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REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL  NO.          831                     OF 2014 (Arising out of Special Leave Petition (Crl.) No. 8914 OF  

2013)

GOPAKUMAR B. NAIR        ...  APPELLANT (S)

VERSUS

C.B.I. & ANR.        ...  RESPONDENT (S)  

J U D G M E N T

RANJAN GOGOI, J.

1. Leave granted.

2. The  appellant  is  the  second  accused  (hereinafter  

referred to as ‘A-2’) in CC No. 48 of 2011 (RC 27(A)/2004) in  

the  Court  of  the  Special  Judge  (SPE/CBI),  

Thiruvananthapuram.  He is aggrieved by the refusal dated  

25.06.2013  of  the  High  Court  of  Kerala  to  quash  the  

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aforesaid  criminal  proceeding  lodged  by  the  respondent-

Central Bureau of Investigation (hereinafter for short ‘CBI’).

3. The allegations made against the accused-appellant in  

the FIR dated 30.11.2004 are to the effect that the accused-

appellant  alongwith  one  T.K.  Rajeev  Kumar  (A-1),  Branch  

Manager,  Indian  Overseas  Bank,  Killippalam  Branch,  

Trivandrum  and  C.  Sivaramakrishna  Pillai  (A-3)  (since  

deceased) had entered into a criminal conspiracy to obtain  

undue pecuniary advantage for themselves.  Specifically, it  

was  alleged  that  in  furtherance  of  the  aforesaid  criminal  

conspiracy the accused-appellant dishonestly applied for a  

car loan of Rs. 5 lakhs and opened a bank account bearing  

No.  1277  on  24.08.2002  without  proper  introduction.  

Thereafter,  according  to  the  prosecution,  the  accused-

appellant  furnished a forged agreement for  purchase of  a  

second hand Lancer Car bearing No. KL-5L-7447 showing the  

value thereof as Rs. 6.65 lakhs though the accused-appellant  

had purchased the said vehicle for Rs. 5.15 lakhs only.  It is  

further alleged that A-1, by abusing his official position as  

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Branch Manager, dishonestly sanctioned Rs. 5 lakhs towards  

car loan without prerequisite sanction inspection.  It is also  

alleged that A-1, who did not have the authority to do so,  

sanctioned  education  loan  of  Rs.4  lakhs  under  the  

Vidyajyothi Scheme to the accused-appellant for undergoing  

a course on Digital Film Making at SAE Technology College,  

Thiruvananthapuram.   According  to  the  prosecution,  the  

accused-appellant had submitted two forged receipts of the  

aforesaid college showing payment of Rs. 1,60,000/- as fees  

which amount was duly released in his favour though  he  

had  actually   paid   Rs.  47,500/-  to  the  college and had  

attended the course only for three days.

4. It  is  the  further  case  of  the  prosecution  that  A-1,  

without being authorised to  do so,  sanctioned cash credit  

facility of  Rs. 17 lakhs to one M/s. Focus Infotainments of  

which  the  accused-appellant  is  the  proprietor  and  in  this  

regard had obtained inflated value of the collateral security  

offered by the accused-appellant from deceased accused,  A-

3.   According  to  the  prosecution  in  the  valuation  report  

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submitted  by  A-3  the  value  of  the  property  offered  as  a  

collateral  security  by  A-2  was  shown  at  Rs.17,34,675/-  

though  the  subsequent  valuation  thereof  by  an  approved  

valuer  was  for  Rs.8,56,600/-.   The  prosecution  had  also  

alleged that after sanction of the said loan, A-1 wiped out  

the  over  draft  facility  of  Rs.  13,94,000/-  given  to  the  

accused-appellant without any authority by transferring the  

said  amount  from the cash  credit  account  which was not  

only  against  the  banking  procedure  but  had  also  caused  

undue pecuniary advantage to the accused-appellant to the  

extent  of  Rs.  23,57,887/-.   On  the  aforesaid  facts,  

commission of offences under Section 120-B IPC read with  

Section 13(2) read with Section 13(1)(d)  of the Prevention of  

Corruption Act and Sections 420/471 IPC was alleged insofar  

as the accused-appellant is concerned.   

5. Based  on  the  aforesaid  allegations  RC  Case  No.  

27(A)/2004  dated  21.7.2005  was  registered  wherein  

chargesheet  had  been filed  against  the  accused-appellant  

under the aforesaid sections of the Indian Penal Code as well  

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as the PC Act.  It is not in dispute that charges under the  

aforesaid  provisions of  law have been framed against  the  

accused-appellant  in  the  court  of  the  Special  Judge  

(SPE/CBI), Thiruvananthapuram on 29.07.2013.   

6. Shri  H.P.  Raval,  learned Senior Counsel  appearing for  

the accused-appellant had contended that all amounts due  

to the bank from the accused-appellant has been tendered  

in full in an out of court settlement between the parties.  An  

acknowledgement  dated  30.3.2009  has  been  issued  on  

behalf of the bank to the aforesaid effect wherein it is also  

stated  that  the  bank  has  no  further  claims  and  charges  

against  the  accused-appellant  in  view  of  the  compromise  

reached.  Placing reliance on the decisions of this Court in  

Nikhil Merchant  vs.  Central Bureau of Investigation  

and Another1 and  Gian Singh  vs.  State of Punjab and  

Another2 and  a  recent  pronouncement  in  CBI,  ACB,  

Mumbai vs.  Narendra  Lal  Jain  & Ors.3 Shri  Raval  had  

contended that in view of the settlement arrived at between  1 (2008) 9 SCC 677 2 (2012) 10 SCC 303 3 2014 (3) SCALE 137

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the bank and the accused-appellant, the High Court ought to  

have exercised its power under Section 482 Cr.P.C. to quash  

the criminal proceedings against the accused-appellant.  Shri  

Raval  has  taken  the  Court  through  the  details  of  the  

allegations made and the charges framed to contend that  

the  same  are  identical  with  those  in  Nikhil  Merchant  

(supra).  The charges against the accused in both the cases  

are  identical;  the  same  has  been  quashed  in  Nikhil  

Merchant (supra) which decision has been endorsed by a  

larger Bench in  Gian Singh  (supra) and also in  Narendra  

Lal Jain (supra).  It is, therefore, contended that the criminal  

proceeding  against  the  accused-appellant  is  liable  to  be  

quashed and the impugned order passed by the High Court  

set aside.

7. On  the  contrary,  Shri  Sidharth  Luthra,  learned  

Additional Solicitor General has submitted that the decision  

in Nikhil Merchant (supra) turns on its own facts and what  

has  been  approved  in  Gian Singh  (supra)  is  merely  the  

principle  of  law  laid  down  in  Nikhil  Merchant  (supra),  

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namely,  that quashing a non-compoundable offence under  

Section 482 Cr.P.C.,  following the settlement  between the  

parties,  does  not  amount  to  a  circumvention  of  the  

provisions of Section 320 of the Code of Criminal Procedure.  

Notwithstanding  the  above,  according  to  Shri  Luthra,  

whether  a  criminal  proceeding  should  or  should  not  be  

interdicted midway would really depend on the facts of each  

case.   Shri  Luthra  has  also  drawn  our  attention  to  the  

observations  made  in  para  61  of  the  judgment  in  Gian  

Singh (supra)  wherein  this  Court  had  carved  out  an  

exception by observing that,  

“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   

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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.”

According to Shri  Luthra in view of the above and having  

regard to the charges framed in the present case the High  

Court was fully justified in declining to quash the criminal  

proceeding against the accused.

8. Insofar as the judgment in Narendra Lal Jain (supra) is  

concerned, Shri Luthra has pointed out that in the aforesaid  

case the accused was charged for the offence under Section  

120B  read  with  Section  420  of  the  IPC  whereas  in  the  

present case the charges against the accused-appellant are  

under  Section  120-B  read  with  Section  13(2)  read  with  

Section  13(1)(d)  of  the  Prevention  of  Corruption  Act  and  

Section 420/471 of the Indian Penal Code.  It is submitted  

that the offences under the Prevention of Corruption Act and  

Section 471 of Indian Penal Code are not compoundable.   

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9. We  have  also  heard  Shri  P.  Suresh  Kumar,  learned  

senior  counsel  for  the  respondent  No.2-bank  who  had  

admitted the payment of the entire amount due from the  

accused-appellant  under  the  transaction  in  question.  

Learned  counsel  has,  however,  submitted  that  in  written  

acknowledgment  issued  by  the  Bank  there  is  no  mention  

regarding any ‘settlement’ of the criminal case against the  

accused-appellant insofar as the bank is concerned.

10. The charges framed against the accused-appellant,  it  

may be repeated,  are  under  Section  120-B IPC  read with  

Section 13(2) read with Section 13(1)(d) of the PC Act and  

Sections  420/471  of  the  IPC.   It  is  true  that  in  Nikhil  

Merchant  (supra) the charges framed against the accused  

were also under Sections 120-B read with Section 5(2) and  

5(1) (d) of the PC Act, 1947 (Section 13(2) read with 13(1)(d)  

of the PC Act, 1988) and Sections 420, 467, 468, 471 of the  

Indian Penal Code.  However, in para 28 of the judgment in  

Nikhil Merchant (supra) on a consideration of the totality of  

the  facts  and  circumstances  in  which  the  charges  were  

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brought  against  the  accused  this  Court  had  come  to  the  

following conclusion:-

“28. The  basic  intention  of  the  accused  in  this   case appears  to  have been to  misrepresent  the   financial  status  of  the  Company,  M/s  Neemuch   Emballage Ltd.,  Mumbai,  in order to avail  of the   credit facilities to an extent to which the Company  was  not  entitled.  In  other  words,  the  main   intention of the Company and its officers was to   cheat  the  Bank  and  induce  it  to  part  with   additional  amounts  of  credit  to  which  the   Company was not otherwise entitled.”

The Court,  thereafter,  took into account the fact that  

the  dispute  between  the  parties  had  been  

settled/compromised and such compromise formed a part of  

the decree passed in the suit filed by the bank.  After holding  

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

proceeding was not contingent on the provisions of Section  

320  of  the  Code  of  Criminal  Procedure,  and  taking  into  

account the conclusion recorded in para 28 of the judgment,  

as noticed above, the Court ultimately concluded that in the  

facts of the case (Nikhil Merchant) it would be justified to  

quash the criminal proceeding.  In this regard, it is important  

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to note that the Court in Nikhil Merchant (supra) had come  

to  the  conclusion  that  “the  dispute  involved  herein  has  

overtones of a civil dispute with certain criminal overtones.”

11. The decisions in Nikhil Merchant (supra) as well as in  

some  other  cases  namely  B.S.  Joshi   vs.  State  of  

Haryana4 and Manoj Sharma vs. State5 were referred to a  

larger  Bench  in  Gian  Singh  (supra)  for  an  authoritative  

pronouncement as to whether in the said cases this Court  

had  “indirectly  permitted  compounding  of  non-

compoundable offences”.  The larger Bench hearing the  

matter in its judgment2 took the view that the,  

“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.  ……..  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.”   [Para 57]

4 (2003) 4 SCC 675 5 (2008) 16 SCC 1 2 Gian Singh Vs. State of Punjab & Anr. (2012) 10 SCC 303

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Eventually, in para 61 the note of caution insofar as heinous  

and  grave  offences  and  offences  under  special  laws,  as  

already noticed, was sounded and it  was held that  Nikhil  

Merchant  (supra),  B.S.  Joshi   vs.  State  of  Haryana  

(supra) and Manoj Sharma vs. State (supra) were correctly  

decided.

12. Reference of a case to a larger Bench necessarily has to  

be for a reconsideration of the principle of law on which the  

case has been decided and not the merits of the decision.  

The  decision  rendered  by  any  Bench  is  final  inter-parte,  

subject to the power of review and the curative power.  Any  

other view would have the effect of conferring some kind of  

an appellate  power  in  a  larger  Bench of  this  Court  which  

cannot be countenanced.  However, the principle of law on  

which the decision based is  open to  reconsideration by a  

larger Bench in an appropriate case.  It is from the aforesaid  

perspective that the reference in Gian Singh (supra) has to  

be  understood,  namely,  whether  quashing  of  a  non-

compoundable  offence  on  the  basis  of  a  

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compromise/settlement of the dispute between the parties  

would be permissible and would not amount to overreaching  

the  provisions  of  Section  320  of  the  Code  of  Criminal  

Procedure.  In fact, this is the question that was referred to  

the larger Bench in Gian Singh (supra) and not the merits of  

the decision in Nikhil Merchant (supra).   

13. The  decision  in  Gian  Singh  (supra)  holding  the  

decision  rendered  in  Nikhil  Merchant  (supra)  and  other  

cases to be correct is only an approval of the principle of law  

enunciated  in  the  said  decisions  i.e.  that  a  non-

compoundable offence can also be quashed under Section  

482  CrPC  on  the  ground  of  a  settlement  between  the  

offender and the victim.  It is not an affirmation, for there  

can  be  none,  that  the  facts  in  Nikhil  Merchant  (supra)  

justified/called  for  the  due  application  of  the  aforesaid  

principle of law. Also, neither  Nikhil Merchant  (supra) nor  

Gian Singh  (supra) can be understood to mean that in a  

case  where  charges  are  framed  for  commission  of  non-

compoundable offences or for criminal conspiracy to commit  

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offences  under  the  PC  Act,  if  the  disputes  between  the  

parties  are  settled  by  payment  of  the  amounts  due,  the  

criminal  proceedings  should  invariably  be  quashed.  What  

really follows from the decision in Gian Singh (supra) is that  

though quashing a non-compoundable offence under Section  

482 CrPC, following a settlement between the parties, would  

not amount to circumvention of the provisions of Section 320  

of the Code the exercise of the power under Section 482 will  

always depend on the facts of each case.  Furthermore, in  

the exercise of such power, the note of caution sounded in  

Gian Singh (supra) (para 61) must be kept in mind.  This, in  

our view, is the correct ratio of the decision in  Gian Singh  

(supra).

14. The aforesaid principle of law may now be applied to  

the facts of the present case.  At the very outset a detailed  

narration of the charges against the accused-appellant has  

been  made.   The  appellant  has  been  charged  with  the  

offence of criminal conspiracy to commit the offence under  

Section  13(1)(d).   He  is  also  substantively  charged under  

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Section 420 (compoundable with the leave of the Court) and  

Section 471 (non-compoundable).  A careful consideration of  

the facts  of  the case would indicate that  unlike in  Nikhil  

Merchant  (supra)  no conclusion can be reached that  the  

substratum of the charges against the accused-appellant in  

the present case is one of cheating nor are the facts similar  

to those in  Narendra Lal Jain (supra) where the accused  

was charged under Section 120-B read with Section 420 IPC  

only.  The offences are certainly more serious; they are not  

private in nature.   The charge of conspiracy is  to commit  

offences  under  the  Prevention  of  Corruption  Act.   The  

accused  has  also  been  charged  for  commission  of  the  

substantive  offence  under  Section  471  IPC.   Though  the  

amounts due have been paid the same is under a private  

settlement between the parties unlike in  Nikhil Merchant  

(supra)  and  Narendra  Lal  Jain  (supra)  where  the  

compromise was a part of the decree of the Court. There is  

no  acknowledgement  on  the  part  of  the  bank  of  the  

exoneration of the criminal liability of the accused-appellant  

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unlike the terms of compromise decree in the aforesaid two  

cases.  In the totality of the facts stated above, if the High  

Court has taken the view that the exclusion spelt out in Gian  

Singh (supra) (para 61) applies to the present case and on  

that basis had come to the conclusion that the power under  

Section  482  CrPC  should  not  be  exercised  to  quash  the  

criminal  case  against  the  accused,  we  cannot  find  any  

justification to interfere with the said decision.  The appeal  

filed by the accused is, therefore, dismissed and the order  

dated 25.06.2013 of the High Court, is affirmed.

...…………………………CJI.        [P. SATHASIVAM]

.........……………………… J.

      [RANJAN GOGOI]

.........………………………J.        [N.V. RAMANA]

NEW DELHI, APRIL 7, 2014.

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