New Delhi, 5th June, 2025 – New Delhi, 5 June 2025 – The Supreme Court, in a judgment delivered by Justices Sanjay Karol and Manoj Misra, set aside the Patna High Court’s order and restored the criminal proceedings against bank officials.
Facts:
In this case, Abhishek Singh, a businessman, took a loan of ₹7.7 lakhs from the Bank of India, Motijhil Branch, in July 2020, pledging 254 grams of 22-carat gold ornaments as security.
The bank demanded repayment of ₹8,01,383.59, including interest. Mr. Singh claimed he repaid the entire amount by 31st March 2023, but the gold was not returned.
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The bank revalued the gold without his knowledge, deducting ₹1,500 as revaluation fees. A new valuation report concluded the ornaments were counterfeit.
The bank filed an FIR against Singh, accusing him of fraud.
Mr. Singh filed an application under Section 156(3) CrPC, leading to an FIR against bank officials, accusing them of cheating, criminal breach of trust, and conspiracy.
The court allowed Singh’s complaint to be quash, leading to an appeal to the Supreme Court.
Appellant:
The appellant argues that the High Court failed to recognize that there was no outstanding loan on 31st March, 2023, and that the judgment relied on documents beyond the FIR/complaint.
The revaluation of the appellant’s pledged gold was done behind his back, contrary to the terms of the loan agreement, and the complaint made under section 156 (3) Cr.P.C. dated 24th May, 2023, was erroneous.
The appellant argued that the High Court had overreached itself by assessing the evidence too soon and that the FIR had been wrongfully quashed because a prima facie case had been established.
Respondent:
The respondents argued that the non-lodging of FIR against the 1st valuer was incorrect, raising suspicion, and the charge on the appellant’s account without consent or prior notice amounts to fraud and cheating.
The respondents argued that the gold loan account was declared a non-performing asset on 1st May, 2021, but was upgraded to standard upon payment.
Subsequent non-payment led to its declaration as an Non-Performing Asset (NPA) on 30th April, 2022.
The amount deposited by the appellant on issuance of a recall notice was not sufficient for the account to be upgraded again, and the gold pledged by the appellant was revalued.
The respondents also argued that the appellant deliberately allowed the loan to become an NPA, knowing that the ornaments alleged were fake.
Judgment:
The Supreme Court ruled in a case regarding the scope of the High Court’s power to quash and set aside proceedings. The court’s role is to determine if an offense is made out, not examine whether charges may hold up in court.
The court’s interference is to prevent abuse of process or secure the ends of justice. Evidence produced by the accused in defense cannot be examined by the court, except in exceptional circumstances.
The court cannot appreciate evidence while considering a petition for quashing criminal proceedings.
The court concluded that the bank’s fraud risk management policy and removal of the 1st valuer were not malafide. The appellant allegedly took the entire loan process with ill intention, but the court’s reasoning is unclear.
The court’s discussion in quashing the FIR did not address the possibility of respondents’ involvement in the misappropriation of the pledged gold.
There was no third-party verification by the bank to corroborate the findings returned by the 2nd valuer, so it cannot be positively ruled out that all parties involved did not commit any act affecting the appellant’s pledged gold.
The High Court was found to have improperly quashed the proceedings initiated by the appellant, and the guilt or innocence of the respondents must be established in the trial. The proceedings out of the subject FIR are revived and restored to the court’s file.
Legal Analysis:
The Supreme Court’s judgment reaffirms the limited scope of a High Court’s power under Section 482 of the CrPC to quash criminal proceedings.
The Court reaffirmed that such powers must be exercised carefully and only if the FIR manifestly fails to disclose any offence.
Relying on Rajeev Kourav v. Baisahab and Naresh Aneja v. State of U.P., the Court emphasized that during the preliminary stage, courts should not indulge in the examination of the case on merits or consider evidence since it is the trial court’s job to do so.
In the given case, the High Court went beyond its jurisdiction by making final views on the intention of the complainant and going beyond the FIR documents.
It also wrongly cited Priyanka Srivastava v. State of UP, when the necessary affidavit was indeed filed along with the complaint under Section 156(3) CrPC.
The Supreme Court highlighted that material questions of fact like, whether the gold deposited was tampered with and whether there was any impropriety on the part of officials of the bank, could be resolved only through due trial proceedings based on evidence.
Hence, it held that the High Court’s verdict of quashing the FIR in advance was not justified, and let the criminal process continue.
This ruling emphasizes the principle that where a complaint involves real allegations deserving investigation, courts cannot interfere at the threshold.
Corram:
JUSTICE SANJAY KAROL
JUSTICE MANOJ MISRA
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