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   REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.396 OF 2017 (Arising out of SLP(Crl.) No.1010 of 2012)

Central Bureau of Investigation … Appellant(s)

:Versus:

Sadhu Ram Singla & Ors. ... Respondent(s)

J U D G M E N T

Pinaki Chandra Ghose, J.

1. Leave granted.

2. This appeal, by special leave, has been filed assailing the

judgment and order dated 2nd June, 2011 passed by the High

Court  of  Punjab  and  Haryana  at  Chandigarh  in  Criminal

Miscellaneous  No.M-2829 of  2011,  whereby the  High Court

while relying upon another judgment of the same High Court

and  on  the  basis  of  settlement  of  dispute,  quashed  the

criminal  proceedings  against  the  respondents,  being  FIR

No.SIA-2001-E-0006  dated  28.12.2001  under  Sections  420

and 471 of  Indian Penal  Code [in  short  ‘IPC’],  registered at

Police Station, SIU(X)/SPE/CBI, New Delhi and the criminal

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proceedings pending in the Court of learned Special Judicial

Magistrate, CBI, Punjab, Patiala.

3. Brief facts of the case are as follows: M/s. Rom Industries

Ltd.,  Mansa  Road,  Bhatinda  (Punjab),  which  is  respondent

No.3  herein,  (hereinafter  referred  to  as  the

“respondent-company”) was dealing with State Bank of Patiala,

Bhatinda (City) Branch (for short “the Bank”) since 1976 and

was availing the credit limits from a consortium of banks with

the Bank as leader and enjoyed total fund based credit limits

from the banking system to an extent of Rs.31,500.00 lacs in

March, 1996. However, in the year 1996, due to destruction of

stocks  consisting  of  Deolided  Cakes  lying  at  Bedi  Port,

Jamnagar in a cyclone storm that hit Bedi Port, Jamnagar on

19/20 June, 1996,  it claimed to have suffered heavy loss to

the extent of Rs.38.08 crores. The destruction of stocks could

not be corroborated by any evidence. The respondent-company

had  been  granted  credit  facilities  against  hypothecation  of

stocks which included stocks lying at the port. But allegedly

after  Bank verification of  the  stocks,  it  was found that  the

respondent-company had fraudulently obtained higher credit

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limits on the basis of stock statements which appeared forged

and false. The respondent-company approached the Bank for

grant of adhoc export packing credit limit of Rs.10 crores in

February 1995, which was sanctioned on 09.03.1995.  

4. Law was set into motion when FIR No.SIA-2001-E-0006

dated  28.12.2001  was  registered  at  Police  Station,

SIU(X)/SPE/CBI, New Delhi, by Shri K. Balachandran, Chief

Vigilance Officer  of  the State Bank of  Patiala under Section

120-B  read  with  Sections  420,  467,  468  and  471  of  IPC,

against the Board of Directors including respondent Nos.1 &

2. Charge-sheet was filed before the learned Special Judicial,

Magistrate,  CBI,  Patiala,  Punjab,  against  the  respondents

under Section 420/471 read with Section 120(B) of  IPC, for

having entered into criminal conspiracy between 1995 to 1996

and  causing  loss  to  State  Bank  of  Patiala  to  the  extent  of

Rs.28.49/- crores through false stock statements, forged bank

guarantee and dishonest misuse of funds generated.

5. During the pendency of the proceedings before the Court

of learned Special Judicial Magistrate, CBI, Patiala, Punjab, a

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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 No.1 for compounding of offences under

Section 320(2) of IPC, was dismissed by the Trial Court on the

ground  that  Section  471  read  with  468  of  IPC  is  a

non-compoundable offence.

6. Thereafter, the respondents approached the High Court,

invoking  its  power  under  Section  482  of  the  Criminal

Procedure  Code,  1973  (in  short  ‘Cr.P.C.)  for  quashing  FIR

No.SIA-2001-E-0006 dated 28.12.2001 and also the resultant

proceedings  pending  before  the  Court  of  learned  Special

Judicial  Magistrate,  CBI,  Patiala,  Punjab,  on  the  basis  of

aforesaid settlement. The High Court by its judgment dated 2nd

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June, 2011, relied on its Full Bench judgment in the case of

Kulwinder Singh & Ors. Vs. State of Punjab Anr., 2007 (4)

CTC 769, and on the basis of settlement of dispute, quashed

the criminal proceedings against the respondents.

7. 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 of

Cr.P.C. on the basis of the settlement arrived at between the

complainant and the respondents-accused. Since the question

before us revolves around clause 9 of Section 320 of Cr.P.C.,

the same is reproduced herein as follows:  

“320. Compounding of offences.-  (1) xxx xxx xxx  (9) No offence shall be compounded except as  provided by this section.”

8. We  have  heard  learned  Additional  Solicitor  General

appearing for the CBI and 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  High  Court  had

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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 the

case of Kulwinder Singh & Ors Vs. State of Punjab & Anr.,

2007  (4)  CTC  769,  in  which  reliance  was  placed  on  the

judgment  delivered  by  this  Court  in  the  case  of  Mrs.

Shakuntala  Sawhney  Vs.  Mrs.  Kaushalya  Sawhney  &

Ors., (1980) 1 SCC 63.

9. Learned  Additional  Solicitor  General  appearing  for  the

CBI has drawn our attention to the decision of this Court in

Manoj Sharma Vs. State & Ors., (2008) 16 SCC 1, wherein it

was observed by this Court:  

“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 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

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judicial  power  to  direct  compounding  of  a non-compoundable offence.”

10. We further  wish  to  supply  emphasis  on  the  judgment

delivered by this Court in the case of  State of Tamil Nadu

Vs. R. Vasanthi Stanley & Anr., (2016) 1 SCC 376, wherein

it was observed:  

“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.”

11. Further reliance was placed on the decision of this Court

in  the  case  of  Central  Bureau  of  Investigation  Vs.  A.

Ravishankar Prasad & Ors., (2009) 6 SCC 351, wherein it

was held:  

“39. Careful analysis of all these judgments clearly reveals that the exercise of inherent powers would entirely  depend on the  facts  and circumstances  of

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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.”

12. Lastly,  reliance  was  placed  upon  another  judgment  of

this Court in Central Bureau of Investigation Vs. Maninder

Singh, (2016) 1 SCC 389, wherein it was held by this Court:

“19. In this case, the High Court while exercising 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, (2014) 15 SCC 29, the order of the High Court cannot be sustained.”

13. Resisting the aforesaid submissions it was canvassed by

Mr. Bishwajit Bhattacharya, learned senior counsel appearing

for  the  respondents  that  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

Vs.  State  of  Punjab & Anr.,  (2012)  10  SCC 303,  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

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part of Full Bench judgment of the High Court in Kulwinder

Singh & Ors. Vs. State of Punjab & Anr.  (supra), which was

reproduced  in  the  impugned  judgment  and  the  same  is

reproduced hereunder:

“26. In Mrs. Shakuntala Sawhney v. Mrs. Kaushalya Sawhney & Ors.,(1980) 1 SCC 63, Hon'ble Krishna Iyer, J. aptly summed up the essence of compromise in the following words :-  

The finest hour of justice arrives propitiously when parties, despite falling apart,  bury the hatchet and weave a sense of fellowship or reunion.

27.  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.  No embargo,  be  in the  shape of  Section 320(9) of the Cr.P.C.  or any other such curtailment, can whittle down the power under Section 482 of the Cr.P.C.”

14. 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 clear violation of the rule of law

which is one of the basic structure of the Constitution of India.

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We  wish  to  supply  emphasis  on  para  21  of  the  Manoj

Sharma’s case (supra) which is as follows:  

“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 (2008)  1 SCC 683 and Govt. 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.”

15. 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’s case (supra) 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

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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.

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.

……..………………………J (Pinaki Chandra Ghose)

……..………………………J (Amitava Roy)

New Delhi; February 23, 2017.