Supreme Court Restores FIR Over Alleged Gold Loan Fraud | Says Patna HC Erred In Treating Complaint As Malicious Without Trial Evidence
Kiran Raj
The Supreme Court Division Bench of Justice Sanjay Karol and Justice Manoj Misra allowed a criminal appeal and directed the reinstatement of a previously quashed First Information Report (FIR). The Court found that the High Court had improperly quashed the FIR filed under Sections 420, 406, and 34 of the Indian Penal Code, stating that "in no circumstances, it can be said that no prima facie case regarding commission of an offence, as alleged in the FIR, is made out from its perusal." Accordingly, the FIR has been restored to the file of the competent court, with no opinion expressed on the merits of the case.
The Court’s final directive instructed the Registry to communicate the order to the Registrar General of the High Court of Judicature at Patna, ensuring transmission to the concerned court for necessary action. All pending applications were declared closed.
The appellant, a businessman by profession, had obtained a loan of Rs. 7,70,000 from the Bank of India, Motijhil Branch, on 22 July 2020. This loan was secured against 254 grams of 22-carat gold ornaments. A dispute subsequently arose surrounding the repayment and valuation of the pledged gold.
The appellant claimed he had settled the loan by paying Rs. 8,01,383.59, inclusive of interest, by 31 March 2023, pursuant to a notice dated 7 October 2022 from the bank. Despite this, the bank deducted Rs. 1500 for revaluation and allegedly failed to return the pledged gold.
According to the bank, the appellant had defaulted, and the loan account had been classified as a Non-Performing Asset (NPA) on 1 May 2021. Though it was upgraded upon repayment, it was again declared NPA on 30 April 2022. The bank contended that the repayment was insufficient to regularize the account, leading to revaluation of the pledged gold.
A subsequent revaluation by a different valuer revealed the ornaments to be gold-plated rather than pure gold. Based on this report, the bank lodged an FIR against the appellant under Sections 420 and 379 IPC on 22 May 2023.
The appellant, in response, filed a complaint on 24 May 2023 under Section 156(3) of the Cr.P.C., alleging fraud in the revaluation and non-return of gold. An FIR, being Mithanpura P.S. Case No.393 of 2023, was registered against the Branch and Credit Manager (Respondent No.1) and others. A charge sheet (No.371/24) was filed on 30 September 2024.
While the investigation was ongoing, the respondents moved an application under Section 482 Cr.P.C. before the High Court of Judicature at Patna on 5 October 2023 to quash the FIR. The High Court allowed this application on 12 November 2024, quashing the FIR.
The High Court based its decision on the following findings:
- The FIR filed by the appellant was a counterblast to the bank's FIR.
- It was intended to cause wrongful loss to the bank and wrongful gain to the complainant.
- The appellant had obtained the loan using spurious gold ornaments.
- The FIR was lodged with an ulterior motive and was an afterthought.
- Even taking the complaint at face value, no offence was disclosed.
- The complaint lacked an affidavit as required by Priyanka Srivastava v. State of UP.
- Continuation of the criminal proceedings was deemed an abuse of process.
Aggrieved by this quashing order, the appellant approached the Supreme Court in appeal.
The Supreme Court examined the propriety of the High Court’s decision to quash the FIR and made several judicial observations.
The Court stated: “The task of the High Court, when called upon to adjudicate an application seeking to quash the proceedings, is to see whether, prima facie, an offence is made out or not.” It added that the High Court is not expected to examine whether the charges would stand at trial and that its jurisdiction is limited.
Quoting Rajeev Kourav v. Baisahab, the Court recorded: “It is no more res integra that exercise of power under Section 482 CrPC to quash a criminal proceeding is only when an allegation made in the FIR or the charge-sheet constitutes the ingredients of the offence/offences alleged.”
Further, in Naresh Aneja v. State of U.P., the Court stated: “It is well settled that when considering an application under Section 482CrPC, the court cannot conduct a mini-trial but instead is to be satisfied that prima facie the offences as alleged are made out.”
Criticizing the High Court’s reasoning, the Supreme Court remarked: “We are at a loss to understand as to how such a conclusion was arrived at, for the settled position is that for determining intention, evidence has to be taken into account.”
The Court pointed out that: “The revaluation report is of February, 2023, i.e., much after the payment had been made and the loan stood settled.” Additionally, the appellant’s requests for return of gold were dated 3 April and 25 April 2023, both post-repayments.
The Court also recorded: “It is difficult to understand as to why the gold was revalued and auctioned,” questioning the absence of third-party verification of the new valuation and observing that the gold had always been in the bank’s custody.
On the issue of evidence and involvement of other parties, it stated: “Fraud, if any, whether perpetrated at the first instance of valuation, or later, is a matter which could be unearthed only after a trial based on the evidence led by the parties.”
Therefore, the Court found that: “In no circumstances, it can be said that no prima facie case regarding commission of an offence, as alleged in the FIR, is made out from its perusal.”
The Supreme Court held: “In that view of the matter, we hold that the High Court had improperly quashed the proceedings initiated by the appellant.” The Court reinstated the FIR and restored the proceedings to the trial court.
Clarifying the limited scope of its judgement, the Bench stated: “It stands clarified that we have not expressed any opinion on the matter, and the guilt or innocence of the respondents has to be established in the trial, in accordance with the law.”
The Court further directed: “The proceedings out of the subject FIR, mentioned in paragraph 2 are revived and restored to the file of the concerned Court.”
Administrative instructions were issued: “The Registry is directed to communicate a copy of this order to the learned Registrar General, High Court of Judicature at Patna, who shall send forthwith a copy of this order to the concerned Court for necessary action.”
The Court concluded by disposing of ancillary matters, stating: “Pending applications, if any, shall stand closed.”
Advocates Representing the Parties:
For the Petitioners: Mr. Navaniti Prasad Singh, Senior Advocate; Mr. Vaibhav Niti, Advocate-on-Record; Ms. Madhavi Agrawal, Advocate.
For the Respondents: Mr. M. C. Dhingra, Senior Advocate; Mr. Gaurav Dhingra, Advocate-on-Record; Mr. Shashank Singh, Advocate; Mr. Samir Ali Khan, Advocate-on-Record.
Case Title: Abhishek Singh v. Ajay Kumar & Ors.
Neutral Citation: 2025 INSC 807
Case Number: Criminal Appeal No. ___ of 2025 (Arising out of SLP(Crl.) No.480/2025)
Bench: Justice Sanjay Karol, Justice Manoj Misra
[Read/Download order]
