Harveer Singh vs. State Of U.P. And Another

Held

The Court held that the applicant's plea of receiving huge money unknowingly, without knowledge that it was proceeds from a crime, is not sufficient to stifle the prosecution. The applicant's claim that he was a puppet used by Bharat Kalra and that he suffered a loss due to paying tax on the amount, and that the money was immediately transferred to Bharat Kalra or his associates, constitutes his defense, which is a subject for trial. The Court found that the applicant had prima facie actively participated in siphoning off money belonging to bank depositors. The act of diverting the money to close relatives of the main accused, rather than returning it to the company from which it was taken, was considered a dishonest act. The Court concluded that there was sufficient evidence to establish a more than prima facie case against the applicant, indicating his participation in the larger conspiracy. The Court reiterated that it cannot conduct a mini-trial under Section 482 Cr.P.C. to determine guilt. There was no document prima facie showing the transaction between the two companies was bona fide for services or materials. Therefore, the allegations were not frivolous and did not fail to disclose an offense. The applicant failed to show that the prosecution was illegitimate or an abuse of the process of law, while the prosecution successfully demonstrated sufficient grounds to proceed against the applicant. The application was dismissed.

Facts

This application under Section 482 Cr.P.C. was filed by Harveer Singh (applicant) seeking to quash a charge sheet dated December 22, 2020, and subsequent orders dated February 6, 2021, February 20, 2021, April 3, 2021, and August 3, 2021. These proceedings stem from FIR No. RC2202018E0013, lodged by the CBI against Bharat Kalra and others under Sections 120B, 420, 468, 471 IPC and Sections 13(2), 13(1)(d) of the Prevention of Corruption Act. The core of the FIR alleges that Bharat Kalra, proprietor of M/s S.M. Enterprises, obtained a credit facility of Rs. 16.12 Crores, later enhanced by Rs. 4 Crores, and subsequently siphoned off Rs. 20.58 Crores by selling hypothecated stocks without depositing sale proceeds. The applicant, Harveer Singh, proprietor of M/s R.S.R. Enterprises, received Rs. 5,08,52,800/- from M/s S.M. Enterprises.

Key Issues

1. Whether the criminal proceedings against the applicant, Harveer Singh, constitute an abuse of the process of the Court and are liable to be quashed, considering his alleged lack of direct involvement in the loan sanction and his claim of unknowingly receiving funds? (Section 482 Cr.P.C., Sections 120B, 420, 468, 471 IPC, Sections 13(2), 13(1)(d) of Prevention of Corruption Act). Arguments for the Applicant (Harveer Singh): The applicant is not named in the FIR, nor was he a borrower, guarantor, or provided collateral. He had no role in opening the account of M/s S.M. Enterprises or in the sanction of credit limits. The sanctioned amount was credited directly to M/s S.M. Enterprises' account. The applicant's firm, M/s R.S.R. Enterprises, received Rs. 5,08,52,800/- due to a business transaction, and the applicant was unaware of the source of these funds. He paid GST and income tax on this amount and was not arrested during the investigation. His case is distinguishable from the main accused and bank officials. Arguments for the Revenue (Central Bureau of Investigation): The investigation revealed that provisional balance sheets, rent agreements, and other documents submitted by Bharat Kalra were forged. The loan was fraudulently sanctioned and released in collusion with bank officers. The loan amount was siphoned off by Bharat Kalra, transferred to various firms including M/s R.S.R. Enterprises, without any actual business transaction. Confirmation letters and work orders were denied by other firms, and the applicant, along with another individual, accepted signing reply letters but stated no actual business was conducted. The applicant was instrumental in diverting bank funds and was part of the alleged conspiracy.