Kolkata, Sept. 2 -- A loan default or a later settlement at a lower amount cannot by itself constitute cheating unless dishonest intention existed when the loan was obtained, the Calcutta High Court has held.
Justice Dr Ajoy Kumar Mukherjee made the observation while dismissing a CBI challenge to Anju Barman's discharge from the cheating charge in a case involving alleged fraud at UCO Bank.
The case arose from allegations against then senior manager Kamal Kumar Chakraborty, who was accused of conspiring with borrowers and others to sanction loans to non-existent or inactive firms, allegedly causing the bank a loss of Rs 4.68 crore.
Barman was accused of obtaining a Rs 20 lakh cash-credit facility for a firm allegedly floated by her using false financial statements and documents. The trial court discharged her from the cheating charge but retained charges relating to conspiracy and forgery.
The CBI argued that the one-time settlement did not absolve her of criminal liability.
The High Court noted that Barman had secured the loan with 42 decimal of land valued at Rs 15 lakh and five fixed deposits of Rs 1 lakh each. The bank later accepted Rs 14.34 lakh in full and final settlement and issued a no-dues certificate.
The court held that the genuine security furnished at the outset showed there was no deception when the loan was obtained. A subsequent default or settlement for a lesser amount, it said, could not establish the dishonest intention required for cheating.
The court clarified that allegations of a fictitious firm or bogus financial statements could constitute other offences and would be tested at trial.
It also said courts cannot mechanically frame charges on prosecution allegations and must independently examine whether the material warrants proceeding for a particular offence, as framing a charge substantially affects an accused's liberty.
Published by HT Digital Content Services with permission from Millennium Post.