Credibility Of Indians In UAE Can Be Prejudicially Affected: Kerala HC Refuses To Quash FIR Against Businessman In Loan Fraud Case

The Kerala High Court refused to quash FIR against a businessman in loan fraud case by M/s. Invest Bank, Sharjah, United Arab Emirates (UAE).

The Court said that the credibility of Indians in UAE and others seeking loans can be prejudicially affected.

A Single Bench of Justice Bechu Kurian Thomas remarked, “… the credibility of Indians in UAE and of others who seek loans from banks can be prejudicially affected if such alleged frauds are permitted to be perpetrated by the citizens of this country, and when criminal proceedings are initiated, they are quashed without even being investigated.”

The Bench observed that the court must always be circumspect and cautious in nipping off in the bud itself, an allegation relating to an offence, even before the investigation is completed.

Senior Advocate S. Sreekumar and Advocate M.V. Amaresan appeared on behalf of the petitioner while Public Prosecutor M.C. Ashi and Advocate Johnson Gomez appeared on behalf of the respondents.

Brief Facts -

A complaint was filed by a person (complainant) alleging that he was authorised by Sharjah based bank to initiate criminal proceedings against the petitioner/accused. It was alleged that the accused in 2017 and 2018 obtained a loan of 68.159 million UAE dirhams equivalent to Rs. 135 crores for the business purposes of his establishment by the name ‘M/s. Hexsa Oil and Gas Services LLC’ and failed to repay 42.898 million UAE dirhams and thereby, committed cheating. The complainant alleged that the loan was disbursed since the accused had promised to repay it in 84 months and also that the amount shall be utilised only for the purpose of the business of his company and the accused had personally undertaken to repay the payment.

Induced by the promise of the accused, the bank disbursed the loan amount, however, the accused defaulted in repayment and when the bank officials visited his establishment, they found that he had diverted the loan amount for his personal purposes without utilising the same for his business. When confronted with it, the accused handed over 84 cheques of Rs. 3,25,000/- UAE dirhams each, but the first cheque itself, when presented for encashment, returned dishonoured. Thereafter, the accused became unreachable as he switched off his phone and soon absconded from Dubai. On verification, the bank realised that the accused had set up business establishments under different names in India, utilising the money taken from the bank. In the meantime, in a civil suit filed by the bank before the Court in UAE, it was held that the outstanding amount due to the bank was 48.898 million UAE dirhams, equivalent to more than Rs. 83 Crores. The accused thereby cheated the bank and committed the offence alleged.

The High Court in view of the above facts noted, “Of course, in cases where the proceedings are initiated with malafides or when there is no possibility of any offence being revealed, the court is vested with the power to quash the proceedings. … While appreciating the circumstances alleged in the complaint and the additional complaint filed by the third respondent, this Court reckons that the complainant has alleged that the accused had, with the intention to defraud the bank, procured loans and thereafter diverted the same to his relatives and other persons and absconded from UAE after switching off his phone and came down to India and commenced businesses.”

The Court added that though in the civil proceedings there is a decree obtained by the bank for repayment of the amount, the same by itself is not a reason to assume that a criminal proceeding will not lie and in certain circumstances, the criminal proceedings as well as civil proceedings can proceed simultaneously.

“Merely because a civil proceeding has been initiated does not mean that a criminal offence cannot be attracted. From the nature of the complaint and the allegations made thereon, it cannot be prima facie stated that the FIR is totally bereft of any legal basis”, it said.

The Court, therefore, concluded that quashing the FIR itself at this stage of the proceedings would seriously prejudice the complainant and it is not a case which may fall within the purview of exceptional circumstances warranting an interference to quash the FIR.

Accordingly, the High Court dismissed the petition and refused to quash FIR against the accused.

Cause Title- Abdul Rahman v. State of Kerala & Ors. (Neutral Citation: 2024:KER:52972)

Appearance:

Petitioner: Senior Advocate S. Sreekumar, Advocates M.V. Amaresan, and S.S. Aravind.

Respondents: Public Prosecutor M.C. Ashi, Advocates Johnson Gomez, Sanjay Johnson, and Sreedevi S.

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