Forgery and use charges cannot stand without material showing the accused made or used forged documents.

The Petitioners, Rita Singh and Natasha Singh, invoked Section 482 CrPC challenging the Revisional Court’s judgment dated 27.08.2022, which set aside their discharge and directed framing of charges, and the consequential order dated 22.11.2022 framing charges under Sections 120B read with 420, 467, 468 and 471 IPC, along with the substantive offences.

The CBI case arose from RC SIG 1998 E-0001 concerning lease finance of approximately ₹2 crores obtained by MISL from Ashok Leyland Finance Ltd. on the representation that MISL had acquired “Air Pre-heaters” from Kesoram Refractories.

The prosecution alleged that documents relating to the transaction were fabricated or altered, that the finance cheque was deposited into an account allegedly opened in the name of a fictitious Kesoram Refractories concern, and that the proceeds were transferred to MESCO group companies.

The CMM initially discharged the Petitioners, but the Revisional Court reversed that decision.

Whether the prior judgment of acquittal dated 24.12.2021 barred the present prosecution under Article 20(2) of the Constitution, Section 300 CrPC, or the doctrine of issue estoppel.

Whether the material collected by the CBI disclosed sufficient grounds to proceed against the Petitioners for criminal conspiracy under Section 120B IPC and cheating under Section 420 IPC at the stage of charge.

Whether the substantive charges under Sections 467 and 468 IPC could be sustained when the Petitioners were not alleged to have made, signed, or altered the disputed documents.

Whether the substantive charge under Section 471 IPC could continue in the absence of material showing that either Petitioner used the forged documents as genuine.

Whether the alleged settlement or repayment of the financial liability justified quashing the criminal proceedings under Section 482 CrPC.

At the stage of framing charge, the Court must not conduct a meticulous evaluation of evidence or determine the likelihood of conviction; it must only assess whether the material, taken at face value, gives rise to a reasonable suspicion that the accused might have committed the offence, as stated in State of Maharashtra v. Som Nath Thapa.

The material must have a discernible connection with the particular accused, and criminal liability cannot be imposed merely because a person is a director or officer of a company; an active role coupled with the requisite criminal intent is necessary, as explained in Sunil Bharti Mittal v. CBI.

Criminal conspiracy may be inferred from surrounding circumstances, although suspicion or conjecture alone is insufficient.

Under Sheila Sebastian v. R. Jawaharaj, a person who is not the maker of a false document cannot ordinarily be prosecuted for the substantive offence of forgery under Sections 463–464 IPC.

Section 471 IPC requires fraudulent or dishonest use of a forged document as genuine, together with knowledge or reason to believe that it is forged.

Article 20(2) and Section 300 CrPC bar a subsequent prosecution for the same offence or on the same facts, while issue estoppel prevents re-litigation of a specific fact finally determined in favour of the accused.

Settlement of a monetary dispute does not ordinarily justify quashing criminal proceedings involving allegations of fraud, conspiracy, forgery, or use of forged documents, applying Gian Singh, Parbatbhai Aahir, Vikram Anantrai Doshi, Sushil Suri, and CBI v. Maninder Singh.

The Court held that the earlier acquittal concerned distinct financial transactions, documents, and alleged acts, and therefore did not attract the constitutional or statutory bar against double jeopardy.

Nevertheless, factual findings in the earlier case concerning the same bank account, movement of funds, and Kesoram Refractories premises could not be indirectly reopened while that judgment remained operative.

After excluding matters subject to those findings, the Court found sufficient material to proceed on conspiracy and cheating: Sanjay Gandhi’s statement attributed transaction-specific participation to both Petitioners in negotiations immediately before the finance was sanctioned; this was considered alongside the alleged submission of documents, the statement that Kesoram Refractories did not deal in Air Pre-heaters, and the subsequent disbursal of funds.

The delayed recording of Gandhi’s supplementary statement and the absence of original documents were matters affecting evidentiary weight at trial, not grounds for discharge at the charge stage.

However, the prosecution did not attribute the making, signing, or alteration of the disputed documents to either Petitioner, nor did it identify any distinct act by either of them of presenting or using the documents as genuine.

The alleged settlement was neither independently verified by the bank nor sufficient in law to extinguish allegations of a pre-planned fraud involving fabricated documents.

The Court held that the prior acquittal did not bar the present prosecution, subject to the prohibition against reopening factual issues conclusively determined in the earlier case.

The charge of criminal conspiracy under Section 120B IPC read with Sections 420, 467, 468 and 471 IPC, and the substantive charge under Section 420 IPC, were permitted to continue.

The substantive charges under Sections 467, 468 and 471 IPC against the Petitioners were set aside because there was no specific material showing that they made, altered, or used the alleged forged documents.

The Trial Court was directed to proceed in accordance with law, uninfluenced by the observations on the merits.