Act of repayment cannot quash a cheating case: Bombay HC

The Aurangabad bench of Bombay HC has held that repayment of the loan amount will not save the accused from criminal prosecution. The bench was hearing an application filed under Section 482 of CrPC seeking to quash of an FIR registered against members of a cooperative credit society. A government auditor of the Cooperation Department of State of Maharashtra had filed the report at a police station in Jalgaon against the applicant members for offences punishable under Sections 420, 406, 408, 409, 120B, r/w Section 34 of IPC. An audit of accounts of an urban cooperative credit society in Jalgaon for 2015-16 was conducted on completion of which the report was forwarded to the district Deputy Registrar of Cooperative Societies. The registrar then referred the matter to the district level scrutiny committee, which found that there were several misdeeds committed by the directors, employees, and borrowers of the concerned credit society in connivance with each other and defrauded the credit society, its members and depositors. It was alleged that the “ directors and employees of the credit society as well as borrowers hatched a conspiracy and misappropriated the funds of the depositors kept in the custody of the credit society. The loans were sanctioned contrary to the bye-laws prescribed for loan proposals of the society” As noted in the order, the applicants did not contend that they availed the loan facilities being members of the co-operative credit society. However, the applicants specifically contended that they have already repaid the amount to the credit society, thereby, discharging their financial liability. Therefore, they cannot be held responsible for any misdeeds or irregularities in the affairs of the society. Observing how the facts indicated towards a clear nexus between the applicants and office bearers of the credit society, the bench said: “ In view of attending circumstances and nature of allegations nurtured on behalf of prosecution, we are not in agreement with the submissions propounded on behalf of applicants that as they repaid the entire loan amount, they cannot be blamed for any irregularities or misconduct in the affairs of the society. In the present case, the investigation of the impugned FIR is in progress and at a primitive stage.However, allegations of sanction and disbursement of a huge amount of loan in favour of applicants by ignoring the fetters imposed by the bye-laws of the society, itself indicate the involvement of the applicants being conspirators in this crime.” The court further stated that offences relating to banking activities were hazardous to the “ public interest and well-being of society” . “ In such nature of offence relating to banking, the customers/depositors of the Credit Society are not only the victim of the crime, but society, in general, is sufferer. The social interest would be at peril and prosecution cannot be treated as party alien to the entire aspect of the matter. Therefore, the factum of repayment of loan would not itself adversely affect the prosecution,” it said. Thus, the court did not find “ any substantial reason to cause any interference in the FIR at this primitive stage” and rejected the applications.

The decision made by the Bombay HC bench is justified on the grounds that mere repayment or compensation cannot be said to have removed the commission of an illegal activity. It is necessary for the court to take strict action against such offenders who try to hide their misdeeds behind the cloak of reparation and save themselves from prosecution. If the court exempts them such malpractices will continue to exist and harm the interests of the common man.