Patna High Court
Y Vishwanath Gowd @ Viswanatha Gowd … vs The State Of Bihar on 21 July, 2026
IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.54471 of 2023
Arising Out of PS. Case No.-174 Year-2023 Thana- EAST CHAMPARAN COMPLAINT
District- East Champaran
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Y VISHWANATH GOWD @ VISWANATHA GOWD YERUR @
VISWANATHA YERUR S/O Y BASAVANA GOWD MANAGING
DIRECTOR AND C.E.O. OF L.I.C. HOUSING FINANCE LTD. HAVING
ITS ADDRESS AT BOMBAY LIFE BUILDING VEER NARIMAN ROAD,
MUMBAI, MAHARASHTRA-400001 PRESENTLY RESIDING AT FLAT
NO. 7, JEEVAN ANAND, BHULABHAI DESAI ROAD, OPPOSITE
BREACH CANDY HOSPITAL, MUMBAI, MUMBAI CITY,
MAHARASHTRA-400026.
... ... Petitioner/s
Versus
1. The State of Bihar BIHAR
2. MUNNI DEVI W/O SACHINDRA RAI R/O KHORA, P.S.- CHIRAIYA,
DISTRICT- EAST CHAMPARAN, BIHAR- 845315
... ... Opposite Party/s
======================================================
Appearance :
For the Petitioner/s : Mr.Puneet Siddharth, Advocate
Mr.Chandra Mohan, Advocate
Mr.Aryan Sinha, Advocate
For the State : Mr.Md. Mushtaque Alam, APP
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CORAM: HONOURABLE MR. JUSTICE ANSUL
CAV JUDGMENT
Date : 21-07-2026
Heard learned counsel for the petitioner and learned
Additional Public Prosecutor for the State.
2. The Petitioner seeks quashing of the order of
cognizance dated 27.02.2023 passed in connection with Complaint
Case No. 174 of 2023 by which the learned Ritu Kumari, Judicial
Magistrate, 1st Class has taken cognizance of the offences under
Sections 406 and 34 of the I.P.C whereas the Complaint Case was
filed for the offences under Sections 406, 420, 409 and 120B of
the Indian Penal Code.
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3. The prosecution case is that one Munni Devi wife of
Sachindra Ram lodged case addressed to the CEO of LIC Branch
Manager where the allegation that her husband was a B.M.P,
Constable and the accused nos. 2 to 6 were agents of Life
Insurance Corporation Housing Finance Ltd. (in short 'LIC HFL').
Learned Magistrate examined the complainant and S.A. and
recorded the statement filed enquiry of witnesses, namely, Preeti
Rani (EW-1), Surendra Singh (EW-2), Virendar Ram (EW-3),
Puran Devi (EW-4) and Sacchindra Ram (EW-5).
4. The allegation is that the accused nos. 2 to 6,
representing themselves as agents of LIC HFL approached the
complainant and induced her to avail a housing loan. Thereafter,
they told her that she must deposit cheques from her husband bank
account as mortgage security for the loan. She provided 14 signed
cheques of her husband's bank account to the accused. She alleged
that instead of opening a fresh loan account, the accused deposited
the loan amount of Rs. 14 lakhs in the existing account of
Sacchindra Ram, State Bank of India, Branch - Laheriasari Tower,
Darbhanga. She states that on 08.03.2017 and 09.03.2017 Rs.
7,50,000/- was diverted to another account. When she approached
the accused, they harassed and abused her and they wanted the
payment of Rs. 18,17,540.25/-.
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5. Heard the respective parties.
6. Learned counsel for the petitioner stated that the
petitioner is MD&CEO LIC HFL and its office at Mumbai. A
housing loan of Rs. 15 lakhs was duly sanctioned by LIC HFL on
05.12.2016
under the scheme ‘Grih Prakash’ for a term of 240
months @ 9.15% per annum (floating) with EMI of Rs. 13,641/-
and thereafter a formal loan agreement was executed and Rs. 14
lakhs was disbursed.
7. Learned counsel for the petitioner further submits that
from the very inception of the loan the borrowers went into regular
default and till 18.05.2023 only 35 EMIs were paid and
outstanding principal stood at Rs. 12,86,528.94/-. A legal notice
and Demand Notice under the SARFAESI Act was issued and the
complaint was filed after receipt of SARFAESI Demand notice.
8. Learned counsel for the petitioner states that the
petitioner was inducted as Director of LIC HFL only from
01.02.2021 and the alleged misappropriation occurred in March,
2017.
9. Perused the records. The complaint states that the loan
amount was deposited in SBI Account on 08.03.2017. Annexure-3
would show the last disbursal date 15.12.2016. The complainant
claims that 14 cheques given as mortgage were misused. The LIC
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HFL statement of account shows that the cheques with matching
numbers were post-dated cheques deposited for the EMI re-
payment and not mortgage cheque. Some bounced, some were
deposited.
10. Learned counsel for the petitioner further submits
that in any view of the matter the events are 2016 and 2017 and the
petitioner joined LIC HFL as Director only on 01.02.2021. The
loan was sanctioned and disbursed from LIC HFL, Bihar Branch
Office. The petitioner is the MD & CEO at the Head Office,
Mumbai.
11. The LIC HFL is an independent legal entity but has
not been made a party to the complaint. The company is not the
party and moreover the order dated 27.02.2023 does not indicate
any reasoning for taking cognizance against accused no. 1
individually given that the complaint itself makes no specific
allegation against him by name or overt act.
12. Learned counsel for the complainant states that the
Courts power under 482 Cr.P.C must be exercised sparingly and
circumspection. He states that prima facie case and disputed facts
cannot be resolved at quashing state. He also submits that the
senior officials and financial institutions are vicariously liable and
both criminal and civil proceedings can run concurrently.
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13. Learned counsel for the informant and learned
Additional Public Prosecutor for the State has vehemently opposed
quashing of the order of cognizance dated 27.02.2023.
14. Perused the records, Section 406 requires
entrustment of property and dominion of property and dishonest
misappropriation. The facts would show that the petitioner was
never entrusted with any property and no cheque was ever
deposited with him.
15. The undisputed facts are that a loan was secured by
complainant and her husband and they defaulted in payment and
the complaint was filed only after SARFAESI Notice of Demand
in December, 2022. The remedy of the complainant is to contest
the matter before the Debt Recovery Tribunal and other
appropriate forums. This is a classical case of conversion of civil
dispute into criminal cases which has been deprecated by the
Hon’ble Supreme Court in the case of Indian Oil Corporation vs.
NEPC India Ltd. reported in (2006) 6 SCC 736.
16. Another part of the argument has to be something
hitting at the basis of entire prosecution. The alleged offence is of
March, 2017. The complaint was filed after more five years and
nine months. Section 406 carries maximum punishment of three
years which means the limitation period under Section 468 Cr.PC
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is three years. In Sarah Mathew vs. Institute of Cardio Vascular
Diseases reported in (2014) 2 SCC 62 constitution bench decision,
it has been held that in Para 51, it is held as under:-
“In view of the above, we hold that for
the purpose of computing the period of limitation
under Section 468 of the Cr.P.C. the relevant date
is the date of filing of the complaint or the date of
institution of prosecution and not the date on
which the Magistrate takes cognizance.”.
Here, allegation is of misappropriation in 2017 and case
has been filed in the year 2021. The complaint is thus prima facie
time barred.
17. Apart from the same, the cognizance order is
completely non-speaking order. It does not disclose any
application of mind to the question whether the petitioner
individually can be held responsible for the alleged acts. In Pepsi
Foods Ltd. vs. Judicial Magistrate reported in (1998) 5 SCC 749
it has been held:-
” Summoning of an accused in a
criminal case is a serious matter. Criminal law
cannot be set into motion as a matter of course. it
is not that the complainant has to bring only two
witnesses to support his allegations in the
complaint to have the criminal law set into motion.
The order of the magistrate summoning the
accused must reflect that he has applied his mind
to the facts of the case and the law applicable
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allegations made in the complaint and the
evidence both oral and documentary in support
thereof and would that be sufficient for the
complainant to succeed in bringing charge home
to the accused. It is not that the Magistrate is a
silent spectator at the time of recording of
preliminary evidence before summoning of the
accused. Magistrate has to carefully scrutinise the
evidence brought on record and may even himself
put questions to the complainant and his witnesses
to elicit answers to find out the truthfulness of the
allegations or otherwise and then examine if any
offence is prima facie committed by all or any of
the accused”.
Thus, the order fails on this count also.
18. Another aspect is that the complainant is ordinarily a
resident of Mumbai. The Hon’ble Supreme Court in the case of
Vijay Dhanuka And Others vs. Najima Mamtaj And Others
reported in (2014) 14 SCC 638 stated in Paras 10 to 12, which is
re-produced as under:-
“10. However, in a case in which the
accused is residing at a place beyond the area in
which the Magistrate exercises his jurisdiction
whether it would be mandatory to hold inquiry or
the investigation as he thinks fit for the purpose
of deciding whether or not there is sufficient
ground for proceeding, is the question which
needs our determination. In this connection, it is
Patna High Court CR. MISC. No.54471 of 2023 dt.21-07-2026
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provides for postponement of issue of process.
The same reads as follows:
“202. Postponement of issue of
process. (1) Any Magistrate, on receipt of a
complaint of an offence of which he is authorised
to take cognizance or which has been made over
to him under Section 192, may, if he thinks fit,
and shall, in a case where the accused is residing
at a place beyond the area in which he exercises
his jurisdiction, postpone the issue of process
against the accused, and either inquire into the
case himself or direct an investigation to be made
by a police officer or by such other person as he
thinks fit, for the purpose of deciding whether or
not there is sufficient ground for proceeding:
Provided that no such direction for
investigation shall be made
(a) where it appears to the Magistrate
that the offence complained of is triable
exclusively by the Court of Session; or
(b) where the complaint has not been
made by a court, unless the complainant and the
witnesses present (if any) have been examined on
oath under Section 200.
(2) In an inquiry under sub-section
(1), the Magistrate may, if he thinks fit, take
evidence of witnesses on oath:
Provided that if it appears to the
Magistrate that the offence complained of is
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shall call upon the com-plainant to produce all
his witnesses and examine them on oath.
(3) If an investigation under sub-
section (1) is made by a person not being a police
officer, he shall have for that investigation all the
powers conferred by this Code on an officer in
charge of a police station except the power to
arrest without warrant.”
(Emphasis Supplied)
11. Section 202 of the Code, inter alia,
contemplates postponement of the issue of the
process “in a case where the accused is residing
at a place beyond the area in which he exercises
his ju-risdiction” and thereafter to either inquire
into the case by himself or direct an investigation
to be made by a police officer or by such other
person as he thinks fit. In the face of it, what
needs our determination is as to whether in a
case where the accused is residing at a place
beyond the area in which the Magistrate
exercises his jurisdiction, inquiry is mandatory or
not.
12. The words “and shall, in a case
where the accused is residing at a place beyond
the area in which he exercises his jurisdiction”
were inserted by Section 19 of the Code of
Criminal Procedure (Amendment) Act (Central
Act 25 of 2005) w.e.f 23-6-2006. The aforesaid
amendment, in the opinion of the legislature, was
essential as false complaints are filed against
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harass them. The note for the amendment reads
as follows:
“False complaints are filed against
persons residing at far off places simply to harass
them. In order to see that innocent persons are
not harassed by unscrupulous persons, this
clause seeks to amend sub-section (1) of Section
202 to make it obligatory upon the Magistrate
that before summoning the accused residing
beyond his jurisdiction he shall enquire into the
case himself or direct investigation to be made by
a police officer or by such other person as he
thinks fit, for finding out whether or not there was
sufficient ground for proceeding against the
accused.”
The use of the expression “shall”
prima facie makes the inquiry or the
investigation, as the case may be, by the
Magistrate mandatory. The word “shall” is
ordinarily mandatory but some-times, taking into
account the context or the intention, it can be
held to be directory. The use of the word “shall”
in all circumstances is not decisive. Bearing in
mind the aforesaid principle, when we look to the
intention of the legislature, we find that it is
aimed to prevent innocent persons from
harassment by unscrupulous persons from false
complaints. Hence, in our opinion, the use of the
expression “shall” and the background and the
purpose for which the amendment has been
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brought, we have no doubt in our mind that
inquiry or the investigation, as the case may be,
is mandatory before summons are issued against
the accused living beyond the territorial
jurisdiction of the Magistrate.”
19. No such inquiry seems to have been held.
20. Another issues is covered by R. Kalyani vs. Janak
C. Mehta reported in (2009) 1 SCC 516 where it states that in
cases of criminal breach of trust by company specific role of the
corporate officers must be pleaded and that by vicarious liability
does not automatically fall from designation. Further, LIC HFL,
the corporate entity in whose name the loan was sanctioned has
not been named as accused. It has been held in number of cases
that if the company is not being made an accused, the case cannot
proceed against its office bearers. The relevant paragraphs of R.
Kalyani (supra) is re-produced as under:-
“41. If a person, thus, has to be
proceeded with as being vicariously liable for the
acts of the company, the company must be made an
accused. In any event, it would be a fair thing to do
so, as legal fiction is raised both against the
company as well as the person responsible for the
acts of the company.”
21. That five other accused persons are there, but in
view of the issue relating to limitation, absence of company as an
accused, non-speaking order violating the judgment of Pepsi
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Foods Ltd. vs. Judicial Magistrate reported in (1998) 5 SCC 749,
this application is allowed. Section 468(1) reads that no court shall
take cognizance of an offence after expiry of limitation. The
embargo attaches to the act of taking cognizance of the offence,
not to the individual accused. If the Magistrate had no competence
to take cognizance of this complaint at all, that incompetence does
not become partial merely because five of the six did not move this
Court. The order of cognizance is one order, on one complaint, of
one offence. It is either within jurisdiction or it is not.
22. In such view of the matter, the order of cognizance
dated 27.02.2023 passed in connection with East Champaran
Complaint Case No. 174 of 2023 by the Ritu Kumari, Judicial
Magistrate, 1st Class is quashed against all the accused persons.
They are free from the burden of Complaint Case No. 174 of
2023and they will not be prosecuted in connection with this case
ever.
23. Accordingly, the present petition stands allowed.
(Ansul, J)
abhishekkr/-
AFR/NAFR AFR CAV DATE 21.04.2026 Uploading Date 23.07.2026 Transmission Date 23.07.2026
