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Sunday, March 2, 2014

Quashing of criminal case sec.420/120 B- Bank is the complainant - Accused who is not a public servant refund the civil liability to the Bank - Bank has no grievance against the Accused - 420 is compoundable where as sec.120 B not and To the latter offence the ratio laid down in B.S. Joshi (supra) and Nikhil Merchant (supra) would apply if the facts of the given case would so justify. The observation in Gian Singh (supra) (para 61) will not be attracted in the present case in view of the offences alleged i.e. under Sections 420/120B IPC.- CBI, ACB, MUMBAI . ... APPELLANT (S) VERSUS NARENDRA LAL JAIN & ORS. ... RESPONDENT (S) = 2014(Feb.Part) judis.nic.in/supremecourt/filename=41278

 Quashing of criminal case sec.420/120 B- Bank is the complainant - Accused who is not a public servant refund the civil liability to the Bank - Bank has no grievance against the Accused - 420 is compoundable where as sec.120 B not and To the latter offence the ratio laid down in B.S.  Joshi  (supra) and Nikhil Merchant (supra) would apply if  the  facts  of  the  given  case would so justify.  The observation in Gian Singh (supra) (para 61) will  not be attracted in the present case in view of the offences alleged i.e.  under Sections 420/120B IPC.=

Central  Bureau  of  Investigation  (CBI)  ACB,  Mumbai
seeks to challenge an order dated 28.10.2005 passed by  the  High  Court  of
Bombay quashing the criminal proceedings against  the  respondents  Narendra
Lal Jain, Jayantilal L. Shah and  Ramanlal  Lalchand  Jain.   The  aforesaid
respondents had moved the High Court under  Section  482  Code  of  Criminal
Procedure, 1973 (for short “Cr.P.C.”) challenging the orders passed  by  the
learned Trial Court refusing to discharge  them  and  also  questioning  the
continuance of the criminal proceedings registered  against  them. =


 In the present case, as already  seen,  the  offence  with  which  the
accused-respondents had been charged are  under  Section  120-B/420  of  the
Indian Penal Code.  The civil  liability  of  the  respondents  to  pay  the
amount to the bank has already been settled  amicably.  
The  terms  of  such
settlement have been extracted above.  No subsisting grievance of  the  bank
in this regard has been brought to the  notice  of  the  Court.   
  Learned counsel has  further  pointed  out  that  
the  charges  framed
against the accused-respondents are under Section 120-B/420  of  the  Indian
Penal Code and the respondents not being  public  servants,  no  substantive
offence under the PC Act can be alleged against them. The relevance  of  the
views expressed in para 61 of the judgment  of  this  Court  in  Gian  Singh
(supra), noted above, to the present  case  is  seriously  disputed  by  the
learned counsel in view of the offences  alleged  against  the  respondents.
Learned counsel has also submitted that by the very same impugned  order  of
the High Court the criminal  proceeding  against  one  Nikhil  Merchant  was
declined to be quashed on the ground that offences under  Sections  468  and
471 of the IPC had been alleged against the said accused.  Aggrieved by  the
order of the High Court the accused had moved this Court under  Article  136
of the Constitution.  
In  the  decision  reported  in  Nikhil  Merchant  vs.
Central Bureau of Investigation and Another[4]  this  Court  understood  the
charges/allegations against the aforesaid Nikhil Merchant in the same  terms
as in the case of the accused-respondents, as already  highlighted.   
Taking
into consideration the ratio  laid  down  in  B.S.  Joshi  (supra)  and  the
compromise between the bank and the accused Nikhil  Merchant  (on  the  same
terms as in the present case) the proceeding against the said  accused  i.e.
Nikhil Merchant was quashed by the Court taking the view that the power  and
the Section 482  Cr.P.C.  and  of  this  Court  under  Article  142  of  the
Constitution cannot be  circumscribed  by  the  provisions  of  Section  320
Cr.P.C.   It  is  further  submitted  by  the  learned  counsel   that   the
correctness of the view in B.S. Joshi (supra) and  Nikhil  Merchant  (supra)
were referred to the three Judges Bench in Gian Singh (supra).   As  already
noted, the opinion expressed in Gian Singh (supra) is that the power of  the
High Court to quash a criminal  proceeding  under  Section  482  Cr.P.C.  is
distinct and different from the power vested in a criminal court by  Section
320 Cr.P.C. to compound an offence.  The conclusion in Gian  Singh  (supra),
therefore, was that the decisions rendered in B.S. Joshi (supra) and  Nikhil
Merchant (supra) are correct.
While  the
offence under Section 420 IPC is compoundable the offence under Section 120-
B is not.  
To the latter offence the ratio laid down in B.S.  Joshi  (supra)
and Nikhil Merchant (supra) would apply if  the  facts  of  the  given  case
would so justify.  The observation in Gian Singh (supra) (para 61) will  not
be attracted in the present case in view of the offences alleged i.e.  under
Sections 420/120B IPC.
11.   In the present case, having regard to the fact that the  liability  to
make good the monetary  loss suffered by the bank had been mutually  settled
between the parties and the accused  had  accepted  the  liability  in  this
regard, the High Court had thought it fit to invoke its power under  Section
482 Cr.P.C.  We do not see how such exercise of  power  can  be  faulted  or
held to be erroneous.  Section 482 of the Code inheres  in  the  High  Court
the power to make such order as may be considered necessary to, inter  alia,
prevent the abuse of the process of law or to serve  the  ends  of  justice.
While it will be wholly unnecessary  to  revert  or  refer  to  the  settled
position in law with regard to the contours of  the  power  available  under
Section 482 Cr.P.C. it must be remembered that  continuance  of  a  criminal
proceeding  which  is  likely  to  become  oppressive  or  may  partake  the
character of  a  lame  prosecution  would  be  good  ground  to  invoke  the
extraordinary power under Section 482 Cr.P.C.
12.   We, therefore, decline to interfere  with  the  impugned  order  dated
28.10.2005 passed by the High Court and dismiss this appeal.   We,  however,
make it clear that the proceedings in  Special  Case  No.  15/95  and  20/95
stands interfered with by the present order  only  in  respect  of  accused-
respondents Narendra Lal Jain and Ramanlal Lalchand Jain.
2014(Feb.Part) judis.nic.in/supremecourt/filename=41278
P SATHASIVAM, RANJAN GOGOI, N.V. RAMANA
                               REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION
                      CRIMINAL APPEAL  NO.517  OF 2014
       (Arising out of Special Leave Petition (Crl) No. 6138 OF 2006)


CBI, ACB, MUMBAI             .           ...    APPELLANT (S)

                                   VERSUS

NARENDRA LAL JAIN & ORS.                 ...  RESPONDENT (S)




                               J U D G M E N T


RANJAN GOGOI, J.

1.    Leave granted.

2.    The appellant, Central  Bureau  of  Investigation  (CBI)  ACB,  Mumbai
seeks to challenge an order dated 28.10.2005 passed by  the  High  Court  of
Bombay quashing the criminal proceedings against  the  respondents  Narendra
Lal Jain, Jayantilal L. Shah and  Ramanlal  Lalchand  Jain.   The  aforesaid
respondents had moved the High Court under  Section  482  Code  of  Criminal
Procedure, 1973 (for short “Cr.P.C.”) challenging the orders passed  by  the
learned Trial Court refusing to discharge  them  and  also  questioning  the
continuance of the criminal proceedings registered  against  them.   Of  the
three accused, Jayantilal L. Shah, the court is informed,  has  died  during
the pendency of the present  appeal  truncating  the  scope  thereof  to  an
adjudication of the correctness of the decision of the High Court in so  far
as accused Narendra Lal Jain and Ramanlal Lalchand Jain are concerned.

3.    On the basis of two FIRs dated 22.03.1993, R.C. No. 21(A) of 1993  and
R.C. No.22 (A) of 1993 were registered against the  accused-respondents  and
several officers of the Bank of  Maharashtra.   The  offences  alleged  were
duly investigated and separate chargesheets in the two cases were  filed  on
the basis whereof Special Case No. 15 of 1995 and Special  Case  No.  20  of
1995 were registered in the Court of the  Special  Judge,  Mumbai.   In  the
chargesheet filed, offences under Sections 120-B/420 IPC and  Sections  5(2)
read with  Section  5(1)(d)  of  the  Prevention  of  Corruption  Act,  1947
corresponding  to  Sections  13(2)  read  with  Section  13(1)(d)   of   the
Prevention of Corruption  Act,  1988  (for  short  “PC  Act”)  were  alleged
against the accused persons.  In so far as the  present  accused-respondents
are concerned the gravamen of the charge is that  they  had  conspired  with
the  bank  officials   and   had   projected   inflated   figures   of   the
creditworthiness of the companies represented by them  and  in  this  manner
had secured more advances/loans from the bank than they were entitled to.

4.    While  the  criminal  cases  were  being  investigated  the  bank  had
instituted suits for recovery of the amounts claimed  to  be  due  from  the
respondents.  The said suits were disposed of in terms  of  consent  decrees
dated 23.04.2001.  Illustratively, the relevant clause of the  agreement  on
the basis of which the consent decrees were passed reads as follows:

      “10. Agreed and declared that dispute between the parties hereto  were
      purely and  simply  of  civil  nature  and  on  payment  mentioned  as
      aforesaid made by the Respondents the Appellants have no grievance  of
      whatsoever  nature  including  of  the  CBI  Complaint   against   the
      Respondents.”



5.    Applications for  discharge  were  filed  by  the  accused-respondents
which were rejected by the learned Trial Court by  order  dated  04.09.2011.
The learned Trial Court, thereafter, proceeded to frame charges against  the
accused.  In  so  far  as  the  present  accused-respondents  are  concerned
charges were framed under  Sections  120-B/420  of  the  Indian  Penal  Code
whereas against the bank officials, charges were framed under the  different
provisions of  the  Prevention  of  Corruption  Act,  1988  (PC  Act).   The
challenge of the respondents  to  the  order  of  the  learned  Trial  Court
refusing discharge and the continuation of the  criminal  proceedings  as  a
whole having been upheld by the High Court and the proceedings  in  question
having been set aside and quashed in respect of the respondent, the CBI  has
filed the present appeal challenging the common  order  of  the  High  Court
dated 28.10.2005.

6.    We have heard Mr. P.P. Malhotra, learned Additional Solicitor  General
appearing on behalf of the appellant and    Mr.  Sushil  Karanjkar,  learned
counsel appearing on behalf of Respondent Nos. 1 and 4.

7.    Shri Malhotra, learned Additional  Solicitor  General,  has  taken  us
through the order passed by the High Court. He has submitted that  the  High
Court had quashed the criminal proceeding registered  against  the  accused-
respondents only on the ground that the civil liability of  the  respondents
had been settled by the consent terms recorded in the decree passed  in  the
suits.   Shri Malhotra  has  submitted  that  when  a  criminal  offence  is
plainly disclosed, settlement of the civil liability,  though  arising  from
the same facts, cannot be  a  sufficient  justification  for  the  premature
termination of the criminal case.  Shri Malhotra  has  also  submitted  that
the offence under Section 120-B alleged against the  accused-respondents  is
not compoundable under Section 320 Cr.P.C.; so also the offences  under  the
PC Act.  Relying on the decision of a three Judges Bench of  this  Court  in
Gian Singh vs. State of Punjab and Another[1], Shri Malhotra  has  submitted
that though it has been held that the power of the High Court under  Section
482 Cr.P.C. is distinct and different from the power vested  in  a  criminal
Court for compounding of offence under Section 320 of the  Cr.P.C.,  it  was
made clear that the High Court must  have  due  regard  to  the  nature  and
gravity of the offences alleged before  proceeding  to  exercise  the  power
under Section 482 Cr.P.C.  Specifically drawing the attention of  the  Court
to para 61 of the report in Gian Singh (supra) Shri Malhotra  has  submitted
that “any compromise between the victim and the offender in relation to  the
offences under special statutes like  the  Prevention  of  Corruption  Act….
cannot provide for any basis  for  quashing  criminal  proceeding  involving
such offences”.  Shri Malhotra had  contended  that  having  regard  to  the
gravity of the offences alleged, which offences are prima  facie  made  out,
in as much as charges have  been  framed  for  the  trial  of  the  accused-
respondents, the High Court was  not  justified  in  quashing  the  criminal
proceedings against the accused-respondents.
 8.   Per contra, the learned counsel for  the  respondents  (accused)  have
submitted that the High  Court,  while  quashing  the  criminal  proceedings
against the respondents (accused), had correctly relied on the judgments  of
this Court in Central Bureau of Investigation, SPE, SIU(X),  New  Delhi  vs.
Duncans Agro Industries Ltd.,  Calcutta[2]  and  B.S.Joshi  and  Others  vs.
State of Haryana and Another[3].  Learned counsel has submitted that  though
simultaneous criminal and civil  action  on  same  set  of  facts  would  be
maintainable, in Duncans Agro Industries Ltd. (supra) it has been held  that
the disposal of the civil suit for recovery, on compromise upon  receipt  of
payments by the  claimants,  would  amount  to  compounding  of  offence  of
cheating.  No error is, therefore, disclosed in the order of the High  Court
insofar as the offence under Section 420  IPC  is  concerned.   As  for  the
offence under Section 120-B it is submitted that this Court  in  B.S.  Joshi
(supra) has held that the  power  under  Section  482  Cr.P.C.  to  quash  a
criminal proceeding is not limited by the provisions of Section 320  Cr.P.C.
and even if an offence is not compoundable under Section  320  Cr.P.C.,  the
same would not act as a bar for the exercise  of  power  under  Section  482
Cr.P.C.  As the dispute between the parties have been settled on  the  terms
of the  compromise  decrees,  it  is  submitted  that  the  High  Court  had
correctly applied the principles laid down in  B.S.  Joshi  (supra)  to  the
facts of the present case.
9.    Learned counsel has  further  pointed  out  that  the  charges  framed
against the accused-respondents are under Section 120-B/420  of  the  Indian
Penal Code and the respondents not being  public  servants,  no  substantive
offence under the PC Act can be alleged against them. The relevance  of  the
views expressed in para 61 of the judgment  of  this  Court  in  Gian  Singh
(supra), noted above, to the present  case  is  seriously  disputed  by  the
learned counsel in view of the offences  alleged  against  the  respondents.
Learned counsel has also submitted that by the very same impugned  order  of
the High Court the criminal  proceeding  against  one  Nikhil  Merchant  was
declined to be quashed on the ground that offences under  Sections  468  and
471 of the IPC had been alleged against the said accused.  Aggrieved by  the
order of the High Court the accused had moved this Court under  Article  136
of the Constitution.  In  the  decision  reported  in  Nikhil  Merchant  vs.
Central Bureau of Investigation and Another[4]  this  Court  understood  the
charges/allegations against the aforesaid Nikhil Merchant in the same  terms
as in the case of the accused-respondents, as already  highlighted.   Taking
into consideration the ratio  laid  down  in  B.S.  Joshi  (supra)  and  the
compromise between the bank and the accused Nikhil  Merchant  (on  the  same
terms as in the present case) the proceeding against the said  accused  i.e.
Nikhil Merchant was quashed by the Court taking the view that the power  and
the Section 482  Cr.P.C.  and  of  this  Court  under  Article  142  of  the
Constitution cannot be  circumscribed  by  the  provisions  of  Section  320
Cr.P.C.   It  is  further  submitted  by  the  learned  counsel   that   the
correctness of the view in B.S. Joshi (supra) and  Nikhil  Merchant  (supra)
were referred to the three Judges Bench in Gian Singh (supra).   As  already
noted, the opinion expressed in Gian Singh (supra) is that the power of  the
High Court to quash a criminal  proceeding  under  Section  482  Cr.P.C.  is
distinct and different from the power vested in a criminal court by  Section
320 Cr.P.C. to compound an offence.  The conclusion in Gian  Singh  (supra),
therefore, was that the decisions rendered in B.S. Joshi (supra) and  Nikhil
Merchant (supra) are correct.
10.   In the present case, as already  seen,  the  offence  with  which  the
accused-respondents had been charged are  under  Section  120-B/420  of  the
Indian Penal Code.  The civil  liability  of  the  respondents  to  pay  the
amount to the bank has already been settled  amicably.  The  terms  of  such
settlement have been extracted above.  No subsisting grievance of  the  bank
in this regard has been brought to the  notice  of  the  Court.   While  the
offence under Section 420 IPC is compoundable the offence under Section 120-
B is not.  To the latter offence the ratio laid down in B.S.  Joshi  (supra)
and Nikhil Merchant (supra) would apply if  the  facts  of  the  given  case
would so justify.  The observation in Gian Singh (supra) (para 61) will  not
be attracted in the present case in view of the offences alleged i.e.  under
Sections 420/120B IPC.
11.   In the present case, having regard to the fact that the  liability  to
make good the monetary  loss suffered by the bank had been mutually  settled
between the parties and the accused  had  accepted  the  liability  in  this
regard, the High Court had thought it fit to invoke its power under  Section
482 Cr.P.C.  We do not see how such exercise of  power  can  be  faulted  or
held to be erroneous.  Section 482 of the Code inheres  in  the  High  Court
the power to make such order as may be considered necessary to, inter  alia,
prevent the abuse of the process of law or to serve  the  ends  of  justice.
While it will be wholly unnecessary  to  revert  or  refer  to  the  settled
position in law with regard to the contours of  the  power  available  under
Section 482 Cr.P.C. it must be remembered that  continuance  of  a  criminal
proceeding  which  is  likely  to  become  oppressive  or  may  partake  the
character of  a  lame  prosecution  would  be  good  ground  to  invoke  the
extraordinary power under Section 482 Cr.P.C.
12.   We, therefore, decline to interfere  with  the  impugned  order  dated
28.10.2005 passed by the High Court and dismiss this appeal.   We,  however,
make it clear that the proceedings in  Special  Case  No.  15/95  and  20/95
stands interfered with by the present order  only  in  respect  of  accused-
respondents Narendra Lal Jain and Ramanlal Lalchand Jain.

                                       .…………………………CJI.
                                        [P. SATHASIVAM]


                                        ........………………………J.
                                        [RANJAN GOGOI]



                                        ..........……………………J.
                                        [N.V.RAMANA]
NEW DELHI,
FEBRUARY 28, 2014.

-----------------------
[1]    (2012) 10 SCC 303
[2]    (1996) 5 SCC 591
[3]    AIR 2003 SC 1387
[4]    (2008) 9 SCC 677

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