Karnataka High Court
Sri Ashish Kanagali vs Central Bureau Of Investigation on 30 September, 2022
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION NO. 7016 OF 2019
C/W
CRIMINAL PETITION NO.5236 OF 2020
IN CRIMINAL PETITION NO. 7016 OF 2019
BETWEEN:
SRI ASHISH KANAGALI
S/O AJIT S. KANAGALI
AGE 38 YEARS, R/AT NO.205
RENAISSANCE PARK-2,
SUBRAMANYANAGARA
BENGALURU - 560 055.
... PETITIONER
(BY SRI D.R.RAVISHANKAR, SR.ADVOCATE FOR
SRI V.SUDHINDRA MURTHY, ADVOCATE)
AND:
1. CENTRAL BUREAU OF INVESTIGATION
ECONOMIC OFFENCES WING, CHENNAI
BY ITS SUPERINTENDENT OF POLICE
CHENNAI - 600 090.
2
2. S.I.D.B.I.(SMALL INDUSTRIES DEVELOPMENT BANK OF
INDIA), AT 5TH FLOOR EAST WING, KHANIJA BHAVAN,
BENGALURU - 560 001, BY ITS
DEPUTY GENERAL MANAGER
SREEPATHY S.,
... RESPONDENTS
(BY SRI P.PRASANNA KUMAR, SPL.P.P., FOR R1;
SRI C.N.SATYANARAYANA SHASTRI, ADVOCATE FOR R2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE FIR IN R. C. NO.07 (E)
2015/CBI/IOW/CHENNAI BEFORE THE XXI ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND SPECIAL JUDGE FOR C.B.I CASES,
BENGALURU (CCH-4) AND THE CHARGE SHEET SUBMITTED
AGAINST THE ACCUSED NO.1 TO 7 U/S 120-B R/W 420 OF IPC,
SUBMITTED BY THE 1ST RESPONDENT C.B.I. TO THE XVII
ADDL.C.M.M., BENGALURU (SPECIAL COURT FOR CBI CASES) AND
NUMBERED AS C.C.NO.11328/2019 ON THE FILE OF XVII
ADDL.C.M.M., BENGLAURU IN SO FAR AS IT RELATES TO THE
PETITIONER/ACCUSED NO.7.
IN CRIMINAL PETITION NO.5236 OF 2020
BETWEEN:
1. AMOGH CURE AND CARE PRIVATE LIMITED
PRESENTLY AT NO.758 AND 759,
19TH MAIN, 2ND SECTOR,
HSR LAYOUT, DOLLAR SCHEME LAYOUT,
BENGALURU - 560 102,
(PRESENTLY CEASED TO BE EXIST)
REPRESENTED BY ITS DIRECTOR
DR. AMIT KUMAR KESHRI
3
2. DR. AMIT KUMAR KESHRI
S/O. SHRI VISHNU KESHRI,
AGED ABOUT 46 YEARS,
PRESENTLY R/AT FLAT NO. 903,
RAJ VAIBHAV BUILDING,
PRADHUMAN GREEN CITY,
KALAWADA ROAD,
RAJKOT, GUJARAT - 360 007.
3. SMT. KAMALA DEVI KESHRI
W/O. SHRI VISHNU KESHRI,
AGED ABOUT 60 YEARS,
PRESENTLY R/AT
NO. 258/23, 2ND FLOOR,
OMKAR NAGAR-B,
TRINGARA, DELHI-110 035.
... PETITIONERS
(BY SRI KESHAVA MURTHY, ADVOCATE FOR
SRI NAVEED AHMED, ADVOCATE)
AND:
1 . CENTRAL BUREAU OF INVESTIGATION
THROUGH INSPECTOR OF POLICE,
CBI/EOW/CHENNAI.
2 . SREEPATHY. S.,
DEPUTY GENERAL MANAGER/
BRANCH HEAD,
SMALL INDUSTRIES DEVELOPMENT
BANK OF INDIA,
5TH FLOOR, EAST WING,
KHANIJA BHAVAN,
BENGALURU - 560 001.
... RESPONDENTS
(BY SRI P.PRASANNA KUMAR, SPL.P.P., FOR R1;
4
SRI C.N.SATYANARAYANA SHASTRI, ADVOCATE FOR R2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE CHARGE SHEET IN
C.C.NO.11328/2019 U/S 120B R/W 420 OF IPC, AND ALL FURTHER
PROCEEDINGS THERETO PENDING IN THE FILE OF THE XVII
A.C.M.M., BANGALORE, CITY CIVIL COURT COMPLEX, BANGALORE
PRODUCED HEREWITH AS ANNEXURE-A.
THESE CRIMINAL PETITIONS HAVING BEEN HEARD AND
RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS
DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Criminal Petition No.7016 of 2019 is preferred by petitioner/accused No.7 and Criminal Petition No.5236 of 2020 is preferred by petitioners/accused Nos. 1, 2 and 3 both arising out of the very same proceedings instituted by the Central Bureau of Investigation ('CBI' for short) in R.C.No.07(E)2015/CBI/IOW /Chennai. Since both the petitions call in question the very same proceedings instituted by the CBI, the matters are taken up together and considered by this common order.
2. Heard Sri D.R.Ravishankar, learned senior counsel appearing for the petitioner in Criminal Petition No.7016 of 2019;
5Sri Keshava Murthy, learned counsel appearing for the petitioners in Criminal Petition No.5236 of 2010; Sri P.Prasanna Kumar, Special Public Prosecutor appearing for respondent No.1 and Sri C.N.Satyanarayana Shastri, learned counsel appearing for respondent No.2 in both the petitions.
3. Brief facts that lead the petitioners to this Court in the subject petitions are as follows:
The 1st petitioner in Criminal Petition No.5236 of 2020 is a Private Limited Company incorporated in the year 2011 and with an object to establish a multi-speciality hospital in the name and style of 'Nurture Hood", a facility that would contain 50 bedded mother and child care hospital with specialization of IVF and other assisted reproduction facilities spread over 34,000 sq.ft. Petitioner No.2/Accused No.2 was an Internal Medicine Consultant having experience of 10 years in the Internal Medicine specialization and had worked at various hospitals.
4. Petitioner No.1/Company started construction of hospital up to four floors with a particular plinth area. Later on falling short 6 of finance, it approached the 2nd respondent/Small Industries Development Bank of India ('the Bank' for short) for financial assistance to purchase equipments, machinery and miscellaneous fixed assets to establish the hospital. A pre-sanction inspection by the Bank was carried out and the proposal for a term loan of Rs.4.25 Crores was sanctioned by the Bank to be disbursed to the hands of the 1st petitioner/Company. Since the finance was sought for purchase of equipments, machinery and miscellaneous fixed assets for the hospital, it is here the 7th accused/petitioner in Criminal Petition No.7016 of 2019 comes into picture.
5. Accused No.7 claims to have an illustrious career of work for several hospitals in the business of setting up of medical equipments to the hospitals that are in need. The loan that was sought to be sanctioned in favour of accused 1, 2, 3/petitioners in Criminal Petition No.5236 of 2020 was for the purpose of medical equipments. An order was placed by accused 1, 2 and 3 with accused No.7 for delivery of medical equipments for establishment of the hospital. The said funds when realized were not utilized for the purpose of setting up of hospital or purchase of medical 7 equipments. Though an order was placed with the petitioner/accused No.7 for the purpose, the moment loan was cleared, the order was cancelled and funds that were to be invested for the purpose of medical equipments were diverted. This diversion of funds made the loan becoming sticky and becoming into Non-
Performing Asset ('NPA' for short).
6. On the aforesaid loan becoming sticky and its slipping becoming a NPA, the Bank registered a complaint on 24-12-2015 for offences punishable under Sections 120B and 420 of the IPC and Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 against all the accused. It was alleged in the complaint that accused No.1 in the month of January 2013 represented by its Office Bearers - Directors and Managing Director/accused Nos. 2, 3 and 4 in connivance with public servants and other private servants availed credit facilities to the tune of Rs.4.25 crores in order to purchase machinery to set up 50 bedded hospital and accused No.1 provided movable assets of the Company - both present and future, towards equitable mortgage and all the lease hold rights of the Company of land and building and a fixed deposit of Rs.25/-
8lakhs apart from guarantee. Therefore, the loan that was sanctioned was in terms of law. In terms of the sanction that was made, a request was made by accused 1 and 2 to disburse Rs.3,81,40,693 to their supplies directly. The amount was disbursed at intermittent intervals. In furtherance of what was requested, an amount of Rs.76,12,779/- was disbursed in favour of M/s Amol Agencies and Rs.1,71,37,914/- to Health Synergies. The allegation in the complaint was that accused Nos.1 to 4 have defrauded the Bank and have made wrongful gain to themselves to the tune of Rs.3,95,25,108/-.
7. Based upon the said complaint which was made directly to the CBI in terms of Master Circular, the CBI conducted investigation and found that accused 1 to 7 were involved in a criminal conspiracy to cheat the Bank in the matter of availing term loan facility to the tune of Rs.4.25 crores. The complaint becomes a crime in Crime in R.C.No.07(E)2015/CBI/EOW/Chennai and the CBI conducted an investigation. It is the case of the CBI during the conduct of investigation that the accused together hatched a conspiracy with an intention to cheat the Bank, furnished false 9 information and misrepresented to the Bank that they had paid advance to the supplier and got refund from the supplier immediately. Investigation further revealed that such applications were made for the purpose of purchasing machinery and surgical equipments even though the accused persons were fully aware that they were not purchasing any such equipment. Charges were drawn up against every one of the accused in the case and charges were accordingly framed.
8. During the pendency of these proceedings, accused 1, 2 and 3 sold liquid assets to make good a portion of the amount of loan that had by then became sticky. The remaining portion of the amount that had to be repaid was repaid to its last pie by entering into a One Time Settlement ('OTS') with the Bank. Therefore, cases are filed before this Court inter alia contending that the loan having been cleared to its last pie by accused 1, 2 and 3 and accused No.7 having played no role at all in the alleged episode of crime, no further proceedings should be permitted to be continued, as it would become an abuse of process of law.
109. The learned senior counsel Sri D.R.Ravishankar representing the petitioner in Criminal Petition No.7016 of 2019 would contend with vehemence that apart from merits of the matter of the role of petitioners in the entire episode of crime, accused 1, 2 and 3 have already settled the issue by repaying all the amount to its last pie and, therefore, there is no warrant for continuation of any proceedings against the petitioners. But, the role of the petitioner/accused No.7 is that of a supplier. A demand was made by accused 1, 2 and 3 and the supply was immediately cancelled and the person who had placed the demand also made a request that the amount that the Bank had sanctioned for such supply should be remitted to their account. This is all the role of the petitioner. The petitioner has not gained a single rupee out of the entire transaction for him to be hauled into these proceedings of allegation of criminal conspiracy.
10. The learned counsel representing the petitioners in Criminal Petition No.5236 of 2020 would contend that the loan that was availed cannot be said to be a fraud or diversion of funds. The loan was availed for a particular purpose that did not get 11 materialized and, therefore, the loan became sticky, but, as on the date, accused 1, 2 and 3 have cleared the loan to its last pie, both by selling the liquid asset and by entering into an OTS with the Bank. The Bank having accepted OTS, now cannot insist on the proceedings to be continued against the petitioners.
11. On the other hand, the learned Special Public Prosecutor representing the CBI Sri P.Prasanna Kumar would vehemently refute the contentions and would contend that the role of the petitioner/accused No.7 is not limited as projected by the learned senior counsel but is other way round. Accused No.7 who was the supplier ought to have returned the money to the Bank since the demand that was made by accused No.1 Company was cancelled.
The 7th accused acceded to the request of accused No.1 and transferred the entire amount to the account of accused No.1 instead of transferring it to the Bank. Therefore, accused No.7 has facilitated the alleged crime and as such, there is need for continuation of prosecution. Insofar as accused 1, 2 and 3 are concerned, the learned Special Public Prosecutor would lay emphasis on the fact that merely because the case is closed by way 12 of entering into OTS, the criminality attached for the fraud that the accused have played with the amount that belonged to the public cannot be washed away by entering into OTS. It is a matter of trial for the petitioners to come out clean.
12. The learned counsel representing the Bank would submit that no doubt the amount has been cleared by entering into a OTS, but the settlement itself makes it clear that any criminal case that is pending consideration against any of the accused would not get washed away by the settlement and would submit that the 7th accused has deliberately co-operated with the other accused in an attempt to siphon of the funds. Both the counsel would seek dismissal of the petitions. In support of their contentions, they place reliance upon the following judgments of the Apex Court:
(i) CBI v. HARISINGH RANKA AND OTHERS - (2019) 16 SCC 687,
(ii) PARBATBHAI AAHIR & OTHERS v. STATE OF GUJARAT AND ANOTHER - (2017) 9 SCC 641,
(iii) M/s KUSUM ALLOYS LIMITED v. CBI AND ANOTHER - Criminal Petition No.1274/2017 decided on 2-04-2018 (Kar.HC).13
13. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record. In furtherance whereof, the issue that falls for consideration is:
"Whether the proceedings instituted against the petitioners could be continued in the teeth of the one time settlement arrived at between the Bank and the borrowers?"
14. The afore-narrated facts are not in dispute. Financial assistance was sought from the hands of the Bank for establishment of a hospital and accused No.7 was to supply medical equipments to the said hospital. The loan that was sought for was sanctioned after it passed through various rungs in the Bank. The loan becomes sticky and proceedings are instituted by the Bank against borrowers and the proceedings so instituted were two fold -
one under the SURFAESI Act and the other a complaint before the CBI as the amount involved was beyond three crores. The Master Circular issued by the Reserve Bank of India which directs registration of a crime before the CBI in the event the account is declared to be a fraud and the amount involved is beyond three 14 crores was taken as a foundation for registration of a crime. A complaint comes to be registered by the Bank before the CBI on 24-12-2015. The gist of the complaint that is required to be noticed for consideration of the lis reads as follows:
"In view of the aforesaid, it is apparent that the promoter Dr. Amit Kumar Keshri has misrepresented the facts and not informed about his links with Health Synergies and fraudulently siphoned off the loan proceeds through fictitious account opened by him in the name of M/s Health Synergies. Dr. Amit Kumar Keshri and others have misrepresented and suppressed the facts and illegally, dishonestly misappropriated the funds disbursed to M/s Amol Agencies in violation of the agreed terms.
It is also apparent that Dr. Amit Kumar Keshri from the very inception had dishonest intention to cheat the Bank. In pursuance thereof, Dr. Amit Kumar Keshri furnished false and misleading information, and also made false representation with the mala fide intention to misappropriate funds and committed breach of trust. He also gave false assurances to repay the amount to SIDBI. Dr. Amit Kumar Keshri dishonestly and fraudulently induced SIDBI to disburse the loan amount having full knowledge that the amount will not be uti9lized for the purpose as intended in the loan agreements/documents.
Dr. Amit Kumar Keshri has perpetrated a fraud on SIDBI, in association with other two directors namely Dr. Balaji R.Pillai, Smt. Kamala Devi, and the guarantor Smt. Sunita Lobo, as also, the machinery/equipment suppliers Amol Agencies, Health Synergies and unknown persons. As per the recall cum SARFAESI notice dated January 2, 2015 the total amount involved is Rs.4,35,86,517/- including principal outstanding of RS.357.42 lakh as on December 31, 2014.
The account turned NPA as on October 08, 2013 due to non-clearance of over dues. The amount of dues as on date of NPA was Rs.3,95,25,108/- (Rupees Three Crore Ninety Fve Lakh Twenty Five Thousand one Hundred and eight only).15
All the documents in original related to the case are available with the bank.
It is therefore requested that a criminal case may be registered against (i) M/s Amogh Cure and Care Private Limited, (ii) its directors i.ee., Dr.Amit Kumar Keshri, Smt. Kamaladevi Keshri, Dr. Balaji Radha Pillai, (iii) Dr. Amit Kumar Keshri, Partner of Health Synergies (iv) Smt. Sunita Lobo, Partner of Health Synergies (v) Dr. Abhisehk Kumar Keshri (vi) Smt. Amolini, Proprietor of Amol Agencies in this regard and to the needful."
Therefore, the complaint so registered was that the accused-
borrowers had misrepresented to the Bank and had availed the said finance. While doing so, the machinery and equipments supplier M/s. Amol Agencies through its proprietor was also complained against. This becomes a crime in Crime No. RC.7/E/2015- CBI/EOW/Chennai. The CBI after investigation filed a charge sheet in the matter. While filing the charge sheet three accused are given up and the remaining are charged. The charge insofar as accused No.7/petitioner in Crime No.7016 of 2019 who is the Manager of M/s Amol Agencies is concerned reads as follows:
"15.14. That, after execution of necessary security/ loan documents by A2 to A4 and guarantors, A2 Dr. Amit Kumar Keshri furnished the bank details of suppliers for supply of medical equipments/machineries and vide his letters dated 1- 02-2013 and 7-02-2013 to the DGM, SIDBI, Bengaluru informed that A1 company, made advance payments to suppliers to the tune of Rs.68,30,221 to M/s Amol Agencies, 16 Bengaluru for purchase of Modular Operation Theatre, IVF Lab, Rs.20,00,000/- to M/s Wipro G.E Healthcare Pvt. Ltd. Bengaluru for purchase of Ultra Sound, X-ray Monitors, Anesthesia Machines, Ventilators and Rs.81,80,000/- to M/s Health Synergies, Bengauru for purchase of OT equipments, ICU equipments and Air Systems and requested the bank to make disbursement from term loan i.e., Rs.76,12,779 to M/s Amol Agencies, Rs. 1,17,37,914 to M/s Health Synergies and Rs.1,87,90,000/- to M/s Wipro GE Health Care Pvt. Ltd. Accordingly, the Bank disbursed Rs.38140693/- from its A/c No.0142010010000 held with SIDBI Bank Limited, Mission Road Branch, Bengaluru and after disbursements the bank vide letters dated 04-03-2013 to M/s Amol Agencies and M/s Health Synergies and letter dated 05-03-2013 to M/s Wipro GE Healthcare Pvt. Ltd. and A1 M/s Amogh Cure and Pvt. Ltd., Bengaluru, informed that as requested by the borrowers SIDBI, Bengaluru released the amounts to their accounts and advised the borrowers and suppliers to inform SIDBI promptly in case of cancellation of or any change in the order by the company for supplying all or any of the machinery/item for which amounts were disbursed through RTGS within 7 days and send them acknowledgment in receipt of the payments.
... ... ... ....
15.16. Investigation revealed that, the bank received letter dated 5-03-2013 of M/s Health Synergies, Bengaluru singed by A6 Abhishek Kumar Keshri and letter dated 11-03- 2013 of M/s Amol Agencies, Bengaluru signed by A7 Shri Ashsh Kanagali acknowledging the receipt of payments towards balance for supply and installation of equipments at unit M/s Nurturehood Hospitals belonging to M/s Amogh Cure and Care Pvt. Ltd, Bengaluru. The Bank has not received any confirmation from M/s Wipro GE Healthcare Pvt. Ltd., Bengaluru.
... ... ... ...
15.18 Enduse of transfer of Rs.7012779/- by M/s Amol Agencies, Bengaluru to M/s Amogh Cure and Care Pvt.Ltd, CA No.000009743570019, Deutsche Bank, Bengaluru.
Investigation revealed that, out of the said credit of Rs.7012779/- on 6-03-2015, A2 Amit Kumar Keshri 17 transferred Rs.700000/- to his A/c No.400002901550019 with Deutsche Bank AG, MG Road, Bengaluru vide Cheque No.407091 and after the said credit A2 Amit Kumar Keshri invested Rs.50,00,00-/- vide Cheque No.037675 into DWS Cash Opportunity Fund through Deutsche Bank, AG, Bengaluru and purchased 498648.662 Units @ Rs.10.0271 each and the said units were redeemed on various dates and redemption payments credited to A2 Amit Kumar Keshri SB A/c 0008053000016724 with South Indian Bank, KG Road Branch, Bengaluru. The details of redemption credits are detailed below."
These are the allegations against accused No.7/petitioner. Accused No.7 is alleged of accepting the order placed by accused 2 and 3 and accepting their cancellation of the said order and remitting the amount that was deposited back to the account of accused Nos. 1, 2 and 3. This according to the charge is contrary to what the Bank had directed the petitioner/accused No.7 to do when the amount was paid for release of medical equipments from the agency.
Further, what could be found against the petitioner/accused No.7 in the charge is at paragraphs 15.30 and 15.31 which reads as follows:
"15.30. Investigation revealed that A7 Ashish Kanagali was managing the business of M/s Amol Agencies, a proprietary firm of his mother Smt. Amol Kanagali and Smt. Amol Kanagali is the sole signatory for the firms CA No.849420110000136 with Bank of India, Milk Colony, Malleswaram West, Bengaluru. Investigation also revealed that during 2011-12 A2 Amit Kumar KeshriandA4 Balaji Radha Pillai approached A7 Ashish Kanagali for supplying of Modular Operation Theatre and IVF Lab for A1 M/s Amogh Cure and 18 Care Pvt. Ltd. at HSR Lay-out, Bengaluru and transferred Rs.5280000/- on various dates from CA No. 0008073000003343 of A1 M/s Amogh Cure and Care Pvt. Ltd. to the CA No.849420110000136 of M/s Amol Agencies, Bengaluru. Investigation further revealed that, M/s Amol Agencies returned the said amounts to A1 M/s Amogh Cure Care Pvt. Ltd., Bengaluru as there was no purchase order from A1 company. Investigation revealed that, though M/s Amol Agencies received only Rs.5280000/- in his accounts, A7 Ashish Kanagali had issued receipts for Rs.6830000/- in the name of M/s Amogh Cure an Cadre Pvt. Ltd. as if the firm has received advance payment on various dates towards advance of invoice No.AA/043/12/09 including cash withdrawal of Rs.1150000/- by A6 Khushboo at the behest of A2 Amit Kumar Keshri. Investigation also revealed that, A2 Amit Kumar Keshri produced the said receipts and book of account of A1 and obtained investment certificate dated 4-01-2013 from Shri Chandrashekara Shetty, Partner, M/s BVC & Co. Chartered Accountants, Bengaluru and submitted to SIDBI, Bengaluru for loan.
15.31. That, the aforesaid acts of A1 to 7 had resulted in wrongful loss to Small Industries Developments Bank of India, Bengaluru to the extent of Rs.6,32,47,982/- as on 31- 03-2019 with corresponding wrongful gain to themselves constituting offences punishable under Section 120-B r/w 420 IPC and substantive offences thereof as detailed below:"
Based upon the aforesaid charge, the trial is said to be in progress against the petitioners. The contention of the Bank is also noted in the charge sheet so filed. The Bank relies on the said paragraph that is quoted in the charge to allege criminal conspiracy against the petitioner in WP No.7016 of 2019 and the said paragraph reads as follows:
19"The Company was informed vide letter dated March 5, 2013 about the disbursement made as per its request as mentioned above. The disbursement intimation letter dated March 4/5, 2013 were also issued to the suppliers advising them inter alia that 'in case of cancellation of or any change in the order by the Borrower for supplying all or any of the machinery/item for which the cheque/demand draft/RTGS/NEFT has been issued in your favour by us on behalf of the Borrower or your inability to supply the same to the Borrower for whatsoever reason, you are requested to promptly inform SIDBI. In such circumstances, you are requested not to refund the amount of cheque/draft /RTGS/NEFT or any part thereof to the Borrower or adjust the same against any other order placed/to be placed or liability of the Borrower, but refund that amount to SIDBI."
What happens during the trial is what assumes significance in the case at hand. From out of the liquid assets the borrowers have cleared a large chunk of loan. The remaining loan along with interest to its last pie is paid to the Bank pursuant to an OTS arrived at between the Bank and the borrowers. Therefore, as on date, it is an admitted fact that the Bank has received the entire loan amount to its last pie along with interest, be it by payment or be it by way of OTS.
15. The issue now is, whether the criminal proceedings can be permitted to be continued, despite the settlement being arrived at between the parties and the amount so involved in the transaction 20 being repaid by the company to its last pie. The learned senior counsel representing the petitioner/accused No.7 would place reliance upon the judgment rendered by the Apex Court in the case of CBI v. SADHU RAM SINGLA AND OTHERS1. The Apex Court in the said judgment has held as follows:
"4. During the pendency of the proceedings before the Court of the learned Special Judicial Magistrate, CBI, Patiala, Punjab, a compromise was arrived at between the Bank and the respondent Company under a One-Time Settlement scheme of the Bank, through which sums of Rs 6 crores and Rs 1.25 crores were deposited by the respondents and acknowledged by the Bank vide letter dated 11-11-2009. Thereafter the Bank released the securities and guarantees of the respondents, withdrew the recovery proceeding pending in the DRT and stated vide the aforesaid letter dated 11-11-2009 that nothing was due from the respondents to the Bank. An application filed by Respondent 1 for compounding of offences under Section 320(2) CrPC, was dismissed by the trial court on the ground that Section 471 read with Section 468 IPC is a non-compoundable offence.
5. Thereafter, the respondents approached the High Court, invoking its power under Section 482 of the Criminal Procedure Code, 1973 (in short "CrPC") for quashing FIR No. SIA-2001-E-0006 dated 28-12-2001 and also the resultant proceedings pending before the Court of the learned Special Judicial Magistrate, CBI, Patiala, Punjab, on the basis of aforesaid settlement. The High Court by its judgment dated 2- 6-2011 [Sadhu Ram Singla v. CBI, 2011 SCC OnLine P&H 7150] , relied on its Full Bench judgment in Kulwinder Singh v. State of Punjab [Kulwinder Singh v. State of Punjab, 2007 SCC OnLine P&H 792: (2007) 4 CTC 769], and on the basis of settlement of dispute, quashed the criminal proceedings against the respondents.1
(2017) 5 SCC 350 21
6. The question which arises before us is no longer res integra i.e. whether FIR and the consequential proceedings alleging non-compoundable offences could be quashed by the High Court in exercise of its jurisdiction under Section 482 CrPC on the basis of the settlement arrived at between the complainant and the respondent-accused. Since the question before us revolves around clause (9) of Section 320 CrPC, the same is reproduced herein as follows:
"320. Compounding of offences.--(1)-(8)* * * (9) No offence shall be compounded except as provided by this section."
7. We have heard the learned Additional Solicitor General appearing for CBI and the learned Senior Counsel appearing for the respondents at length and carefully examined the materials placed on record. We have also taken notice of the fact that the counsel for the appellant in the High Court had sought time for filing the reply but no reply was filed. We have also taken notice of the fact that the High Court while quashing the said FIR and consequential proceedings, has relied on the Full Bench judgment of that High Court in Kulwinder Singh v. State of Punjab [Kulwinder Singh v. State of Punjab, 2007 SCC OnLine P&H 792 : (2007) 4 CTC 769] , in which reliance was placed on the judgment delivered by this Court in Shakuntala Sawhney v. Kaushalya Sawhney [Shakuntala Sawhney v. Kaushalya Sawhney, (1980) 1 SCC 63] .
8. The learned Additional Solicitor General appearing for CBI has drawn our attention to the decision of this Court in Manoj Sharma v. State [Manoj Sharma v. State, (2008) 16 SCC 1 : (2010) 4 SCC (Cri) 145] , wherein it was observed by this Court: (SCC pp. 8-9, para 22) "22. Since Section 320 CrPC has clearly stated which offences are compoundable and which are not, the High Court or even this Court would not ordinarily be justified in doing something indirectly which could 22 not be done directly. Even otherwise, it ordinarily would not be a legitimate exercise of judicial power under Article 226 of the Constitution or under Section 482 CrPC to direct doing something which CrPC has expressly prohibited. Section 320(9) CrPC expressly states that no offence shall be compounded except as provided by that section. Hence, in my opinion, it would ordinarily not be a legitimate exercise of judicial power to direct compounding of a non-compoundable offence."
9. We further wish to supply emphasis on the judgment delivered by this Court in State of T.N. v. R. Vasanthi Stanley [State of T.N. v. R. Vasanthi Stanley, (2016) 1 SCC 376 : (2016) 1 SCC (Cri) 282] , wherein it was observed:
(SCC p. 387, para 15) "15. As far as the load on the criminal justice dispensation system is concerned it has an insegregable nexus with speedy trial. A grave criminal offence or serious economic offence or for that matter the offence that has the potentiality to create a dent in the financial health of the institutions, is not to be quashed on the ground that there is delay in trial or the principle that when the matter has been settled it should be quashed to avoid the load on the system. That can never be an acceptable principle or parameter, for that would amount to destroying the stem cells of law and order in many a realm and further strengthen the marrows of the unscrupulous litigations. Such a situation should never be conceived of."
10. Further reliance was placed on the decision of this Court in CBI v. A. Ravishankar Prasad [CBI v. A. Ravishankar Prasad, (2009) 6 SCC 351 : (2009) 2 SCC (Cri) 1063] , wherein it was held: (SCC p. 363, para 39) "39. Careful analysis of all these judgments clearly reveals that the exercise of inherent powers would entirely depend on the facts and circumstances of each case. The object of incorporating inherent powers in the Code is to prevent abuse of the process of the court or to secure ends of justice."23
11. Lastly, reliance was placed upon another judgment of this Court in CBI v. Maninder Singh [CBI v. Maninder Singh, (2016) 1 SCC 389 : (2016) 1 SCC (Cri) 292] , wherein it was held by this Court: (SCC p. 396, para 19) "19. In this case, the High Court while exercising [Maninder Singh v. CBI, 2009 SCC OnLine Del 4246] its inherent power ignored all the facts viz. the impact of the offence, the use of the State machinery to keep the matter pending for so many years coupled with the fraudulent conduct of the respondent. Considering the facts and circumstances of the case at hand in the light of the decision in Vikram Anantrai Doshi case [State of Maharashtra v. Vikram Anantrai Doshi, (2014) 15 SCC 29 : (2015) 4 SCC (Cri) 563] , the order of the High Court cannot be sustained."
12. Resisting the aforesaid submissions it was canvassed by Mr Bishwajit Bhattacharya, learned Senior Counsel appearing for the respondents that the High Court has judiciously and rightly considered the facts and circumstances of the present case. Relying upon the judgment of this Court in Gian Singh v. State of Punjab [Gian Singh v. State of Punjab, (2012) 10 SCC 303 : (2012) 4 SCC (Civ) 1188 :
(2013) 1 SCC (Cri) 160 : (2012) 2 SCC (L&S) 988] , the learned Senior Counsel appearing for the respondents strenuously urged that the offences in the present case are not heinous offences. He further drew our attention towards the relevant part of the Full Bench judgment of the High Court in Kulwinder Singh v. State of Punjab [Kulwinder Singh v. State of Punjab, 2007 SCC OnLine P&H 792 : (2007) 4 CTC 769] , which was reproduced in the impugned judgment and the same is reproduced hereunder: (SCC OnLine P&H paras 29-31) "29. In Shakuntala Sawhney v. Kaushalya Sawhney [Shakuntala Sawhney v. Kaushalya Sawhney, (1980) 1 SCC 63] , Hon'ble Krishna Iyer, J. aptly summed up the essence of compromise in the following words: (SCC p. 65, para 4) 24 '4. ... The finest hour of justice arrives propitiously when parties, despite falling apart, bury the hatchet and weave a sense of fellowship or reunion.'
30. The power to do complete justice is the very essence of every judicial justice dispensation system. It cannot be diluted by distorted perceptions and is not a slave to anything; except to the caution and circumspection, the standards of which the Court sets before it, in exercise of such plenary and unfettered power inherently vested in it while donning the cloak of compassion to achieve the ends of justice.
31. No embargo, be in the shape of Section 320(9) CrPC or any other such curtailment, can whittle down the power under Section 482 CrPC."
13. Since the present case pertains to the crucial doctrine of judicial restraint, we are of the considered opinion that encroaching into the right of the other organ of the Government would tantamount to clear violation of the rule of law which is one of the basic structure of the Constitution of India. We wish to supply emphasis on para 21 of Manoj Sharma case [Manoj Sharma v. State, (2008) 16 SCC 1:
(2010) 4 SCC (Cri) 145] which is as follows: (SCC p. 8) "21. Ordinarily, we would have agreed with Mr B.B. Singh. The doctrine of judicial restraint which has been emphasised repeatedly by this Court e.g. in Aravali Golf Club v. Chander Hass [Aravali Golf Club v. Chander Hass, (2008) 1 SCC 683: (2008) 1 SCC (L&S) 289] and State of A.P. v. P. Laxmi Devi [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720] , restricts the power of the Court and does not permit the Court to ordinarily encroach into the legislative or executive domain. As observed by this Court in the above decisions, there is a broad separation of powers in the Constitution and it would not be proper for one organ of the State to encroach into the domain of another organ."25
14. Having carefully considered the singular facts and circumstances of the present case, and 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 view taken in Manoj Sharma case [Manoj Sharma v. State, (2008) 16 SCC 1: (2010) 4 SCC (Cri) 145] and several decisions of this Court delivered thereafter with respect to the doctrine of judicial restraint. In concluding hereinabove, we are not unmindful of the view recorded in the decisions cited at the Bar that depending on the attendant facts, continuance of the criminal proceedings, after a compromise has been arrived at between the complainant and the accused, would amount to abuse of process of court and an exercise in futility since the trial would be prolonged and ultimately, it may end in a decision which may be of no consequence to any of the parties."
Placing reliance upon the aforesaid paragraphs, the learned senior counsel would submit that, in the light of facts being similar to what was before the Apex Court in SADHU RAM SINGLA's case, the further proceedings against the petitioner/accused No.7 cannot be permitted to be continued. The learned counsel representing the petitioners in the companion petition would also toe the lines of the learned senior counsel representing the petitioner/accused No.7.
16. The learned Special Public Prosecutor for the CBI would further contend that merely because there is a settlement arrived at by way of OTS, it cannot amount to closure of criminal proceedings.
26The Apex Court in the case of HARI SINGH RANKA (supra) considers the judgment in the case of SADHU RAM SINGLA and holds that settlement under OTS scheme would not be sufficient to wipe out criminal liability. The Apex Court in the case of CBI v.
HARISINGH RANKA AND OTHERS2 (supra) has held as follows:-
"16. In the aforesaid backdrop of facts, we take into consideration the effect of OTS. It is apparent that a large number of documents were filed by CBI along with the charge- sheet. There are serious allegations in the instant case levelled against the accused persons of using fabricated documents whereas there was no supply or no such transactions took place. The letterhead of M/s Modern Denim Ltd., Accused 13 had also been used. It passes comprehension how the trial court has given a clean chit that offence falls short of constituting the conspiracy under Section 120-B IPC. The trial court has not cared to refer to the aforesaid various materials which have been alleged to be fabricated/forged and as to how the misuse of bank funds was made. In our considered opinion, in the facts of the instant case, the manner in which the trial court has discharged the accused persons, in spite of the overwhelming materials on record, could not be said to be legally justified order at all. The OTS merely deals with the civil liability that too by making of payment of Rs 25 crores whereas outstanding liability was Rs 44 crores though it was submitted that loss caused was approximately 13 crores. Be that as it may, we are not on the civil liability. Ultimately, the amount which has been settled in OTS Scheme cannot be legally sufficient to wipe out the criminal liability of the accused persons. OTS could wipe off only the civil liability of the accused, not the criminal one. However, this may not be taken to be the ultimate conclusion on merits of the case, it would be open to the trial court to record any finding after the trial of the case.2
(2019) 16 SCC 687 27
17. In Rumi Dhar case [Rumi Dhar v. State of W.B., (2009) 6 SCC 364 : (2009) 2 SCC (Cri) 1074] , this Court has observed that when settlement is arrived at between the creditors and the debtor, the offence, if committed, as such does not come to an end. Even a judgment rendered in the civil proceedings, when it is rendered on the basis of a settlement entered into between the parties, would not be of large relevance as per criminal offence required of Section 43 of the Evidence Act. The judgment of the civil court is admissible only for limited purposes.
18. In State of Maharashtra v. Vikram Anantrai Doshi [State of Maharashtra v. Vikram Anantrai Doshi, (2014) 15 SCC 29 : (2015) 4 SCC (Cri) 563] , this Court has considered the decision in Narinder Singh case [Narinder Singh v. State of Punjab, (2014) 6 SCC 466: (2014) 3 SCC (Cri) 54] , Dimpey Gujral v. State (UT of Chandigarh) [Dimpey Gujral v. State (UT of Chandigarh), (2013) 11 SCC 497:
(2012) 4 SCC (Cri) 35] and Gian Singh case [Gian Singh v. State of Punjab, (2012) 10 SCC 303: (2012) 4 SCC (Civ) 1188: (2013) 1 SCC (Cri) 160: (2012) 2 SCC (L&S) 988] and has laid down the principles for making interference in such matters thus: (Vikram Anantrai Doshi case [State of Maharashtra v. Vikram Anantrai Doshi, (2014) 15 SCC 29: (2015) 4 SCC (Cri) 563], SCC pp. 38-39 & 41-42, paras 18, 24 & 26) "18. Recently, in Narinder Singh v. State of Punjab [Narinder Singh v. State of Punjab, (2014) 6 SCC 466 : (2014) 3 SCC (Cri) 54] , a two-Judge Bench placed reliance on Gian Singh case [Gian Singh v. State of Punjab, (2012) 10 SCC 303: (2012) 4 SCC (Civ) 1188: (2013) 1 SCC (Cri) 160: (2012) 2 SCC (L&S) 988] and Dimpey Gujral v. State (UT of Chandigarh) [Dimpey Gujral v. State (UT of Chandigarh), (2013) 11 SCC 497: (2012) 4 SCC (Cri) 35] and distinguished the decision in State of Rajasthan v. Shambhu Kewat [State of Rajasthan v. Shambhu Kewat, (2014) 4 SCC 149: (2014) 4 SCC (Cri) 781] , 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 28 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 : (Narinder Singh case [Narinder Singh v. State of Punjab, (2014) 6 SCC 466: (2014) 3 SCC (Cri) 54] , SCC p. 483, para 29) '29.2. 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.
29.3. Such a power is not to 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 the 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.
29.4. On the other hand, those criminal cases having overwhelmingly and predominantly 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.
2929.5. 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.' ***
24. In the case at hand, as per the charge-sheet, 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 charge-sheet. Thus, allegation of forgery is very much there. As is manifest from the impugned order [Vikram Anantrai Doshi v. State of Maharashtra, 2010 SCC OnLine Bom 2242] , 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 exposé 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 off has a foundation in criminal law. The learned counsel would submit that it does not depict a case which has overwhelmingly and predominatingly a civil flavour. The intrinsic character is different. The emphasis is laid on the creation of fictitious companies.
***
26. We are in respectful agreement with the aforesaid view. Be it stated, that availing of money from a nationalised 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 charge-sheet cannot be put in the compartment of an individual or personal wrong. It is a social 30 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 kinds of benefits it cannot be regarded as a case having overwhelmingly and pre-dominatingly 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 skilfully 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-dues 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 that comes to his aid and the said experience should be used with care, 31 caution, circumspection and courageous prudence. As we find in the case at hand the learned Single Judge has not taken pains to scrutinise 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 [Vikram Anantrai Doshi v. State of Maharashtra, 2010 SCC OnLine Bom 2242] of the High Court is wholly indefensible."
19. It has been observed by this Court that when the charge-sheet reflects that the respondent got LCs issued by 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. 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. Civil settlement of the controversy would not suffice to wipe off the criminal liability. The case reflects fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge-sheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. This Court has further observed that accepted principle of handling of finance that whenever there are manipulation and cleverly conceived contrivance to avail of this kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly civil character. The gravity of the offence creates a dent in the economic spine of the nation. The quashing of the 32 case was set aside as social interest would be in peril. The order of the High Court was held to be indefensible. Facts are more or less similar in the instant case, and as such the impugned orders cannot be permitted to be sustained on the anvil of the aforesaid principles.
20. Reliance has also been placed on Gian Singh case [Gian Singh v. State of Punjab, (2012) 10 SCC 303 :
(2012) 4 SCC (Civ) 1188 : (2013) 1 SCC (Cri) 160 : (2012) 2 SCC (L&S) 988] in which this Court has held thus : (SCC pp.
340-43, paras 58-61) "58. Where the High Court quashes a criminal proceeding having regard to the fact that the dispute between the offender and the victim has been settled although the offences are not compoundable, it does so as in its opinion, continuation of criminal proceedings will be an exercise in futility and justice in the case demands that the dispute between the parties is put to an end and peace is restored; securing the ends of justice being the ultimate guiding factor. No doubt, crimes are acts which have harmful effect on the public and consist in wrongdoing that seriously endangers and threatens the well-being of the society and it is not safe to leave the crime-doer only because he and the victim have settled the dispute amicably or that the victim has been paid compensation, yet certain crimes have been made compoundable in law, with or without the permission of the court. In respect of serious offences like murder, rape, dacoity, etc., or other offences of mental depravity under IPC or offences of moral turpitude under special statutes, like the Prevention of Corruption Act or the offences committed by public servants while working in that capacity, the settlement between the offender and the victim can have no legal sanction at all. However, certain offences which overwhelmingly and predominantly bear civil flavour having arisen out of civil, mercantile, commercial, financial, partnership or such like transactions or the offences arising out of matrimony, particularly relating to dowry, etc. or the family dispute, where the wrong is basically to the victim and the offender and the victim 33 have settled all disputes between them amicably, irrespective of the fact that such offences have not been made compoundable, the High Court may within the framework of its inherent power, quash the criminal proceeding or criminal complaint or FIR if it is satisfied that on the face of such settlement, there is hardly any likelihood of the offender being convicted and by not quashing the criminal proceedings, justice shall be casualty and ends of justice shall be defeated. The above list is illustrative and not exhaustive. Each case will depend on its own facts and no hard-and-fast category can be prescribed.
59. B.S. Joshi [B.S. Joshi v. State of Haryana, (2003) 4 SCC 675 : 2003 SCC (Cri) 848] , Nikhil Merchant [Nikhil Merchant v. CBI, (2008) 9 SCC 677 :
(2008) 3 SCC (Cri) 858] , Manoj Sharma [Manoj Sharma v. State, (2008) 16 SCC 1 : (2010) 4 SCC (Cri) 145] and Shiji [Shiji v. Radhika, (2011) 10 SCC 705 :
(2012) 1 SCC (Cri) 101] do illustrate the principle that the High Court may quash criminal proceedings or FIR or complaint in exercise of its inherent power under Section 482 of the Code and Section 320 does not limit or affect the powers of the High Court under Section
482. Can it be said that by quashing criminal proceedings in B.S. Joshi [B.S. Joshi v. State of Haryana, (2003) 4 SCC 675 : 2003 SCC (Cri) 848] , Nikhil Merchant [Nikhil Merchant v. CBI, (2008) 9 SCC 677 : (2008) 3 SCC (Cri) 858] , Manoj Sharma [Manoj Sharma v. State, (2008) 16 SCC 1 : (2010) 4 SCC (Cri) 145] and Shiji [Shiji v. Radhika, (2011) 10 SCC 705 :
(2012) 1 SCC (Cri) 101] this Court has compounded the non-compoundable offences indirectly? We do not think so. There does exist the distinction between compounding of an offence under Section 320 and quashing of a criminal case by the High Court in exercise of inherent power under Section 482. The two powers are distinct and different although the ultimate consequence may be the same viz. acquittal of the accused or dismissal of indictment.
60. We find no incongruity in the above principle of law and the decisions of this Court 34 in Simrikhia [Simrikhia v. Dolley Mukherjee, (1990) 2 SCC 437: 1990 SCC (Cri) 327], Dharampal [Dharampal v. Ramshri, (1993) 1 SCC 435: 1993 SCC (Cri) 333] , Arun Shankar Shukla [Arun Shankar Shukla v. State of U.P., (1999) 6 SCC 146: 1999 SCC (Cri) 1076], Ishwar Singh [Ishwar Singh v. State of M.P.,(2008) 15 SCC 667: (2009) 3 SCC (Cri) 1153], Rumi Dhar [Rumi Dhar v. State of W.B., (2009) 6 SCC 364: (2009) 2 SCC (Cri) 1074] and Ashok Sadarangani [Ashok Sadarangani v. Union of India, (2012) 11 SCC 321: (2013) 1 SCC (Civ) 298: (2013) 1 SCC (Cri) 638]. The principle pro-pounded in Simrikhia [Simrikhia v. Dolley Mukherjee, (1990) 2 SCC 437: 1990 SCC (Cri) 327] that the inherent jurisdiction of the High Court cannot be invoked to override express bar provided in law is by now well settled. In Dharampal [Dharampal v. Ramshri, (1993) 1 SCC 435: 1993 SCC (Cri) 333] , the Court observed the same thing that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code. Similar statement of law is made in Arun Shankar Shukla [Arun Shankar Shukla v. State of U.P., (1999) 6 SCC 146:
1999 SCC (Cri) 1076] . In Ishwar Singh [Ishwar Singh v. State of M.P., (2008) 15 SCC 667: (2009) 3 SCC (Cri) 1153] the accused was alleged to have committed an offence punishable under Section 307 IPC and with reference to Section 320 of the Code, it was held that the offence punishable under Section 307 IPC was not compoundable offence and there was express bar in Section 320 that no offence shall be compounded if it is not compoundable under the Code. In Rumi Dhar [Rumi Dhar v. State of W.B., (2009) 6 SCC 364 :
(2009) 2 SCC (Cri) 1074] although the accused had paid the entire due amount as per the settlement with the bank in the matter of recovery before the Debts Recovery Tribunal, the accused was being proceeded with for the commission of the offences under Sections 120-B/420/467/468/471 IPC along with the bank officers who were being prosecuted under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act. The Court refused to quash the charge against the accused by holding that the Court would not 35 quash a case involving a crime against the society when a prima facie case has been made out against the accused for framing the charge. Ashok Sadarangani [Ashok Sadarangani v. Union of India, (2012) 11 SCC 321 : (2013) 1 SCC (Civ) 298 : (2013) 1 SCC (Cri) 638] was again a case where the accused persons were charged of having committed the offences under Sections 120-B, 465, 467, 468 and 471 IPC and the allegations were that the accused secured the credit facilities by submitting forged property documents as collaterals and utilised such facilities in a dishonest and 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. The Court was alive to the reference made in one of the present matters and also the decisions in B.S. Joshi [B.S. Joshi v. State of Haryana, (2003) 4 SCC 675: 2003 SCC (Cri) 848] , Nikhil Merchant [Nikhil Merchant v. CBI, (2008) 9 SCC 677: (2008) 3 SCC (Cri) 858] and Manoj Sharma [Manoj Sharma v. State, (2008) 16 SCC 1: (2010) 4 SCC (Cri) 145] and it was held that B.S. Joshi [B.S. Joshi v. State of Haryana, (2003) 4 SCC 675 : 2003 SCC (Cri) 848] and Nikhil Merchant [Nikhil Merchant v. CBI, (2008) 9 SCC 677: (2008) 3 SCC (Cri) 858] dealt with different factual situation as the dispute involved had overtures of a civil dispute but the case under consideration in Ashok Sadarangani [Ashok Sadarangani v. Union of India, (2012) 11 SCC 321: (2013) 1 SCC (Civ) 298: (2013) 1 SCC (Cri) 638] was more on the criminal intent than on a civil aspect. The decision in Ashok Sadarangani [Ashok Sadarangani v. Union of India, (2012) 11 SCC 321: (2013) 1 SCC (Civ) 298: (2013) 1 SCC (Cri) 638] supports the view that the criminal matters involving overtures of a civil dispute stand on a different footing.
61. The position that emerges from the above discussion can be summarised thus: the power of the High Court in quashing a criminal proceeding or FIR or complaint in exercise of its inherent jurisdiction is 36 distinct and different from the power given to a criminal court for compounding the offences under Section 320 of the Code. 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 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 over-whelmingly 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 37 despite full and complete settlement and compromise with the victim. In other words, the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and the wrongdoer and whether to secure the ends of justice, it is appropriate that the criminal case is put to an end and if the answer to the above question(s) is in the affirmative, the High Court shall be well within its jurisdiction to quash the criminal proceeding."
(Emphasis supplied) It is further germane to notice the judgment of the Apex Court in the case of PARBATBHAI AAHIR & OTHERS v. STATE OF GUJARAT AND ANOTHER3 (supra) wherein the Apex Court holds as follows:
"16.10. There is yet an exception to the principle set out in propositions 16.8 and 16.9 above. Economic offences involving the financial and economic well-being of the State have implications which lie beyond the domain of a mere dispute between parties disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance."
(Emphasis supplied) 3 (2017) 9 SCC 641 38 It is also germane to notice the judgment of a Co-ordinate Bench of this Court which considered the judgment in the case of SADHU RAM SINGLA in the case of M/s KUSUM ALLOYS LIMITED v.
CBI AND ANOTHER4 (supra) wherein the Co-ordinate Bench in detail has held as follows:
"8. Though this Court is inclined to accept the contention of Sri Prasanna Kumar, learned Standing counsel appearing for respondent to dismiss the petition on the ground that petitioners cannot re-agitate the same issue yet again, in view of the arguments canvassed by Sri M.T.Nanaiah, learned Sr.counsel appearing for petitioners that even on merits , petitioners have case for quashing of the proceedings, this Court has also examined said contention by examining the entire charge sheet material and also case law relied upon by the learned Sr.counsel appearing for petitioners in the interest of justice.
9. Hon'ble Apex Court, in catena of judgments, have held that exercise of inherent power under Section 482 Cr.P.C. can be resorted to : (1) to secure ends of justice; or (2) to prevent the abuse of process of the Court or law particularly where complainant and accused have settled their differences and have arrived at an amicable arrangement and continuation of criminal proceedings after such compromise having been arrived at between them would tantamount to abuse of process of law, inasmuch as, continuation of such proceedings would not subserve the ends of justice or it would be burdensome for the accused to appear before jurisdictional Court and undergo ordeal of trial. There may be circumstances where from of charge sheet material available on record, prosecution would not be able to prove the guilt of the accused and in such circumstances directing the accused to undergo prolonged trial would be of no consequence to either of 4 Criminal Petition No.1274/2017 decided on 02-04-2018 39 the parties and it would be yet another ground for this Court to exercise extraordinary jurisdiction.
10. Hon'ble Apex Court In GIAN SINGH vs STATE OF PUNJAB reported in 2012(5) Kar.L.J. 476 (SC) was examining as to whether offences which were not compoundable under Section 320 of Cr.P.C. can be quashed under Section 482 of Cr.P.C. and it came to be held that exercise of inherent jurisdiction is distinct and different from the power given to a criminal court for compounding the offence under Section 320 of the Code. It was further held that said power is of wide plenitude with the guideline engrafted in such power. It is also held that inherent power of High Court under Section 482 of Cr.P.C. has no statutory limitation and has to be exercised with great caution.
11. In the case of CENTRAL BUREAU OF INVESTIGATION, ACB, MUMBAI vs NARENDRA LAL JAIN & OTHERS reported in (2014) 5 SCC 364 Hon'ble Apex Court has opined that quashment of criminal proceedings in respect of non compoundable offence on the basis of a compromise, High Court can invoke its power under Section 482 of Cr.P.C., since continuation of criminal proceedings are likely to become oppressive or may partake the character of lame prosecution.
12. In the case of NIKHIL MERCHANT vs CENTRAL BUREAU OF INVESTIGATION AND ANOTHER reported in (2008) 9 SCC 677 Hon'ble Apex Court has held that on a compromise entered into between parties by which the parties withdrew all claims and allegations against each other, technicality, held should not come in the way of quashing of criminal proceedings, since continuance of same would be a futile exercise.
13. It is in this background, Sri M.T.Nanaiah, learned Senior Counsel appearing for petitioner has very heavily relied upon judgment of Hon'ble Apex Court in the case of CENTRAL BUREAU OF INVESTIGATION vs SADHU RAM SINGLA & OTHERS reported in 2017 CRL.L.J 2269 to buttress his argument that continuation of criminal proceedings against petitioners in the instant case would not sub-serve the ends of justice particularly, in the background of settlement having 40 been arrived at between the Bank and the borrowing company under One Time Settlement Scheme of the Bank, whereunder the lending Bank has issued a Settlement Certificate dated 07.03.2017. He has further submitted that continuation of the proceedings against petitioners in the changed scenario, would be abuse of process of law. Though at first blush said argument looks attractive, it is not so or in other words, it requires to be rejected for reasons for more than one. Firstly, in the facts obtained in the said case viz., in SADHU RAM SINGLA's case, settlement was arrived at between the Borrower and the Bank and it was held that continuation of criminal case where complainant and accused had settled their differences and had arrived at an amicable arrangement and as such continuation of criminal proceedings against accused would not be justified. In fact, Hon'ble Apex Court has noticed in SADHU RAM SINGLA's case that during the pendency of proceedings before the learned Special Judicial Magistrate, CBI, Patiala, Punjab, a compromise was arrived at between the Bank and respondent - company under a One Time Settlement scheme of the Bank and Bank had released the securities and guarantees of respondents and withdrew recovery proceedings pending in DRT and had intimated nothing was due from respondents to the Bank. An application under Section 320(2) IPC was filed for compounding offence and it came to be dismissed by trial Court and allowed by the High Court. While confirming the said order of High Court, observations came to be made by Hon'ble Apex Court. In fact, the point of law canvassed had been kept open with the following observations by the Hon'ble Apex Court:
"16. In view of the discussion we made in the preceding paragraphs, in our opinion, it would be proper to keep the said point of law open. However, in the given facts, we dismiss this appeal."
14. Judgment of Hon'ble Apex Court in NARENDRA LAL JAIN , which was very heavily relied upon by the learned Senior Counsel appearing for petitioner wherein exercise of the extraordinary jurisdiction by the High Court was not interfered by the Hon'ble Apex Court was on the premise that there was a compromise entered into by the Bank with the borrower and there was specific clause in the consent decree or a joint memo/compromise petition filed whereunder, it was agreed 41 and declared by both the parties that disputes between them were purely civil nature and appellants (Bank) have no grievance of whatsoever nature including that of the CBI complaint against respondents (accused). It is in this background, jurisdiction exercised by the High Court quashing the proceedings was not interfered.
15. Hon'ble Apex Court in the case of STATE OF TAMIL NADU, REPRESENTED BY INSPECTOR OF POLICE, CENTRAL CRIME BRANCH vs R.VASANTHI STANLEY AND ANOTHER reported in (2016)1 SCC 376, after noticing NARENDRA LAL JAIN's case as well as NIKHIL MERCHANT's case referred to supra has held that High Court was in error in quashing proceedings by exercising power under Section 482 Cr.P.C. though having unrestricted and undefined power and such power should not be capriciously or arbitrarily exercised and should be exercised only in appropriate cases to do real and substantial justice for the administration of which alone the courts exist. In fact, their Lordships have referred to judgment in the case of STATE OF MAHARASHTRA vs VIKRAM ANANTRAI DOSHI reported in (2014)15 SCC 29 whereunder it has been held that availing of money from a nationalized bank as alleged by the investigating agency vividly exposits fiscal impurity and in a way, financial fraud. It has been further held:
"The ultimate victim is the collective interest. 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."
It has been further held that it has the potentiality to usher in economic crisis and further held that it is not such a case where one can pay the amount and obtain a 'no-dues certificate' and enjoy the benefit of quashing of criminal proceedings on the hypothesis that nothing more remains to be done. Since collective interest of which the Court is the guardian, cannot be a silent or mute spectator to allow the proceedings to be withdrawn or for that matter, yield to the ingenuous dexterity of the accused persons to invoke jurisdiction under Article 226 of the Constitution or under Section 482 of the Code and quash the proceedings.
4216. Further, in the case of CBI vs MANINDER SINGH reported in (2016)1 SCC 389 has held that prosecution against economic offenders, if any, are not allowed to continue, it was the entire community which would be aggrieved and courts have to guard the collective interest of the society.
17. Yet again, Hon'ble Apex Court in the case of PARBATBHAI AAHIR ALIAS PARBATBHAI BHIMSINHBHAI KARMUR & OTHERS vs STATE OF GUJARAT & ANOTHER reported in (2017)9 SCC 641 having enumerated the contingencies under which Section 482 Cr.P.C. jurisdiction can be exercised by the High Court, though not exhaustive but illustrative, has further held that exception to the principle set out in the propositions at paragraphs 16.8 and 16.9, economic offences involving the financial, land, economic well being of the State have implications which lie beyond the domain of a more dispute between private disputants. It has been further held that High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance.
18. Keeping these principles in mind, when the facts on hand are examined, it would clearly emerge from the charge sheet material that C.W.69 - N. Naseer Ahmed had approached accused No.12-second petitioner to get some bills in the name of M/s Innovative Ventures Pvt. Ltd. for which he asked for 1% commission. He has also stated that there was no transaction of materials to M/s. Innovative Ventures Pvt. Ltd and entire transaction was bogus one done on the instructions of second petitioner-accused No.12. Accused No.12 was the Managing Director of M/s.Kusum Alloys Ltd. - accused No-15. It is the case of prosecution that accused No -12 transferred Rs.524 Lakhs fraudulently collected in cash from the term loan account of M/s. Innovative Ventures Pvt. Ltd through third parties. It is also the case of prosecution that out of the loan amount, Rs.301.50 lakhs was transferred to 43 the account of M/s. Kusum Alloys Ltd. - first petitioner herein held at Union Bank of India, Palakkad, Kerala and then transferred to its account at Bangalore held at Vijaya Bank towards repayment of outstanding liability of M/s.Kusum Alloys Limited -first petitioner herein. In fact, learned Sessions Judge while considering the application filed by the petitioners for discharge, at paragraph 43 of his order dated 25.03.2013 has in detail stated as to how monies borrowed from the Union Bank of India, Indore were routed through the said company and the role played by first petitioner - accused No -15 in this regard. In the light of said material available on record, it cannot be gainsaid by the petitioners that proceedings are required to be quashed in exercise of power vested in this Court under Section 482 Cr.P.C. Hence, this Court is of the considered view that there is no merit in this petition and accordingly, it stands rejected."
(Emphasis supplied)
17. On a perusal of the afore-quoted judgments of the Apex Court and that of the Co-ordinate Bench of this Court, what would unmistakably emerge is, merely because there has been a OTS between the parties, the proceedings cannot be interjected or obliterated, if the account was declared to be a fraud at the outset.
The loan was declared to be a product of fraud in terms of the extant guidelines of the RBI. In the light of the complaint so registered and the judgments of the Apex Court and that of the Co-
ordinate Bench of this Court, further proceedings in the case on hand cannot be interfered with. It is for the petitioners to come out 44 clean, as it would become a matter of evidence that the petitioners had no intention to defraud the Bank.
18. The Criminal Petitions, lacking in merit, are accordingly dismissed.
It is made clear, that the observations made in the course of the order, are only for the purpose of consideration of the case of the petitioners under Section 482 of the Cr.P.C. and would neither bind nor influence further proceedings before any judicial fora.
Sd/-
JUDGE bkp CT:MJ