In a petition filed before the Orissa High Court seeking quashing of an order of cognizance dated 06.05.2010 by the S.D.J.M., Bhubaneswar whereby cognizance was taken for offences under Sections 406, 409, 468, 471, 418, 120-B read with Section 34 of the Indian Penal Code, 1860 (IPC) against the petitioner and other accused persons, a Single Judge Bench of Justice Sanjeeb K Panigrahi dismissed the petition and sustained the impugned order, FIR, as well as the charge sheet.
The case emanated from a written report by the Secretary, Orissa Khadi and Village Industries Board, alleging cheating, fraud and criminal misappropriation in relation to loans sanctioned under the Consortium Bank Credit Loan Scheme. It was submitted that funds were routed through the Board for promotion of village industries, and loans amounting to ₹1,69,00,000 were sanctioned to 26 beneficiaries. Investigation revealed that machinery was not actually supplied, demand drafts and cheques were encashed, and loan amounts were misappropriated without establishment of proposed industrial units.
Regarding the petitioner, the allegation was that he availed a loan of ₹6,50,000 for installation of a Voltage Stabiliser Unit but no such industrial unit was established and no machinery was supplied. The loan was sanctioned by OKVIB and after its release, a demand draft of Rs. 6,49,712 was issued in favour of Reliance Enterprises towards supply of plant and machinery. Physical verification reports recorded that no unit existed at the site and suggested use of fabricated documents and false declarations for securing disbursement. After completion of investigation, a charge sheet was submitted against about 40 accused persons, including the petitioner.
The petitioner contended that the dispute essentially arose out of a loan transaction and that the matter lost its criminal character after he deposited ₹29,90,351 on 06.09.2024 towards loan dues in a certificate proceeding. He argued that continuation of the criminal proceeding after an inordinate delay since 2003 would be oppressive and serve no useful purpose once the financial liability cleared.
Referring to precedents, the Court stated that persons accused of cheating banks or misappropriating public funds cannot escape trial by merely returning money. It was emphasized that these are social wrongs having grave impact. It was stated that when grave criminal allegations concern public funds meant for a welfare and self-employment scheme, it cannot be treated as a mere private loan dispute.
The Court found that the prosecution materials disclosed a prima facie case involving cheating, forgery, and conspiracy, and was not persuaded to interdict the prosecution at the threshold. Regarding the delay, the Court stated that the complexity and magnitude of investigation involving 40 accused persons explained the time taken. It was said that delay, by itself, is not a sufficient ground to quash a criminal proceeding unless the accused shows that real and specific prejudice was caused to him.
Stating that it was not the Court’s function to resolve disputed facts or weigh evidence under Section 482, it was said that the FIR and statements did raise a strong suspicion of deliberate fraud. The Court noted that the Supreme Court had warned against quashing criminal cases involving public interest unless the ends of justice require it and stated that denying trial in the present case may send a dangerous signal that borrowers can escape liability by belated payment. It was said that “High Court must be cautious to avoid becoming a forum of exception where allegations of financial wrongdoing is condoned by technicalities.“
Hence, the Court was not satisfied that continuation of criminal proceedings would amount to abuse of process or violate any settled principle of justice and stated that the present case did not fall within any exception entitling summary quashing. Thus, the Court dismissed the petition, sustained the FIR, charge-sheet and cognizance order, and allowed the criminal trial to proceed in accordance with law.
