Bank Fraud in UAE – Kerala High Court refuses quashing of FIR –

“…The Credibility of Indians in UAE and of others who seek loans from banks can be prejudicially affected if such alleged frauds are permitted to be perpetrated by the citizens of this Country, and when criminal proceedings are initiated, they are quashed without even being investigated.”

The quote above is a bold statement that an Indian Court made to showcase the strength of the Indian Legal System.   The court reiterates the position that criminal complaints made by foreign banks against Indian citizens, alleging fraud, etc. will be not dismissed in the threshold itself, without allowing proper criminal investigation.

The Kerala High Court was considering a petition filed under Article 482 of the Code of Criminal Procedure to quash a First Information Report (FIR) registered based on a complaint made on behalf of a Foreign Bank, based in Sharjah.

The complaint in brief is as follows:

The Accused availed of loans from 2013 onwards from the complainant bank, and after having generated trust in the bank, by making partial repayments, consequently, the bank sanctioned an amount of 55,263,000 UAE Dirhams and thereafter transferred the entire ownership in his company to a third party and left the country, during the period of the loan, and upon audit in December 2017 it was found that he affected related party transfer to the tune of 32,148,61 UAE Dirhams before the transferring the ownership to a third party, without notice to the bank and thereby committed the offense of Section 420 IPC read with Section 188 of Cr PC. 

Submissions on behalf of the Petitioner:

The crime is only at the investigation stage and what has been revealed so far is a large scale fraud and deception played by the petitioner who had absconded from UAE after defrauding the bank of several crores of rupees.  It was pointed out that after absconding from UAE, the petitioner commenced businesses in India utilizing the amount received by him from the bank in UAE and even diverted it to his relatives.  It was submitted that the accused had slowly procured the confidence of the bank with the intention of ultimately cheating it of a substantial amount and that the manner in which it was committed could be unraveled only by a proper investigation.

Submission on behalf of the State:

The Learned Public Prosecutor would submit that due to the interim order, an effective investigation has not been carried out to date.

Findings of the Court:

Intention to deceive from the beginning is the gist of the offence of cheating and a mere failure to keep a promise, subsequently cannot give rise to any assumption that there was culpable intention from the beginning.  Deception being the quintessence of the offense of cheating, it is essential that deception be performed by the accused to induce the complainant. Deception can certainly be carried out by words or by conduct and what is deception, will depend on upon the facts and circumstances of each case. No straitjacket formula can be prescribed for the nature of deception that me be carried out,as it is generally done in a subtle and wily manner brought about by craft, guile, and even cunningly, which cannot be identified easily by others.  A person can have a habitual propensity for deception and in such circumstances, it becomes the character of that person, while deception can occur, even in isolated instances as well, which will come to light only much later.  In either event, the deception alleged will have to be appreciated on the basis of the circumstances arising in each case.  Thus, the intention is a mental state of being, which will have to be gathered from various circumstances.  Moreover, section 415 IPC does not limit any manner in which the deception may take place.  It is also not necessary that the deception should be by express words as it can even be by conduct.

The Court found that from the nature of the complaint and the allegations made thereon, it cannot be prima facie stated that the FIR is totally bereft of any legal basis.  As observed in the decisions in Achin Gupta vs. State of Haryana and Mahmood Ali and others vs State of up and other (supra), the circumstances emerging from the records of the case over and above the averments in the complaint and the FIR do indicate that the offense alleged against the petitioner can be made out at least at this stage of the proceedings. Finally, the Court held, quashing the FIR itself at this stage of the proceedings would seriously prejudice the complainant and therefore this is not a case which may fall within the purview of exceptional circumstances warranting an interference to quash the FIR.

Result:

There is no merit in the Crl. MC and it is dismissed.

The case was reported in Live Law and other law journals and portals

https://www.livelaw.in/high-court/kerala-high-court/kerala-high-court-indians-reputation-abroad-loan-fraud-abdul-rahman-sharjah-bank-263769: Bank Fraud in UAE – Kerala High Court refuses quashing of FIR –