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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.8546   OF 2014           (Arising out of S.L.P.(C) No.20066 of 2008)

GOLD QUEST INTERNATIONAL PRIVATE LIMITED ……. APPELLANT

VERSUS

THE STATE OF TAMIL  NADU & ORS.                … .. RESPONDENTS

J U D G M E N T  

PRAFULLA C.PANT,J.

1.   Leave granted.

2.  The question before us in this appeal is whether the Division Bench of  

High Court has erred in law in setting aside the order of learned Single  

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Judge quashing the First Information Report (for short, ‘FIR’) on the basis  

of  the  compromise  and  settlement  between  the  complainant  and  the  

appellant.

3. Brief  facts  of  the  case  are  that  the  appellant  is  an  International  

Numismatic Company which has operations in over sixty countries.  It is  

pleaded that it conducts its business with necessary licence.  The multi  

level marketing through direct selling of products is being adopted by the  

Company in the interest of the consumers by eliminating the middleman  

and  rewarding  the  consumer  by  reducing  the  prices.  The  appellant-

company has over sixteen thousand members/ consumers in and around  

the city  of  Chennai  alone. A complaint  was made in the year 2003 by  

Respondent No.7  against the appellant-company alleging non-compliance  

of issuance of numismatic gold coin on receipt of Rs.16,800/- from wife of  

Respondent  No.7 as per the promise made by the appellant-company.  

Some  other  customers  also  had  complaints  on  the  basis  of  which  

Respondent No.4 registered a case under Section 420 of the Indian Penal  

Code read with Sections 4, 5 & 6 of the Prize Chits and Money Circulation  

(Banning)  Act,  1978.  The  appellant-company filed  a  writ  petition  being  

W.P.No.26784 of  2003 before  the  High  Court  of  Judicature  at  Madras  

praying therein that the FIR registered against it be quashed. Since all the  

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claimants including the complainant settled the dispute with the appellant-

company and entered into  an agreement,  learned Single  Judge of  the  

High  Court  by  its  order  dated  19th April,  2005  quashed  the  FIR,  and  

disposed of  the aforesaid writ  petition.  However,  the State-respondents  

challenged the said order  dated 19th April, 2005 passed by the learned  

Single Judge whereby the FIR No.307 of 2003 was quashed, before the  

Division Bench of  the High Court.  The Division Bench allowed the writ  

appeal  being W.A.No.1178 of 2005 filed by the State-respondents and  

directed Respondent No.4 to investigate the crime. Hence,  this appeal.

4. We have heard learned counsel  for  the parties,  and perused the  

papers on record.

5. The  main  ground  on  which  the  Division  Bench  appears  to  have  

interfered with the order of the learned Single Judge is that out of 172  

claimants, there was no compromise from two persons.  However, there  

was  sufficient  evidence  on  record  to  suggest  that  the  whereabouts  of  

those two persons were not known, nor have they ever challenged the  

order of  learned Single Judge. The Division Bench while accepting the  

arguments  of  the State-Respondents  have  relied  on  a  decision  of  this  

Court in Union of India vs. Bhajan Lal  (AIR 1992 SC 604 : 1992 Supp.

(1) SCC 335). The said judgment appears to have been discussed by this  

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Court in B. S. Joshi & Ors. vs.  State of Haryana & Anr. (2003) 4 SCC  

675. Relevant paragraphs of  B. S. Joshi’s case (supra) are reproduced  

below:

“ 2.  The question that  falls  for  determination in  the  instant case is about the ambit of the inherent powers of the  High  Courts  under  Section  482  of  the  Code  of  Criminal  Procedure (the Code)  read with Articles 226 and 227 of the  Constitution  of  India  to  quash  criminal  proceedings.  The  scope  and  ambit  of  power  under  Section  482  has  been  examined by this Court in a catena of earlier decisions but in  the present case that is required to be considered in relation  to matrimonial disputes. The matrimonial disputes of the kind  in the present case have been on considerable increase in  recent times resulting in filing of complaints by the wife under  Sections 498-A and 406 IPC not only against the husband  but his other family members also. When such matters are  resolved either by the wife agreeing to rejoin the matrimonial  home or  mutual  separation of  husband and wife  and also  mutual  settlement  of  other  pending  disputes  as  a  result  whereof both sides approach the High Court and jointly pray  for  quashing  of  the  criminal  proceedings  or  the  first  information  report  or  complaint  filed  by  the  wife  under  Sections 498-A and 406 IPC, can the prayer be declined on  the ground that  since the  offences are  non-compoundable  under Section 320 of the Code, therefore, it is not permissible  for  the  court  to  quash  the  criminal  proceedings  or  FIR or  complaint.

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4.   The  High  Court  has,  by  the  impugned  judgment,  dismissed  the  petition  filed  by  the  appellants  seeking  

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quashing of the FIR for in view of the High Court the offences  under Sections 498-A and 406 IPC are non-compoundable  and  the  inherent  powers  under  Section  482  of  the  Code  cannot  be  invoked  to  bypass  the  mandatory  provision  of  Section 320 of the Code. For its view, the High Court has  referred to and relied upon the decisions of this Court in State  of  Haryana  v.  Bhajan  Lal  [1992  suppl.(1)  SCC  335], Madhu  Limaye  v.  State  of  Maharashtra  [(1977)  4  SCC  551] and  Surendra Nath Mohanty v. State of Orissa [(1999) 5 SCC 238].

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14.  There is no doubt that the object of introducing Chapter  XX-A containing Section 498-A in the Indian Penal Code was  to prevent torture to a woman by her husband or by relatives  of  her  husband.  Section  498-A was added with  a  view to  punishing a husband and his relatives who harass or torture  the  wife  to  coerce  her  or  her  relatives  to  satisfy  unlawful  demands  of  dowry.  The  hypertechnical  view  would  be  counterproductive  and would act against interests of women  and against the object for which this provision was added.  There is every likelihood that non-exercise of inherent power  to quash the proceedings to meet the ends of justice would  prevent women from settling earlier. That is not the object of  Chapter XX-A of the Indian Penal Code.

15.  In view of the above discussion, we hold that the High  Court in exercise of its inherent powers can quash criminal  proceedings or FIR or complaint and Section 320 of the Code  does not limit or affect the powers under Section 482 of the  Code.”

6.    Subsequent to the case of B.S. Joshi (supra) in Nikhil Merchant vs.  

Central Bureau of Investigation & Anr.     (2008) 9 SCC 677, this Court  

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has made the following observations in paragraphs 30 and 31  which are  

quoted below:

“30.  In the instant case, the disputes between the Company  and  the  Bank  have  been  set  at  rest  on  the  basis  of  the  compromise arrived at by them whereunder the dues of the  Bank have been cleared and the Bank does not  appear  to  have any further claim against the Company. What, however,  remains  is  the  fact  that  certain  documents  were  alleged  to  have been created by the appellant herein in order to avail of  credit  facilities  beyond the limit  to  which the Company was  entitled. The dispute involved herein has overtones of a civil  dispute  with  certain  criminal  facets.  The  question  which  is  required to  be answered in  this  case is  whether  the power  which independently lies with this Court to quash the criminal  proceedings pursuant to the compromise arrived at, should at  all be exercised?

31. On an overall view of the facts as indicated hereinabove  and keeping in mind the decision of this Court in  B.S. Joshi  case  [(2003)  4  SCC  675],  and  the  compromise  arrived  at  between the Company and the Bank as also Clause 11 of the  consent  terms  filed  in  the  suit  filed  by  the  Bank,  we  are  satisfied that this is a fit case where technicality should not be  allowed to stand in  the way in the quashing of  the criminal  proceedings, since, in our view, the continuance of the same  after the compromise arrived at between the parties would be  a futile exercise.”

7.      In  Gian Singh vs.  State of Punjab & Anr.  (2012) 10 SCC 303,  

judgments  in  B.S.  Joshi  (supra) and  Nikhil  Merchant  (supra) were  

considered  by a three-Judge Bench of this Court and it has found that the  

view  taken  in  aforesaid  two  cases  by  this  Court  is  correct.  Relevant  

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paragraphs of the judgment in Gian Singh (supra) read as follows:

“  57.   Quashing of offence or criminal proceedings on the  ground of settlement between an offender and victim is not  the same thing as compounding of offence. They are different  and  not  interchangeable.  Strictly  speaking,  the  power  of  compounding of offences  given  to  a court  under  Section  320  is  materially  different  from  the  quashing  of  criminal  proceedings  by  the  High  Court  in  exercise  of  its  inherent jurisdiction. In compounding of offences, power of a  criminal court is circumscribed by the provisions contained in  Section  320  and  the  court  is  guided  solely  and  squarely  thereby while, on the other hand, the formation of opinion by  the High Court  for  quashing a  criminal  offence or  criminal  proceeding or criminal complaint is guided by the material on  record as to whether the ends of justice  would justify such  exercise of power although the ultimate consequence may be  acquittal or dismissal of indictment.

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59.  B.S. Joshi  [(2003)  4 SCC 675], Nikhil  Merchant  [(2008)  9  SCC 677], Manoj Sharma [(2008) 16 SCC 1 and Shiji  [(2011) 10  SCC 705] 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,  Nikhil  Merchant,  Manoj  Sharma   and  Shiji  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.  

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acquittal of the accused or dismissal of indictment.

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61.    The  position  that  emerges  from  the  above  discussion can be summarized thus: the power of the High  Court in quashing a criminal  proceeding or FIR or complaint  in exercise of its inherent jurisdiction is 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  overwhelmingly  and  predominatingly   civil  flavour  stand  on  a  different  footing  for  the  purposes  of  quashing, particularly the offences arising from commercial,  financial,  mercantile,  civil,  partnership  or  such  like  transactions or the offences arising out of matrimony relating  to  dowry,  etc.   or  the  family  disputes  where  the  wrong is  basically private or personal in nature and the parties have  

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resolved their  entire dispute. In this category of cases, the  High Court may quash  the criminal proceedings if in its view,  because of the compromise  between the offender and the  victim, the possibility of conviction is remote and bleak and  continuation of the criminal case would put the accused to  great oppression and prejudice and extreme injustice would  be caused to him by not quashing the criminal case despite  full and complete settlement and compromise with the victim.  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 proceedings.”

8.   In view of the principle laid down by this Court in the aforesaid  

cases,  we  are  of  the  view  in  the  disputes  which  are  substantially  

matrimonial in nature, or the civil property disputes with criminal facets, if   

the parties have entered into settlement,  and it  has become clear  that  

there are no chances of conviction, there is no illegality in quashing the  

proceedings  under  Section  482  Cr.P.C.  read  with  Article  226  of  the  

Constitution.   However,  the same would not  apply where the nature of  

offence is very serious like rape, murder, robbery, dacoity, cases under  

Prevention  of  Corruption  Act,  cases  under  Narcotic  Drugs  and  

Psychotropic Substances Act and other similar kind of offences in which  

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punishment  of  life  imprisonment  or  death  can  be  awarded.  After  

considering the facts and circumstances of the present case, we are of the  

view that learned Single Judge did not commit any error of law in quashing  

the  FIR  after  not  only  the  complainant  and  the  appellant  settled  their  

money  dispute  but  also  the  other  alleged  sufferers  entered  into  an  

agreement with the appellant, and as such, they too settled their claims.

9.    For the reasons as discussed above, we are of the opinion that the  

impugned order dated 7th March, 2008 passed by the Division Bench of  

the  High  Court  in  W.A.No.1178  of  2005  is  liable  to  be  set  aside.  

Accordingly, the appeal is allowed, and the order dated 19 th April,  2005  

passed by the learned Single Judge in W.P. No. 26874 of 2003 stands  

restored. No order as to costs.

.………………………………………..J.                     (SUDHANSU JYOTI MUKHOPADHAYA)

 …….………………………………………J

      (PRAFULLA C. PANT)

NEW DELHI, SEPTEMBER 8, 2014.

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