Introduction:

The High Court of Jammu & Kashmir and Ladakh recently clarified that misuse of position by a public servant does not amount to “abuse” under Section 5(1)(d) of the J&K Prevention of Corruption Act unless accompanied by a dishonest intent to secure a pecuniary advantage for oneself or others. Justice Javed Iqbal Wani quashed an FIR filed by the Anti-Corruption Bureau (ACB) against Raj Singh Gehlot, a chartered accountant and promoter of Ambience Towers Private Limited (ATPL), over allegations of corruption in obtaining a ₹300 crore loan from J&K Bank.

Arguments of Both Sides:

The ACB alleged that the ₹300 crore loan sanctioned to ATPL violated bank norms, as it was based on unregistered lease deeds and discrepancies in lease terms, reducing the loan’s eligibility to ₹195.89 crore. The Bureau claimed the loan caused undue pecuniary benefits to ATPL, implicating Gehlot in a criminal conspiracy and abuse of power. Conversely, Gehlot argued that the loan followed regulatory norms and that no financial loss occurred to the bank, supported by a forensic audit report finding no fund diversion or fraudulent practices. He contended that the allegations reflected mere procedural lapses and not criminal intent, rendering the FIR unjustified.

Court’s Judgment:

The Court extensively examined Section 5(1)(d) and Section 120-B of the Ranbir Penal Code (RPC) to determine whether the allegations in the FIR constituted criminal offences. Justice Wani observed that for actions to fall under Section 5(1)(d), there must be evidence of dishonest intent to secure pecuniary benefits. The Court reasoned that procedural lapses or administrative decisions, even if flawed, cannot constitute abuse without fraudulent intent. Addressing allegations of conspiracy under Section 120-B RPC, the Court highlighted the necessity of an agreement to commit an illegal act or achieve a lawful object through illicit means, supported by tangible evidence. Mere conjectures or assumptions were deemed insufficient. Referring to principles laid down in the State of Haryana v. Bhajan Lal, the Court emphasised that criminal proceedings must disclose a cognisable offence to warrant continuation. In this case, the allegations primarily indicated procedural lapses by bank officials rather than criminal misconduct. The Court concluded that the investigation lacked incriminating material against Gehlot, deeming it appropriate to quash the FIR as far as he was concerned. This decision reinforced the principle that criminal liability cannot be imposed without concrete evidence of dishonest intent or conspiracy.