Case Name: Abhishek Singh Vs. Ajay Kumar & Ors.
Case Number: Criminal appeal No. of 2025 (arising out of SLP(Crl.) No. 480/2025)
Date of Judgment: 5th June 2025
Quorum: Hon’ble Mr. Justice Sanjay Karol
FACTUAL BACKGROUND
The appellant in the instant appeal is a businessman by vocation. He required certain funds for the purpose of the business, which he secured by way of a loan from the Bank of India, Motijhil Branch, by pledging 254 grams of 22 carat gold ornaments as security. Precisely, an amount of rupees 7,70,000/- was given as loan to the appellant on 22nd July 2020. The instant disputes emerged in relation to the repayment of this loan.
The appellant argues that, upon receipt of the bank notice dated 7th October 2022, he repaid the prescribed sum of rupees 8,01,383.59/-, which is inclusive of the interest, to the bank on 31st March, 2023. However, unknown to the appellant, the bank conducted a revaluation of the pledged gold and to that end deducted a fee of rupees 1500/-. In addition to this, the appellant request to return the gold pledged by him, was also ignored. The bank asserts that the appellant has not paid the loan, because of which the gold has now become the asset of the bank, and whereby the return of the gold is not possible. In order to recover the loan amount from the appellant, the gold was revalued by a different valuer. Upon this inspection, the pledged gold was found to gold-plated metal instead of real gold.
Subsequently, an FIR was registered under sections 420 and 379 of the IPC against the appellant on 22nd May, 2023. Thereupon, another FIR, the one that forms the basis of the present appeal, was filed by the appellant under section 156(3) of the CrPC, against the Branch and credit manager of the bank at the time of revaluation of the gold. On investigation of the latter complaint, the investigating authorities filed a chargesheet before the Judicial Magistrate, 1st class, on 30th September, 2024. It is noteworthy that, while the said investigation was underway, the respondents filed a application to quash the FIR registered on 5th October.
Considering this application, the High Court concluded that the FIR was filed with an ulterior motive and is a mere counterblast to the FIR lodged by the bank. The court relied on the judgment in Priyanka Srivastava v. State of UP, to hold that since the appellant had not affixed any affidavit as mandated by this judgment, the FIR is unsustainable. On these grounds, the FIR was quashed by the High Court. The present appeal before the Hon’ble Supreme Court arises from this very judgment and Order dated 12th November, 2024 passed by the High Court of Judicature at Patna in Criminal Miscellaneous No. 67884 of 2023.
ISSUES FOR DETERMINATION
Whether the High Court correctly exercised its power under section 482 of CrPC?
LEGAL PROVISIONS
Section 482 of Code of Criminal Procedure, 1973, Sections 420, 406 and 34 of the Indian Penal Code.
APPELLANT’S CONTENTIONS
The appellant main contention is that the High of Judicature at Bombay, failed to appreciate that as on 31st March, 2023, there was not outstanding loan, against which the process of recovery could have been initiated. In delivering the impugned judgment, the Court relied on documents other than the FIR/complaint lodged, which would be outside its scope. This cannot be allowed, as other documents in the nature of defense of the party against whom the allegations have been made in the FIR, cannot be looked into.
Furthermore, the appellant contends that revaluation of the pledged gold was done behind his back, contrary to the terms of the loan agreement. Thus, the possibility of tampering with or replacing the ornaments with those of questionable quality cannot be ruled out. The claim of the respondents that the non-lodging of FIR against the 1st valuer is entirely incorrect, raises suspicion. Lastly, the counsel for the appellant argues that the charge on the appellant’s account without consent or prior notice amounts to fraud and cheating.
RESPONDENT’S CONTENTIONS
The counsel for the respondent contends that, the amount deposited by the appellant on issuance of the recall notice of the bank, was not sufficient for the account to be upgraded again, and as such, the pledged gold is ought to be revalued. The valuer was changed on the reasonable apprehension that the 1st gold valuer had possibly committed, and thus he was de-empaneled.
The respondent strongly claims that the appellant deliberately allowed the loan to become an NPA, since he knew that the pledged ornaments were fake. The first recall notice issued on 30th July, 2022 clearly states that any failure to deposit the dues within 15 days would mean that the bank is empowered to take steps to auction the gold jewelry. In the present appeal, the appellant failed to respond to the recall notice within the prescribed time period. This reflects the apparent intention of the appellant to cheat.
ANALYSIS
The Court first looked into the validity of power exercised by the High Court. The apex court observed that the duty of the High Court, when called upon to adjudicate applications seeking to quash the proceedings, is to ensure that no offence is made out on prima facie inspection. The duty is not to examine whether the charges may hold up in the court. Be referring to the decision of this court in Rajeev Kourav v Baisahab (2020), wherein the court has affirmed the principle that defense evidence produced by the accused cannot be looked into by the court, except in very exceptional circumstances, at the initial state of the criminal proceedings.
In the recent decision in Naresh Aneja v. State of UP, this court had upheld the norm that when considering applications made under Section 482 CrPC, the court cannot conduct a mini trial, but instead, must be prima facie satisfied that the alleged offence has been committed. It must be seen, without conducting a minute examination of the record, that there is some substance in the allegations made, which could meet the statutory threshold. In the instant case, the High Court not only took note of the fraud risk management policy of the respondent, but has also factored in the removal of the 1st valuer, resulting in the conclusion that the bank has not acted in mala fides. The court points out the ambiguity surrounding the conclusion of the High Court, since as per the settled position of law, evidence has to be taken into consideration. The conclusion that appellant had an ulterior motive, also remains unclear.
Further, it is observed that the revaluation report was issued in February, 2023, which is much later from when the payment was made and the loan stood settled. Both the letters addressed to the Bank officials, by the appellant, seeking return of the pledged gold were made subsequent to the full and final payment of the gold on 3rd April, 2023 and 25th April, 2023 respectively. Despite the delay in making the repayment, the reason why the gold was revalued and actioned, remains unsettled. Another point of concern is the failure of the High Court in not considering the possibility that the respondents might have been involved in misappropriating the pledged gold, while cancelling the FIR. The appellant also never had access to the gold after its first valuation, after which it remained in the custody of the respondent bank. Thus, any fraud that took place during the 1st valuation, could only be discovered through proper trial and evidence. This forms a prima facie case against the respondent. Hence, the impugned FIR cannot be quashed.
JUDGMENT
The Supreme Court concluded that the High Court had improperly quashed the proceedings initiated by the appellant. The guilt or innocence of the respondent has to be established in the trial, in accordance with law. Accordingly, the present appeal was allowed, the proceedings arising from the impugned FIR has been revived, and restored to the file of the concerned Court.
CONCLUSION
In conclusion, through this judgment, the Supreme Court has reaffirmed the principle that High Court must exercise the required amount of caution when quashing FIRs, under applications made under section 482 of CrPC. The court held that the court must examine whether the alleged case filed against the party must not be prima facie be made out, in order to quash an FIR. It underscored that, the disputed facts and allegations of fraud must be tested through a full trial.
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WRITTEN BY AYANA THERESA XAVIER
