Full Judgment Text
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PETITIONER:
PUNJAB NATIONAL BANK AND ORS.
Vs.
RESPONDENT:
SURENDRA PRASAD SINHA
DATE OF JUDGMENT20/04/1992
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
JEEVAN REDDY, B.P. (J)
CITATION:
1992 AIR 1815 1992 SCR (2) 528
1993 SCC Supl. (1) 499 JT 1992 (3) 46
1992 SCALE (1)926
ACT:
Limitation Act, 1963-Section 3-Whether bars the right
to which a remedy related-Right to enforce debt by judicial
process-Scope of-Time barred debt-Realisation of-Filing of
suit to recover debt-Creditor’s obligation.
Penal Code, 1860-Section 405-Action in terms of a
contract-Whether amounts to criminal breach of trust or
misappropriation-Creditor in possession of security-
Adjustment of debt due from security-Justification of.
Penal Code, 1860-Section 409, 109/114-Complaint
petition-Maintainability-Duty of Magistrate, indicated-
Accused to be legally responsible for the offences charged-
Magistrate’s satisfaction of prima facie case-Criminal
justice-Objects of.
HEADNOTE:
On 5.5.1984, the Bank-Appellant No.1, gave a loan of
RS.15,000 to one S.N. Dubey. The respondent and his wife
executed a Security Bond, as guarantors and handed over a
fixed Deposit Receipt for a sum of Rs. 24,000 which was
valued at Rs. 41,292 on its maturity on 1.11.1988.
The principal debtor defaulted marking payment of the
debt. When the respondent’s F.D. matured, the Manager of
the Bank (appellant No.5) adjusting a sum of Rs.27,037.60
due and payable by the principal debtor as on December 1988
and the balance sum of Rs.14,254.40 was credited to the S.B.
Account of the respondent.
The respondent filed a private complaint against the
appellants in the Court of Addl. Chief Judicial Magistrate
u/ss.409,109/114, IPC, alleging that the debt became barred
by limitation as on 5.5.1987; that the liability of the
respondent being co-extensive with that of the principal
debtor, his liability also stood extinguished as on
5.5.1987; that without taking any action to recover the
amount from the principal debtor within the period
529
of limitation, on 14.1.1989, the Branch Manager credited to
his S.B. Account only Rs.14,254.00 on the maturity of his
F.D.R. and thereby the appellants criminally embezzled the
amount.
The appellants filed this Criminal Appeal by special
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leave challenging the High Court’s order declining to quash
the complaint filed by the respondent u/ss.409, 109/114,
IPC.
Allowing the appeal of the Bank, this Court,
HELD : 1.01. The rules of limitation are not meant to
destroy the rights of the parties. Section 3 of the
Limitation 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 is the right is destroyed.
[532E-F]
1.02. Though the right to enforce the debt by judicial
process is barred, 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. [532G]
1.03. What s.3. refers is only to the remedy but not to
the right of the creditors. Such debt continues to subsists
so long as it is not paid. It is not obligatory to file a
suit to recover the debt. [532G-H]
2.01. Action in terms of the contract expressly 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. [533C]
2.02. 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. [533A]
2.03. The bank had in its possession the F.D.R. as
guarantee for due payment of the debt and bank appropriated
the amount towards the debt due and payable by the principal
debtor. [533D]
2.04. The respondent and his wife stood guarantors to
the principal debtor, jointly executed the security bond and
entrusted the F.D.R. as
530
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. [533B-C]
3.01. 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.
[533E]
3.02. 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,
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least it would be an instrument in the hands of the private
complainant 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. [533F-534A]
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
254 of 1992.
From the Judgment and Order dated 25.6.1991 of the
Madhya Pradesh High Court in Misc. Criminal Case No. 1701
of 1991.
G.L. Sanghi, Dhruv Mehta, Aman Vachher and S.K. Mehta
for the Appellants.
The Judgment of the Court was delivered by
531
K. RAMASWAMY, J. Special leave granted.
Through 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 respondent, 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 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
Rs. 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 Rs. 24,000 which would mature
on November 1, 1988. At maturity its value would be at Rs.
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 Rs. 27,037.60
due and payable by the principal debtor as on December, 1988
and the balance sum of Rs. 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 co-extensive
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 Rs.14,250.40 was
credited to his Saving Bank Account No. 3763. The entire
amount at maturity, namely Rs. 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 to save themselves from the
financial obligation neglected to recover the amount from
the principal debtor and allowed the claim to be barred
limitation and embezzled the amount entrusted by the
respondent. The appellant 2 to 6 abated the commission of
the crime in converting the amount of Rs. 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.
532
The security bond, admittedly, executed by the
respondent reads the material parts thus : "We Confirm
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having handed over to you by way to security against your
branch office Katni F.D. Account No. 77/83 dated November 1,
1983 for Rs. 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."
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
contract 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. Section
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 is that right itself is destroyed. For example
under s.27 of the Act a suit for possession of any property
becoming barred by limitation, 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 reasons 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 subsists 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
533
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
and his wife stood guarantors to the principal 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 expressly or
implied is a negation of criminal breach of trust defined in
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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.
It is also salutary to note that judicial process
should not be an instrument of oppression or needles
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
Migistracy to find whether the concerned accused should be
legally responsible for the 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
534
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 of
harass them for vendetta.
The appeal is accordingly allowed and the complaint is
quashed.
V.P.R. Appeal allowed.
535