Court emphasizes the necessity of strong suspicion for proceeding with trial in Rs. 600 lakh loan fraud involving alleged conspiracy and misrepresentation.
In a significant judgment, the Delhi High Court has upheld the framing of charges against Vikas Garg and another petitioner associated with a due diligence agency, involved in a Rs. 600 lakh loan fraud case. The Court, presided by Justice Saurabh Banerjee, emphasized that at the stage of framing charges, the threshold is not proof beyond reasonable doubt but rather the existence of strong suspicion that the accused committed an offence.
The case revolves around allegations that in 2013, a fraudulent loan was sanctioned by the Corporation Bank based on forged documents. The petitioner’s firm, engaged for due diligence, allegedly submitted a misleading report facilitating the loan approval. The report, which purportedly verified the existence and authenticity of the borrower and related documents, was found to contain substantial misrepresentations.
The Court highlighted the principles under Sections 227 and 228 of the Criminal Procedure Code, 1973, noting that framing of charges is warranted when there is sufficient material to raise grave suspicion against the accused. It was observed that the due diligence agency had a positive duty to independently verify the borrower’s credentials, which was allegedly neglected, leading to the sanction of the fraudulent loan.
Further, the Court dismissed the petitioners' arguments for quashing the charges, reiterating that such powers should be exercised sparingly, particularly when the allegations are not patently absurd or inherently improbable. The judgment underscores the necessity for a trial to test the veracity of the allegations and the evidence presented.
This decision comes as a reaffirmation of the judiciary's role in ensuring that due process is followed, particularly in cases involving financial frauds and corruption, emphasizing the criticality of independent verification by due diligence agencies in loan sanctioning processes.
Bottom Line:
The Court emphasized that at the stage of framing charges, the purpose is not to determine guilt but to assess whether there is sufficient ground to proceed against the accused based on the material on record, even if there is a strong suspicion of involvement in the alleged offence.
Statutory provision(s):
Criminal Procedure Code, 1973 - Sections 227, 228, 482, 397
Indian Penal Code, 1860 - Sections 120B, 420, 468, 471
Prevention of Corruption Act, 1988 - Section 13(2) read with Section 13(1)(d)
