REPORTABLE IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1109 0F 2011 (Arising Out of S.L.P. (Criminal) No.6113 of 2009)

SUSHIL SURI —    APPELLANT

VERSUS

C.B.I. & ANR. — RESPONDENTS

J U D G M E N T

D.K. JAIN, J.:

1.Leave granted.

2.This appeal, by special leave, is directed against judgment dated 21st May  

2009 delivered by the High Court of Delhi in Criminal Misc. Case No.3842  

of 2008, in a petition filed by the appellant herein under Section 482 of the  

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

impugned judgment, a learned Single Judge of the High Court has declined  

to quash the Chargesheet filed against the appellant and other directors of a  

Company, namely, M/s Morpen Laboratories Ltd. (for short “the Company”)  

for offences punishable under Sections 120B, 420, 409, 468 and 471 of the  

Indian Penal Code, 1860 (for short “the IPC”).

3.Briefly stated, the facts, material for adjudication of the issue, arising in  

this appeal, are as follows:

A  source  information  was  received  by  the  Central  Bureau  of  

Investigation  (for  short  “the  CBI”)  that  in  the  year  1999  two  Chartered  

Accountants, namely, Sanjay Malik and Bipin Kakkar, had dishonestly and  

fraudulently opened/caused to be opened several fictitious accounts in some  

banks  in  the  names  of  certain  concerns,  with  an  intention  and object  to  

facilitate  the  diversion of  bank finance availed by various  public  limited  

companies  for  the  purpose  other  than  what  had  been  stated  in  the  loan  

application.  On the basis of the said information, a First Information Report  

(FIR) was registered against the afore-mentioned Company and its directors.  

The relevant portion of the FIR reads thus:

“That in June 1999, S/Sh. K.B. Suri, Sushil Suri and Smt. Kanta  Suri, the Executive Directors of M/s. Morepen Labs Ltd. having  their office at 416-418, Antriksh Bhawan (sic), 22, K.G. Marg,  New Delhi, conspired together and in furtherance of the said  criminal conspiracy they, dishonestly and fraudulently made an  application  to  Punjab  &  Sind  Bank,  Connaught  Place,  New  Delhi for Hire-Purchase Finance to the tune of  `300 Lacs, by  submitting fake and forged purchase orders, invoices and bills  relating to supply of machineries and equipments to be installed  in their factory/works situated in Distt. Solan (HP).

That  the  above  Executive  Directors  of  the  company,  dishonestly, fraudulently and in conspiracy with other accused  persons  submitted  to  the  bank,  fake  and  forged  invoices  of  fictitious/non-existent  supplier  i.e.  M/s.  R.K.  Engineers,  M/s.  Teem  Metals  Pvt.  Ltd.  and  M/s.  Malson  Impex,  made  accommodation  payments  representing  as  genuine  advance  payments to suppliers and thereby caused the bank to release  funds to the tune of `300 lacs towards cost of machineries and  

2

equipments and pay orders in various amounts issued by the  bank for the purpose of making payments to suppliers.  These  amounts were then fraudulently deposited in several fictitious  accounts  of  S/Sh.  Sanjay  Malik  and  Bipin  Kakkar  at  Corporation Bank and Canara Bank and encashed.   The bank  finance raised by the company on the pretext of procurement of  machineries  and  equipments  were  not  used  for  the  purpose  stated  in  the  application  for  loan,  instead  the  bank loan was  diverted  by the  above Executive  Directors,  in  collusion  with  S/Sh.  Sanjay Malik and Bipin Kakkar,  for  other  undisclosed  non-business purposes.

That during the year 1998 also the above Executive Directors of  M/s. Morepen Labs Ltd. had adopted a similar modus-operandi  in  collusion  with  some  other  unknown  persons/Chartered  Accountants and applied for bank finance to the tune of  `200  lacs for purchase of machineries and equipments with an object  to  divert  bank  finance  for  undisclosed  non-business  orders,  invoices and bills of fictitious suppliers, i.e. M/s. B.K. Chemi- Plant Industries and M/s. Flexon Hose and Engineering Co. Pvt.  Ltd. and caused the bank to release loan of  `200 lacs for the  purpose of procurement of machineries and equipments to be  installed in their  factory works situated in Distt.  Solan (HP).  The bank loan  thus  released  by  Punjab  & Sind Bank (Hire- Purchase  Branch),  Connaught  Circus,  New  Delhi  was  not  actually used for the purpose stated in the loan proposal rather  the  pay  orders  issued  by  the  bank  in  the  name of  fictitious  suppliers  M/s.  Chemi-Plant  Industries  and M/s.  Flexon Hose  and  Engineering  Co.  Pvt.  Ltd.  were  deposited  in  fictitious  accounts  opened  in  the  above  name  and  style  at  Bank  of  Rajasthan,  Kamla  Nagar  Branch,  Delhi  and  encashed.   No  suppliers of machineries  and equipments were made by M/s.  B.K.  Chemi-Plant  Industries  and  M/s.  Flexon  Hose  and  Engineering Co. Pvt. Ltd. to M/s. Morepen Labs. Ltd. and bank  finance availed by the company for the said purpose were again  used for some undisclosed non-business purposes.

The above facts and circumstances disclose the commission of  offences u/s 120-B, IPC r/w 420, 409, 468 and 471 IPC and  substantive offences thereunder against Chartered Accountants  S/Sh.  Sanjay  Malik  and  Bipin  Kakkar  and  S/Sh.  K.B.  Suri,  Sushil Suri and Smt. Kanta Suri, Executive Directors of M/s.  Morepen Labs.  Ltd.,  New Delhi and other unknown persons.  

3

Therefore, a regular case is registered and entrusted to Sh. A.K.  Singh, Dy. SP/SIU-VII, for investigation.”

4.The Company is a public limited company, engaged in the manufacturing  

of pharmaceutical products.  In order to run its affairs, from time to time, the  

Company had been raising funds from different  sources,  like  loans from  

different banks/financial institutions as also from the open market by way of  

‘public issues’, ‘rights issues’ and ‘bonds’ etc.  Investigations revealed that  

in the year 1998, the Company, through its directors, including the appellant  

in this appeal, applied for a hire purchase advance of `2 crores from Punjab  

and Sind Bank (for short “PSB”),  Hire Purchase Branch, New Delhi,  for  

purchase of various machinery items to be installed at their manufacturing  

units at different places.  It transpired that the machinery for which the loan  

was raised from PSB was never purchased by the Company and, in fact, to  

defraud PSB, photographs of the existing/some other machinery were taken  

by affixing labels of PSB and the same were filed with PSB, as confirmation  

for having purchased the machinery, for which the loan was raised under the  

hire purchase limit.  It was discovered that although the loan taken by the  

Company from PSB had been repaid, but the Company never purchased any  

machinery,  utilising  the  funds  disbursed  by  PSB against  the  purchase  of  

machinery. Furthermore, the value of the machinery, purportedly purchased  

with these funds,  was reflected in the balance-sheet of the Company and  

even depreciation on the said machinery,  amounting to  `52,33,066/-,  was  

4

also claimed in the Income Tax Return/Minimum Alternate Tax (MAT) for  

the assessment year 1998-1999, without any such machinery having been  

actually acquired.

5.In the year 1999, the Company and its directors again applied for hire  

purchase advance of `3 crores from PSB for purchase of more machines.  In  

their balance-sheet for the assessment year 1999-2000, the Company again  

claimed the benefit of depreciation in the Income Tax/Minimum Alternate  

Tax amounting to `1,44,88,605/- although no such machinery was purchased  

by the Company.  It further transpired that loan proposals were supported by  

forged proforma invoices, purportedly issued by some suppliers in whose  

name  fictitious  bank  accounts  were  opened  to  encash  the  Demand  

Drafts/Pay  Orders  issued  by  PSB  in  favour  of  these  firms.   The  

investigations  thus,  revealed  that  the  appellant  and  a  number  of  other  

persons  had  committed  the  afore-mentioned  offences.   Accordingly,  a  

Chargesheet  was filed by the CBI on 13th October,  2004 in the Court of  

Chief Metropolitan Magistrate, Delhi.

6.The Chief Metropolitan Magistrate took cognizance of the offences and  

summoned the accused to stand trial.  On being so summoned, the appellant  

filed the afore-stated petition under Section 482 of the Cr.P.C., praying for  

quashing of the Chargesheet mainly on the ground that once the Company  

had repaid the loan to PSB along with interest, no loss was caused to PSB  

and, therefore, they had not committed any offence for which Chargesheet  

5

had been filed.  In support of the said plea, decision of this Court in Nikhil   

Merchant  Vs.  Central Bureau of Investigation & Anr.1  was pressed into  

service.  On behalf of the CBI, it was pleaded that the appellant and others,  

by  forging  documents/vouchers  to  show  purchase  of  machinery,  a  pre-

condition for release of instalments of loan, had not only duped PSB but also  

defrauded the revenue by claiming depreciation on non-existent machinery  

and in the process cheated the public exchequer of crores of rupees.

7.As already stated, the High Court has come to the conclusion that merely  

because the Company and its directors had repaid the loan to PSB they could  

not  be  exonerated  of  the  offences  committed  by  forging/fabricating  the  

documents  with  the  intention  of  defrauding  the  bank  as  well  as  the  

exchequer.  The High Court was of the view that the ratio of the decision of  

this  Court  in  Rumi Dhar (Smt)  Vs.  State  of  West  Bengal  & Anr.2,  was  

applicable on the facts of the present case and the decision of this Court in  

Nikhil  Merchant (supra)  was  clearly  distinguishable  on  facts.  Thus,  the  

High Court held that on the peculiar facts of the case, the appellant was not  

entitled to any relief.  Accordingly, the petition filed by the appellant was  

dismissed  with  costs.   He  was  directed  to  appear  before  the  trial  court.  

Aggrieved thereby, the appellant is before us in this appeal.

8.Mr. Vijay Aggarwal, learned counsel appearing on behalf of the appellant  

assailed the judgment of the High Court on the ground that all the dues, as  1 (2008) 9 SCC 677 2 (2009) 6 SCC 364

6

claimed by PSB having been paid by the debtor Company without demur,  

more so,  when the Bank had not initiated any action for the recovery of  

money, the case of the appellant is on a much stronger footing as compared  

to the case of Nikhil Merchant (supra), wherein this Court had quashed the  

criminal  proceedings  initiated  against  the  borrower  in  view  of  their  

compromise with the Bank.  It was contended that since in the present case,  

there is no allegation that the appellant had committed any offence under the  

Prevention of Corruption Act 1988, at best, the allegation in the Chargesheet  

may  attract  Section  420  of  the  IPC,  which  offence  is  otherwise  

compoundable under Section 320 of the Cr.P.C.  It was asserted that full  

amount in question having been paid to the Bank, there was no monetary  

loss to the Bank and, therefore, continuation of criminal proceedings against  

all the accused, including the appellant, would not only be an exercise in  

futility but an abuse of the process of law as well.  It was thus, pleaded that  

it was a fit case where the High Court should have exercised its jurisdiction  

under Section 482 of the Cr.P.C. and quashed the Chargesheet.  In support,  

while relying heavily on the decision in  Nikhil Merchant (supra), learned  

counsel also commended us to the decisions of this Court in  B.S. Joshi &  

Ors.  Vs.  State of Haryana & Anr.3 and Madan Mohan Abbot Vs. State of   

Punjab4.  The decision in Rumi Dhar (supra) relied upon by the High Court,  

was sought to be distinguished by submitting that in that case the provisions  

3 (2003) 4 SCC 675 4 (2008) 4 SCC 582

7

of the Prevention of Corruption Act, 1988 had been invoked; the Bank had  

to file a suit for recovery of the amount due to it and the Revision Petition  

filed against framing of charge against the accused in that case had also been  

dismissed, which is not the case here.  

9.Per contra, Mr. H.P. Rawal, learned Additional Solicitor General of India,  

appearing  for  the  CBI,  supporting  the  impugned  judgment,  strenuously  

urged  that  having  regard  to  the  nature  of  the  allegations  against  the  

appellant,  based  on  the  evidence  collected  during  the  course  of  

investigations, the High Court has rightly refused to exercise its jurisdiction  

under Section 482 of the Cr.P.C.  Relying on a decision of this Court in  

Central  Bureau  of  Investigation  Vs.  A.  Ravishankar  Prasad  &  Ors.5,  

learned counsel contended that overwhelming material is available on record  

which  clearly  shows  that  the  Company  and  its  directors,  including  the  

appellant,  and  other  persons  had  conspired  to   forge,  fabricate  and  use  

documents  in order to avail loan from the bank and had opened or caused to  

be opened fictitious bank accounts in the names of the suppliers  to encash  

the pay orders/demand drafts issued by PSB and played fraud with PSB as  

also on the public exchequer by claiming depreciation on the machinery,  

which was never purchased.  It was argued that the offences for which the  

appellant has been Chargesheeted would survive irrespective of discharge of  

debt  of PSB by the Company.   Relying on the decision of this  Court  in  

5 (2009) 6 SCC 351

8

Sajjan  Kumar  Vs.  Central  Bureau  of  Investigation6, learned  counsel  

asserted that when the material on record is per se sufficient for the Court to  

form  an  opinion  that  the  accused  have  committed  the  offences  alleged  

against  them  and  frame  the  said  charges,  there  is  no  reason  why  the  

Chargesheet against the appellant should be quashed at such a preliminary  

stage when he has only been summoned to stand trial.  

10.Before embarking on an evaluation of the rival submissions, it would be  

instructive to briefly notice the scope and ambit of the inherent powers of  

the High Court under Section 482 of the Cr.P.C.  

11.Section 482 of the Cr.P.C. itself  envisages three circumstances under  

which the inherent jurisdiction may be exercised by the High Court, namely:  

(i) to give effect to an order under the Cr.P.C.; (ii) to prevent an abuse of the  

process of Court; and (iii) to otherwise secure the ends of justice.  It is trite  

that  although  the  power  possessed  by  the  High  Court  under  the  said  

provision  is  very  wide  but  it  is  not  unbridled.   It  has  to  be  exercised  

sparingly,  carefully  and  cautiously,  ex  debito  justitiae to  do  real  and  

substantial  justice  for  which  alone  the  Court  exists.  Nevertheless,  it  is  

neither feasible nor desirable to lay down any inflexible rule which would  

govern the exercise of inherent jurisdiction of the Court. Yet, in numerous  

cases, this Court has laid down certain broad principles which may be borne  

in  mind  while  exercising  jurisdiction  under  Section  482  of  the  Cr.P.C.  

6 (2010) 9 SCC 368

9

Though it is emphasised that exercise of inherent powers would depend on  

the facts and circumstances of each case, but, the common thread which runs  

through all the decisions on the subject is that the Court would be justified in  

invoking  its  inherent  jurisdiction  where  the  allegations  made  in  the  

Complaint or Chargesheet, as the case may be, taken at their face value and  

accepted in their entirety do not constitute the offence alleged.  

12.In one of the earlier cases in R.P. Kapur Vs. State of Punjab7  this Court  

had culled out some of the categories of cases where the inherent powers  

under Section 482 of the Cr.P.C. could be exercised by the High Court to  

quash criminal proceedings against the accused.  These are:  

“(i) where  it  manifestly  appears  that  there  is  a  legal  bar  against  the  institution  or  continuance of  the proceedings e.g.  want of sanction;  

(ii) where the allegations in the first information report or the  complaint taken at their face value and accepted in their entirety  do not constitute the offence alleged;

(iii) where the allegations constitute an offence, but there is  no legal evidence adduced or the evidence adduced clearly or  manifestly fails to prove the charge.”

13.In Dinesh Dutt Joshi Vs. State of Rajasthan & Anr.8, while explaining  

the  object  and  purpose  of  Section  482  of  the  Cr.P.C.,  this  Court  had  

observed thus:

“6…….The principle embodied in the section is based upon the  maxim:  quando lex aliquid alicui concedit, concedere videtur   

7 AIR 1960 SC 866  8 (2001) 8 SCC 570  

1

et id sine quo res ipsae esse non potest i.e. when the law gives  anything to anyone, it gives also all those things without which  the  thing itself  would be  unavailable.   The section  does  not  confer any new power, but only declares that the High Court  possesses  inherent  powers  for  the  purposes  specified  in  the  section.  As lacunae are sometimes found in procedural law, the  section has been embodied to cover such lacunae wherever they  are discovered. The use of extraordinary powers conferred upon  the High Court under this section are however required to be  reserved, as far as possible, for extraordinary cases.”

14.Recently, this Court in  A. Ravishankar Prasad & Ors.  (supra), relied  

upon by learned counsel for the CBI, referring to several earlier decisions on  

the  point,  including  R.P.  Kapur (supra);  State  of  Haryana  &  Ors.  Vs.   

Bhajan Lal & Ors.9; Janata Dal Vs. H.S. Chowdhary & Ors.10; B.S. Joshi  

& Ors. (supra); Nikhil Merchant (supra) etc. has reiterated that the exercise  

of inherent powers would entirely depend on the facts and circumstances of  

each case.  It has been further observed that the inherent powers should not  

be  exercised  to  stifle  a  legitimate  prosecution.  The  High  Court  should  

normally refrain from giving a prima facie decision in a case where all the  

facts  are incomplete and hazy,  more so, when the evidence has not been  

collected and produced before the Court and the issues involved, whether  

factual or legal, are of such magnitude that they cannot be seen in their true  

perspective without sufficient material.   

15.Bearing in mind the object, scope and width of power of the High Court  

under  Section  482  of  the  Cr.P.C.,  enunciated  above,   the  question  for  

9 1992 Supp (1) SCC 335 10 (1992) 4 SCC 305

1

consideration is whether on facts in hand, the High Court was correct in law  

in declining to exercise its jurisdiction under the said Section?  

16.Having examined the case in light of the allegations in the Chargesheet,  

we are of the opinion that the view taken by the High Court in the matter  

cannot be flawed and deserves to be affirmed.  It is manifest from a bare  

reading  of  the  Chargesheet,  placed  on  record,  that  the  gravamen  of  the  

allegations against the appellant as also the co-accused is that the Company,  

acting through its directors in concert with the Chartered Accountants and  

some other persons: (i) conceived a criminal conspiracy and executed it by  

forging and  fabricating  a  number  of  documents,  like  photographs  of  old  

machines, purchase orders and invoices showing purchase of machinery  in  

order to support their claim to avail hire purchase loan from PSB; (ii) on the  

strength of these false documents, PSB parted with the money by issuing  

pay orders & demand drafts in favour of the Company and  (iii) the accused  

opened  six  fictitious  accounts  in  the  banks  (four  accounts  in  Bank  of  

Rajasthan and two in Bank of Madura) to encash the pay orders/bank drafts  

issued  by  PSB  in  favour  of  the  suppliers  of  machines,  thereby  directly  

rotating back the loan amount to the borrower from these fictitious accounts,  

and in the process committed a systematic  fraud on the Bank (PSB) and  

obtained  pecuniary  advantage  for  themselves.   Precise  details  of  all  the  

fictitious accounts as also the further flow of money realised on encashment  

of  demand  drafts/pay  orders  have  been  incorporated  in  the  Chargesheet.  

1

Additionally,  by  allegedly  claiming  depreciation  on  the  new  machinery,  

which was never purchased, on the basis of forged invoices etc.; the accused  

cheated the public exchequer as well.  

17.As afore-stated,  in  the  Chargesheet,  the  accused  are  alleged  to  have  

committed offences punishable under Section 120B, read with Sections 420,  

409, 468 and 471 IPC.  We feel that at this preliminary stage of proceedings,  

it  would  neither  be  desirable  nor  proper  to  return  a  final  finding  as  to  

whether the essential ingredients of the said Sections are satisfied.  For the  

purpose of the present appeal, it will suffice to observe that on a conspectus  

of  the  factual  scenario,  noted  above,  prima  facie,  the  Chargesheet  does  

disclose the commission of offences by the appellant under the afore-noted  

Sections.  The essential ingredient of the offence of “criminal conspiracy”,  

defined in Section 120A IPC, is the agreement to commit an offence.  In a  

case where the agreement is for accomplishment of an act which by itself  

constitutes an offence, then in that event, unless the Statute so requires, no  

overt act  is necessary to be proved by the prosecution because in such a  

fact-situation  criminal  conspiracy  is  established  by  proving  such  an  

agreement.  In other words, where the conspiracy alleged is with regard to  

commission  of  a  serious  crime of  the  nature  as  contemplated  in  Section  

120B read with the proviso to sub-section (2) of Section 120A IPC, then in  

that event mere proof of an agreement between the accused for commission  

of such crime alone is enough to bring about a conviction under Section  

1

120B and the proof of any overt act by the accused or by any one of them  

would not be necessary. (See: Suresh Chandra Bahri Vs. State of Bihar11).   

18.Similarly, the definition of “forgery” in Section 463 IPC is very wide.  

The basic elements of forgery  are: (i) the making of a false document or  

part of it and (ii) such making should be with such intention as is specified  

in the Section viz. (a) to cause damage or injury to (i) the public, or (ii) any  

person; or (b) to support any claim or title; or (c) to cause any person to part  

with property; or (d) to cause any person to enter into an express or implied  

contract; or (e) to commit fraud or that fraud may be committed. As stated  

above,  in  the  instant  case  more  than  sufficient  circumstances  exist  

suggesting  the  hatching  of  criminal  conspiracy  and  forgery  of  several  

documents  leading  to  commission  of  the  aforementioned  Sections.  We  

refrain from saying more on the subject at this juncture, lest it may cause  

prejudice to the appellant or the prosecution.

19.We may now advert to the decision of this Court in the case of Nikhil   

Merchant (supra),  on  which  great  emphasis  was  laid,  on  behalf  of  the  

appellant.   In  that  case  a  Chargesheet  was  filed  by  the  CBI  against  the  

accused under Section 120B read with Sections 420, 467, 468, 471 IPC read  

with Sections 5(2) and 5(1)(d) of the Prevention of Corruption Act, 1947  

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

Act,  1988.   The  allegation  under  the  Chargesheet  was  that  the  accused  

11 1995 Supp (1) SCC 80

1

persons had conspired with each other in fraudulently diverting the funds of  

the Bank.  Offence alleging forgery was also included in the Chargesheet.  

In the meantime, the suit for recovery of money filed by the Bank against  

the  Company,  to  which the  appellant  in  that  case  was also  a  party,  was  

disposed  of  on  a  written  compromise  arrived  at  between  the  parties.  

Consequent  upon  the  compromise  of  the  suit  and  having  regard  to  the  

contents  of  clause 11 of  the  consent  terms,  which stipulated that  neither  

party  had  any  claim  against  the  other  and  parties  were  withdrawing  all  

allegations  and  counter  allegations  made  against  each  other,  the  said  

appellant filed an application for discharge.   The application was rejected  

by the trial court.  A petition preferred under Section 482 of the Cr.P.C. was  

also dismissed by the High Court.  In further appeal to this Court, accepting  

the contention of the appellant that this Court could transcend the limitation  

imposed under Section 320 of the Cr.P.C. and pass orders quashing criminal  

proceedings  even  where  non  compoundable  offences  were  involved,  

quashing the criminal proceedings the Court observed thus:

“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  

1

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  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.”

[Emphasis supplied]

20.A bare reading of the afore-extracted paragraphs would indicate that the  

question posed for consideration in that case was with regard to the power of  

this  Court  under  Article  142  of  the  Constitution  of  India  to  quash  the  

criminal proceedings in the facts and circumstances of a given case and not  

in relation to the powers of the High Court under Section 482 of the Cr.P.C.  

The Court  came to  the  conclusion that  it  was a fit  case  where  it  should  

exercise its powers under Article 142 of the Constitution.  In our opinion,  

Nikhil Merchant (supra) does not hold as an absolute proposition of law that  

whenever a dispute between the parties, having overtones of a civil dispute  

with  criminal  facets  is  settled  between  them,  continuance  of  criminal  

proceedings  would  be  an  exercise  in  futility  and,  therefore,  should  be  

quashed.  Similarly,  in  B.S. Joshi & Ors.  (supra),  which has been relied  

upon  in  Nikhil  Merchant (supra),  the  question  for  consideration  was  

whether the High Court in exercise of its inherent powers can quash criminal  

proceedings or FIR or Complaint for offences which are not compoundable  

1

under Section 320 of the Cr.P.C.  It was held that Section 320 cannot limit or  

affect the powers of the High Court under Section 482 of the Cr.P.C., a well  

settled proposition of law.  We are of the opinion that  Nikhil  Merchant  

(supra)  as  also  the  other  two  judgments  relied  upon  on  behalf  of  the  

appellant are clearly distinguishable on facts.  It needs little emphasis that  

even  one  additional  or  different  fact  may  make  a  world  of  difference  

between  the  conclusions  in  two  cases  and  blindly  placing  reliance  on  a  

decision is never proper. It is trite that while applying ratio, the Court may  

not  pick  out  a  word  or  sentence  from  the  judgment  divorced  from  the  

context  in  which  the  said  question  arose  for  consideration.  (See:  Zee  

Telefilms Ltd. & Anr.  Vs.  Union of India & Anr.12).  In this regard, the  

following  words  of  Lord  Denning,  quoted  in  Haryana  Financial   

Corporation & Anr. Vs. Jagdamba Oil Mills & Anr.13, are also quite apt:

“Each  case  depends  on  its  own  facts  and  a  close  similarity  between one case and another  is  not  enough because  even a  single significant detail may alter the entire aspect.  In deciding  such cases, one should avoid the temptation to decide cases (as  said by Cardozo) by matching the colour of one case against the  colour of another.  To decide, therefore, on which side of the  line a case falls, the broad resemblance to another case is not at  all decisive.”

21. In the present case, having regard to the modus operandi adopted by the  

accused, as projected in the Chargesheet and briefly referred to in para 17  

(supra), we have no hesitation in holding that it is not a fit case for exercise  

12 (2005) 4 SCC 649 13 (2002) 3 SCC 496

1

of jurisdiction by the High Court under Section 482 of the Cr.P.C. as also by  

this Court under Article 142 of the Constitution of India.  As noted above,  

the accused had not only duped PSB, they had also availed of depreciation  

on the machinery, which was never purchased and used by them, causing  

loss to the exchequer, a serious economic offence against the society.      

22.The view we have taken above, gets fortified by a recent decision of this  

Court in  Rumi Dhar  (supra), wherein while dealing with a fact situation,  

akin  to  the  present  case,  referring  to  the  decision  in  Nikhil  Merchant  

(supra),  the  Court  declined  to  quash  criminal  proceedings  in  that  case,  

observing thus:

“24.  The  jurisdiction  of  the  Court  under  Article  142  of  the  Constitution of India is not in dispute.  Exercise of such power  would, however, depend on the facts and circumstances of each  case.   The  High  Court,  in  exercise  of  its  jurisdiction  under  Section 482 of the Code of Criminal Procedure, and this Court,  in terms of Article 142 of the Constitution of India, would not  direct  quashing of a case involving crime against  the society  particularly  when both the  learned Special  Judge as also the  High Court have found that a prima facie case has been made  out against the appellant herein for framing the charge.”

23.We respectfully concur with the afore-extracted observations.  In the final  

analysis, we hold that merely because the dues of the bank have been paid  

up, the appellant cannot be exonerated from the criminal liability. Therefore,  

the Chargesheet against him cannot be quashed.   

1

24.In view of the foregoing discussion,  we do not find any merit  in this  

appeal and it is dismissed accordingly.  The Trial Court shall now proceed  

with the case as expeditiously as possible without being influenced by any  

observations made by the High Court or in this judgment on the merits of the  

Chargesheet.

.……………………………………               (D.K. JAIN, J.)  

                             .…………………………………….              (H.L. DATTU, J.)

NEW DELHI; MAY 6, 2011. (ARS)

1