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Monday, October 6, 2014

Sec.482 of Cr.P.C. - Non-Compoundable Economic Offences against public funds/Banks - not to be quashed on comprise -Fraud on Bank of Baroda - siphon crores of amounts in the name of fictitious companies for their personal use - pending trial one of accused paid amount and obtained no due certificate - High court quashed the case against him - Apex court held that It is not such a case where one can pay the amount and obtain a “no due certificate” and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Article 226 of the Constitution or under Section 482 of the Code and quash the proceeding. It is not legally permissible. It is the experience of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinize the entire conspectus of facts in proper perspective and quashed the criminal proceeding. Ex consequenti, the appeal is allowed, and the order passed by the High Court is set aside and it is directed that the trial shall proceed in accordance with law. = CRIMINAL APPEAL NO. 2048 OF 2014 (Arising out of S.L.P. (Crl.) No. 6461 of 2011) State of Maharashtra Through CBI … Appellant Versus Vikram Anantrai Doshi and Others …Respondents = 2014- Sept. Month - http://judis.nic.in/supremecourt/imgst.aspx?filename=41939

Sec.482 of Cr.P.C. - Non-Compoundable Economic Offences against public funds/Banks - not to be quashed on comprise -Fraud on Bank of Baroda - siphon crores of amounts in the name of fictitious companies for their personal use - pending trial one of accused paid amount and obtained no due certificate - High court quashed the case against him - Apex court held that It is not such a case where one can pay the amount and obtain a “no due certificate” and enjoy the benefit of quashing of the  criminal proceeding on the hypostasis that nothing more remains to  be   done.  The collective interest of which  the  Court  is  the  guardian  cannot be a silent or a mute spectator to allow the proceedings to  be withdrawn, or for that matter yield to the ingenuous dexterity of  the  accused persons to invoke the jurisdiction under Article  226  of  the
  Constitution  or  under  Section  482  of  the  Code  and  quash   the  proceeding.  It is not legally permissible. It is the  experience  of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence.  As we find  in the case at hand the learned Single  Judge  has  not  taken  pains  to   scrutinize the entire conspectus of facts in  proper  perspective  and  quashed the criminal proceeding. Ex consequenti, the appeal is allowed, and the order passed  by  the  High Court is set aside and  it  is  directed  that  the  trial  shall  proceed in accordance with  law.  =

During the pendency of the case before the trial court on  30th  March
      2009 the informant, Bank of Baroda, had transferred  its  debts  to  a
      trust IARC – BOB-01-07 under the control of Kotak Mahindra Bank.   
The
      accused, Vikram Doshi, settled the disputes and paid  Rs.42  lacs  for
      settling the dispute.  
On that basis, Kotak Mahindra Bank issued a “no
      due certificate” to M/s  Atcom  Technology  Limited  stating  that  on
      receipt of Rs.42 lacs, there was no amount outstanding and payable  by
      them in respect of facility advanced by Bank of Baroda.  
The said bank
      also confirmed that  the  guarantees  issued  by  Vikram  Doshi  stood
      discharged.
   9. After the  receipt  of  such  “No  dues  certificate”  the  respondent
      preferred a petition under Section 482 of the Cr.P.C. bearing Criminal
      Application No. 2239 of 2009 before the  High Court of  Judicature  at
      Bombay and the learned Single Judge vide order dated 24.2.2010 quashed
      the criminal proceedings pending before the learned Addl. Metropolitan
      Magistrate.
The learned Single Judge referred to one of  its  earlier
      orders and came to hold as follows:-
           “Both the offices under Sections 406  and  420  are  compoundable
           with  the  permission  of  the  court.   As   already   discussed
           hereinabove, the Bank has already given its No Due Certificate to
           the borrower i.e. ATCOM.  It  can clearly be seen  that  even  if
           the matter is permitted to go  for  trial,  no  fruitful  purpose
           would be served, except burdening the criminal Courts  which  are
           already over-burdened.”=
whether  a  proceeding  could  be  quashed  in
      exercise of inherent jurisdiction in respect of  the  non-compoundable
      offences and  principle of law in that regard was not in  a  state  of
      certainty.   The said position has been made clear by this Court  that
      High Court has the jurisdiction to quash a criminal  proceeding  under
      Section 482 of  the  Code  in  respect  of  non-compoundable  offences
      barring certain nature of crimes.=
In Rumi  Dhar
      v. State of W.B.[2] while dealing with an order declining to discharge
      the accused under Section 239 of the Code by the learned Special Judge
      which has been affirmed by the High Court, a two-Judge Bench  referred
      to the decision in Central Bureau of  Investigation  v.  Duncans  Agro
      Industries Ltd.[3] and Nikhil Merchant v. C.B.I.[4] came  to  hold  as
      follows:-

              “14. It is now a well-settled principle  of  law  that  in  a
              given case, a civil proceeding and a criminal proceeding  can
              proceed simultaneously.  Bank  is  entitled  to  recover  the
              amount of loan given to the debtor.  If  in  connection  with
              obtaining  the  said  loan,  criminal  offences   have   been
              committed  by  the  persons  accused  thereof  including  the
              officers  of  the  Bank,  criminal  proceedings  would   also
              indisputably be maintainable.”


      In the said case, the Court took note  of  the  fact  the  compromise
     entered into between the Oriental Bank of  Commerce  and  the  accused
     pertaining to repayment of loan  could  not  form  the  foundation  of
     discharge of the accused.  The two-Judge Bench appreciated  the  stand
     of the C.B.I. before the High Court that the criminal case against the
     accused had started not only for obtaining loan but also on the ground
     of criminal conspiracy with the Bank officers and  accordingly  upheld
     the order passed by the High Court.=
The  modus  operandi  as
      narrated in the chargesheet cannot be put in  the  compartment  of  an
      individual or personal wrong.  It is a social wrong and it has immense
      societal impact.  It is an accepted principle of handling  of  finance
      that  whenever  there  is   manipulation   and    cleverly   conceived
      contrivance to  avail of these kind of benefits it cannot be  regarded
      as  a   case  having  overwhelmingly  and  predominantingly  of  civil
      character.  The ultimate victim  is  the  collective.   It  creates  a
      hazard in the financial interest of the society.  The gravity  of  the
      offence creates a dent in the  economic  spine  of  the  nation.   
The
      cleverness which has been skillfully contrived, if the allegations are
      true, has a serious consequence.  A crime of this nature, in our view,
      would definitely fall in the category of  offences  which  travel  far
      ahead of personal or private wrong.  It has the potentiality to  usher
      in economic crisis.  Its implications have its own seriousness, for it
      creates a concavity in the solemnity that  is  expected  in  financial
      transactions.  
 It is not such a case where one can pay the amount and
      obtain a “no due certificate” and enjoy the benefit of quashing of the
      criminal proceeding on the hypostasis that nothing more remains to  be
      done.  
The collective interest of which  the  Court  is  the  guardian
      cannot be a silent or a mute spectator to allow the proceedings to  be
      withdrawn, or for that matter yield to the ingenuous dexterity of  the
      accused persons to invoke the jurisdiction under Article  226  of  the
      Constitution  or  under  Section  482  of  the  Code  and  quash   the
      proceeding.  It is not legally permissible. 
 The Court is expected  to
      be on guard to these kinds of adroit moves.  The High Court, we humbly
      remind, should have dealt with the matter  keeping  in  mind  that  in
      these kind of litigations the accused when perceives a tiny  gleam  of
      success, readily invokes the inherent jurisdiction for quashing of the
      criminal proceeding.  
The court’s principal duty,  at  that  juncture,
      should be to  scan  the  entire  facts  to  find  out  the  thrust  of
      allegations and the crux of the settlement.  
It is the  experience  of
      the Judge comes to his aid and the said experience should be used with
      care, caution, circumspection and courageous prudence.  As we find  in
      the case at hand the learned Single  Judge  has  not  taken  pains  to
      scrutinize the entire conspectus of facts in  proper  perspective  and
      quashed the criminal proceeding.  
The said quashment neither helps  to
      secure the ends of justice nor  does  it  prevent  the  abuse  of  the
      process of the Court nor can it be  also  said  that  as  there  is  a
      settlement  no evidence will come on record and there will  be  remote
      chance of conviction.  Such a finding in our view would  be  difficult
      to record.  Be that as it  may,  the  fact  remains  that  the  social
      interest would be on  peril  and  the  prosecuting  agency,  in  these
      circumstances, cannot be treated as an alien to the whole case.  Ergo,
      we have no other option but to hold that the order of the  High  Court
      is wholly indefensible.
  24.   Ex consequenti, the appeal is allowed, and the order passed  by  the
      High Court is set aside and  it  is  directed  that  the  trial  shall
      proceed in accordance with  law.   We  may  hasten  to  add  that  our
      observations in the present  appeal  are  solely  in  the  context  of
      adjudicating the justifiability of order of quashing of  the  criminal
      proceeding and it would not have any bearing at  the  time  of  trial.
      And we so clarify.



2014- Sept. Month - http://judis.nic.in/supremecourt/imgst.aspx?filename=41939

THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION
                      CRIMINAL  APPEAL NO. 2048 OF 2014
               (Arising out of S.L.P. (Crl.) No. 6461 of 2011)


      State of Maharashtra Through CBI             … Appellant


                                   Versus


      Vikram Anantrai Doshi and Others            …Respondents








                               J U D G M E N T


      Dipak Misra, J.
           The centripodal issue that strikingly  emerges,  commanding  the
      judicial conscience to ponder and cogitate with reasonable  yard-stick
      of precision, for  consideration  how  far  a  superior  court  should
      proceed to analyse the factual  score  in  exercise  of  its  inherent
      jurisdiction bestowed upon  it  under  Section  482  of  the  Code  of
      Criminal Procedure or under Article 226 of the Constitution of  India,
      to quash the criminal proceeding solely on the ground that the parties
      have entered into a settlement and, therefore, the continuance of  the
      criminal  proceeding  would  be  an  exercise  in  futility,  or   the
      substantial cause of justice  warrants  such  quashment  to  make  the
      parties free from unnecessary litigation with the assumed motto of not
      loading the system with unfruitful prosecution, of course with certain
      riders, one of which, as regards the cases  pertaining  to  commercial
      litigations, appreciation of predominant nature  of  civil  propensity
      involved in the lis or social impact in the backdrop of the  facts  of
      the case.  The primary question that we have posed has  a  substantial
      supplementary issue; i.e. should the courts totally  remain  oblivious
      to the prism of  fiscal  purity  and  wholly  brush  aside  the  modus
      operandi maladroitly adopted, as alleged by the  prosecution,  on  the
      part of industrial entrepreneurs or the borrowers  on  the  foundation
      that money has been paid back to the  public  financial  institutions.
      We think not, especially regard being had  to  the  obtaining  factual
      matrix in the case at hand.
   2. Presently to the factual  exposition.   On  the  basis  of  a  written
      complaint of chief vigilance  officer,  Bank  of  Baroda  a  case  was
      registered against the respondents on 6.1.2006 and after completion of
      investigation a report was filed before the Special Court, CBI  cases,
      Mumbai with a  prayer  to  forward  the  chargesheet  to  the  learned
      Magistrate who was competent to take cognizance  of  the  offences  as
      the involvement of R.C. Sharma, the concerned Bank Officer,  a  public
      servant, in the crime in question, could  not  be  prima  facie  found
      during the investigation.  As the facts would  undrape,  on   3.2.2006
      upon perusal of the chargesheet the learned Special Judge,  CBI  cases
      directed to place the chargesheet before  the  appropriate  court  and
      accordingly a fresh chargesheet was filed before the ACMM, 19th Court,
      Esplanade, Mumbai vide criminal case no. 82/CPW/2006 for commission of
      offences punishable under Section 120-B, Section 406, 20, 467, 468 and
      471 IPC against  the accused persons.
   3. On a perusal of the charge sheet,  it  is  evincible  that  there  are
      allegations to the effect that Vikram Doshi, A 1, Vineet Doshi,  A  2,
      and Sanjay J. Shah, A 3, made number of applications to  the  Bank  of
      Baroda for sanction of various credit facilities,  stating  that  they
      wanted to induct the said bank as a new consortium member  to  replace
      the existing members, namely, the UTI Bank and the Federal Bank.  They
      requested the said Bank to sanction 15% of the total  Working  Capital
      facility sanctioned by the consortium of Banks,  so  that,  that  much
      amount could be transferred to the UTI bank and Federal Bank  to  take
      over the existing liabilities with the said two banks. It was revealed
      during investigation  that  the  account  of  the  company,  with  the
      consortium of banks as well as the finance  institutions,  was  highly
      irregular and in the said condition the accused persons approached the
      Bank for sanction of loan. In the application to the Bank, the accused
      persons concealed the fact relating to the  dues  outstanding  against
      them. Thereafter, when asked for the  outstanding  position  with  the
      existing consortium members, the accused persons  willfully  and  with
      the criminal intent to mislead the Bank  of  Baroda,  furnished  wrong
      statements about  the  outstanding  position  by  giving  considerably
      lesser amount as outstanding than the actual.
   4. As further alleged, the  amount  of  loan  sought  was  sanctioned  on
      24.01.2003 by one Mr. K.K. Aggarwal, General Manager and  communicated
      to the branch. As per the terms and conditions of the said Term  Loan,
      the primary security for the same was the first charge to  be  created
      on the fixed assets  of  the  company  ranking  pari  passu  with  the
      existing Term Lending Institutions.  The primary charge for  the  cash
      credit and working  capital  demand  loan  was  the  hypothecation  of
      current assets such as stocks, stocks in trade, raw materials and book
      debts, and, that apart, one of the important terms and conditions  was
      that the CC, WCDL and Term Loan amounts were to be  directly  paid  to
      the company’s account with the UTI Bank and Federal Bank so as to take
      over the liabilities as well as the securities mortgaged with the  two
      banks.  Despite the said situation, the Bank on  29.01.2003  intimated
      the sanction to  ATCOM,  the  company  in  question.   It  is  further
      demonstrable from the chargesheet that A-1 and A-2, with the intention
      to escape personal liabilities, made A-3 and one  Mr.   Chirag  Gandhi
      directors in ATCOM and got all the loan documents including the Demand
      Promissory Note (DPN) signed by  the  said  persons.   The  terms  and
      conditions of the sanction was that  the  entire  Working  Capital  of
      Rs.570.00 lakhs (Rs.114.00 lakhs + Rs.456.00 lakhs) and the Term  Loan
      of Rs.360.00 lakhs were to be  directly  paid  to  the  UTI  Bank  and
      Federal Bank. Consequently, the Term Loan was released and paid as per
      the sanction terms and conditions. As alleged, A-1 induced the Bank to
      release the sanctioned Working Capital Funds to  the  Current  Account
      and from the said account money was dishonestly diverted  to  his  own
      accounts with SBI  and  Dena  Bank,  to  bring  down  the  outstanding
      liabilities in those accounts. As per the Chargesheet, Rs.114.00 lakhs
      of Cash Credit  (the  Fund  Based  portion  of  Working  Capital)  and
      Rs.456.00 lakhs (the Demand Based portion  of  Working  Capital)  were
      released into the Current Account on 27.03.2003. Thus, the total funds
      released into the Current Account was Rs.560.00 lakhs out of which A-1
      dishonestly transferred Rs.352.00 lakhs to  SBI  and  about  Rs.200.00
      lakhs to Dena Bank, which amounted to diversion  of  concerned  Bank’s
      funds dishonestly and caused wrongful loss to the said Bank.
   5. As is evident from the chargesheet the transfer of funds of CC and  DL
      to the current account was  with  a  dishonest  intention  to  further
      divert the funds from the current account, and  for  transfer  of  the
      said funds of CC and WCDL.  A-1 used the cheque  leaf  available  with
      him for the Current Account and substituted  out  the  words  “Current
      Account” and substituted them with “Cash Credit”. It has come  out  in
      the investigation that in order to further divert the funds  from  the
      Current Account, A-3 used to issue “Pay Yourself cheques” by obtaining
      Banker’s Cheque favouring their account with SBI and Dena Bank. It  is
      also perceivable from the chargesheet that though the accused A-1  and
      A-3 knew that the said Working Capital was  sanctioned  only  for  the
      purpose of taking over the liabilities of UTI Bank  and  Federal  Bank
      yet they  dishonestly diverted the funds to SBI  and  Dena  Bank.  The
      sanctioned money, as alleged, was not used  for  the  purpose  it  was
      availed of and the sanction terms and conditions were  violated  as  a
      consequence of which the Bank could not get the charge in  pari  passu
      with the other consortium Banks. The said diversion of  funds  by  A-1
      and A-3 deprived the Bank of its security and the entire  loan  became
      unsecured.
   6. The investigation further revealed that  A-1  got  letter  of  credits
      (hereinafter referred as “LCs”) issued  from  SBI  and  Dena  Bank  in
      favour of fictitious companies propped by the  accused  and  used  the
      said LCs to siphon the funds from these  Banks.  The  LCs  beneficiary
      firms, favoring whom the A-2 and A-3  had  requested  the  LCs  to  be
      issued, were companies existing only on paper without  any  commercial
      activity. The said fictitious companies  got  the  LCs  discounted  by
      attaching their bogus bills and portion  of  these  discount  proceeds
      were used for personal benefits of  A-1  and  a  certain  portion  was
      routed back to ATCOM. On the due dates, ATCOM did  not  discharge  its
      liabilities  with  SBI  and  Dena  Bank.  In  the   chargesheet,   the
      particulars of the names of fictitious companies have been given.  The
      said list covers 10 companies. It has been further  mentioned  in  the
      chargesheet  that  the  Proprietors/Directors  of   these   fictitious
      companies had issued false bills under their signatures and discounted
      these false bills backed by the LCs, with the  discounting  Banks,  at
      the   instance   of   one   Kanakranjan   Jain.    Some    of    these
      Proprietors/Directors are the employees and domestic servants of  said
      Kanakrajan Jain.
   7. After so stating the chargesheet proceeds as follows:
                 “That, in two of these fictitious companies, viz., M/s Anew
                 Electronics & M/s Covet Securities, Sh. Vikram Doshi  (A-1)
                 and Sh. Vineet Joshi, (A-2) were Directors for some  period
                 of  time.  These  two  companies  were  maintaining   their
                 accounts at United Western Bank. Sh.  Vikaram  Doshi  (A-1)
                 was also having his personal account in the same bank. From
                 these two Accounts Sh. Vikram Doshi had received a  sum  of
                 Rs. 1, 48,50,000/-. This amount was utilized by him towards
                 purchase of residential flat. Thus it  is  clear  that  the
                 accused persons under the garb of business requirements had
                 obtained credit facilities from the bank but  had  utilized
                 the funds for acquiring  immovable  property  for  personal
                 use. In order to clear the liability generated  because  of
                 such illegal acts, they had induced the Bank of  Baroda  to
                 sanction  the  credit  facilities,   which   facility   was
                 dishonestly used by them. The entire amount sanctioned  and
                 released by the Bank of Baroda is outstanding  and  nothing
                 has been repaid. Because of the acts of  the  accused,  the
                 facilities sanctioned by the Bank of  Baroda  are  rendered
                 without any securities  and  the  bank  has  thus  suffered
                 wrongful loss.”

   8. During the pendency of the case before the trial court on  30th  March
      2009 the informant, Bank of Baroda, had transferred  its  debts  to  a
      trust IARC – BOB-01-07 under the control of Kotak Mahindra Bank.   The
      accused, Vikram Doshi, settled the disputes and paid  Rs.42  lacs  for
      settling the dispute.  On that basis, Kotak Mahindra Bank issued a “no
      due certificate” to M/s  Atcom  Technology  Limited  stating  that  on
      receipt of Rs.42 lacs, there was no amount outstanding and payable  by
      them in respect of facility advanced by Bank of Baroda.  The said bank
      also confirmed that  the  guarantees  issued  by  Vikram  Doshi  stood
      discharged.
   9. After the  receipt  of  such  “No  dues  certificate”  the  respondent
      preferred a petition under Section 482 of the Cr.P.C. bearing Criminal
      Application No. 2239 of 2009 before the  High Court of  Judicature  at
      Bombay and the learned Single Judge vide order dated 24.2.2010 quashed
      the criminal proceedings pending before the learned Addl. Metropolitan
      Magistrate.  The learned Single Judge referred to one of  its  earlier
      orders and came to hold as follows:-
           “Both the offices under Sections 406  and  420  are  compoundable
           with  the  permission  of  the  court.   As   already   discussed
           hereinabove, the Bank has already given its No Due Certificate to
           the borrower i.e. ATCOM.  It  can clearly be seen  that  even  if
           the matter is permitted to go  for  trial,  no  fruitful  purpose
           would be served, except burdening the criminal Courts  which  are
           already over-burdened.”


  10. To arrive at the same conclusion the High Court relied on the decision
      in Madan Mohan Abbot v.  State  of  Punjab[1]  and  distinguished  the
      pronouncement in A. Ravishanker Prasad (supra).
  11.  We have heard Ms. Pinky Anand, learned ASG and Mr. P.K. Dey,  learned
      counsel for the Central Bureau of Investigation and Arunabh  Chowdhury
      and Mr. Anupam Lal Das for the respondents.
  12. In the backdrop of aforesaid facts the seminal question that arises is
      whether in the obtaining factual matrix the High Court is justified in
      quashing the criminal proceeding.  Learned counsel for the  appellants
      submits that the High Court has erroneously opined that the  remaining
      offences are 406 and 420 of IPC whereas the chargesheet, also included
      other offences against the accused persons.  It is  further  contended
      that the chargesheet was not filed against the public officer  as  the
      allegation against public officer could not  be  substantiated  during
      the investigation and the High Court without appreciating the  gravity
      of the other offences has quashed the proceeding which makes the order
      absolutely vulnerable in law.   Learned  counsel  for  the  respondent
      would contend that when “No due certificate”  was  obtained  from  the
      bank and the matter had been settled  the  High  Court  has  correctly
      quashed  the  proceeding  and  hence,  it   does   not   warrant   any
      interference.
  13. At this juncture, we are obligated to state that when the  High  Court
      decided, the issue was  whether  a  proceeding  could  be  quashed  in
      exercise of inherent jurisdiction in respect of  the  non-compoundable
      offences and  principle of law in that regard was not in  a  state  of
      certainty.   The said position has been made clear by this Court  that
      High Court has the jurisdiction to quash a criminal  proceeding  under
      Section 482 of  the  Code  in  respect  of  non-compoundable  offences
      barring certain nature of crimes.
  14. To appreciate the complete picture in proper perspective we  think  it
      seemly to refer to the relevant decisions in the field.  In Rumi  Dhar
      v. State of W.B.[2] while dealing with an order declining to discharge
      the accused under Section 239 of the Code by the learned Special Judge
      which has been affirmed by the High Court, a two-Judge Bench  referred
      to the decision in Central Bureau of  Investigation  v.  Duncans  Agro
      Industries Ltd.[3] and Nikhil Merchant v. C.B.I.[4] came  to  hold  as
      follows:-

              “14. It is now a well-settled principle  of  law  that  in  a
              given case, a civil proceeding and a criminal proceeding  can
              proceed simultaneously.  Bank  is  entitled  to  recover  the
              amount of loan given to the debtor.  If  in  connection  with
              obtaining  the  said  loan,  criminal  offences   have   been
              committed  by  the  persons  accused  thereof  including  the
              officers  of  the  Bank,  criminal  proceedings  would   also
              indisputably be maintainable.”


      In the said case, the Court took note  of  the  fact  the  compromise
     entered into between the Oriental Bank of  Commerce  and  the  accused
     pertaining to repayment of loan  could  not  form  the  foundation  of
     discharge of the accused.  The two-Judge Bench appreciated  the  stand
     of the C.B.I. before the High Court that the criminal case against the
     accused had started not only for obtaining loan but also on the ground
     of criminal conspiracy with the Bank officers and  accordingly  upheld
     the order passed by the High Court.
  15. In Central Bureau  of  Investigation  v.  A.  Ravishanker  Prasad  and
      Others[5], the Court was dealing with the fact situation  wherein  the
      accused persons had committed offences such as forgery, fabrication of
      documents  and  used  the  said  documents  as  genuine.   There   was
      allegation that  they  had  entered  into  conspiracy  with  the  Bank
      officers for availing  huge  credit  facilities.   In  course  of  the
      pendency of the criminal proceedings, the accused persons had  settled
      the outstanding dues by paying a sum of rupees 157 crores and on  that
      basis preferred an application under  Section  482  of  the  Code  for
      quashing of the criminal proceeding and the  High  Court  quashed  the
      proceedings on the basis of the settlement.  Be it stated,  the  trial
      had progressed in the said case and  92  witnesses  had  already  been
      examined.  The question that arose before this Court was whether  such
      a proceeding should have been quashed.  The  Court  distinguished  the
      decision in Duncans Agro Industries Ltd.‘s case and  opined  that  the
      tenor of the language implied therein indicates that quashing  of  the
      complaint  depends  on  the  facts  of  each  case.   The  Court  also
      distinguished the decision in Nikhil Merchant’s case.
  16. A three-Judge Bench in the case of Gian Singh v. State of  Punjab  and
      Another[6] while answering the reference whether the  High  Court  has
      the jurisdiction under Section 482 of the Code to quash  a  proceeding
      in respect of non-compoundable offences, after referring to number  of
      authorities, ruled that Section 482 of the Code, as its very  language
      suggests, saves the inherent power of the High Court which it  has  by
      virtue of it being a superior court to prevent abuse of the process of
      court or otherwise to secure the ends of justice.  The words, “nothing
      in this  Code”  which  means  that  the  provision  is  an  overriding
      provision and the said words leave no manner of doubt that none of the
      provisions of the Code limits or restricts  the  inherent  power.  The
      Bench proceeded to state that the guideline for exercise of such power
      is provided in Section 482 itself i.e. to prevent abuse of the process
      of any court or otherwise  to  secure  the  ends  of  justice  and  in
      different situations, the inherent power may be exercised in different
      ways to achieve its ultimate objective. Formation of  opinion  by  the
      High Court before it exercises inherent power  under  Section  482  on
      either of the twin objectives, (i) to prevent abuse of the process  of
      any court, or (ii) to secure the ends of justice, is a sine  qua  non.
      The Court further added that it is the judicial obligation of the High
      Court to undo a wrong in course of administration  of  justice  or  to
      [pic]prevent continuation of  unnecessary  judicial  process  and  the
      maxim ex debito justitiae is inbuilt in such exercise  for  the  whole
      idea is to do real, complete and  substantial  justice  for  which  it
      exists.
            After so stating, the three-Judge Bench addressed to the  issue
    pertaining to the quashing of a criminal proceeding on  the  ground  of
    settlement between an offender and the victim and in this  context,  it
    ruled thus:-

          “61. Inherent power  is  of  wide  plenitude  with  no  statutory
          limitation but  it  has  to  be  exercised  in  accord  with  the
          guideline engrafted in such power viz.: (i) to secure the ends of
          justice, or (ii) to prevent abuse of the process of any court. In
          what cases power to quash the criminal proceeding or complaint or
          FIR may be exercised where  the  offender  and  the  victim  have
          settled  their  dispute  would  [pic]depend  on  the  facts   and
          circumstances of each case and no  category  can  be  prescribed.
          However, before exercise of such power, the High Court must  have
          due regard to the nature and gravity of the  crime.  Heinous  and
          serious offences of mental depravity  or  offences  like  murder,
          rape, dacoity, etc. cannot be fittingly quashed even  though  the
          victim or victim’s family  and  the  offender  have  settled  the
          dispute. Such offences are not  private  in  nature  and  have  a
          serious impact on society. Similarly, any compromise between  the
          victim and the offender in relation to the offences under special
          statutes like the Prevention of Corruption Act  or  the  offences
          committed by public servants  while  working  in  that  capacity,
          etc.;  cannot  provide  for  any  basis  for  quashing   criminal
          proceedings involving  such  offences.  But  the  criminal  cases
          having overwhelmingly and predominatingly civil flavour stand  on
          a different footing for the purposes  of  quashing,  particularly
          the offences  arising  from  commercial,  financial,  mercantile,
          civil, partnership or such  like  transactions  or  the  offences
          arising out of matrimony relating to dowry, etc.  or  the  family
          disputes where the wrong is  basically  private  or  personal  in
          nature and the parties have resolved  their  entire  dispute.  In
          this category of cases, the High Court  may  quash  the  criminal
          proceedings if in its view, because of the compromise between the
          offender and the victim, the possibility of conviction is  remote
          and bleak and continuation of the criminal  case  would  put  the
          accused to great oppression and prejudice and  extreme  injustice
          would be caused to him by not quashing the criminal case  despite
          full and complete settlement and compromise with the victim.”


  17. Recently, in Narinder Singh & Ors. v. State of Punjab & Anr.[7], a two-
      Judge Bench placed reliance on Gian Singh’s  case  (supra)  and  Dimpy
      Gujral v. Union Territory through Administrator[8]  and  distinguished
      the decision in State of Rajasthan v. Sambhu  Kevat[9],  and  came  to
      hold that in the facts of the said case the proceedings under  Section
      307 deserved to be quashed.  The two-Judge  Bench  laid  down  certain
      guidelines by which the High Courts would be guided in giving adequate
      treatment to the settlement between the  parties  and  exercising  its
      power under Section 482 of the Code while accepting the settlement and
      quashing the proceedings or refusing to accept the  settlement.   Some
      of the guidelines which are  relevant  for  the  present  purpose  are
      reproduced below :-
         “(II) When the parties have reached the  settlement  and  on  that
         basis petition for quashing the criminal proceedings is filed, the
         guiding factor in such cases would be to secure:

                 (i) ends of justice, or
                 (ii) to prevent abuse of the process of any  Court.
          While exercising the power the High Court is to form  an  opinion
          on either of the aforesaid two objectives.

          (III) Such a power is not  be  exercised  in  those  prosecutions
          which involve heinous and serious offences of mental depravity or
          offences like murder, rape, dacoity, etc. Such offences  are  not
          private  in  nature  and  have  a  serious  impact  on   society.
          Similarly, for offences alleged  to  have  been  committed  under
          special statute like the Prevention  of  Corruption  Act  or  the
          offences committed by  Public  Servants  while  working  in  that
          capacity are not to be quashed merely on the basis of  compromise
          between the victim and the offender.

         (IV) On the other, those criminal cases having overwhelmingly  and
         pre-dominantly civil character, particularly those arising out  of
         commercial transactions or arising out of matrimonial relationship
         or family  disputes  should  be  quashed  when  the  parties  have
         resolved their entire disputes among themselves.

         (V) While exercising its powers, the High Court is to  examine  as
         to whether the possibility of conviction is remote and  bleak  and
         continuation of criminal cases would  put  the  accused  to  great
         oppression and prejudice and extreme injustice would be caused  to
         him by not quashing the criminal cases.”






  18. At this stage it is apt to notice a three-Judge Bench decision in CBI,
      ACB, Mumbai v. Narendra Lal Jain & Ors.[10] In the  said  case  during
      the investigation pertaining to the culpability of the accused in  the
      crime, the concerned bank had instituted suits  for  recovery  of  the
      amount claimed to be due from the  respondents  and  said  suits  were
      disposed in terms of the consent decrees.  On the basis  of  the  said
      consent decrees an application  for  discharge  was  filed  which  was
      rejected by the trial court but eventually was  allowed  by  the  High
      Court. Be it stated, charges were framed under Section  120-B/420  IPC
      by the learned trial Judge against the private  parties.   As  far  as
      bank officials are concerned,  charges  were  framed  under  different
      provisions of the  Prevention  of  Corruption  of  Act,  1988.   Being
      dissatisfied with the said order, the CBI had preferred an  appeal  by
      obtaining special leave and in that context the  court  observed  that
      the accused respondent had been charged under  Section  120-B/420  IPC
      and the civil liability of  the  respondent  to  pay  the  amount  had
      already been settled and further there was no grievance on the part of
      the bank. Taking note of the fact that offence under  Section  420  of
      IPC is compoundable and Section 120-B is not compoundable,  the  Court
      eventually opined thus:-

           “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.”


  19.   Slightly more recently in Gopakumar B. Nair v. CBI and Anr.[11]  the
      Court referred to the paragraph 61 of Gian Singh’s Case, distinguished
      the decision in Narendra Lal Jain (supra) regard being had to the fact
      that the accused persons were facing charges under Section  120-B  r/w
      Section 13(2) r/w 13 (1) (d) of the 1988 Act and  Section  420/471  of
      IPC and came to hold  that  substratum  of  the  charges  against  the
      accused-appellant were not similar  to  those  in  Narendra  Lal  Jain
      (supra) wherein the accused was charged under Section 120-B read  with
      Section 420 IPC only.  After so stating the Court observed as follows:-


              “The offences are certainly more serious; they are not private
              in nature.  The charge of conspiracy  is  to  commit  offences
              under the Prevention of Corruption Act.  The accused has  also
              been charged for commission of the substantive  offence  under
              Section 471 IPC.  Though the amount due  have  been  paid  the
              same is under a private settlement between the parties  unlike
              in Nikhil Merchant (supra)  and  Narendra  Lal  Jain   (supra)
              where the compromise was a part of the decree  of  the  Court.
              There is no acknowledgement on the part of  the  bank  of  the
              exoneration of the criminal liability of the accused-appellant
              unlike the terms of compromise decree  in  the  aforesaid  two
              cases.  In the totality of the facts stated above, if the High
              Court has taken the view that the exclusion spelt out in  Gian
              Singh (supra) (para61)  applies to the  present  case  and  on
              that basis had come to the conclusion  that  the  power  under
              Section 482 CrPC should not be exercised to quash the criminal
              case against the accused, we cannot find any justification  to
              interfere with the said decision.”


  20.   The present obtaining factual score has to  be  appreciated  on  the
      anvil  of  aforesaid  authorities.   On  a  studied  scrutiny  of  the
      principles stated in Gain Singh (supra) it is limpid that  the  three-
      Judge Bench has ruled  that  proceeding  in  respect  of  heinous  and
      serious offences and the offences under prevention of  corruption  Act
      and all other offences committed by public servants while  working  in
      that capacity are not to be quashed.  That apart, the court  has  also
      emphasized on offences having a serious impact  on  society.   It  has
      been further laid down that criminal cases having  overwhelmingly  and
      predominantingly civil flavour stand on a different  footing  for  the
      purposes  of  quashing,  particularly  the   offences   arising   from
      commercial, financial, mercantile,  civil  partnership  or  such  like
      transactions or the offences arising  out  of  matrimony  relating  to
      dowry, etc. or the  family  disputes  where  the  wrong  is  basically
      private or personal in nature.  In Narendra Lal Jain (supra) the three-
      Judge Bench quashed the proceeding as the  charges  were  famed  under
      Section 120/420  IPC  in  respect  of  the  private  respondents.   In
      Gopakumar B. Nair’s case  the  court  distinguished  the  decision  in
      Narendra Lal Jain (supra) and opined that the accused  had  also  been
      charged for the commission of offence under Section 471 of IPC and  on
      that basis declined to interfere with the order  passed  by  the  High
      Court which had refused to quash the criminal proceeding.
  21.  In the case at hand, as per the chargesheet the respondents  had  got
      LCs issued from the bank in favour of fictitious companies propped  up
      by them and the fictitious beneficiary companies had  got  letters  of
      credits discounted by attaching their bogus bills.  The  names  of  10
      fictitious companies have been mentioned in  the  chargesheet.   Thus,
      allegation of forgery is very much there.  As  is  manifest  from  the
      impugned order, the learned Single Judge has not adverted to the same.
       It is not a simple case where an accused has borrowed money from  the
      bank and diverted it somewhere else and, thereafter, paid the  amount.
      It does not fresco a  situation  where  there  is  dealing  between  a
      private financial institution and an accused, and after initiation  of
      the criminal proceedings he pays the  sum  and  gets  the  controversy
      settled.  The expose’ of facts tells a different story.  As  submitted
      by the learned Counsel for CBI the manner  in  which  the  letters  of
      credits were issued and the funds were siphoned has  a  foundation  in
      criminal law.  Learned counsel would submit that it does not depict  a
      case which has overwhelmingly and predominatingly civil flavour.   The
      intrinsic character is different.  Emphasis is laid on the creation of
      fictitious companies.
  22.    In this context,  we  may  usefully  refer  to  a  two-Judge  Bench
      decision in  Central  Bureau  of  Investigation  v.  Jagjit  Singh[12]
      wherein the court being moved by the CBI had overturned the  order  of
      the High Court quashing the criminal proceeding and in  that  backdrop
      had taken note of  the  fact  that  accused  persons  had  dishonestly
      induced delivery of the property of  the  bank  and  had  used  forged
      documents as genuine.  Proceeding further the Court opined as follows:-


           “The offences when committed in relation with banking  activities
           including offences under Sections 420/471 IPC have harmful effect
           on the public and threaten the well-being of the society.   These
           offences fall under the  category  of  offences  involving  moral
           turpitude committed by public  servants  while  working  in  that
           capacity.  Prima facie, one may state that the bank is the victim
           in such cases but, in fact, the  society  in  general,  including
           customers of the bank is the  sufferer.   In  the  present  case,
           there was neither an allegation regarding any abuse of process of
           any court not anything on record to suggest  that  the  offenders
           were entitled to secure the order in the ends of justice.”


  23.   We are in respectful agreement  with  the  aforesaid  view.   Be  it
      stated, that availing of money from a nationalized bank in the manner,
      as alleged  by  the  investigating  agency,  vividly  exposits  fiscal
      impurity and, in a  way,  financial  fraud.   The  modus  operandi  as
      narrated in the chargesheet cannot be put in  the  compartment  of  an
      individual or personal wrong.  It is a social wrong and it has immense
      societal impact.  It is an accepted principle of handling  of  finance
      that  whenever  there  is   manipulation   and    cleverly   conceived
      contrivance to  avail of these kind of benefits it cannot be  regarded
      as  a   case  having  overwhelmingly  and  predominantingly  of  civil
      character.  The ultimate victim  is  the  collective.   It  creates  a
      hazard in the financial interest of the society.  The gravity  of  the
      offence creates a dent in the  economic  spine  of  the  nation.   The
      cleverness which has been skillfully contrived, if the allegations are
      true, has a serious consequence.  A crime of this nature, in our view,
      would definitely fall in the category of  offences  which  travel  far
      ahead of personal or private wrong.  It has the potentiality to  usher
      in economic crisis.  Its implications have its own seriousness, for it
      creates a concavity in the solemnity that  is  expected  in  financial
      transactions.   It is not such a case where one can pay the amount and
      obtain a “no due certificate” and enjoy the benefit of quashing of the
      criminal proceeding on the hypostasis that nothing more remains to  be
      done.  The collective interest of which  the  Court  is  the  guardian
      cannot be a silent or a mute spectator to allow the proceedings to  be
      withdrawn, or for that matter yield to the ingenuous dexterity of  the
      accused persons to invoke the jurisdiction under Article  226  of  the
      Constitution  or  under  Section  482  of  the  Code  and  quash   the
      proceeding.  It is not legally permissible.  The Court is expected  to
      be on guard to these kinds of adroit moves.  The High Court, we humbly
      remind, should have dealt with the matter  keeping  in  mind  that  in
      these kind of litigations the accused when perceives a tiny  gleam  of
      success, readily invokes the inherent jurisdiction for quashing of the
      criminal proceeding.  The court’s principal duty,  at  that  juncture,
      should be to  scan  the  entire  facts  to  find  out  the  thrust  of
      allegations and the crux of the settlement.  It is the  experience  of
      the Judge comes to his aid and the said experience should be used with
      care, caution, circumspection and courageous prudence.  As we find  in
      the case at hand the learned Single  Judge  has  not  taken  pains  to
      scrutinize the entire conspectus of facts in  proper  perspective  and
      quashed the criminal proceeding.  The said quashment neither helps  to
      secure the ends of justice nor  does  it  prevent  the  abuse  of  the
      process of the Court nor can it be  also  said  that  as  there  is  a
      settlement  no evidence will come on record and there will  be  remote
      chance of conviction.  Such a finding in our view would  be  difficult
      to record.  Be that as it  may,  the  fact  remains  that  the  social
      interest would be on  peril  and  the  prosecuting  agency,  in  these
      circumstances, cannot be treated as an alien to the whole case.  Ergo,
      we have no other option but to hold that the order of the  High  Court
      is wholly indefensible.
  24.   Ex consequenti, the appeal is allowed, and the order passed  by  the
      High Court is set aside and  it  is  directed  that  the  trial  shall
      proceed in accordance with  law.   We  may  hasten  to  add  that  our
      observations in the present  appeal  are  solely  in  the  context  of
      adjudicating the justifiability of order of quashing of  the  criminal
      proceeding and it would not have any bearing at  the  time  of  trial.
      And we so clarify.


                                                              ………………………………J.
                                                              [Dipak  Misra]








                                                              ………………………………J.
                                                                 [Vikramajit
      Sen]
      New Delhi;
      September 19, 2014.








-----------------------
[1] (2008) 4 SCC 582
[2] (2009) 6 SCC 364
[3] (1996) 5 SCC 591
[4] (2008) 9 SCC 677
[5] (2009) 6 SCC 351
[6] (2012) 10 SCC 303
[7] 2014(4) SCALE 195
[8] AIR 2012 SCW 5333
[9] 2013(14) SCALE 235
[10] 2014 3 SCALE 137
[11] 2014 4 SCALE 659
[12] (2013) 10 SCC 686


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