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National Bank Of Oman v. Barakara Abdul Aziz And Another
Factual and Procedural Background
National Bank of Oman, which has no branch or business activities in India, alleged that the respondent opened a current account with the Bank in Abu Dhabi during 1995, fraudulently secured and later defaulted on overdraft and credit facilities that eventually totalled AED 43,15,000 (approximately INR 5.178 crore). To settle its exposure, the Bank and the respondent executed a restructuring agreement on 12-11-2002, under which the respondent issued post-dated cheques for 24 monthly instalments. Those cheques were dishonoured and the respondent allegedly absconded to India.
The Bank obtained sanction under the proviso to Section 188 CrPC from the Central Government (Letter No. F/83/2007.Jud.Cell dated 26-3-2010) and, acting through its power-of-attorney holder resident in Ahmednagar, filed Private Complaint RTC No. 260 of 2007 before the Chief Judicial Magistrate (CJM), Ahmednagar. On 25-2-2011 the CJM, after examining the complaint and documents, issued process against the respondent for offences under Sections 418 and 420 of the Indian Penal Code (IPC).
The respondent, a resident of Dakshin Kannada District in Karnataka, challenged that order before the High Court of Bombay at Aurangabad (Criminal Application No. 3146 of 2012). The High Court concluded that (i) the allegations did not prima facie constitute offences under Sections 418/420 IPC and (ii) the CJM failed to comply with the mandatory requirement of enquiry or investigation under Section 202 CrPC—amended in 2005—before summoning an accused residing outside the court’s territorial jurisdiction. Consequently, the High Court set aside the CJM’s order.
The Bank filed the present special leave petition before the Supreme Court of India.
Legal Issues Presented
- Whether the Chief Judicial Magistrate, Ahmednagar, was obliged under amended Section 202 CrPC to conduct an enquiry or direct an investigation before issuing process against an accused residing outside his territorial jurisdiction.
- Whether, on finding non-compliance with Section 202 CrPC, the High Court was justified in quashing the complaint outright instead of remitting the matter for compliance with the statutory procedure.
Arguments of the Parties
Respondent’s Arguments
- The complaint’s allegations, even if accepted, did not make out a prima facie case of cheating under Sections 418 or 420 IPC.
- The respondent resided in Dakshin Kannada, outside the territorial jurisdiction of the CJM, Ahmednagar; therefore the Magistrate was statutorily required under Section 202 CrPC to postpone issuance of process and first conduct an enquiry or direct investigation, which was not done.
Complainant Bank’s Position
The opinion does not provide a detailed account of the Bank’s submissions in the Supreme Court, apart from challenging the High Court’s order.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court affirmed the High Court’s view that the CJM failed to follow the mandatory procedure under amended Section 202 CrPC. The amendment, effective from 23-6-2006, explicitly requires a Magistrate to enquire into the case or order investigation before issuing process where the accused resides beyond the Magistrate’s territorial jurisdiction. The Court underscored:
- The purpose of Section 202 CrPC is limited to ascertaining the truth or falsehood of the allegations solely from the complainant’s viewpoint, without considering possible defences.
- The legislative intent behind the 2005 amendment, as reflected in the Notes on Clauses, aims to prevent harassment of persons residing at distant places by false or frivolous complaints.
- Because the respondent admittedly lived in Dakshin Kannada, the CJM’s omission to conduct the prescribed enquiry or investigation rendered the issuance of process legally infirm.
However, the Supreme Court disagreed with the High Court’s remedy. It held that instead of quashing the complaint, the proper course was to remit the matter to the Magistrate to comply with Section 202 CrPC and then decide afresh whether process should issue.
Holding and Implications
DISPOSED OF – MATTER REMITTED.
The Supreme Court disposed of the special leave petition, remitting the complaint to the Chief Judicial Magistrate, Ahmednagar, to pass fresh orders within two months after strictly complying with Section 202 CrPC. The Court expressly directed that the Magistrate should remain uninfluenced by the High Court’s tentative observations on the merits. The ruling reinforces the mandatory nature of the amended Section 202 CrPC when an accused resides outside the Magistrate’s jurisdiction; however, it sets no new substantive precedent on cheating, focusing instead on procedural compliance.
Order
1. The complainant, National Bank of Oman lodged a private complaint RTC No. 260 of 2007 in the Court of the Chief Judicial Magistrate, Ahmednagar against the respondent alleging that he had cheated the Bank by swindling 43,15,000 UAE Dirhams (equivalent to 5.178 crore Indian rupees).
2. The gist of the complaint reads as follows:
“In the year 1995, the applicant accused opened current account with the complainant Bank on a representation that he was holding Indian passport. The accused slowly gained confidence of the complainant Bank. In February 1996, the accused produced trading licence issued by Abu Dhabi Municipality and Town Planning and represented that he owned firm M/s Bushra Textiles, situated at Abu Dhabi and engaged in retail and wholesale trading and sale of textile garments, stationery items, electronics, etc. The accused further represented that he was established in business at Abu Dhabi and was well supported by loyal clientele and was in the process of expanding his business, which required financial facilities from the Bank. The accused also represented to the Bank that he had more than enough financial stability and viability to honour the financial commitments and pay back the finances made available to him by the Bank. Based on the said solemn representation, the Company in good faith granted to the accused overdraft facility of 2,50,000 AED. This facility was enhanced from time to time to the extent of 51 lakhs AED by overdraft loan against trust receipts, local bill limit, credit card, etc. till October 2001. The accused, however, committed breach of undertaking and failed to repay the dues of the complainant Bank.
The complainant Bank, therefore, contemplated legal action against the accused in order to obtain detention orders from the competent court at UAE.
The accused thereupon approached the complainant Bank in November 2002 and entered into a restructuring/settlement agreement with the Bank on 12-11-2002 for AED 43,15,000 by converting all the outstanding liabilities into a term loan to be repaid in 48 instalments.
The accused undertook to pay the said amount as per terms of MoU and also issued post-dated cheques for 24 monthly instalments and gave assurance and undertaking that the said cheques would be honoured and loan would be repaid as per the restructuring agreement between the parties and thereby induced the Bank not to take immediate action and obtain detention order. The complainant relied upon the said representation and did not take action against the accused in November 2002. The said cheques were dishonoured for want of sufficient funds in the account and in the meanwhile the accused surreptitiously and clandestinely absconded to India without discharging his loan liability.”
3. The complainant Bank is not having any branch or any activity in India nor carrying on any business in India. The Bank, therefore, decided to appoint Mr N.B Sapkal as its power-of-attorney holder for the purpose of filing complaint and taking legal steps against the respondent, who is alleged to have duped the Bank and escaped to India. The power-of-attorney holder is a resident of Ahmednagar and according to the Bank it was convenient for the Bank to file the complaint at Ahmednagar.
4. The respondent being a citizen of India, necessary sanction had to be obtained from the Central Government under the proviso to Section 188 of the Code of Criminal Procedure. Sanction was accordingly sought for from the Government of India and the Government of India, Ministry of Home Affairs, vide Letter No. F/83/2007.Jud.Cell dated 26-3-2010 accorded sanction to enquire and conduct trial of the respondent by a court of competent jurisdiction in India.
5. The Chief Judicial Magistrate, Ahmednagar on 25-2-2011 passed the following order on the complaint:
“Perused the complaint and the documents attached thereto. The Central Government has accorded sanction to prosecute the accused. Heard the learned counsel appearing for the complainant. There are sufficient materials against the accused. The complainant has made out prima facie case against the accused. Hence process be issued for offences under Sections 418 and 420 IPC.
Dated 25-2-2011
(G.O Agrawal)
CJM, Ahmednagar”
6. The respondent challenged that order by filing Criminal Application No. 3146 of 2012 before the High Court of Judicature of Bombay, Bench at Aurangabad. It was contended that the allegations in the complaint do not prima facie constitute any offence or make out a case for issuance of process under Sections 418 and 420 IPC. Further, it was stated that the respondent-accused was a resident of Dakshin Kannada in the State of Karnataka and the CJM, Ahmednagar issued the process without complying with the mandatory requirement of making an enquiry or directing an investigation for the purpose of deciding whether or not there was sufficient ground for initiating proceedings against the accused as contemplated under Section 202 of the Code of Criminal Procedure.
7. The High Court took the view that prima facie the bare allegation of cheating did not make out a case against the accused for issuance of process under Sections 418 or 420 IPC. Further, it was held that the CJM did not follow the procedure laid down under Section 202 CrPC. The High Court held that the Magistrate was obliged to postpone the process against the accused and either enquire into the case himself or direct an investigation to be made by a police officer or by such other officer as he thinks fit for the purpose of deciding whether or not there is sufficient ground for proceeding in a case where the accused is residing beyond the area in which the Magistrate exercises his jurisdiction. The High Court noticed that the accused is a resident of District Dakshin Kannada, Karnataka and hence, the CJM should have followed the procedure laid down in Section 202 CrPC. The High Court, therefore, set aside the order dated 25-2-2011 issuing the process under Sections 418 and 420 IPC by the CJM, Ahmednagar. Aggrieved by the said order the Bank has come up with this special leave petition.
8. We find no error in the view taken by the High Court that the CJM, Ahmednagar had not carried out any enquiry or ordered investigation as contemplated under Section 202 CrPC before issuing the process, considering the fact that the respondent is a resident of District Dakshin Kannada, which does not fall within the jurisdiction of the CJM, Ahmednagar. It was, therefore, incumbent upon him to carry out an enquiry or order investigation as contemplated under Section 202 CrPC before issuing the process.
9. The duty of a Magistrate receiving a complaint is set out in Section 202 CrPC and there is an obligation on the Magistrate to find out if there is any matter which calls for investigation by a criminal court. The scope of enquiry under this section is restricted only to find out the truth or otherwise of the allegations made in the complaint in order to determine whether process has to be issued or not. Investigation under Section 202 CrPC is different from the investigation contemplated in Section 156 as it is only for holding the Magistrate to decide whether or not there is sufficient ground for him to proceed further. The scope of enquiry under Section 202 CrPC is, therefore, limited to the ascertainment of truth or falsehood of the allegations made in the complaint:
(i) on the materials placed by the complainant before the court;
(ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and
(iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defence that the accused may have.
10. Section 202 CrPC was amended by the Code of Criminal Procedure (Amendment) Act, 2005 and the following words were inserted:
“and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction,”
The notes on clauses for the abovementioned amendment read as follows:
“False complaints are filed against persons residing at far off places simply to harass them. In order to see that innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub-section (1) of Section 202 to make it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused.”
The amendment has come into force w.e.f 23-6-2006 vide Notification No. S.O 923(E) dated 21-6-2006.
11. We are of the view that the High Court has correctly held that the abovementioned amendment was not noticed by the CJM, Ahmednagar. The CJM had failed to carry out any enquiry or order investigation as contemplated under the amended Section 202 CrPC. Since it is an admitted fact that the accused is residing outside the jurisdiction of the CJM, Ahmednagar, we find no error in the view taken by the High Court.
12. All the same, the High Court instead of quashing the complaint, should have directed the Magistrate to pass fresh orders following the provisions of Section 202 CrPC. Hence, we remit the matter to the Magistrate for passing fresh orders uninfluenced by the prima facie conclusion reached by the High Court that the bare allegations of cheating do not make out a case against the accused for issuance of process under Section 418 or 420 IPC. The CJM will pass fresh orders after complying with the procedure laid down in Section 202 CrPC, within two months from the date of receipt of this order.
13. The special leave petition is, accordingly, disposed of.
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