You have very carefully tried to paint your sister as innosent.
You are not clear about the fact :-
- How third person can get a copy of the electircity bill of her landlord?
- this bill was used as address proof or otherwise?
- any bank cheque given by the so called frind of your sister?
- any ID proof given by her if so whether genuine or forged?
- what are all the events that happened from default and upto FIR?
- what happened between FIR and arrest?
- How and what type of handwriting can match?
The finance company was initially just interested to get the money only and they give FIR only when they are compelled. You have not intimated how your sister responded to them. Obviously she missed a chance of refunding the loan in time and getting the matter closed.
You are asking where is the justice?
you just realise that if you had given a loan under these circumstances based on forged documents and only one of the person is available who had activelyhelped the transaction by giving the electircity bill (may be a few more document which you do not know) then:-
- why at police and finance compnay should not be convinced that she was in connivance for loan as well as for absconding of the friend.
- why police should not put the entire charge on her when she is unable to locate the so called friend.
Police (as appering from your information) has not sought remand of her and made her to coax the whereabouts of the so called friend. You have reason to believe police is acting with compassion.
Still you should consider falling on feet of finance compnay by refunding entire loan so that they become mercyful and agree to withdraw the charges.
In any case you are going to spend much more in litigation.