Patna High Court
Radhe SharmaversusState Of Bihar and Anr
- Decided
- Disposal
- DISMISSED
- Bench
- SUNIL DUTTA MISHRA
Holding
The High Court held that the magistrate correctly cancelled the anticipatory bail for failure to furnish the contractually required bank guarantee, and the petition under Section 482 was dismissed.
Summary
The petitioner, director of Arena Agro Industries, entered into a rice‑milling agreement with the Bihar State Food and Civil Supplies Corporation (BSFCSC) and received paddy but delivered only a fraction of the required custom‑milled rice, leading to a loss of about Rs 5 crore. He was charged under IPC sections 420, 406, 467 and 468 and was granted anticipatory bail, which was later cancelled by a Judicial Magistrate on 6 Nov 2017 for failure to furnish the bank guarantee as directed by the Supreme Court in State of Bihar v. Divesh Kumar Chaudhary. The petitioner filed a Section 482 application seeking quashal of that cancellation and of a later Section 82 process order. The High Court examined the Supreme Court’s pronouncements that a bank guarantee must be furnished strictly as per the contract and that non‑compliance justifies bail cancellation. Finding that the petitioner had not complied with the contractual guarantee requirement, the Court held the magistrate’s cancellation proper and dismissed the petition. The application was therefore disposed of without interference.
Issues considered
- Whether the cancellation of anticipatory bail on the ground of non‑furnishing of bank guarantee is justified under the directions of the Supreme Court in State of Bihar v. Divesh Kumar Chaudhary.
- Whether the term ‘bank guarantee’ in the Supreme Court order is limited to the amount stipulated in the contract and not the entire alleged defaulted sum.
- Whether the High Court can exercise its inherent jurisdiction under Section 482 Cr.P.C. to quash the magistrate’s order and the subsequent Section 82 process.
Legislation cited
- Code of Criminal Procedure, 1973 — s. 482, 82
- Indian Penal Code — s. 406, 420, 467, 468
- Negotiable Instruments Act — s. 138
Subjects
- anticipatory bail
- bank guarantee
- Section 482
- Section 82
- contract breach
- rice milling
- criminal procedure
- bail cancellation
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.40726 of 2018
Arising Out of PS. Case No.-43 Year-2016 Thana- KASHICHAK District- Nawada
======================================================
Radhe Sharma, Son of Late Harangi Singh, Resident of Village Nimi, P.S.
Shekhopur Sarai, District- Sheikhpura, Director M/S. Arena Agro Industries
Private Limited, Mahrath, P.S. Kashichak, District- Nawada.
... ... Petitioner/s
Versus
1. State of Bihar
2. The Bihar State Food and Civil Supplies Corporation Limited, through its
District Manager, Nawada.
... ... Opposite Party/s
======================================================
Appearance :
For the Petitioner/s : Mr. Suraj Samdarshi, Advocate
For the State : Mr. Parmeshwar Mehta, A.P.P
For the BSFC : Mr. Umesh Prasad, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE SUNIL DUTTA MISHRA
ORAL ORDER
7 28-04-2026 Heard learned counsel for the parties as well as
learned APP for the State.
2. The present application has been filed under
Section 482 of the Code of Criminal Procedure, 1973
(hereinafter referred to as ‘Cr.P.C’) for quashing the order dated
06.11.2017 passed by learned Judicial Magistrate, 1st class,
Gaya (hereinafter referred to as ‘Magistrate’) in connection with
G.R. No. 12221 of 2016 arising out of Kashichak P.S. Case No.
43 of 2016 wherein anticipatory bail earlier granted to the
petitioner was cancelled, for non- furnishing the bank guarantee
for the disputed outstanding amount.
3. As per prosecution case, the petitioner, who is the
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Director of M/s. Arena Agro Industries Private Limited, had
entered into an agreement for the Kharif Marketing Season
2012–13 for milling of paddy and under the said agreement, the
petitioner had received 63,092.45 quintals of paddy and was
required to supply 42,271.94 quintals of custom milled rice, i.e.,
67% of the total paddy by 30.12.2013. However, the petitioner
delivered only 19,170 quintals of the said rice by 30.12.2013
and failed to deliver the remaining 23,101.94 quintals of custom
milled rice worth Rs.5,00,28,640.43/-. The petitioner had
deposited only Rs.1,01,000,00.00/- and failed to deposited
balance amount of Rs.3,99,28,640.43/- alongwith 12% interest,
aggregating to a total amount of Rs.4,69,91,081.08/-.
4. On the basis of the aforesaid allegations, District
Manager of Bihar State Food and Civil Supply Corporation Ltd.
(hereinafter referred to as ‘BSFCSC’), Nawada (O.P. No.2),
lodged an F.I.R in Kashichak Police Station under sections 420,
406, 467 and 468 of I.P.C which was registered on 13.05.2016
as Kashichak P.S Case No.43 of 2016. The Petitioner was
granted anticipatory bail vide Order dated 08.06.2016 passed in
A.B.P. No.467 of 2016.
5. The Hon’ble Supreme Court in State of Bihar v.
Divesh Kumar Chaudhary and Ano. reported in (2018) 16 SCC
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817 vide order dated 28.02.2017, upon the appeal filled by
BSFCSC with regard to several millers (not in the case of
petitioner), directed that all accused in F.I.R.s will ensure that
bank guarantee, if not furnished, is furnished and if lapsed, is
renewed within a period of one month from the date of this
order, failing which the anticipatory bail will stand cancelled.
Based on the said order of Apex Court, BSFCSC moved an
application for cancellation of bail bond of the petitioner. The
petitioner in reply to that application stated that BSFCSC did
not prefer any application for cancellation of bail in case of
petitioner and further, the bank guarantee was to be given as per
Clause 3 of the agreement dated 23.01.2013. However, Vide
Order dated 06.11.2017, learned Magistrate cancelled the bail of
petitioner on the ground non-furnishing of bank guarantee by
petitioner in the light of said order of Apex Court. Aggrieved
thereby, petitioner has preferred this present application,
challenging the order dated 06.11.2017 of learned Magistrate.
Petitioner has further filed I.A No.1 of 2025 for seeking
additional relief for setting aside the order dated 16.09.2022
passed by the learned Magistrate, whereby process under
Section 82 of the Cr.P.C. has been issued against the petitioner.
6. Learned counsel for the petitioner submits that
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order dated 06.11.2017 passed by the learned Judicial
Magistrate, 1st Class, Gaya, whereby the anticipatory bail
granted to the petitioner has been cancelled, is wholly illegal,
arbitrary and without jurisdiction. Learned counsel further
submits that the petitioner was granted anticipatory bail by the
competent court and there has been no violation of any
condition of the said bail order. The cancellation of bail solely
on the ground of non-furnishing of bank guarantee is
misconceived and contrary to settled legal position. Learned
counsel further submits that the entire dispute arises out of a
contractual transaction between the petitioner and the BSFCSC
with regard to supply of custom milled rice, and the issue
relating to furnishing of bank guarantee is governed strictly by
the terms of the agreement entered into between the parties. He
further submits that as per the agreement, the obligation of the
petitioner was limited to furnishing bank guarantee to a
specified extent and not for the entire alleged outstanding or
defalcated amount.
7. Learned counsel of petitioner further submits that
the learned Magistrate has erroneously relied upon the
directions issued by the Hon’ble Apex Court in Divesh Kumar
Chaudhary (supra), without appreciating the true import and
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scope of the said order. It is submitted that the said issue now
stands conclusively settled by the judgment of the Hon’ble
Supreme Court in Arvind Tiwary v. State of Bihar & Anr.
reported in (2018) 8 SCC 475 , wherein it has been categorically
held that the expression “bank guarantee” refers only to the
bank guarantee which a miller is required to furnish in terms of
the agreement and not with respect to the entire alleged
defaulted amount. Learned counsel further submits that any
adverse order including cancellation of bail or issuance of non-
bailable warrant on account of non-furnishing of bank guarantee
beyond contractual obligation is unsustainable in law. Learned
counsel further submits that the order dated 16.09.2022 passed
by the learned Magistrate, issuing process under Section 82
Cr.P.C. against the petitioner is also illegal and unsustainable. It
is submitted that the said order has been passed in a mechanical
manner without following the mandatory procedure of awaiting
the execution report of the non-bailable warrant, which is a
condition precedent for initiating such proceedings. It is thus
submitted that order dated 06.11.2017 as well as the subsequent
order dated 16.09.2022 are made in a mechanical manner
without application of mind and without having regard to settled
position of law and are liable to be set aside.
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8. Learned counsel appearing for O.P. No. 2 submits
that the present quashing application is wholly misconceived,
devoid of merit and fit to be dismissed at the threshold. Learned
counsel further submits that the present case arises out of
Kashichak P.S. Case No. 43 of 2016 instituted at the instance of
the District Manager, Bihar State Food & Civil Supplies
Corporation Limited, Nawada, against the petitioner under
Sections 420, 406, 467 and 468 of the Indian Penal Code. The
allegation against the petitioner is of serious nature involving
large-scale misappropriation of public money. Learned counsel
further submits that the petitioner, being a miller, had received
63,092.45 quintals of paddy for milling and was under
obligation to supply 67% custom milled rice, i.e., 42,271.94
quintals. However, the petitioner supplied only 19,170 quintals
and failed to deliver the remaining 23,101.94 quintals of custom
milled rice despite repeated directions and reminders issued by
the Corporation. The value of the undelivered quantity amounts
to Rs. 5,00,28,659.19, thereby causing huge loss to the State
exchequer.
9. Learned counsel for O.P. No. 2 further submits that
for recovery of the aforesaid amount, a certificate proceeding
being Certificate Case No. 9(M) of 2016 was initiated before the
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District Certificate Officer, Nawada, wherein the petitioner
appeared and participated. During pendency of the said
proceeding, the petitioner deposited a meagre amount of Rs.
1,10,000 and a substantial amount still remained outstanding.
After due consideration, final order was passed by the
competent authority vide Memo No.10 dated 19.04.2017.
Thereafter, petitioner deposited four cheques amounting to Rs.
90,00,000, all of which were dishonoured due to insufficient
funds. Consequently, a separate criminal case being Nagar P.S.
Case No. 579 of 2017 was instituted against the petitioner under
Sections 420 and 406 of the Indian Penal Code as well as
Section 138 of the Negotiable Instruments Act. Learned counsel
further submits that despite obtaining anticipatory bail, the
petitioner has committed fraud by issuing 4 cheques of
Rs.90,00,000 which were bounced and has suppressed material
facts from this Hon’ble Court. Learned counsel further submits
that the petitioner is absconding in connection with the
subsequent case arising out of dishonour of cheques. He further
submits that the anticipatory bail granted to the petitioner was
rightly cancelled by the learned Magistrate vide order dated
06.11.2017, on account of non-compliance of the direction of
Apex Court in Divesh Kumar Chaudhary (supra) relating to
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furnishing of bank guarantee. It is thus submitted that the said
order does not suffer from any illegality or infirmity warranting
interference by this Hon’ble Court.
10. Learned A.P.P. for the State submits that the
cancellation of anticipatory bail is in consonance with the
direction issued by the Hon’ble Apex Court in Divesh Kumar
Chaudhary (supra) vide order dated 28.02.2017, wherein it was
categorically directed that all accused persons in similar matters
shall furnish/renew bank guarantee within a period of 30 days
from the date of order, failing which the protection granted by
way of anticipatory bail shall stand cancelled. Learned A.P.P.
further submits that the petitioner having failed to comply with
the said direction, the learned Magistrate has rightly cancelled
the anticipatory bail and issued further process for his
appearance. It is thus submitted that no illegality or perversity is
found in the impugned order and the present application does
not call for any interference in exercise of inherent jurisdiction.
11. Having heard the learned counsel for the parties as
well as the learned A.P.P. for the State and upon perusal of the
materials available on record, it appears that the present case
arises out of Kashichak P.S. Case No. 43 of 2016 instituted at
the instance of the District Manager, Bihar State Food & Civil
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Supplies Corporation Limited, Nawada, alleging inter alia that
the petitioner, being the Director of a rice mill, had entered into
an agreement for milling of paddy during the Kharif Marketing
Season 2012–13 and had received a substantial quantity of
paddy for the said purpose. The allegation, as reflected from the
First Information Report, is that the petitioner was required to
deliver 67% of the custom milled rice against the paddy
received. However, he supplied only 19,170 quintals of custom
milled rice and failed to deliver the remaining substantial
quantity, thereby causing financial loss to the Corporation. It is
further alleged that despite repeated reminders, the petitioner
did not fulfill his contractual obligation and thereby
misappropriated the value of the undelivered stock, which was
meant for public distribution and welfare schemes. It further
transpires from the record that the petitioner was granted
anticipatory bail, which subsequently came to be cancelled by
the learned Magistrate vide Order dated 06.11.2017 on account
of non-furnishing of furnishing of bank guarantee in the light of
Apex Court direction in Divesh Kumar Chaudhary (supra) and
subsequently vide order dated 16.09.2022 passed by the learned
Magistrate, process under section 82 is issued against petitioner.
The question which falls for consideration is as to “whether
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order dated 06.11.2017 passed by learned Magistrate requires
intervention by this court under section 482 Cr.P.C in exercise
of inherent jurisdiction”.
12. Since this whole issue is revolve around the Order
of the Hon’ble Supreme in Divesh Kumar Chaudhary (supra),
so it is appropriate here cite relevant paragraph of said order ,
which is as under:
“10……...Since the anticipatory bail/bail
was granted more than one year back and financial
interest of the State is or can be secured, we are not
inclined to cancel the anticipatory bail/bail but
modify the order of granting of anticipatory
bail/bail conditional adding conditions as follows:
(1) The accused in all the FIR(s), will
ensure that bank guarantee, if not
furnished, is furnished and if lapsed, is
renewed within a period of one month from
today failing which the anticipatory
bail/bail granted will stand cancelled.
(2) The accused will cooperate with
investigation/trial and their failure to
appear, when required, will be a ground for
cancellation of anticipatory bail/bail. An
order of cancellation will be passed by the
trial court on being satisfied about such
failure.
(3) The investigation will be completed
within a period of three months.
(4) All the accused will be tried only at
five places viz. Patna, Gaya, Chhapra,
Darbhanga and Purnia by officers of the
appropriate rank determined by the High
Court within one week from today. The High
Court may specify the area of jurisdiction of
the said five courts by a public order. If
required by the High Court, the State
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Government may sanction extra strength of
officers with requisite infrastructure so that
normal work of courts is not disturbed on
account of the special arrangement for these
cases.
(5) The officers posted will deal with
these cases exclusively. If free from their
work, any other work may be assigned to the
said officers.
(6) The authorities concerned will be at
liberty to encash the bank guarantee(s) after
holding that there is a breach of terms of the
agreement which decision will be subject to
appropriate remedies of the parties.
(7) If not otherwise encashed, the bank
guarantee will be kept alive till the trial is
over. However, deposits/furnishing of bank
guarantees will be abide by further orders of
the trial court, interim or final.
(8) If any amount is deposited by the
accused, the said amount will be adjusted in
the amount of the bank guarantee, which is
to be furnished by the accused.
(9) The accused will surrender their
passports to the respective courts within a
period of four weeks from today and will not
leave the country without prior permission
from the court concerned.
On compliance of the above order, if any accused
is in custody, he will be granted bail in accordance
with law……….”
(emphasis supplied)
13. The Hon’ble Supreme Court further make
clarification regarding furnishing of bank guarantee in Arvind
Tiwary (supra) and held as under:
“20.1. The expression “bank guarantee”
used in Condition 1 as stipulated in order
dated 28-2-2017 [State of Bihar v. Divesh
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Kumar Chaudhary, (2018) 16 SCC 817]
passed by this Court pertains to bank
guarantee which the miller concerned was
obliged, in terms of the agreement in
question to furnish. The obligation to furnish
the bank guarantee and to keep it alive is
referable to the terms of the agreement and
not to the “defalcated sum” as was
submitted by the Corporation.
20.2. If on account of failure to submit and
to keep it alive in respect of the “defalcated
sum”, any benefit of bail/anticipatory bail
was withdrawn and orders of non-bailable
warrants were issued, such orders stand
cancelled and recalled. However the millers
concerned ought to have furnished and
kept alive bank guarantees as contemplated
in terms of the agreement. If there be any
failure on this count the cancellation of
bail/anticipatory bail was perfectly
justified.”
(emphasis supplied)
14. It would be apposite to cite relevant paragraph of
the agreement, which is as under:
“2. The second party has monthly milling
capacity of 1800 MT of Paddy, but, he has
to furnish Bank Guarantee equivalent to
the value of Paddy taken by him for milling
in concerned procurement season and in
case, he requires further quantity of paddy
for milling, he has to furnish further Bank
Guarantee equivalent to the value of paddy
desired by him to be taken for milling.
However, he has to deliver C.M.R. in time
before next lot of paddy is taken by him. The
said Bank Guarantee of Rs.2,00,000. (Two
lack only) issued in favour of District
Manager, Bihar State Food & Civil Supplies
Corporation Ltd., Nawada Vide Serial
no.551285 dated 19/1/13 has been submitted
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by the second party as per State Government
instruction from time to time.
3. The second party is at liberty to take
paddy for milling as much as the quantity he
desires during the said procurement season
in accordance with his monthly milling
capacity but, he has to furnish Bank
Guarantee for the value of paddy, which he
takes for milling or in case, be is not
capable of furnishing Bank Guarantce, he
has to pledge immovable property in the
form of mortgage bond for the rest amount
or he can pledge immovable property for
the entire value of paddy which he takes for
milling. …………….”
(emphasis supplied)
15. In the present case, from the agreement governing
the parties, it is evident from clause 2 of agreement that the
petitioner, was under a clear contractual obligation to furnish a
bank guarantee corresponding to the value of paddy taken for
milling. The terms further stipulate that in the event the
petitioner intended to additional quantity of paddy beyond the
initial allotment, he was required to furnish a further bank
guarantee equivalent to the value of such additional paddy. The
clause 3 of agreement further provides that in case, petitioner is
not capable of furnishing bank guarantee, he has to pledge
immovable property in the form of mortgage bond for rest
amount or for entire value of paddy. It is, therefore, manifest
that the scheme of the agreement ensures that at all stages, the
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value of paddy lifted remains adequately secured, either by way
of bank guarantee or by mortgage of property. It is further
discernible from the terms that the furnishing of bank guarantee
is not a one-time formality but a continuing obligation, directly
linked with the quantity of paddy taken from time to time. The
petitioner was also required to adhere to timely delivery of
C.M.R. before lifting subsequent lots, thereby maintaining
financial and operational discipline under the agreement.
16. The legal position in this regard has been well
settled by Apex court. The Hon’ble Supreme Court in Dinesh
Kumar Chaudhary (supra) has held that in matters arising out
of FIRs relating to such transactions, the accused must ensure
that the bank guarantee, if not already furnished, is furnished,
and if lapsed, is duly renewed within the stipulated period of
thirty days from date of this order, failing which the privilege of
anticipatory bail shall stand cancelled. Further, in Arvind
Tiwary (supra), Apex court observed that a bank guarantee is to
be construed strictly in the context of the terms of the agreement
and is confined only to the extent of the guarantee contemplated
under the contractual stipulations, and not to the entire alleged
defaulted amount.
17. In the present case, when the case of the petitioner
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is examined in light of the aforesaid settled principle, it emerges
that the agreement contemplated a bank guarantee
corresponding to the value of paddy taken for milling and in
case of non-furnishing of bank guarantee partially or
completely, immovable property is to be pledged for rest
amount or for entire value of paddy respectively. The petitioner
has admittedly not furnished bank guarantee (except initial bank
guarantee of Rs.2 lacs) for received paddy and has not pledged
any immovable property for rest amount. Thus, there is clear
deficiency in complying with the contractual requirement. The
partial furnishing of bank guarantee cannot be treated as
substantial compliance. The learned Magistrate has committed
no error in cancelling the anticipatory bail granted earlier to
petitioner on ground of non-furnishing of bank guarantee in
light of the settled position of law.
18. From the above discussion, this Court is of the
considered opinion that the petitioner has failed to demonstrate
bona fide compliance with the above said direction of Hon’ble
Apex Court and the learned Court concerned has rightly
cancelled his anticipatory bail and taken further coercive steps
for his appearance and the same are not liable to be quashed
while exercising inherent jurisdiction of this court.
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19. Accordingly, this application, being devoid of
merit, is hereby dismissed.
20. I.A.(s), if any, stands disposed of.
21. Interim order, if any, is vacated.
22. Let a copy of this order be communicated to the
court concerned forthwith for information and necessary
compliance.
(Sunil Dutta Mishra, J)
Ritik/-
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