him
is fit for commitment of the accused to the Court of Session.
He is entitled to sift and weigh the materials on record, but only
for seeing whether there is sufficient evidence for commitment,
and not whether there is sufficient evidence for conviction. On
the other hand, ifthe Magistrate finds that there is no prima facie
evidence or the evidence placed is totally unworthy of credit, it
is his duty to discharge the accused at once. It is also settled
F
law that while exercising jurisdiction under Section 227 of the
Code, the Magistrate should not make a roving enquiry into the
G
pros and cons of the matter and weigh the evidence as if he
was conducting a trial. This provision was introduced in the
Code to avoid wastage of public time and to save the accused
from unavoidable harassment and expenditure. While analyzing
the role of the respondent herein (A-6) from the charge sheet
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A and the materials supplied along with it, the above principles
have to be kept in mind.
13. In Rupan Deol Bajaj (Mrs.) and Another vs. Kanwar
Pal Singh Giff and Another, (1995) 6 SCC 194, this Court has
8 considered the scope of quashing an FIR and held that it is
settled principle of law that at the stage of quashing an FIR or
complaint, the High Court is not justified in embarking upon an
enquiry as to the probability, reliability or genuineness of the
allegations made therein. By noting the principles laid down in
C State of Haryana vs. Bhajan Lal, 1992 Supp (1) SCC 335, this
Court held that an FIR or a complaint may be quashed if the
allegations made therein are so absurd and inherently
improbable that no prudent person can ever reach a just
conclusion that there is sufficient ground for proceeding against
the accused.
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14. In Mahavir Prashad Gupta and Another vs. State of
National Capital Territory of Delhi and Others, (2000) 8 SCC
115, this Court considered the jurisdiction of the High Court
under Section 482 of the Code and held as under:
"5. The law on the subject is very clear. In the case of State
of Bihar v .. Murad Ali Khan ( 1988) 4 SCC 655 it has been
held that jurisdiction under Section 482 of the Code of
Criminal Procedure has to be exercised sparingly and with
circumspection. It has been held that at an initial stage a
court should not embark upon an inquiry as to whether the
allegations in the complaint are likely to be established by
evidence or not. Again in the case of State of Haryana v.
Bhajan Lal 1992 Supp. (1) SCC 335 this Court has held
that the power of quashing criminal proceedings must be
exercised very sparingly and with circumspection and that
too in the rarest of rare cases. It has been held that the
court would not be justified in embarking upon an inquiry
as to the reliability or genuineness or otherwise of the
allegations made in the FIR or the complaint. It has been
held that the extraordinary or inherent powers did not
CENTRAL BUREAU OF INVESTIGATION, HYDERABAD v.
73
K. NARAYANA RAO [P. SATHASIVAM, J.]
confer an arbitrary jurisdiction on the court to act according
A
to its whim or caprice.
15. Regarding conspiracy, Mr. Raval, learned ASG after
taking us through the averments in the charge sheet based
reliance on a decision of this Court in Shivnarayan
B
Laxminarayan Joshi and Others vs. State of Maharashtra,
( 1980) 2 sec 465 wherein it was held that once the conspiracy
to commit an illegal act is proved, act of one conspirator
becomes the act of the other. By pointing out the same, learned
ASG submitted that the respondent herein (A-6), along with the
C
other conspirators defrauded the Bank's money by sanctioning
loans to various fictitious persons.
16. We have already extracted the relevant allegations and
the role of the respondent herein (A-6). The only allegation
against the respondent is that he submitted false legal opinion
D
to the Bank in respect of the housing loans in the capacity of a
panel advocate and did not point out actual ownership of the
properties. As rightly pointed out by Mr. Venkataramani,
learned senior counsel for the respondent, the respondent was
not named in the FIR. The allegations in the FIR are that A-1 to
E
A-4 conspired together and cheated Vijaya Bank,
Narayanaguda, Hyderabad to the tune of Rs. 1.27 crores. It is
further seen that the offences alleged against A-1 to A-4 are
the offences punishable under Sections 120B, 419, 420, 467,
468 and 471 of IPC and Section 13(2) read with Section 13
F
(1 )(d) of the Prevention of Corruption Act, 1988. It is not in
dispute that the respondent is a practicing advocate and
according to Mr. Venkataramani, he has experience in giving
legal opinion and has conducted several cases for the banks
including Vijaya Bank. As stated earlier, the only allegation
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against him is that he submitted false legal opinion about the
genuineness of the properties in question. It is the definite stand
of the respondent herein that he has rendered Legal Scrutiny
Reports in all the cases after perusing the documents submitted
by tl:le Bank. It is also his claim that rendition of legal opinion
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A cannot be construed as an offence. He further pointed out that
it is not possible for the panel advocate to investigate the
genuineness of the documents and in the present case, he only
perused the contents and concluded whether the title was
conveyed through a document or not. It is also brought to our
B notice that LW-5 (Listed Witness), who is the Law Officer of
Vijaya Bank, has given a statement regarding flaw in respect
of title of several properties. It is the claim of the respondent
that in his statement, LW-5 has not even made a single
comment as to the veracity of the legal opinion rendered by the
c respondent herein. In other words, it is the claim of the
respondent that none of the witnesses have spoken to any overt
act on his part or his involvement in the alleged conspiracy.
Learned senior counsel for the respondent has also pointed out
that out of 78 witnesses no one has made any relevant
0 comment or statement about the alleged involvement of the
respondent herein in the matter in question.
17. In order to appreciate the claim and the stand of the
respondent herein as a panel advocate, we have perused the
legal opinion rendered by the respondent herein in the form of
E Legal Scrutiny Report dated 10.09.2003 as to the title relating
to Sri B.A.V.K. Mohan Rao, S/o late Shri Someshwar Rao
which is as under.
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"Legal Scrutiny Report
To
The Branch Manager,
Vijaya Bank,
Narayanaguda
Hyderabad
Sir,
Dated 10.09.2003.
Sub:- Title Opinion Shri BAVK Mohan Rao
S/o Late Shri Someswar Rao.
With reference to your letter dated NIL.