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REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL  NO.517  OF 2014

(Arising out of Special Leave Petition (Crl) No. 6138 OF 2006)

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

VERSUS

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

J U D G M E N T

RANJAN GOGOI, J.

1. Leave granted.

2. The  appellant,  Central  Bureau  of  Investigation  (CBI)  

ACB, Mumbai seeks to challenge an order dated 28.10.2005  

passed by the High Court of Bombay quashing the criminal  

proceedings  against  the  respondents  Narendra  Lal  Jain,  

Jayantilal L. Shah and Ramanlal Lalchand Jain.  The aforesaid  

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respondents had moved the High Court under Section 482  

Code  of  Criminal  Procedure,  1973  (for  short  “Cr.P.C.”)  

challenging  the  orders  passed  by  the  learned  Trial  Court  

refusing  to  discharge  them  and  also  questioning  the  

continuance of the criminal proceedings registered against  

them.  Of the three accused, Jayantilal L. Shah, the court is  

informed,  has  died  during  the  pendency  of  the  present  

appeal truncating the scope thereof to an adjudication of the  

correctness of  the decision of the High Court in so far  as  

accused Narendra Lal Jain and Ramanlal Lalchand Jain are  

concerned.

3. On the basis  of two FIRs  dated 22.03.1993,  R.C.  No.  

21(A) of 1993 and R.C. No.22 (A) of 1993 were registered  

against the accused-respondents and several officers of the  

Bank  of  Maharashtra.   The  offences  alleged  were  duly  

investigated  and  separate  chargesheets  in  the  two  cases  

were filed on the basis whereof Special Case No. 15 of 1995  

and Special Case No. 20 of 1995 were registered in the Court  

of  the  Special  Judge,  Mumbai.   In  the  chargesheet  filed,  

offences  under  Sections  120-B/420  IPC  and  Sections  5(2)  

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read with Section 5(1)(d) of the Prevention of Corruption Act,  

1947  corresponding  to  Sections  13(2)  read  with  Section  

13(1)(d) of the Prevention of Corruption Act, 1988 (for short  

“PC Act”) were alleged against the accused persons.  In so  

far as the present accused-respondents are concerned the  

gravamen of the charge is that they had conspired with the  

bank  officials  and  had  projected  inflated  figures  of  the  

creditworthiness of the companies represented by them and  

in this manner had secured more advances/loans from the  

bank than they were entitled to.

4. While the criminal  cases were being investigated the  

bank  had  instituted  suits  for  recovery  of  the  amounts  

claimed to be due from the respondents.  The said suits were  

disposed of in terms of consent decrees dated 23.04.2001.  

Illustratively,  the relevant clause of the agreement on the  

basis of which the consent decrees were passed reads as  

follows:

“10.  Agreed  and  declared  that  dispute  between the parties hereto were purely and  simply  of  civil  nature  and  on  payment  mentioned  as  aforesaid  made  by  the  

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Respondents  the  Appellants  have  no  grievance of whatsoever nature including of  the CBI Complaint against the Respondents.”

5. Applications for  discharge were filed by the accused-

respondents which were rejected by the learned Trial Court  

by  order  dated  04.09.2011.   The  learned  Trial  Court,  

thereafter, proceeded to frame charges against the accused.  

In so far as the present accused-respondents are concerned  

charges were framed under Sections 120-B/420 of the Indian  

Penal Code whereas against the bank officials, charges were  

framed under the different provisions of the Prevention of  

Corruption  Act,  1988  (PC  Act).   The  challenge  of  the  

respondents to the order of the learned Trial Court refusing  

discharge and the continuation of the criminal proceedings  

as a whole having been upheld by the High Court and the  

proceedings in question having been set aside and quashed  

in respect of the respondent, the CBI has filed the present  

appeal  challenging  the  common  order  of  the  High  Court  

dated 28.10.2005.

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6. We  have  heard  Mr.  P.P.  Malhotra,  learned  Additional  

Solicitor General appearing on behalf of the appellant and  

Mr. Sushil Karanjkar, learned counsel appearing on behalf of  

Respondent Nos. 1 and 4.

7. Shri Malhotra, learned Additional Solicitor General, has  

taken us through the order passed by the High Court. He has  

submitted  that  the  High  Court  had  quashed  the  criminal  

proceeding registered against the accused-respondents only  

on the ground that the civil liability of the respondents had  

been settled by the consent terms recorded in the decree  

passed in the suits.   Shri Malhotra has submitted that when  

a criminal offence is plainly disclosed, settlement of the civil  

liability,  though arising  from the same facts,  cannot  be a  

sufficient justification for the premature termination of the  

criminal  case.   Shri  Malhotra  has  also  submitted  that  the  

offence under  Section 120-B alleged against  the accused-

respondents is not compoundable under Section 320 Cr.P.C.;  

so  also  the  offences  under  the  PC  Act.   Relying  on  the  

decision of a three Judges Bench of this Court in Gian Singh  

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vs.  State  of  Punjab  and  Another1,  Shri  Malhotra  has  

submitted that though it has been held that the power of the  

High Court under Section 482 Cr.P.C. is distinct and different  

from the power vested in a criminal Court for compounding  

of  offence under  Section 320 of  the Cr.P.C.,  it  was  made  

clear that the High Court must have due regard to the nature  

and  gravity  of  the  offences  alleged  before  proceeding  to  

exercise the power under Section 482 Cr.P.C.   Specifically  

drawing the attention of the Court to para 61 of the report in  

Gian Singh (supra) Shri Malhotra has submitted that “any  

compromise between the victim and the offender in relation  

to the offences under special statutes like the Prevention of  

Corruption Act…. cannot provide for any basis for quashing  

criminal proceeding involving such offences”.  Shri Malhotra  

had  contended  that  having  regard  to  the  gravity  of  the  

offences alleged, which offences are prima facie made out,  

in as much as charges have been framed for the trial of the  

accused-respondents,  the  High  Court  was  not  justified  in  

1 (2012) 10 SCC 303

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quashing  the  criminal  proceedings  against  the  accused-

respondents.  

8. Per  contra,  the  learned  counsel  for  the  respondents  

(accused)  have  submitted  that  the  High  Court,  while  

quashing the criminal proceedings against the respondents  

(accused),  had  correctly  relied  on  the  judgments  of  this  

Court in  Central Bureau of Investigation, SPE, SIU(X),  

New Delhi vs. Duncans Agro Industries Ltd., Calcutta2  

and B.S.Joshi  and  Others  vs. State  of  Haryana  and  

Another3.   Learned  counsel  has  submitted  that  though  

simultaneous criminal and civil action on same set of facts  

would be maintainable, in  Duncans Agro Industries Ltd.  

(supra) it has been held that the disposal of the civil suit for  

recovery, on compromise upon receipt of payments by the  

claimants,  would  amount  to  compounding  of  offence  of  

cheating.  No error is, therefore, disclosed in the order of the  

High Court insofar as the offence under Section 420 IPC is  

concerned.   As  for  the  offence  under  Section  120-B  it  is  

submitted that this Court in B.S. Joshi (supra) has held that  

2 (1996) 5 SCC 591 3 AIR 2003 SC 1387

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the  power  under  Section  482  Cr.P.C.  to  quash  a  criminal  

proceeding is not limited by the provisions of Section 320  

Cr.P.C. and even if an offence is not compoundable under  

Section 320 Cr.P.C., the same would not act as a bar for the  

exercise of power under Section 482 Cr.P.C.  As the dispute  

between the parties have been settled on the terms of the  

compromise decrees, it is submitted that the High Court had  

correctly  applied  the  principles  laid  down  in  B.S.  Joshi  

(supra) to the facts of the present case.

9. Learned  counsel  has  further  pointed  out  that  the  

charges framed against the accused-respondents are under  

Section  120-B/420  of  the  Indian  Penal  Code  and  the  

respondents  not  being  public  servants,  no  substantive  

offence under the PC Act can be alleged against them. The  

relevance of the views expressed in para 61 of the judgment  

of  this  Court  in  Gian Singh (supra),  noted above,  to  the  

present case is seriously disputed by the learned counsel in  

view  of  the  offences  alleged  against  the  respondents.  

Learned counsel has also submitted that by the very same  

impugned order of the High Court the criminal proceeding  

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against one Nikhil Merchant was declined to be quashed on  

the ground that offences under Sections 468 and 471 of the  

IPC had been alleged against the said accused.  Aggrieved  

by the order of the High Court the accused had moved this  

Court under Article 136 of the Constitution. In the decision  

reported  in  Nikhil  Merchant  vs. Central  Bureau  of  

Investigation  and  Another4 this  Court  understood  the  

charges/allegations against the aforesaid Nikhil Merchant in  

the same terms as in the case of the accused-respondents,  

as already highlighted.  Taking into consideration the ratio  

laid  down  in  B.S.  Joshi (supra)  and  the  compromise  

between the bank and the accused Nikhil Merchant (on the  

same terms as in the present case) the proceeding against  

the said accused i.e.  Nikhil  Merchant was quashed by the  

Court taking the view that the power and the Section 482  

Cr.P.C. and of this Court under Article 142 of the Constitution  

cannot  be circumscribed by the provisions of  Section 320  

Cr.P.C.  It is further submitted by the learned counsel that  

the correctness of the view in B.S. Joshi (supra) and Nikhil  

4 (2008) 9 SCC 677

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Merchant (supra) were referred to the three Judges Bench  

in  Gian  Singh (supra).   As  already  noted,  the  opinion  

expressed in  Gian Singh (supra) is that the power of the  

High Court to quash a criminal proceeding under Section 482  

Cr.P.C. is distinct and different from the power vested in a  

criminal  court  by  Section  320  Cr.P.C.  to  compound  an  

offence.  The conclusion in  Gian Singh (supra), therefore,  

was that the decisions rendered in  B.S. Joshi (supra) and  

Nikhil Merchant (supra) are correct.

10. In the present case, as already seen, the offence with  

which the accused-respondents had been charged are under  

Section  120-B/420  of  the  Indian  Penal  Code.   The  civil  

liability of the respondents to pay the amount to the bank  

has  already  been  settled  amicably.  The  terms  of  such  

settlement  have  been  extracted  above.   No  subsisting  

grievance of the bank in this regard has been brought to the  

notice of the Court.  While the offence under Section 420 IPC  

is compoundable the offence under Section 120-B is not.  To  

the latter offence the ratio laid down in  B.S. Joshi (supra)  

and Nikhil Merchant (supra) would apply if the facts of the  

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given case would so justify.  The observation in Gian Singh  

(supra) (para 61) will not be attracted in the present case in  

view of  the offences alleged i.e.  under  Sections 420/120B  

IPC.   

11. In the present case, having regard to the fact that the  

liability  to  make good the monetary  loss suffered by the  

bank had been mutually settled between the parties and the  

accused had accepted the liability in this regard, the High  

Court had thought it  fit  to invoke its power under Section  

482 Cr.P.C.  We do not see how such exercise of power can  

be faulted or held to be erroneous.  Section 482 of the Code  

inheres in the High Court the power to make such order as  

may  be  considered  necessary  to,  inter  alia,  prevent  the  

abuse of the process of law or to serve the ends of justice.  

While it will be wholly unnecessary to revert or refer to the  

settled position in  law with  regard to  the contours  of  the  

power  available  under  Section  482  Cr.P.C.  it  must  be  

remembered  that  continuance  of  a  criminal  proceeding  

which  is  likely  to  become oppressive  or  may  partake  the  

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character of a lame prosecution would be good ground to  

invoke the extraordinary power under Section 482 Cr.P.C.   

12. We, therefore, decline to interfere with the impugned  

order  dated  28.10.2005  passed  by  the  High  Court  and  

dismiss this appeal.   We, however,  make it  clear that the  

proceedings  in  Special  Case  No.  15/95  and  20/95  stands  

interfered  with  by  the  present  order  only  in  respect  of  

accused-respondents  Narendra  Lal  Jain  and  Ramanlal  

Lalchand Jain.

.…………………………CJI. [P. SATHASIVAM]

........………………………J. [RANJAN GOGOI]

..........……………………J. [N.V.RAMANA]

NEW DELHI, FEBRUARY 28, 2014.

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