OBSERVATION OF GIVEN CRIMINAL CASE:

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

DISTRICT: RAJKOT

CRIMINAL MISC. APPLICATION NO. 17533 OF 2018

IN THE MATTER OF: -

1. Hemantbhai Parbatbhai Lakkad

2. Ravi Harsukh Lakkad
3. Pradip Govind Lakkad
4. Jatin Dhirajbhai Lakkad
………………Applicants

VERSUS

1. State of Gujarat
2. Jigneshgiri Keshvgiri Goswami
………………Respondents
The present case is an Application filed before the High Court of Gujarat. The Application was
constrained to approach this court by the way of filing the present application the applicants is
seeking quashing of F.I.R. registered as FIR No. 1/23/2016 dated 08.02.2016 registered at the
Gondal City Police Station, Rajkot Rural, for the offences punishable u/s 406,408, 420, 102(B)
of the Indian Penal Code, 1860 filed by Respondent No. 2.
1. The Applicants nos. 1 to 4 are the Director of the M/s Shrinathji Sprintex Pvt. Ltd. As per
the version of the Respondent No. 2 in the impugned FIR, M/s Shrinathiji Sprintex Pvt.
Ltd has taken the Loan bypledging10, 400 cotton bales with State Bank of Patiyala. The
Applicants state that they are not any kind of agreement with the Respondent No. 2 nor
they have any nexus with the Respondent No.2.
2. The Accused no. 5 and 6 who were the Directors in the M/s Shreinathji Sprintex Pvt. Ltd
on 01.05.2015 Accused No. 5 and 6. Hence they are not Director or guarantor of the M/s
Shreinathji Sprintex Pvt. Ltd as per the agreement dated 01.05.2015 and also the Accused
No. 5 and 6 have preferred Criminal Misc. Application No. 10643 of 2016 before this
Hon'ble High Court of Gujarat praying quashing and setting aside impugned F.I.R. The
Applicants state that, this Hon'ble High Court has vide its order dated 08.03.2017
protected them from coercive steps. The Applicants state that Criminal Mise. Application
10643 of 2016 is arising from the same F.LR and Applicants are seeking similar relief.
3. The Applicants state that apart from the Directors and ex-directors of M Shrinathji
Sprintex Pvt. Ltd, there are three other accused in the Impugned FIR who are the
employees of the Respondent No. 2. The Accused No. 7 Imtiyaz Daal, Accused No. 8
Vipinsinh, Accuned No 9. Vidhyasagar Tiwariare the other accused in the impugned FIR.
4. That as per the version of the Respondent No. 2 in the impugned FIR Mis Staragriware
Housing & Collateral Management Ltd is in contract with the State Bank of Patiyala. As
per the terms of contract Respondent No. 2 having responsibility to administrate, manage
and keep records of goods which are stored in the goodown. The responsibility of taking
care of goods and inventory of incoming and outgoing stock is upon the Respondent No.
2 Company.
5. That as per the version of the Respondent No. 2 in the impugned FIR is, the Applicants
have applied for financial assistance from State Bank of Patiyala The Respondent No. 2
has stated that the Applicants have inked contract of pledge with State Bank of Patiyala
 for 10,400 cotton bales. It is stated that M/s Shrinathji Sprintex having Goodown Nos. 2
and 10 in which 10,400 cotton bales were stored. M/s Kishan Brothers who is also
arrayed in the impugned FIR for the similar alleged offence is having goodown no. 10
wherein 500 cotton bales were stored. M/s Galaxy Cotton Pvt. Ltd the third Firm against
which the Respondent No. 2 made similar allegation is having goodown no. 3 and 12 in
which 3,800 cotton bales were placed. Hence there are 14,700 cotton bales were pledge
by 3 differeșt entities with the State Bank of Patiyala, and as per the version of the
Respondent No. 2, they have inked agreement for administrate and management.
6. That it appears from the record and statement of the parties that, the Account of M/s
Shrinathji Sprintex Pvt. Ltd was not operating well and hence State Bank of Patiyala has
issued auction sale notice in the newspaper to sale the goods which were pledge to
recover the dues. The auction notice issued by the State Bank of Patiyala was dated
01.12.2015, and it is published with certain terms and conditions.
7. The important conditions which are there in the auction sale notice issued by the State
Bank of Patiyale are:
I. Condition No. 3.
Stocks can be inspected at warehouses between 10.00 AM to 5.00 PM or any day
before 09.12.2015.
II. Conditions No. 7.
The Stocks are being sold on “As is where is basis” and “Without any Recourses”
basis.
III. Condition No. 8.
Bank is not responsible for any claims subsequent to the delivery of stocks to the
Successful bidder.
IV. Condition No. 13.
The intending bidders are at their own liberty to make their own assessment /
enquiry about the stocks and after the bid is open hank will not entertain any sort
of queries.
Hence it is clear from the above conditions that, bank is aware about the stock
which is available and hence after due verification and inventory they have
published auction notice for sale of quantity mentioned in the notice. The
 Applicants state that as per the conditions sufficient opportunity was given to visit
the premises, inspect the goods and then participate. If the goods as alleged was
short, it may come in to notice of anyone. Even otherwise before conducting the
auction it is responsibility of the Respondent No. 2 and the Bank to verify the
goods available and then published the auction. Hence the allegation which are
alleged in the FIR against the Applicants are baseless, unpractical, for harassing
the Applicants and to shift the burden of loss upon Respondent No. 2 to
Applicants impugned FIR is lodge with malicious and malafide intention.
8. That as per the allegation of the Respondent No. 2 in the impugned FIR, at the time of
delivering the goods to auction purchaser, they found some deficit in the quantity of
goods and quality of some goods are not proper. The allegation of the Respondent No. 2
is that while delivering the goods from goodown no. 2 and 10, they found deficit of 2352
cotton bales and they delivered 8548 cotton pales. It is further alleged that they have
found 155 bales which was of cotton threat and cotton waste. The allegation of the
Respondent No. 2 is, value of 2352 cotton bales comes to Rs. 3,73,96,800/- for which
they have not mention any calculation or rate per bales. To curtail the allegation, the
Applicants state that 2332 cotton holes we not les quantity which can be ignore while
inspection. Anyone can find if such huge quantity is missing. More particularly when
officer of the Respondent No. 2 whose daily job is to maintain stock and inventory can
easily track goods from their experience. Hence allegation of the Respondent no. 2 found
false and beyond the practical possibility
9. The Respondent No. 2 has in its impugned FIR stated that Applicants have with collusion
with their officers / employees prepared false and fabricated stock sheet hence the stock
comes short. Though it is clear from the auction sale notice, that before auction
everybody are invited to inspect the stock, at that time there was no shortage of goods
and suddenly after the auction and at the time of handing over the delivery the stock
comes short. The Applicants state that all the procedure of auction and handing over the
goods to purchaser were done in their absence. The statement of supervisor and Branch
Manager of State Bank of Patiyala clearly shows that all the responsibility of taking
inventory and stock record is upon Respondent No. 2, and entire procedure was explained
 by them in their statement which shows that there is no scope of tempering the record and
inventory. Hence also the impugned FIR fails to prove case against the Applicants.
10. The Respondent No. 2 has in its impugned FIR alleged that the Applicants have in
collusion with his employees, arranged the bales in such a sequence and pattern, that by
sight none can found bales are short or less in quantity. The allegation of the Respondent.
No. 2 is baseless as it is made after the delivery is done, as its after thought of the
Respondent No. 2 to blame Applicants.
11. The Applicants state that due to some change in policy they are suffering bad days and
hence they are not able to repay its loan amount. The Applicants state that as and when
they purchased any goods, after reaching it to goodown, an inventory report will be
prepared by the employee of the Respondent No. 2 who is present on the spot and
forward it to the branch office of the Respondent No. 2, in turn it will forwarded to its
head office and a copy of same will be given by the Respondent No. 2 to State Bank of
Patiyala. Hence there is no chance of making any mischief or cheating or syphoning of
goods. The Applicants further state that, while withdrawing the goods from the goodown,
they have to deposit the amount of goods which will be withdrawn to State Bank of
Patiyala. The Bank will issue a challan which Applicants have to produce with the
Respondent No. 2, who will prepare their own form in which the quantity of goods, date,
quantity, payment etc. is mentioned. By production of form issued by the Respondent No.
2’s office, the goodown keeper will allow Applicants to take away the goods. Hence there
is no scope of taking away or cheating by Applicants with the Bank. Hence allegation of
406, 408, 420 and 120(B) are false and required to be quash.
12. The Applicants state that, as per the statement of the Sanjaybhai Kesturchand Naulakkha,
who happens to be the branch manager of the State Bank of Patiyala, Rajkot Branch
dated 11.02.2016, ne clearly stated that all the responsibility of taking care of goods,
maintain stock sheet and stuck registrar, is upon the Respondent No 2. He further added
that Bank is paying 1% amount as charge of service of the Respondent No. 2, against
which all the responsibility and liability qua goods of Applicants is upon them, that is
what the agreement with the Bank and Respondent No. 2. Hence the Applicants state
that, failure of Respondent No. 2 in taking due care of the goods and maintain stock
registrar when goods came short, they created a story blaming upon the Applicants. The
 Applicants state that, statement of the Sanjay Naulakkha clearly states that there is no sub
sentence in the impugned FIR and all the responsibility and liability of goods in upon the
Respondent No. 2. Hence the Applicants cannot be punished for failure of Respondent
No. 2 Instead of the State Bank of Patiyala has to initiate proceedings against the
Respondent No. 2 for breach of condition of contract and loss. The story created by
Respondent No. 2 is beyond the feet and belief.
13. The Applicants state that the auction notice issued by the Bank has specifically
mentioned that the auction will be conducted on "AS IS WHERE IS" and "NO
RECOUSE" basis. Hence the Respondent No. 2 and officers of the State Bank of Patiyala
were aware about the status of stock stored in the goodown. The allegation of 2352
missing cotton bales is not small thing which can be ignored. Even otherwise the
responsibility of maintain stock sheet in the goodown is upon the Respondent No 2
Hence there is no role of the Applicants in diverting the goods. The security guard and
officers were present on the goodown, and can anyone take away 2352 cotton bales in
their presence? The allegation of the Respondent. No. 2 is beyond the practical
possibility.
14. The Applicants state that they themselves apprehended theft of goods, hence they have
approached Police. The Applicants have made a representation before Police.
15. The Applicants state that, they have challenged the illegally and arbitrary action of the
Bank before Civil Court, Rajkot vide Special Civil Suit No. 319 of 2015. The Applicants
have sought injunction before the Court, and also prayed for inventory of goods. An
Application under Exhibit 14 is preferred by the Applicants under the apprehending that,
the goods of the Applicants is stolen by the Respondent No. 2 in collusion with the
officers of the Bank and purchasers. The L.d. Court below has in its order dated
18.01.2016 rejected the Application of the Applicants observing that, Defendants
(Respondent No. 2 herein und Bank) are having statement of goods and list. The court
has further observed that there is no theft of goods, as Bank is selling the goods upon
available quantity, hence the Application for Court Commissioner and Court Receiver
was rejected. A copy of the order passed in Special Civil Suit No. 319 of 2015 filed
before 15 Additional Senior Civil Judge, Rajkot.
16. The Applicants state that The Applicant has preferred Criminal Misc. Application 10648
of 2016 before this Hon'ble High Court seeking anticipatory ball in case of Impugned
FIR. The Applicant states that this Hon'ble Court has appreciated the argument of the
Applicant against the impugned FIR and granted bail to the Applicant on certain terms
and conditions on 05.05.2016.
17. The Applicants state that the allegation of Respondent No. 2 will turn down by the
statement of Imtiyaz Dual, employer of Respondent. No. 2. The say of the co-accused is,
he is the officer on the goodown, and responsibility of taking inventory of incoming and
outgoing goods is upon him on behalf of Respondent No. 2 Company. It is also stated
that he was serving as Supervisor of Respondent No. 2 and his duty on the goods is
during 9 AM to 6 PM. Imtiyaz also stated that he took record of goods as and when come
or go und inform to his branch, head office and State Bank of Patiyala about the same
through his report. The statement of the Imtiyaz clearly held Applicants innocent as, he
accept that the keys of Goodown were always with him, and if Applicants wanted to take
out goods, they have to produce form signed by the Branch of Respondent No. 2 upon
challan of State Bank of Patiyala. Then only Applicants will get his goods. Hence it is
clear that there is no involvement of Applicants is shortage of goods A copy of statement
made by Imtiyaz Deal dated 14.09.2016. Hence allegations of the Respondent No. 2
proves baseless, malafide malicious only ta shift their burden of failure upon the
Applicants. There is prima facie no role or involvement of the Applicants in alleged
shortage. The statement of employee of the Respondent No. 2 himself and statement of
Branch Manager of State Bank of Patiyala clearly shows that, entire liability of taking
care of goods and maintain stock sheet is upon Respondent No 2. The impugned FIR is
lodge to balm Applicants for default of performing the contractual duty by Respondent
No. 2 and shifts the burden of facing loss of an amount of Rs 3 Crore. The impugned FIR
is nothing but a tactics to harass and grab money from the Applicants.
18. The Applicants state chat though the Police is not registering their compliant they have
preferred an Application before seeking direction to lodge FIR against Respondent No. 2
and State Bank of Patiyala. The Applicants have on 28.05.2016 made a complaint before
Police for illegal action of bank and collusion of the Respondent No. 2 with the
purchaser. The Applicants state that Police was not lodging FIR of the Applicants hence
 they have preferred Special Criminal Application No. 4355 of 2016 before this Hon'ble
High Court. The Applicants has taken stand that the keys of Goodown was always with
the Respondent no. 2 which was recorded by this Hon'ble Court in its ordies dated
05.07.2016.
19. The Applicants slate that after concluding the auction, while delivering the goods, as is
the say of the Respondent No. 2 in the Impinged FIR, they found shortage of 2352 cotton
bales, and 155 bales of cotton thread and cotton waste good. The Applicants state that if
they found shortage of goods, they have to immediately move to Police to lodge
Complains. The Respondent No. 2 has allowed purchasers to take away the goods and
after period of one month impugned FIR came to be lodge. Hence it shows clear
collusion of the Respondent to cause financial loss to Applicants and harass them. The
Applicants state that smock statement was prepared by the employee of Respondent No.
2 and out by the Applicants, hence if there is any shortage or variation in stock sheet, will
not amounts to criminal breach of trust, or forgery or fraud or collusion by Applicants.
20. The Applicants state that even otherwise the Respondent no. 2 has no locus to lodge FIR
against the Applicants. The Applicants are not in any contract with the Respondent No. 4.
The State Bank of Patiyala has inked contract with the Respondent No. 4. The Applicants
have in transaction of alleged loan with the State Bank of Patiyala, the alleged due is of
State Bank of Patiyala, the auction was conducted by State Bank of Patiyala and
agreement of pledge between Applicants and State Bank of Patiyala hence if there is any
criminal Conspiracy, the State Bank of Patiyala has right to prove and prosecute and not
the Respondent No. 2.
21. The Applicants state that the State Bank of Patiyala has preferred Original Application
No. 413 of 2017 o 25.03.2017 seeking recovery of 2,89,70,140/- before Debts Recovery
Tribunal, Ahmedabad. In the said Civil suit there is no whisper of any allegation like
forgery or fraud of shortage of goods. The said Original Application arises for the same
loan transaction, which also proves that the dispute pertains to civil litigation and for
which Criminal action cannot be initiated. In the case at hand, the complaint is filed by
third party who has no nexus with the Applicants directly. Even otherwise, bare reading
of FIR proves that there is no prima facie offence committed by the Applicants which
needs criminal punishment.
22. That a is ultimately loosed to Applicants as there valuable stock of cotton bales is missing
and the responsibility of take care of goods is upon Respondent No 2. Hence the
Respondent No 2 has to pay the deficit amount to Applicants for loss and irregularity of
service. The Respondent No 2 has breach condition of agreement with the State Bank of
Patiyala for which State Bank of Patiyala has to take strike action against the Respondent
No. 2 not against the Applicant. The filing of impugned FIR is filed only to harass the
Applicant for malafide intention to grab money.
23. The Statement of the Accused No. 2, the Branch Manager of State Bank of Patiyala,
Rajkot Brunch clearly demonstrate that all the responsibility and liability of taking care
of goods, prepare inventory list, maintain stock registrar is upon Respondent No. 2. The
keys of goods brain where the goods got missing were always with the officers of
Respondent No. 2, without proper papers not allowed Applicants to enter into goodown.
The statement of co-accused itself states that there is no role of Applicants in shortage of
goods. The statement of bank officer will proves that all the responsibility is upon the
Respondent No. 2, and hence it is clear that to hid failure of Respondent No. 2, he has
find way out of lodging impugned FIR against innocent person like Applicants.
24. The Applicants were shock to know that, Respondent No. 2 has lodge FIR against them
fur shortage and loss of their own goods. The Applicants state that the goods which are
missing are raw material of their business and they themselves wanted to sale it to clear it
dues Hence there is no valid reason for diverting or theft the goods. The impugned FIR
does not constitute any motive upon Applicants for the offence which was imposed upon
them. The Applicants are on Anticipatory Bail granted by this Hon'ble High Court upon
certain terms and conditions. The Applicants state that impugned FIR is nothing but to
harass the Applicants, a civil dispute converted in to Criminal color by third party.
25. The applicant had filed this application for the gross abuse of law by respondent, the
grounds being set out hereunder were.
A. Because the (Original Complainant has no locus to lodge Criminal Complaint against the
Applicant. The Respondent No. 2 has no agreement with the Applicant upon which the
impugned FIR is filed.
B. Because the Applicant has no nexus with the Original Complainant as the alleged loan
transaction of the Applicant was with the State Bank of Patiyala who has not preferred or
taken any steps against the Applicant for alleged incidents.
C. Because there no prima facie forgery, cheating or criminal breach of trust made out while
bare rending of Impugned FIR.
D. Because the dispute which is alleged in the impugned FIR is of civil nature. The Original
Complainant is not even a competent person to lodge and for against the Applicants.
E. Because as the case is of Pledge the Applicant is not answerable for the less number of
the bales found in the stock. It is the duty of the bank in case of the Pledging of the Stock.
F. Because the goods were sold on "As is Where is" and "No Resource" basis no any
liability of the present applicant is established.
G. Because it is the responsibility of Respondent No. 2 to take inventory and stock sheet of
goods of the Applicant, Applicant cannot be held liable.
H. Because the Bank has auction sold the property and after the selling goods, the goods
found missing. The Applicant was not present at the time of auction or handing over the
goods, hence the Respondent No. 2 and officers of State Bank of Patiyala is the best
person to ask where the missing goods are?
I. Because the bank has schedule the auction and security guard of Respondent No. 2 is
there on premises, hence it is their responsibility to check the goods first before
auctioning it. Once the auction is concluded as per the agreement responsibility of
Applicant it ends.
J. Because the ultimate loss occurs to Applicant as the Respondent No. 2 having
responsibility in protect the goods, has lost valuable goods, and now shifting their
liability on Applicant. Hence also the impugned FIR required to be quashed.
K. Because the dispute pertains to civil dispute, hence lodging the FIR is not permissible.
More particularly when the impugned FIR is lodged by a person who has no authority,
power or nexus. Hence also the impugned FIR requires to be quash.
L. Because Original Application is pending before the Debts Recovery Tribunal Ahmadabad
and hence also no criminal offence is made out against Applicant.
M. Because prima facie FIR does not make out case against the Applicants, because there is
no evidence against the Applicants, which proves that specific allegation against
Applicants, which is a civil matter and the same is pending before the Ld. Tribunal.
N. The FIR has been filed before the Original Application and even though no criminal
breach has been mentioned in the entire Original application.
O. Because the impugned FIR does not constitute an offence as the version of the
Respondent Bank in the impugned FIR clearly shows that the dispute pertains to civil
nature for which Civil Litigation is going on before Competent Forum. Hence impugned
FIR deserves to be quashed.
P. Because there are no prime facie proof against the Applicants making them liable for the
offence under which the FIR is lodged
Q. It is submitted that Respondent no.2 with a clear intention to mislead the authorities, load
filed the F.I.R. which essentially contains the matter of civil nature, which has been given
a clock of criminal offence.
R. It is submitted that the FIR is filed in gross abuse of the process of criminal law as the
complaint is not tenable in law and is false, frivolous, oppressive and vexatious, against
the present applicant only with a view of extorting money and to achieve something
cannot be achieved otherwise.
S. That even if the Hit is to be believed as it is, the ingredients of 406,408 & 420, and
120(b) are not satisfied.
T. Because the dispute is precisely of Civil nature and pending before the Civil Court which
is efficient to take appropriate measures upon valid complaint by the competent
complainant.
U. Any other ground which may be urged at the time of the hearing.
26. The Applicant has therefore, respectfully prays that the Hon’ble Court may be pleased to
quash and set aside the F1R being FIR No 1/23/16 Dated 08.02.2016 registered before
Gondal City Police Station, Rajkot Rural, for the offences punishable under Section
406,408& 420, and 120(b) of the Indian Penal Code; Pending admission, hearing and
final disposal of this application, This Hon'ble Court may be please to stay all further
proceedings pursuant to the F.I.R. being FIR No 1/23/16 Dated 08.02.2016 registered
before Gondal City Police Station, Rajkot Rural, for the offences punishable under
 Section 406,408 & 420, and 120(b) of the Indian Penal Code; Costs of this Petition; such
other and further allied and consequential relief(s) in favour of the applicants, as deemed
just and proper, n the facts and circumstances of the case.

 In the present case, we observe that an FIR is filed against the applicant under sections
406, 408 & 420, and 120(A), which is inappropriate. The falsely allegations made against
the applicant stating that he is involved in the theft of the goods. The cotton bales which
were reported missing after the auction was done, that to they get to know after one
month from the date they took away the goods. as the argument done by the applicant
that if the total quantity of goods which is 10,400 were there before the auction then after
auction how it is possible that they only found 2352 cotton bales and 155 bales of cotton
thread and cotton waste good. Before doing the documentation for the auction why the
shortage was not checked? Even the respondent no.2 has all the rights to enter in the
goodown for the investigation before the goods were given back to the customer or to the
purchaser. All the documentation of the inventories or the accounts of the quantity
shorted in the goodown were with the respondent no. 2 and State Bank of the Patiyala, as
they have the rights to intervene, so the if any misplace of the goods happen then the
respondent no.2 and State Bank of Patiyala is responsible for this.
 As the special civil suit was also filed before the civil court of Rajkot, where the matter
was filed only for the inventory of the goods and in the Debts Recovery Tribunal,
Ahmedabad the State Bank of Patiyala preferred original application no. 433 of 2017 o
25.03.2017 seeking recovery of 2,89,70,140/-. Where tribunal said that "the said original
application arises for the same loan transaction, which also proves that the dispute
pertains to civil litigation and for which criminal action cannot be initiated”. Therefore,
the application is pending before the Hon'ble High court of Gujarat. So, we observe that
there is no prima facie of forgery, cheating or criminal breach from the end of the
applicant, due to which the FIR which is filed against him and this application which is
filed for seeking quashing of the registered FIR should be granted.