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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL ORIGINAL JURISDICTION
WRIT PETITION (CRL.) No.26 OF 2011
ASHOK SADARANGANI & ANR. ... PETITIONERS
VS.
UNION OF INDIA & ORS. ... RESPONDENTS
J U D G M E N T
ALTAMAS KABIR, J.
1. The issue which has been raised in this writ petition is
whether an offence which is not compoundable under the
provisions of the Criminal Procedure Code, 1973, hereinafter
referred to as the "Cr.P.C.", can be quashed in the facts
and circumstances of the case.
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2. The writ petitioner No.1, Ashok Sadarangani, opened a
Current Account No.314 in the name of his proprietary
concern, M/s. Internat Impex, Mumbai, with the Bank of
Maharashtra, Overseas Branch, Mumbai. The said account was
subsequently converted by the Bank into Cash Credit Account
No.3 and Cash Credit facility of Rs.125 lacs, Import Letter
of Credit facility of Rs.100 lacs, Bank Guarantee facility
of Rs.20 lacs and Forward Contracts upto a limit of Rs.300
lacs, were sanctioned and such decision was conveyed to the
Petitioner No.1 by the Bank by its letter dated 7th July,
1999. On 16th October, 1999, the Bank sought additional
collateral security of Rs.56 lacs from the Petitioner No.1,
who, on 29th December, 1999, submitted a Lease Deed dated 29th
December, 1999, in respect of an immovable property leased
to M/s. Nitesh Amusements Pvt. Ltd. by Shri Homi D. Sanjana
and his family members, through their Constituted Attorney,
Shri Kersi V. Mehta. The Petitioners herein were Directors
of the aforesaid company.
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3. In December, 2000, six irrevocable Import Letters of
Credit for a total sum of Rs.188.01 lacs were opened by the
Bank of Maharashtra on behalf of M/s. Internat Impex,
Mumbai, for import of "houseware items & rechargeable
lanterns" and "velvet four-way and upholstery materials".
The documents relating to the said Letters of Credit,
including Bills of Lading, Invoice and Bills of Exchange,
were accepted and collected by the Petitioner No.1 on behalf
of the firm from the Bank and he undertook to make payment
on the due date. However, the Petitioners defaulted in
payment of their liability of about 188 lacs towards the
Bank. On 10th April, 2003, R.C.No.3/E/2003/CBI/EOW/MUM in
Case No.3/CPW/2004, was registered at the behest of the Bank
of Maharashtra. On 30th June, 2003, on the complaint of the
Union Bank of India, Special Case No.3 of 2004, in CBI Case
R.C.No.8/E.2003/MUM, was registered by the Central Bureau of
Investigation, hereinafter referred to as "CBI", against the
Petitioners alleging that they had secured the credit
facilities by submitting forged property documents as
collaterals and utilized such facilities in a dishonest and
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fraudulent manner by opening Letters of Credit in respect of
foreign supplies of goods, without actually bringing any
goods but inducing the Bank to negotiate the Letters of
Credit in favour of foreign suppliers and also by misusing
the Cash Credit facility.
4. Charge-sheet was filed in the said Special Case No.3 of
2004 on 14th January, 2004. At about the same time, a
criminal case, being No.236 of 2001, was registered against
Shri Kersi Mehta and others under Section 120-B, r/w 465,
467, 468 and 471 of the Indian Penal Code, hereinafter
referred to as the "IPC". The said case was registered
primarily on the accusation that Shri Kersi Mehta, in
connivance with the Petitioner No.1, had sought to sell or
dispose of the property belonging to Shri Homi D. Sanjana,
situated at Kandivli and Aksha and that the Powers of
Attorney dated 11.1.1996 and 24.1.1999, which had been used
by Shri Kersi Mehta in the transactions, were not genuine.
5. In 2000 a Civil Suit, being S.C. Suit No.4849 of 2000,
was filed by Shri Homi D. Sanjana, in the City Civil Court
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at Bombay, against Shri Kersi Mehta and various Government
authorities, in which the relief sought for was for a
direction upon Shri Kersi Mehta to deliver up to the Court
the said two Powers of Attorney for cancellation of the
same.
6. It is a matter of record that, although, the Petitioner
No.1 has surrendered and is on bail and facing trial, the
Petitioner No.2 is yet to be arrested in connection with the
case.
7. While the criminal case against the Petitioners was
proceeding, the Union Bank of India wrote to the Petitioner
No.1 on 27th September, 2010, offering a One-Time Settlement
of the disputes relating to the transactions in question.
Subsequently, on 27th September, 2010, a compromise proposal
relating to the transaction between the Petitioners and the
Bank was also mooted by the Asset Recovery Branch at Mumbai
of the Bank of Maharashtra and a communication was addressed
to the Petitioner No.1, which, however, made it clear that
such compromise should not be construed as settlement of
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criminal complaints/investigations/ proceedings pending in
the court against the borrowers/guarantors. As has been
submitted during the course of hearing of the writ petition,
pursuant to such offer of One-Time Settlement, dues of both
the Banks have been cleared by the Petitioners and they
have, therefore, entered into a compromise with the
Petitioners indicating that they had no further claim
against the Petitioners.
8. It is in this background that a separate application was
made in the writ petition, being Criminal Misc. Petition
No.1110 of 2012, for stay of further proceedings in
R.C.No.3/E/2003/CBI/EOW/ MUM filed by the CBI and pending
before the Additional Metropolitan Magistrate, 19th Court,
Esplanade, Mumbai, and also Special Case No.3 of 2004 in CBI
Case RC No.8/E/2003/MUM filed by the CBI before the Special
Judge at Mumbai, together with Criminal Case No.236 of 2001,
registered with Kherwadi Police Station, Bandra (East),
Mumbai. The same has also been taken up for consideration
along with the writ petition for final disposal.
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9. Appearing in support of the writ petition, Shri Mukul
Rohatgi, learned Senior Advocate, submitted that the issue,
which has fallen for consideration in the writ petition, has
been considered in great detail in several decisions of this
Court. Learned counsel submitted that in some cases this
Court had exercised its powers under Article 142 of the
Constitution of India to quash proceedings which were not
compoundable, but the common thread which runs through
almost all the judgments is that the power to interfere with
even non-compoundable cases was not doubted, but the same
was required to be used very sparingly and only in special
circumstances.
10. Shri Rohatgi submitted that the facts of this case are
almost identical to the facts of the case in Nikhil Merchant
Vs. Central Bureau of Investigation & Anr. [(2008) 9 SCC
677], which was decided on 20th August, 2008. Shri Rohatgi
submitted that as far back as in 1996, a similar issue had
come for consideration before this Court in Central Bureau
of Investigation, SPE, SIU(X), New Delhi Vs. Duncans Agro
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Industries Ltd., Calcutta [(1996) 5 SCC 591], in which the
provisions of Section 320 Cr.P.C. were considered in regard
to offences which constituted both civil and criminal wrong,
including the offence of cheating. In the said case, this
Court while considering the aforesaid issue held that
compromise in a civil suit for all intents and purposes
amounted to compounding of the offence of cheating.
Furthermore, in the said case, the investigations had not
been completed even till 1991, even though there was no
impediment to complete the same. Having further regard to
the fact that the claim of the Bank had been satisfied and
the suit instituted by the Banks had been compromised on
receiving their dues, this Court was of the view that the
complaint and the criminal action initiated thereupon,
should not be pursued any further.
11. Shri Rohatgi then referred to the decision of this Court
in Nikhil Merchant's case (supra), to which one of us
(Kabir, J.) was a party. In the said case, what was urged
was that though an offence may not be compoundable, it did
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not take away the powers of this Court to quash such
proceedings in exercise of its inherent jurisdiction under
Article 142 of the Constitution, and even Section 320
Cr.P.C. could not fetter such powers, as had been earlier
held in B.S. Joshi Vs. State of Haryana [(2003) 4 SCC 675].
It had also been contended on behalf of the Union of India
that the power under Article 142 of the Constitution was to
be exercised sparingly and only in rare cases and not
otherwise. The fact that such a power vested in the Supreme
Court under Article 142 of the Constitution or the High
Court under Section 482 Cr.P.C. was never in doubt, only the
manner of its application was in issue and it was held that
such power was to be used sparingly in order to prevent any
obstruction to the spring of justice. Taking an over all
view of the facts in the said case and keeping in mind the
decision in B.S. Joshi's case and the compromise arrived at
between the company and the Bank and the consent terms, this
Court took the view that technicality should not be allowed
to stand in the way of quashing of the criminal
proceedings, since the continuance of the same after the
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compromise had been arrived at between the parties, would be
a futile exercise. Reference was also made to another
decision of this Court in Manoj Sharma Vs. State & Ors.
[(2008) 16 SCC 1], where following the decisions rendered in
B.S. Joshi's case and in Nikhil Merchant's case (supra) and
after referring to various other decisions, this Court
ultimately came to the conclusion that continuance of the
criminal proceedings before the trial court would be an
exercise in futility and, accordingly, quashed the same.
12. To buttress his aforesaid submissions, Mr. Rohatgi then
referred to and relied upon the decision in Shiji @ Pappu &
Ors. Vs. Radhika & Anr. [(2011) 10 SCC 705], where also the
question of quashing of proceedings relating to non-
compoundable offences after a compromise had been arrived at
between the rival parties, was under consideration. After
examining the powers of the High Court under Section 482
Cr.P.C., the learned Judges came to the conclusion that in
the facts and circumstances of the case, the continuance of
proceedings would be nothing but an empty formality and that
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Section 482 Cr.P.C. in such circumstances could be
justifiably invoked by the High Court to prevent the abuse
of the process of law. The learned judges, who decided the
said case, took into consideration the decisions rendered by
this Court in B.S. Joshi's case, Nikhil Merchant's case and
also Manoj Sharma's case (supra) in arriving at the
aforesaid decision.
13. Mr. Rohatgi submitted that application of the law as
laid down in the Duncans Agro Industries's case, and,
thereafter, in B.S. Joshi's case, followed in Nikhil
Merchant's case, as also in Manoj Sharma's case (supra),
gave sufficient indication that the powers under Article 142
of the Constitution, as far as the Supreme Court is
concerned, and Section 482 Cr.P.C., as far as the High
Courts are concerned, could not be fettered by reason of the
fact that an offence might not be compoundable but in its
own facts was capable of being quashed.
14. On the other hand, learned Additional Solicitor General,
Shri Mohan Jain, urged that even if the Banks and the
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Petitioners had settled their disputes and had also entered
into a compromise settlement, that did not absolve the
Petitioners of the offence, which they had already committed
under the criminal laws, which was explicitly indicated in
the settlement itself. Shri Jain submitted that the gravity
of the offence would be revealed from the various
transactions which were effected by the writ petitioners in
order to camouflage their intention of offering as security
a property in respect of which they had no title. As
innocent as it may seem to be, it is more than a coincidence
that the Petitioners offered as security a leasehold
property which had been acquired from one Shri Kersi Mehta,
who had used a Power of Attorney alleged to have been
executed by Shri Homi D. Sanjana and his family members and
in respect whereof a criminal case had been filed by Shri
Homi against the said Kersi Mehta and the writ petitioners.
Shri Jain contended that the entire transaction was based on
a fraud perpetrated on Shri Homi D. Sanjana and his family
members and, in fact, no title to the property in question
had ever passed to the Petitioners.
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15. Shri Jain submitted that in Rumi Dhar (Smt.) Vs. State
of West Bengal & Anr. [(2009) 6 SCC 364], a Bench of two
Judges while considering the maintainability of criminal
action where the liability was both civil and criminal, had
occasion to consider the effect of a judgment in civil
proceedings in respect of a loan obtained by fraud. As an
off-shoot of the aforesaid question, another question raised
was regarding the continuance of the criminal proceedings
after settlement and repayment of a loan, wherein it was
held that where settlement is arrived at by and between the
creditor bank and debtor, the offence committed as such,
does not come to an end. The judgment of a tribunal in
civil proceedings and, that too, when it is rendered on the
basis of the settlement entered into between the parties,
would not be of much relevance in a criminal proceeding in
view of the provisions of Section 43 of the Indian Evidence
Act, 1872, which provides that judgments in civil
proceedings will be admissible in evidence only for limited
purposes. However, in deciding the said matter, the Bench
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took note of the decision in Nikhil Merchant's case (supra),
as also the judgment rendered in Duncans Agro Industries
case (supra). While considering the said judgments, the
learned Judges ultimately observed that the jurisdiction of
the Court under Article 142 of the Constitution of India is
not in dispute, but that exercise of such power would depend
on the facts and circumstances of each case. After
referring to the decision in Nikhil Merchant's case (supra),
this Court also held that the High Court, in exercise of its
jurisdiction under Section 482 Cr.P.C. and the Supreme Court
in terms of Article 142 of the Constitution, would
ordinarily direct the quashing of a charge involving a crime
against society, particularly, when both quashing of a case,
continuance whereof after the settlement is arrived at
between the parties, would be a futile exercise. Reference
was then made to another decision of this Court in Sushil
Suri Vs. Central Bureau of Investigation & Anr. [(2011) 5
SCC 708], in which the Bench was called upon to deliberate
upon the very same issue, as has been raised in the present
writ petition. In the said case, after discussing earlier
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decisions, including those rendered in B.S. Joshi's case
(supra) and in Nikhil Merchant's case (supra), the Court,
while placing reliance on the decision in Rumi Dhar's case
(supra), observed that while the jurisdiction of the Court
under Article 142 of the Constitution was not in dispute,
the exercise of such power would, however, depend on the
facts and circumstances of each case.
16. The learned Additional Solicitor General contended that
having regard to the divergent views expressed by different
Benches of this Court, when the same issue surfaced in Gian
Singh Vs. State of Punjab & Anr., SLP (Crl.) No. 8989 of
2010, wherein the decisions in B.S. Joshi's case, Nikhil
Merchant's case and Manoj Sharma's case (supra) came to be
considered, the Bench comprised of two Judges, was of the
view that the said decisions required reconsideration and
directed that the matter be placed before a larger Bench to
consider the correctness of the said three decisions. Shri
Jain urged that as the same issue which was involved in the
present case was also the subject matter of the reference to
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a larger Bench, this Court should abstain from pronouncing
judgment on the issue which was the subject matter in the
said reference. Shri Jain urged that in the circumstances
mentioned hereinabove, no relief could be given to the
Petitioners on the writ petition and the same was liable to
be dismissed.
17. Having carefully considered the facts and circumstances
of the case, as also the law relating to the continuance of
criminal cases where the complainant and the accused had
settled their differences and had arrived at an amicable
arrangement, we see no reason to differ with the views that
had been taken in Nikhil Merchant's case or Manoj Sharma's
case (supra) or the several decisions that have come
thereafter. It is, however, no coincidence that the golden
thread which runs through all the decisions cited, indicates
that continuance of a criminal proceeding after a compromise
has been arrived at between the complainant and the accused,
would amount to abuse of the process of court and an
exercise in futility, since the trial could be prolonged and
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ultimately, may conclude in a decision which may be of any
consequence to any of the other parties. Even in Sushil
Suri's case on which the learned Additional Solicitor
General had relied, the learned Judges who decided the said
case, took note of the decisions in various other cases,
where it had been reiterated that the exercise of inherent
powers would depend entirely on the facts and circumstances
of each case. In other words, not that there is any
restriction on the power or authority vested in the Supreme
Court in exercising powers under Article 142 of the
Constitution, but that in exercising such powers the Court
has to be circumspect, and has to exercise such power
sparingly in the facts of each case. Furthermore, the
issue, which has been referred to a larger Bench in Gian
Singh's case (supra) in relation to the decisions of this
Court in B.S. Joshi's case, Nikhil Merchant's case, as also
Manoj Sharma's case, deal with a situation which is
different from that of the present case. While in the cases
referred to hereinabove, the main question was whether
offences which were not compoundable, under Section 320
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Cr.P.C. could be quashed under Section 482 Cr.P.C., in Gian
Singh's case the Court was of the view that a non-
compoundable offence could not be compounded and that the
Courts should not try to take over the function of the
Parliament or executive. In fact, in none of the cases
referred to in Gian Singh's case, did this Court permit
compounding of non-compoundable offences. On the other
hand, upon taking various factors into consideration,
including the futility of continuing with the criminal
proceedings, this Court ultimately quashed the same.
18. In addition to the above, even with regard to the
decision of this Court in Central Bureau of Investigation
Vs. Ravi Shankar Prasad & Ors. [(2009) 6 SCC 351], this
Court observed that the High Court can exercise power under
Section 482 Cr.P.C. to do real and substantial justice and
to prevent abuse of the process of Court when exceptional
circumstances warranted the exercise of such power. Once
the circumstances in a given case were held to be such as to
attract the provisions of Article 142 or Articles 32 and 226
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of the Constitution, it would be open to the Supreme Court
to exercise its extraordinary powers under Article 142 of
the Constitution to quash the proceedings, the continuance
whereof would only amount to abuse of the process of Court.
In the instant case the dispute between the petitioners and
the Banks having been compromised, we have to examine
whether the continuance of the criminal proceeding could
turn out to be an exercise in futility without anything
positive being ultimately achieved.
19. As was indicated in Harbhajan Singh's case (supra), the
pendency of a reference to a larger Bench, does not mean
that all other proceedings involving the same issue would
remain stayed till a decision was rendered in the reference.
The reference made in Gian Singh's case (supra) need not,
therefore, detain us. Till such time as the decisions cited
at the Bar are not modified or altered in any way, they
continue to hold the field.
20. In the present case, the fact situation is different
from that in Nikhil Merchant's case (supra). While in Nikhil
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Merchant's case the accused had misrepresented the financial
status of the company in question in order to avail of
credit facilities to an extent to which the company was not
entitled, in the instant case, the allegation is that as
part of a larger conspiracy, property acquired on lease from
a person who had no title to the leased properties, was
offered as collateral security for loans obtained. Apart
from the above, the actual owner of the property has filed a
criminal complaint against Shri Kersi V. Mehta who had held
himself out as the Attorney of the owner and his family
members. The ratio of the decisions in B.S. Joshi's case
and in Nikhil Merchant's case or for that matter, even in
Manoj Sharma's case, does not help the case of the writ
petitioners. In Nikhil Merchant's case, this Court had in
the facts of the case observed that the dispute involved had
overtures of a civil dispute with criminal facets. This is
not so in the instant case, where the emphasis is more on
the criminal intent of the Petitioners than on the civil
aspect involving the dues of the Bank in respect of which a
compromise was worked out.
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21. In the different fact situation of this case and those
in B.S. Joshi's case or in Nikhil Merchant's case (supra),
we are not inclined to grant the reliefs prayed for in the
writ petition and the same is accordingly dismissed.
22. There will, however, be no order as to costs.
...............................................................J.
(ALTAMAS KABIR)
...............................................................J.
(J. CHELAMESWAR)
New Delhi
Dated: 14.03.2012
