Punjab National Bank and others Versus Surendra Prasad Sinha [ALL SC 1992 APRIL]

Keywords:- Limitation-TimeTime Where any expression of it occurs in any Rules, or any judgment, order or direction, and whenever the doing or not doing of anything at a certain time of the day or night or during a certain part of the day or night has an effect in law, that time is, unless it is otherwise specifically stated, held to be standard time as used in a particular country or state. (In Physics, time and Space never exist actually-“quantum entanglement”) barred Debt-

• The rules of limitation are not meant to destroy the rights of the parties. S. 3 of the Limitation Act 36.of 1963, for short “the Act” only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation if the right is destroyed. For example under S. 27 of the Act a suit for possession of any property becoming barred by limitation if the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. Though the right to enforce the debt by judicial process is barred under S. 3 read with the relevant Article in the Schedule, the right to debt remains. The time barred debt does not cease to exist by reason of S. 3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What S. 3 refers is only to the remedy but not to the right of the creditors. Such debt continues to subsist so long as it is not paid.

AIR 1992 SC 1815 : (1992) 2 SCR 528 : (1993) 1 Suppl. SCC 499 : JT 1992 (3) SC 46 : (1992) 1 SCALE 926 : (1992) CriLJ SC 2916

(SUPREME COURT OF INDIAIndia Bharat Varsha (Jambu Dvipa) is the name of this land mass. The people of this land are Sanatan Dharmin and they always defeated invaders. Indra (10000 yrs) was the oldest deified King of this land. Manu's jurisprudence enlitened this land. Vedas have been the civilizational literature of this land. Guiding principles of this land are : सत्यं वद । धर्मं चर । स्वाध्यायान्मा प्रमदः । Read more)

(Before: K. Ramaswamy And B. P. Jeevan Reddy, JJ.)

Criminal Appeal No.254 of 1992, Decided on: 20-04-1992.

Issue of process—Juristic person—Duty of Magistrate to ascertain as to whether the officer of CorporationCorporation A legally established entity that can enter into contracts, own assets and incur debt, as well as sue and be sued—all separately from its owner(s). The term covers both for-profit and nonprofit corporations and includes nonstock corporations, incorporated membership organizations, incorporated cooperatives, incorporated trade associations, professional corporations and, under certain circumstances, limited liability companies. were legally responsible for the offence charged or not.

The complaint was laid, impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the Court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complaint as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance.

Penal Code, 1860—Section 409—Criminal breach of trust—Banker lien—Debt barred by limitation—Bank adjusting the amount due under fixed deposits of guarantor towards the time barred debt—It does not constitute criminal breach of trust.

Criminal Procedure Code, 1973—Section 204—Issue of process—Juristic person—Duty of Magistrate to ascertain as to whether the officer of Corporation were legally responsible for the offence charged or not.

Counsel for the Parties:

Mr. G.L. Sanghi, Sr. Advocate, Mr. Dhruv Mehta, Mr. Aman Vachher and Mr. S. K. Mehta, Advocates with him, for Appellants.

JudgmentJudgment The statement given by the Judge on the grounds of a decree or order - CPC 2(9). It contains a concise statement of the case, points for determination, the decision thereon, and the reasons for such decision - Order 20 Rule 4(2).  Section 354 of CrPC requires that every judgment shall contain points for determination, the decision thereon and the reasons for the decision. Indian Supreme Court Decisions > Law declared by Supreme Court to be binding on all courts (Art 141 Indian Constitution) Civil and judicial authorities to act in aid of the Supreme Court (Art 144) Supreme Court Network On Judiciary – Portal > Denning: “Judges do not speak, as do actors, to please. They do not speak, as do advocates, to persuade. They do not speak, as do historians, to recount the past. They speak to give Judgment. And in their judgments, you will find passages, which are worthy to rank with the greatest literature….” Law Points on Judgment Writing > The judge must write to provide an easy-to-understand analysis of the issues of law and fact which arise for decision. Judgments are primarily meant for those whose cases are decided by judges (State Bank of India and Another Vs Ajay Kumar Sood SC 2022)

K. Ramaswamy, J—Special leave granted.

2. Though the respondent was served on July 29, 1991, neither appeared in person, nor through counsel. The facts set out in the complaint eloquently manifests on its face a clear abuse of the process of the Court to harass the appellants. The respondents, an Advocate and Standing Counsel for the first appellant filed a private complaint in the Court of Addl. Chief Judicial Magistrate, Katni in C.C. No. 933/91 for offences under S. 409 and Ss. 109/114, I.P.C. The facts stated in the complaint run thus:

The first appellant’s branch at Katni gave a loan of ` 15,000/- to one Sriman Narain Dubey on May 5, 1984 and the respondent and his wife Annapoorna stood as guarantors, executed Annexure ‘P’ “security bond” and handed over Fixed Deposit Receipt for a sum of ` 24,000 / -, which would mature on November 1, 1988. At maturity its value would be at Rupees 41,292/-. The principal debtor committed default in payment of the debt. On maturity, the Branch Manager, 5th appellant, Sri V. K. Dubey, adjusted a sum of ` 27,037.60 due and payable by the principal debtor as on December, 1988 and the balance sum of Rupees 14,254.40 was credited to the Saving Banks Account of the respondent. The respondent alleged that the debt became barred by limitation as on May 5, 1987. The liability of the respondent being coextensive with that of the principal debtor, his liability also stood extinguished as on May 5, 1987. Without taking any action to recover the amount from the principal debtor within the period of limitation, on January 14, 1989, Sri D. K. Dubey, the Branch Manager, intimated that only Rupees 14,254.40 was credited to his Saving Bank Account No. 3763. The entire amount at maturity, namely Rupees 41,292/- ought to have been credited to his account and despite repeated demands made by the respondent it was not credited. Thereby the appellants criminally embezzled the said amount. The first appellant with a dishonest interest (intent) to save themselves from the financial obligation neglected to recover the amount from the principal debtor and allowed the claimA Claim A claim is “factually unsustainable” where it could be said with confidence before trial that the factual basis for the claim is entirely without substance, which can be the case if it were clear beyond question that the facts pleaded are contradicted by all the documents or other material on which it is based. to be barred limitation and embezzled the amount entrusted by the respondent. The appellants 2 to 6 abeted the commission of the crimeCrime A positive or negative act in violation of penal law; an offense against the state classified either as a felony or misdemeanor. in converting the amount of ` 27,037.40 to its own use in violation of the specific direction of the respondent. Thus they committed the offences punishable under S. 409 and Ss. 109 and 114, I.P.C.

3. The security bond, admittedly, executed by the respondent reads the material parts thus:”We confirm having handed over to you by way of security against your branch office Katni F.D. Account No. 77/ 83 dated November 1, 1983 for ` 24,000/ – in the event of renewal of the said Fixed Deposit Receipt as security for the above loan.” “We confirm….. the F.D.R. will continue to remain with the bank as security here.” “The amount due and other charges, if any, be adjusted and appropriated by you from the proceeds of the said F.D.R. at any time before, on or its maturity at your discretion, unless the loan is otherwise fully adjusted from the dues on demand in writing made by you….” “We give the bank right to credit the balance to our saving banks account or any other amount and adjust the amount due from the borrowers out of the same.” “We authorise you and confirm that the F.D.R. pledged a security for the said loan shall also be security including the surplus proceeds thereof for any other liability and the obligation of person and further in favour of the bank and the bank shall be entitled to retain/ realise/ utilise/ appropriate the same without reference to us.”

4. Admittedly, as the principal debtor did not repay the debt. The bank as creditor adjusted at maturity of the F.D.R., the outstanding debt due to the bank in terms of the contractContract An agreement enforceable by law is a contract. All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Indian Contract Act. and the balance sum was credited to the Saving Banks Account of the respondent. The rules of limitation are not meant to destroy the rights of the parties. S. 3 of the Limitation Act 36.of 1963, for short “the Act” only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation if the right is destroyed. For example under S. 27 of the Act a suit for possession of any property becoming barred by limitation if the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. Though the right to enforce the debt by judicial process is barred under S. 3 read with the relevant Article in the Schedule, the right to debt remains. The time barred debt does not cease to exist by reason of S. 3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What S. 3 refers is only to the remedy but not to the right of the creditors. Such debt continues to subsist so long as it is not paid. It is not obligatory to file a suit to recover the debt. It is settled law that the creditor would be entitled to adjust, from the payment of a sum by a debtor, towards the time barred debt. It is also equally settled law that the creditor when he is in possession of an adequate security, the debt due could be adjusted from the security in his possession and custody. Undoubtedly the respondent principal and his wife stood guarantors to the debtor, jointly executed the security bond and entrusted the F.D.R. as security to adjust the outstanding debt from it at maturity. Therefore, though the remedy to recover the debt from the principal debtor is barred by limitation, the liability still subsists. In terms of the contract the bank is entitled to appropriate the debt due and credit the balance amount to the saving bank account of the respondent. Thereby the appellant did not act in violation of any law, nor converted the amount entrusted to them dishonestly for any purpose. Action in terms of the contract express or implied is a negation of criminal breach of trust defined in S. 405 and punishable under S. 409, I.P.C. It is neither dishonest, nor misappropriation. The bank had in its possession the fixed deposit receipt as guarantee for due payment of the debt and the bank appropriated the amount towards the debt due and payable by the principal debtor. Further, the F. D. R. was not entrusted during the course of the business of the first appellant as a Banker of the respondent but in the capacity as guarantor. The complaint does not make out any case much less prima facie case, a condition precedent to set criminal law in motion. The Magistrate without adverting whether the allegation in the complaint prima facie makes out an offence charged for, obviously, in a mechanical manner, issued the process against all the appellants. The High Court committed grave error in declining to quash the complaint on the finding that the bank acted prima facie high handedly.

5. It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the Court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complaint as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta.

6. The appeal is accordingly allowed and the complaint is quashed.