Holding

The Supreme Court held that the High Court must exercise its inherent jurisdiction under Section 482 CrPC to quash criminal proceedings where the complaint is baseless, malicious and an abuse of process, and set aside the High Court’s order.

Summary

The appellants, bank officials, filed a petition under Section 482 of the Code of Criminal Procedure seeking to quash a criminal complaint filed by a guarantor alleging offences under the IPC. The Sub‑Divisional Judicial Magistrate had taken cognizance of the complaint and issued non‑bailable warrants without examining the merits, prompting the appellants to approach the High Court, which dismissed the petition without reasoning. The Supreme Court held that the complaint did not disclose any prima facie offence and was filed with a malicious intent to harass the bank officials, constituting an abuse of process. It observed that the magistrate had failed to apply his mind and that the High Court erred in refusing to exercise its inherent jurisdiction under Section 482. Consequently, the Supreme Court set aside the High Court order and quashed the criminal proceedings, allowing the appeal.

Issues considered

Whether the High Court should exercise its inherent powers under Section 482 CrPC to quash criminal proceedings at the preliminary stage when the complaint is frivolous and lacks a prima facie case.
Whether the Sub‑Divisional Judicial Magistrate applied his mind before taking cognizance of the complaint.
Whether the allegations in the complaint disclose the commission of any offence under the IPC.
Whether refusal to exercise jurisdiction under Section 482 amounts to an abuse of the judicial process.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 120-B, s. 409, s. 422, s. 476
Public Demand Recovery Act

Subjects

Section 482inherent jurisdictionabuse of processcriminal complaintmagistrate cognizancequash criminal proceedingsbank officialsguarantorPublic Demand Recovery ActIndian Penal Codepreliminary stage

Judgment

[2009] 13 (ADDL.) S.C.R. 444

A M.N. OJHA & ORS. +
v.
ALOK KUMAR SRIVASTAV & ANR.
(Criminal Appeal No.1582 of 2009)
AUGUST 21, 2009
B
[R.V. RAVEENDRAN AND B. SUDERSHAN REDDY, JJ.]
-..,,.. ...
CODE OF CRIMINAL PROCEDURE, 1973:

c s.482 - Powers of High Court - Explained - Complaint
case by one of the guarantor against bank officials alleging
criminal breach of trust on their part in encashing FDRs
offered by guarantors as security- Judicial Magistrate issuing
summons to bank officials - Petition uls 482 by Bank officials
seeking to quash the proceedings - Summarily dismissed by
D
High Court.- Held: The averments made in the complaint do
..._ ~

nC?t reveal commission of any offence by bank officials, who
were only taking steps to realize the loan amount - The
Magistrate did not apply his mind and took cognizance of the
case without considering allegations on merits - High Court
E abdicated its duty in refusing to exercise its jurisdiction u/s.482
though the case required its interference in order to prevent
abuse of the process of court - A clear case is made out for
interference by Supreme Court - Order of High Court set
•
y
aside - Criminal proceedings against bank officials quashed
F - Constitution of India, 1950 - Article 136.

Respondent no.1 and others stood guarantors for a
proprietary concern which obtained loan from the bank
of which the appellants were the employees. When the
G borrower defaulted in repayment of the. loan amount, the
bank informed the borrower as also the guarantors and -~ ~
later field an FIR against them for cheating and
misappropriation .of hypothecated goods and also
initiated proceedings under the Public Demand Recovery
H 444
M.N. OJHA & ORS. v. ALOK KUMAR SRIVASTAV & 445
ANR.
Act for recovery of balance amount after adjustment of A
+ fixed deposit amounts placed as security by guarantors.
Respondent no.1 filed a complaint case before the
Judicial Magistrate against bank officials alleging
offences punishable u/ss. 409, 422, 476 and ,120-B IPC
and stated that the Branch Manager in conspiracy with B
the brother of the borrower who was also an employee
of the bank allowed operation of the account and
t --'(' committed criminal breach of trust. The Judicial
Magistrate took cognizance of the complaint and directed
non-bailable warrants to issue against the bank officials. c
The petition filed u/s.482 Cr. P.C. by the bank Officials
having been summarily dismissed, they filed the appeal.

Allowing the appeal, the Court
~

... its jurisdiction
HELD: 1.1. Normally, the High Court, in exercise of
u/s 482 of the Code of Criminal Procedure,
D

1973, would not intervene in the criminal proceedings at
the preliminary stage/when the investigation/enquiry is
pending. But, at the same time the High Court cannot
refuse to exercise its jurisdiction if the interest of justice E
so required where the allegations made in the FIR or
complaint are so absurd and inherently improbable on
... the basis of which no fair-minded and informed observer
'i" can ever reach a just and proper conclusion as to the
existence of sufficient grounds for proceeding. In such F
cases refusal to exercise the jurisdiction may equally
result in injustice more particularly in cases where the
complainant sets the criminal law in motion with a view
to exert pressure and harass the persons arrayed as
accused in the complaint. [Para 15] [454-C-G]
G

I- .+-- State of Kamataka v. L. Muniswamy (1977) 2 SCC 699
and Kurukshetra University v. State of Haryana (1977) 4 SCC
451, relied on.

H
446 SUPREME COURT REPORTS [~009] 13 (ADDL.) S.C.R.

A 1.2. The instant case is one where the averments and.. +
allegations made in the complaint do not disclose·
commission of any offence by the appellants or any one
of them. They were merely discharging their duties to
realize and recover the amounts due to the bank from the
B borrower as well as the guarantors. Sequence of events
undoubtedly suggests that the criminal proceedings have
been maliciously instituted with an ulterior motive of
wreaking vengeance on the appellants and with a view ')- .,
to spite them due to personal grudge. It was clearly
c intended to prevent the public servants from discharging
their duties. The SDJM took cognizance of the case and
issued non-bailable warrants against the appellants
without even examining the allegations and averments
made in the complaint filed by the respondent-
. complainant. There was material before the SDJM to
0
show that the complainant himself admitted about-his . ~
executing the agreement of guarantee and other
documents unconditionally agreeing to discharge the
loan amount in case of failure of the principal borrower
E to pay the said amount to the bank and that the complaint
was only a counter blast to the FIR lodged by appellant
no. 1 against the complainant and the borrower and other
guarantors for cheating and misappropriation with regard
to same transaction.This is a clear case of non-
application of mind by the Magistrate. He did not -+-
F scrutinize even the contents of the complaint, leave aside
the material documents available on record. [Para 13, 14
and 16] [455-A-E; 452-F-H; 453-A-C; 453-H; 454-A]
Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate
G & Ors. (1998)5 SCC 749, relied on.
1.3.The High Court committed a manifest error in -~ _..,
disposing of the petition filed by the appellants u/s •. 482
of the Code without even adverting to the basic facts
which were placed before it for its consideration. The
H
M.N. OJHA & ORS. v. ALOK KUMAR SRIVASTAV & 447
ANR.
High Court almost abdicated its duty in refusing to A
exercise its jurisdiction u/s. 482 Cr. P.C. though the case
on hand required its interference in order to prevent
abuse of the process of court subordinate to it. A clear
case is made out requiring interference by this Court to
secure the ends of justice. Jherefore, the impugned order B
of the High Court is set aside and the criminal
proceedings arising out of Complaint Case No. 916 (c) of
2003 are quashed. [Paras 15 and 17] [454-8-E; 455-G]
Case Law Reference:
c
<1977) 2 sec 699 relied on Para 15
(1977) 4 sec 451 relied on Para 15
(1998) 5 sec 749 relied on Para 14
CRIMINAL APPEL.LATE JURISDICTION : Criminal Appeal D
No. 1582 of 2009.

From the Judgment and Order dated 03.01.2007 of the
High Court of Judicature at Patna in Crl. Misc. No. 18838 of
2004. E
Dhruv Mehta, Yashraj Singh Deora, Mohit Abraham, K.L.
Mehta & Co. for the Appellants.

Gopal Singh, Chandan Kumar for the Respondents.
F
The Judgment of the Court was delivered by

B. SUDERSHAN REDDY, J. 1. Leave granted.

2. This appeal by grant of special leave is directed by the
appellant, assailing the judgment and order dated 3.1.2007 G
passed by the High Court of Judicature at Patna in Criminal
Miscellaneous No. 18838 of 2004 by which the High Court
dismissed the petition for quashing the criminal proceedings
arising out of Complaint Case No. 916 (c) of 2003 pending on
H
-
. 448 SUPREME COURT REPORTS (2009) 13 {ADDL.) S.C.R.

A the file of Sub-Divisional Judicial Magistrate, Patna.
3. The brief factual matrix of the case is as under:
+
On ·21.12.1998; Punjab National Bank, Patna City
sanctioned a ioan amount of Rs. 5 lakhs to Mis. Nirmala
B Alankar House, Patna City, a proprietary concern owned by one
Jatinder Mohan. The said Jatinder Mohan furnished security of
five guarantors including the respondent- complainant who in
turn deposited Fixed Deposit Receipts (FDRs) worth Rs. '"')-- t
50,000/-, each duly signed authorizing the bank to appropriate
c the.proceeds of FDRs along with interest if the timely payments
are not made· by the borrower. Each one of them had also
executed and signed Agreement of guarantee jointly and
severally guaranteeing to pay the bank after demand in Writing
all principal, interest, costs, charges and expenses due and
~
D which may at any time become due to the bank from the
borrower, on accounts opened in respect of the said limits down
to the date of payment and also all loss or damages, costs, +·
charges and expenses occasioned to the bank by reason of
omission, failure or default temporary or otherwise in such
E payment by the borrower. The guarantors further agreed that
the bank may enforce the guarantee without enforcing, selling·
or realizing any of the securities kept under lien, hypothecated,
pledged or mortgaged with it, notwithstanding that any bills or
other instruments given by the borrower in the said account may
be in circulation for collection and outstanding. ~
"
F
4. The bank in the month of March, 2000 having realized
that the loan account became totally irregular since the borrower
was.not paying any amount whatsoever as undertaken in tenns
of the agreement. On 26.3.2002, the first appellant - Senior
G Manager having realized that the recovery of bank loan became
impossible ·adjusted sonie amounts from the FDRs fu.rnished -·
by the guarantors as security towards the dues of the borrower. -~~

The bank vide its notice dated 27 .12.2002 informed the
borrower as well as the guarantors that the loan account should
H
M.N. OJHA & ORS. v. ALOK KUMAR SRIVASTAV & 449
ANR. [B. SUDERSHAN REDDY, J.]
be regularized to which there was no response. This was A
+ followed by an FIR lodged by the bank with the concerned
police station against the borrower and guarantors including the
respondent for cheating and for misappropriation of
hypothecated goods. The said case is pending trial.
B
5. The guarantors addressed a legal notice dated nil to the
Deputy General Manager, Vigilance Cell, PNB, New Delhi,
Zonal Manager, PNB, Patna and Regional Manager PNB,
i ~ (Haridwar) alleging therein, that they were put to serious
inconvenience due to the misconduct on the part of Appellant
no. 1. It was also alleged that no proper steps were taken
c
against the borrower for realization of loan amounts before
proceedings against them and to encash the FDRs offered by
them as sureties for recovery of loan.

6. In the said legal notice it was further alleged that one D
-+· Prakash Mohan while he was working in Patna City Branch as
assistant had managed a cash credit facilities for a sum of Rs.
5 lakhs in the name of his own brother Jitender Mohan and that
both Prakash as well as appellant no. 1 have colluded with each
other with a view to defraud the bank and "put the blame upon E
the innocent guarantors".

7. Thereafter, the complainant Alok Kumar Shrivastava
"~ who was one of the guarantors, being aggrieved by the action
of the bank in appropriating the fixed deposit amount, filed a
F
. Complaint Case No. 916 of 2003 in the court of SDJM, Patna
City under Section 409,422,426 and 1208 IPC in which the
other three guarantors were shown as witnesses. The learned
SDJM, Patna City, took cognizance of the case vide order
dated 22.3.2004; .and directed non-bailable warrant of arrest
against all appellants herein who were named as the accused G
persons in the complaint.

-
~ ~~

8. In the meanwhile, the bank initiated proceedings under
the Public Demand Recovery Act for recovery of balance
amollnts payable by the borrower after adjustment of the fixed H
450 SUPREME COURT REPORTS [2009] 13 {ADDL.) s~c.R.

.
~

A deposit amounts.
+
9. The appellants being aggrieved by the order of SDJM,
Patna City, Patna preferred a petition under Section 482 of the
Code of Criminal Procedure in the High court of Judicature at
Patna to quash the criminal proceedings initiated against them
B
by the respondent-complainant. The High Court disposed of the
said petition summarily without assigning any reasons
whatsoever in the following manner:
~;

"Having considered the materials on record and facts
c stated in the complaint petition, I do not find any merit in
this application and so the impugned order does not
require any Interference. The facts are to be examined and
duly considered at the appropriate stage of trial."

D Hence this appeal.
~
SUBMISSIONS:-

10. Shri Dhruv Mehta, learned counsel for the appellants
submitted that the High Court failed to appreciate that the
E complaint has been lodged with a completely malicious intent
to simply harass the appellants who were only discharging their
duties as public servants which is nothing but an abuse of the
process of law. The averments made in the complaint are totally A.
indefinite in their nature and none of the ingredients of the ~
F offences alleged to have been committed are made out against
the appellants. It was also contended that the summoning order
has been passed by the learned SDJM without application of
mind and contrary to the law laid down by this court in more
than one judgment. It was submitted that the complaint was filed
G as a counter blast to the FIR already lodged by the bank on
20.2.2003 for cheating and misappropriation of hypothecated
· goods against the borrower and as well as the guarantors.
-
-~-<

11. Though the respondent was served on 16.5.2007, he
neither appeared in person nor through counsel.
H
M.N. OJHA & ORS. v. ALOK KUMAR SRIVASTAV & 451
ANR. [B. SUDERSHAN REDDY, J.]

+ 12. The respondent-complainant is one of the guarantors A
who guaranteed repayment of the loan obtained by· the
borrower. There is no dispute that the loan account became
totally irregular and the bank has beer\ left with no option but to
appropriate the FDRs along with interest accrued thereon. The
action initiated was in terms of the documents executed by the B

. ......-
complainant along with other guarantors. It is evident from the
record that the bank had lodged Fl R with the police on
20.2.2003, for cheatfng and misappropriation of hypothecated
goods against the borrower as well as the guarantors. The
police initiated action against the complainant and others based
on the said FIR lodged by the first appellant on behalf of the
c
bank. This fact is specifically admitted in the legal notice issued
for and on behalf of the guarantors including the complainant.
t
We have no doubt whatsoever in our mind that the complaint
dated 3.12.2003; filed by the complainant against the
appellants almost after 1O months of the FIR lodged by the first D
.........
appellant on behalf of the bank is nothing but a clear abuse of
the judicial process to harass the appellants. The complainant
himself admitted in his complaint that the account in question
was gradually becoming irregular and the Manager ought to
have taken step~ for SJlle of the hypothecated goods and E
appropriated the sale proceeds towards the recovery of loan
amounts. It is the case of the complainant in his complaint that
;
the first appellant should have appropriated the hypothecated
~
goods first and only thereafter steps could have been taken for
recovery of the balance amount if any from the guarantors. It F
was alleged that the Branch Manager in conspiracy with the.
brother of the borrower who is none other than an employee of
the bank allowed the operation of the account till the things
became "bad to worse". According to him, the Branch Manager
conspired with the borrower and committed criminal breach of G
• +· trust. Repeated assertions have been made in the complaint
that all the accused persons in conspiracy with each other have
~
diverted huge bank money in a fraudulent manner for their own
benefit. Surprisingly enough neither the borrower nor his brother
with whom the bank officers are alleged to have colluded is H
452 SUPREME COURT REPORTS [2009) 13 (ADDL.) S.C.R.

A arrayed as accused. The complainant in. his complaint freely +
used choicest expressions such as "fraud, collusion, conspiracy
and cheating etc." but did not make any concrete allegations
against the appellants suggesting commission of any offence.
That a plain reading of the complaint and taking the allegations
a and averments made therein to be true on their face value do
not revesl the commission of any offence whatsoever by the
appellants who were only taking steps to realize the amount due
to the bank from the borrower and in the process encashed the ~ f
FDRs offered by the guarantors as security for the discharge
C of the loan. What is the crime they have committed even if they
did not proceed against the hypothecated properties before
realizing the FORs offered by guarantors? Where is the
misappropriation of money? Whom did·they cheat?

13. In our considered view, criminal law has been set in "-

D motion by the complainant to harass the bank officers
needlessly and to wreak personal vengeance in order to bring
them under pressure not to further prosecute the proceedings
already initiated by the appellants against the complainant on
behalf of the bank.
E
14. In our considered opinion, ·the learned SDJM set the
criminal law in motion against the appellants without even
examining the allegations and averments made in the complaint
filed by the respondent-complainant. The learned SDJM took
F , cognizance of the case without considering the allegations on
merits. Had the learned SDJM perused the complaint properly
he would have realized that the complainant himself had made
a mention about the lodging of the FIR for criminal breach of
trust and other offences against the respondent-complainant
and others. Had he looked into the complaint properly, he would
G have certainly asked the complainant to furnish the. copy of the
said FIR. A copy of the legal notice issued on behalf of the
respondent-Complainant to the appellants was filed along with
the complaint and a mention is made about it in the order
passed by the learned SDJM. Had the learned SDJM perused
H
M.N. OJHA & ORS. v. ALOK KUMAR SRIVASTAV & 453
ANR. [B. SUDERSHAN REDDY, J.]
>~ the said legal notice, he would have realized that the A
complainant himself admitted about his execution of agreement
of guarantee and other documents unconditionally agreeing to
discharge the loan amount in case of failure of the principal
borrower to pay the said amount to the bank. Had the learned
SDJM applied his mind to the facts and circumstances and B
sequence of events and as well as the documents filed by the
complainant himself along with the complaint, surely he would
•• have dismissed the complaint. He would have realized that the
complaint was only a counter blast to the FIR lodged by the
Bank against the complainant and others with regard to same c
transaction. This Court in Pepsi Foods Ltd. & Anr. vs. Special
Judicial Magistrate & Ors. [(1998)5 SCC 749 held:

}

. "28. Summoning of an accused in a criminal case is a
serious matter. Criminal law cannot be set into motion as
a matter of course. It is not that the complainant has to D
bring only two witnesses to support hfs allegations in the
complaint to have the criminal law set into motion. The
order of the Magistrate summoning the accused must
reflect that he has applied his mind to the facts of the case
and the law applicable thereto. He has to examine the E
nature· of allegations made in the complaint and the
evidence both oral and documentary in support thereof and
>
... would that be sufficient for the complainant to succeed in
bringing charge home to the accused. It is not that the
Magistrate is a silent spectator at the time of recording of F
preliminary evidence before summoning of the accused.
The Magistrate has to carefully scrutinise the evidence
brought on record and may even himself put questions to
the complainant and his witnesses to elicit answers to find
out the truthfulness of the allegations or otherwise and then G
examine if any offence is prima facie committed by all or
~
,.,,....
+· any of the accused."

The case on hand is a classic illustration of non-application
of mind by the learned Magistrate. The learned Magistrate did
H
454 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A not scrutinize even the contents of the complaint, leave aside +
the material documents available on record. The learned
Magistrat' truly was a silent spectator at the time of recording ~

of preliminary evidence before summoning the appellants.

15. The High Court committed a manifest error in disposing
B
of the petition filed by the appellants under Section 482 of the
Code without even adverting to the basic facts which were
placed before it for its consideration. It is true that the court in '+- ~
exercise of its jurisdiction under Section 482 of the Code of
Criminal Procedure cannot go into the truth or otherwise of the
c allegations and appreciate the evidence if any available on
record. Normally, the High Court would not intervene in the
criminal proceedings at the preliminary stage/when the
investigation/enquiry is pending. Interference by the High Court
in exercise of its jurisdiction under Section 482 of Code of ~ ~
D Criminal Procedure can only be where a clear case for such ~ ,.,.
interference is made out. Frequent and uncalled for interference
even at the preliminary stage by the High Court may result in
causing obstf1:JCtion in progress of the inquiry in a criminal case
which may not be in the public interest. But at the same time
E the High Court cannot refuse to exercise its jurisdiction if the
interest of justice so required where the allegations made in
the FIR or complaint are so absurd and inherently improbable
....
on the basis of which no fair-minded and informed observer can
~
ever reach a just and proper conclusion as to the existence of
F sufficient grounds for proceeding. In such cases refusal to
exercise the jurisdiction may equally result in injustice more
particularly in cases where the Complainant sets the criminal
law in motion with a view to exert pressure and harass the
persons arrayed as accused in the complaint. It is well settled
G and needs no restatement that the saving of inherent power of
the High Court in criminal matters is intended to achieve a ~__._-<

salutary public purpose "which is that a court proceeding ought ....,.,,
not to be permitted to degenerate into a weapon of harassment
or persecution. If such power is not conceded, it may even lead
H to injustice". [See: State of Kamataka vs. L. Muniswamy (1977)
M.N. OJHA & ORS. v. ALOK KUMAR SRIVASTAV & 455
ANR. [B. SUDERSHAN REDDY, J.]
+ 2 SCC 699). We are conscious that inherent powers do not A
confer an arbitrary jurisdiction on the Hiph Court to "act
according to whim or caprice. That statutory power has to be
exercised sparingly, with circumspection and in the rarest of
rare cases". [See: Kurukshetra University vs. State of Haryana
(1977) 4 sec 451).

... 16. This is one case where the averments and allegations
made in the complaint do not disclose the commission of any
offence by the appellants or any one of them. They were merely
B

discharging their duties to realize and recover the amounts due
to the bank from the borrower as well as the guarantors. The
c
complaint obviously has been filed as counter .blast to the
proceedings already initiated by the bank including the first
.. information report lodged by the first appellant against the
complainant and the borrower for the offences of cheating and
D
"' misappropriation. Sequence of events undoubtedly suggests
that the criminal proceedings have been maliciously instituted
with an ulterior-motive of wreaking vengeance on the appellants
and with a view to spite them due to personal grudge. It was
clearly intended to prevent the public servants from discharging
their duties. The criminal law has been set in motion by the E
learned SDJM by mere asking to do so by the complainant.
The High Court almost abdicated its duty in refusing to exercise
• 4' its jurisdiction under Section 482 of the Code of Criminal
Procedure though the case on hand required its interference
in order to prevent abuse of the process by a court subordinate F
to it. A clear case is made out requiring our interference to
secure the ends of justice.

17. For all the aforesaid reasons, the impugned order of
the High Court is set aside and the criminal proceedings arising
G
out of Complaint. Case No. 916 (c) of 2003 are quashed. The
appeal is, accordingly, allowed.
r

R.P. Appeal allowed.