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Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL  APPEAL NO. 2048 OF 2014 (Arising out of S.L.P. (Crl.) No. 6461 of 2011)  

State of Maharashtra Through CBI … Appellant

Versus

Vikram Anantrai Doshi and Others     …Respondents

J U D G M E N T

Dipak Misra, J.

The  centripodal  issue  that  strikingly  emerges,  

commanding the judicial conscience to ponder and cogitate  

with  reasonable  yard-stick  of  precision,  for  consideration  

how  far  a  superior  court  should  proceed  to  analyse  the  

factual score in exercise of its inherent jurisdiction bestowed  

upon it under Section 482 of the Code of Criminal Procedure  

or under Article 226 of the Constitution of India, to quash the  

criminal  proceeding  solely  on  the  ground that  the  parties

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have  entered  into  a  settlement  and,  therefore,  the  

continuance of the criminal proceeding would be an exercise  

in futility, or the substantial cause of justice warrants such  

quashment  to  make  the  parties  free  from  unnecessary  

litigation with the assumed motto of not loading the system  

with unfruitful prosecution, of course with certain riders, one  

of  which,  as  regards  the  cases  pertaining  to  commercial  

litigations,  appreciation  of  predominant  nature  of  civil  

propensity  involved  in  the  lis  or  social  impact  in  the  

backdrop of the facts of the case.  The primary question that  

we have posed has a substantial supplementary issue; i.e.  

should  the courts  totally  remain oblivious  to  the prism of  

fiscal  purity  and  wholly  brush  aside  the  modus  operandi  

maladroitly adopted, as alleged by the prosecution, on the  

part  of  industrial  entrepreneurs  or  the  borrowers  on  the  

foundation  that  money  has  been  paid  back  to  the  public  

financial institutions.  We think not, especially regard being  

had to the obtaining factual matrix in the case at hand.    2. Presently  to  the factual  exposition.   On the basis  of  a  

written complaint of chief vigilance officer, Bank of Baroda a

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case was  registered against  the  respondents  on  6.1.2006  

and  after  completion  of  investigation  a  report  was  filed  

before the Special Court, CBI cases, Mumbai with a prayer to  

forward the chargesheet to the learned Magistrate who was  

competent  to  take  cognizance  of  the  offences  as   the  

involvement of R.C. Sharma, the concerned Bank Officer, a  

public servant, in the crime in question, could not be prima  

facie  found  during  the  investigation.   As  the  facts  would  

undrape, on  3.2.2006 upon perusal of the chargesheet the  

learned  Special  Judge,  CBI  cases  directed  to  place  the  

chargesheet before the appropriate court and accordingly a  

fresh chargesheet  was filed before the ACMM,  19th Court,  

Esplanade, Mumbai vide criminal case no. 82/CPW/2006 for  

commission  of  offences  punishable  under  Section  120-B,  

Section 406, 20, 467, 468 and 471 IPC against  the accused  

persons.  3. On a perusal of the charge sheet, it is evincible that there  

are allegations to the effect that Vikram Doshi, A 1, Vineet  

Doshi,  A  2,  and  Sanjay  J.  Shah,  A  3,  made  number  of  

applications to the Bank of Baroda for sanction of various

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credit facilities, stating that they wanted to induct the said  

bank as a new consortium member to replace the existing  

members, namely, the UTI Bank and the Federal Bank.  They  

requested  the  said  Bank  to  sanction  15%  of  the  total  

Working  Capital  facility  sanctioned  by  the  consortium  of  

Banks, so that, that much amount could be transferred to  

the  UTI  bank and Federal  Bank to  take over  the  existing  

liabilities  with  the said  two banks.  It  was revealed during  

investigation  that  the  account  of  the  company,  with  the  

consortium of banks as well as the finance institutions, was  

highly  irregular  and  in  the  said  condition  the  accused  

persons approached the Bank for  sanction of  loan.  In  the  

application to the Bank, the accused persons concealed the  

fact  relating  to  the  dues  outstanding  against  them.  

Thereafter, when asked for the outstanding position with the  

existing consortium members, the accused persons willfully  

and with the criminal intent to mislead the Bank of Baroda,  

furnished wrong statements about the outstanding position  

by giving considerably lesser  amount as outstanding than  

the actual.

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4. As  further  alleged,  the  amount  of  loan  sought  was  

sanctioned on 24.01.2003 by one Mr. K.K. Aggarwal, General  

Manager and communicated to the branch. As per the terms  

and conditions of the said Term Loan, the primary security  

for the same was the first charge to be created on the fixed  

assets of the company ranking pari passu with the existing  

Term Lending Institutions.  The primary charge for the cash  

credit  and  working  capital  demand  loan  was  the  

hypothecation  of  current  assets  such  as  stocks,  stocks  in  

trade, raw materials and book debts, and, that apart, one of  

the important terms and conditions was that the CC, WCDL  

and  Term Loan  amounts  were  to  be  directly  paid  to  the  

company’s account with the UTI Bank and Federal Bank so  

as  to  take  over  the  liabilities  as  well  as  the  securities  

mortgaged with the two banks.  Despite the said situation,  

the Bank on 29.01.2003 intimated the sanction to ATCOM,  

the company in question.  It is further demonstrable from  

the  chargesheet  that  A-1  and  A-2,  with  the  intention  to  

escape personal  liabilities,  made A-3 and one Mr.   Chirag  

Gandhi directors in ATCOM and got all the loan documents

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including the Demand Promissory Note (DPN) signed by the  

said persons.  The terms and conditions of the sanction was  

that  the  entire  Working  Capital  of  Rs.570.00  lakhs  

(Rs.114.00 lakhs + Rs.456.00 lakhs) and the Term Loan of  

Rs.360.00 lakhs were to be directly paid to the UTI Bank and  

Federal  Bank.  Consequently,  the Term Loan was released  

and  paid  as  per  the  sanction  terms  and  conditions.  As  

alleged,  A-1  induced  the  Bank  to  release  the  sanctioned  

Working Capital Funds to the Current Account and from the  

said  account  money  was  dishonestly  diverted  to  his  own  

accounts  with  SBI  and  Dena  Bank,  to  bring  down  the  

outstanding  liabilities  in  those  accounts.  As  per  the  

Chargesheet,  Rs.114.00  lakhs  of  Cash  Credit  (the  Fund  

Based portion of Working Capital) and Rs.456.00 lakhs (the  

Demand Based portion  of  Working  Capital)  were  released  

into  the  Current  Account  on  27.03.2003.  Thus,  the  total  

funds released into the Current Account was Rs.560.00 lakhs  

out of which A-1 dishonestly transferred Rs.352.00 lakhs to  

SBI  and  about  Rs.200.00  lakhs  to  Dena  Bank,  which

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amounted  to  diversion  of  concerned  Bank’s  funds  

dishonestly and caused wrongful loss to the said Bank. 5. As is evident from the chargesheet the transfer of funds  

of CC and DL to the current account was with a dishonest  

intention  to  further  divert  the  funds  from  the  current  

account, and for transfer of the said funds of CC and WCDL.  

A-1 used the cheque leaf available with him for the Current  

Account  and substituted out  the words “Current  Account”  

and substituted them with “Cash Credit”. It has come out in  

the investigation that  in  order  to  further  divert  the funds  

from the Current Account, A-3 used to issue “Pay Yourself  

cheques”  by  obtaining  Banker’s  Cheque  favouring  their  

account with SBI and Dena Bank. It is also perceivable from  

the chargesheet that though the accused A-1 and A-3 knew  

that the said Working Capital  was sanctioned only for the  

purpose of taking over the liabilities of UTI Bank and Federal  

Bank yet they  dishonestly  diverted the funds to SBI  and  

Dena Bank. The sanctioned money, as alleged, was not used  

for the purpose it was availed of and the sanction terms and  

conditions  were  violated  as  a  consequence  of  which  the

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Bank could not get the charge in  pari passu with the other  

consortium Banks. The said diversion of funds by A-1 and A-

3  deprived  the  Bank  of  its  security  and  the  entire  loan  

became unsecured. 6. The investigation further revealed that A-1 got letter of  

credits (hereinafter referred as “LCs”) issued from SBI and  

Dena Bank in favour of fictitious companies propped by the  

accused and used the said  LCs to  siphon the funds from  

these Banks. The LCs beneficiary firms, favoring whom the  

A-2  and  A-3  had  requested  the  LCs  to  be  issued,  were  

companies existing only on paper without any commercial  

activity.  The  said  fictitious  companies  got  the  LCs  

discounted  by  attaching  their  bogus  bills  and  portion  of  

these discount proceeds were used for personal benefits of  

A-1 and a certain portion was routed back to ATCOM. On the  

due dates, ATCOM did not discharge its liabilities with SBI  

and Dena Bank. In the chargesheet, the particulars of the  

names of fictitious companies have been given. The said list  

covers 10 companies. It has been further mentioned in the  

chargesheet that the Proprietors/Directors of these fictitious

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companies had issued false bills under their signatures and  

discounted  these  false  bills  backed  by  the  LCs,  with  the  

discounting Banks, at the instance of one Kanakranjan Jain.  

Some of these Proprietors/Directors are the employees and  

domestic servants of said Kanakrajan Jain.   7. After so stating the chargesheet proceeds as follows:

“That, in two of these fictitious companies,  viz.,  M/s  Anew  Electronics  &  M/s  Covet  Securities, Sh. Vikram Doshi (A-1) and Sh.  Vineet Joshi, (A-2) were Directors for some  period of time. These two companies were  maintaining  their  accounts  at  United  Western  Bank.  Sh.  Vikaram  Doshi  (A-1)  was  also  having  his  personal  account  in  the same bank. From these two Accounts  Sh. Vikram Doshi had received a sum of  Rs.  1,  48,50,000/-.  This  amount  was  utilized  by  him  towards  purchase  of  residential  flat.  Thus  it  is  clear  that  the  accused  persons  under  the  garb  of  business requirements had obtained credit  facilities  from the  bank  but  had  utilized  the  funds  for  acquiring  immovable  property for personal use. In order to clear  the  liability  generated  because  of  such  illegal acts, they had induced the Bank of  Baroda  to  sanction  the  credit  facilities,  which  facility  was  dishonestly  used  by  them. The entire amount sanctioned and  released  by  the  Bank  of  Baroda  is  outstanding and nothing has been repaid.  Because of  the acts  of  the accused,  the  facilities sanctioned by the Bank of Baroda

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are  rendered  without  any  securities  and  the bank has thus suffered wrongful loss.”

8. During the pendency of the case before the trial court on  

30th March  2009  the  informant,  Bank  of  Baroda,  had  

transferred its debts to a trust IARC – BOB-01-07 under the  

control of Kotak Mahindra Bank.  The accused, Vikram Doshi,  

settled  the  disputes  and  paid  Rs.42  lacs  for  settling  the  

dispute.  On that basis, Kotak Mahindra Bank issued a “no  

due  certificate”  to  M/s  Atcom Technology  Limited  stating  

that  on  receipt  of  Rs.42  lacs,  there  was  no  amount  

outstanding  and  payable  by  them  in  respect  of  facility  

advanced by Bank of Baroda.  The said bank also confirmed  

that  the  guarantees  issued  by  Vikram  Doshi  stood  

discharged. 9. After  the  receipt  of  such  “No  dues  certificate”  the  

respondent  preferred  a  petition  under  Section  482  of  the  

Cr.P.C. bearing Criminal Application No. 2239 of 2009 before  

the  High Court of  Judicature at  Bombay and the learned  

Single  Judge  vide  order  dated  24.2.2010  quashed  the  

criminal  proceedings  pending  before  the  learned  Addl.

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Metropolitan Magistrate.  The learned Single Judge referred  

to one of its earlier orders and came to hold as follows:-  “Both the offices under Sections 406 and 420 are  compoundable  with  the  permission  of  the  court.  As  already discussed hereinabove,  the Bank has  already  given  its  No  Due  Certificate  to  the  borrower i.e. ATCOM.  It  can clearly be seen that  even if the matter is permitted to go for trial, no  fruitful purpose would be served, except burdening  the  criminal  Courts  which  are  already  over- burdened.”

10. To arrive at the same conclusion the High Court relied on  

the decision in Madan Mohan Abbot v. State of Punjab1  

and distinguished the pronouncement in  A. Ravishanker  

Prasad (supra).   11. We have heard Ms. Pinky Anand, learned ASG and Mr.  

P.K.  Dey,  learned  counsel  for  the  Central  Bureau  of  

Investigation and Arunabh Chowdhury and Mr. Anupam Lal  

Das for the respondents.  12.In the backdrop of aforesaid facts the seminal question  

that  arises  is  whether  in  the obtaining factual  matrix  the  

High Court is justified in quashing the criminal proceeding.  

Learned counsel  for  the appellants  submits  that  the High  

Court has erroneously opined that the remaining offences  

are  406  and  420  of  IPC  whereas  the  chargesheet,  also  1 (2008) 4 SCC 582

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included other offences against the accused persons.  It is  

further contended that the chargesheet was not filed against  

the  public  officer  as  the  allegation  against  public  officer  

could not be substantiated during the investigation and the  

High  Court  without  appreciating  the  gravity  of  the  other  

offences has quashed the proceeding which makes the order  

absolutely  vulnerable  in  law.   Learned  counsel  for  the  

respondent would contend that  when “No due certificate”  

was  obtained  from  the  bank  and  the  matter  had  been  

settled the High Court has correctly quashed the proceeding  

and hence, it does not warrant any interference. 13.At this juncture, we are obligated to state that when the  

High Court decided,  the issue was  whether a proceeding  

could  be  quashed  in  exercise  of  inherent  jurisdiction  in  

respect of the non-compoundable offences and  principle of  

law in that regard was not in a state of certainty.   The said  

position has been made clear by this Court that High Court  

has  the jurisdiction to quash a criminal  proceeding under  

Section 482 of  the Code in  respect  of  non-compoundable  

offences barring certain nature of crimes.  

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14.To appreciate the complete picture in proper perspective  

we think it seemly to refer to the relevant decisions in the  

field.  In  Rumi Dhar v. State of W.B.2 while dealing with  

an order declining to discharge the accused under Section  

239 of  the Code by the learned Special  Judge which  has  

been affirmed by the High Court, a two-Judge Bench referred  

to  the  decision  in  Central  Bureau  of  Investigation  v.  

Duncans Agro Industries Ltd.3 and Nikhil Merchant v.  

C.B.I.4 came to hold as follows:-

“14. It is now a well-settled principle of law  that in a given case, a civil proceeding and  a  criminal  proceeding  can  proceed  simultaneously. Bank is entitled to recover  the amount of loan given to the debtor. If  in connection with obtaining the said loan,  criminal offences have been committed by  the persons accused thereof including the  officers of the Bank, criminal  proceedings  would also indisputably be maintainable.”

In  the  said  case,  the  Court  took  note  of  the  fact  the  

compromise  entered  into  between  the  Oriental  Bank  of  

Commerce and the accused pertaining to repayment of loan  

2 (2009) 6 SCC 364 3 (1996) 5 SCC 591 4 (2008) 9 SCC 677

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could not form the foundation of discharge of the accused.  

The  two-Judge  Bench  appreciated  the  stand  of  the  C.B.I.  

before  the  High  Court  that  the  criminal  case  against  the  

accused had started not only for obtaining loan but also on  

the ground of criminal conspiracy with the Bank officers and  

accordingly upheld the order passed by the High Court.

15.In  Central  Bureau  of  Investigation  v.  A.   

Ravishanker Prasad and Others5, the Court was dealing  

with  the  fact  situation  wherein  the  accused  persons  had  

committed  offences  such  as  forgery,  fabrication  of  

documents and used the said documents as genuine.  There  

was allegation that they had entered into conspiracy with  

the Bank officers for availing huge credit facilities.  In course  

of the pendency of the criminal proceedings,  the accused  

persons had settled the outstanding dues by paying a sum  

of  rupees  157  crores  and  on  that  basis  preferred  an  

application under Section 482 of the Code for quashing of  

the  criminal  proceeding  and  the  High  Court  quashed  the  

proceedings on the basis of the settlement.  Be it stated, the  

5 (2009) 6 SCC 351

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trial had progressed in the said case and 92 witnesses had  

already been examined.  The question that arose before this  

Court  was  whether  such  a  proceeding  should  have  been  

quashed.  The Court distinguished the decision in Duncans  

Agro Industries Ltd.‘s case and opined that the tenor of  

the language implied therein indicates that quashing of the  

complaint depends on the facts of each case.  The Court also  

distinguished the decision in Nikhil Merchant’s case. 16.A three-Judge Bench in the case of Gian Singh v. State  

of  Punjab  and Another6 while  answering  the  reference  

whether the High Court has the jurisdiction under Section  

482 of the Code to quash a proceeding in respect of non-

compoundable  offences,  after  referring  to  number  of  

authorities, ruled that Section 482 of the Code, as its very  

language suggests,  saves the inherent  power  of  the High  

Court which it has by virtue of it being a superior court to  

prevent abuse of the process of court or otherwise to secure  

the ends of justice.  The words, “nothing in this Code” which  

means that the provision is an overriding provision and the  

said  words  leave  no  manner  of  doubt  that  none  of  the  6 (2012) 10 SCC 303

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provisions of the Code limits or restricts the inherent power.  

The Bench proceeded to state that the guideline for exercise  

of such power is provided in Section 482 itself i.e. to prevent  

abuse of the process of any court or otherwise to secure the  

ends of justice and in different situations, the inherent power  

may be exercised in different ways to achieve its ultimate  

objective. Formation of opinion by the High Court before it  

exercises inherent power under Section 482 on either of the  

twin objectives, (i) to prevent abuse of the process of any  

court, or (ii) to secure the ends of justice, is a sine qua non.  

The Court further added that it is the judicial obligation of  

the High Court to undo a wrong in course of administration  

of justice or to prevent continuation of unnecessary judicial  

process and the maxim ex debito justitiae is inbuilt in such  

exercise  for  the  whole  idea  is  to  do  real,  complete  and  

substantial justice for which it exists.  

After so stating, the three-Judge Bench addressed to the  

issue pertaining to the quashing of a criminal proceeding on  

the ground of settlement between an offender and the victim  

and in this context, it ruled thus:-

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“61. 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  resolved  their  entire  dispute.  In  this  category  of  cases,  the  High

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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.”  

17.Recently,  in  Narinder  Singh  &  Ors.  v.  State  of  

Punjab  &  Anr.7,  a  two-Judge  Bench  placed  reliance  on  

Gian Singh’s  case (supra)  and  Dimpy Gujral  v.  Union  

Territory through Administrator8 and distinguished the  

decision in  State of Rajasthan v. Sambhu Kevat9, and  

came  to  hold  that  in  the  facts  of  the  said  case  the  

proceedings  under  Section  307  deserved  to  be  quashed.  

The two-Judge Bench laid down certain guidelines by which  

the  High  Courts  would  be  guided  in  giving  adequate  

treatment  to  the  settlement  between  the  parties  and  

exercising  its  power  under  Section 482 of  the  Code  while  

accepting the settlement and quashing the proceedings or  

refusing to accept the settlement.  Some of the guidelines  

7 2014(4) SCALE 195 8 AIR 2012 SCW 5333 9 2013(14) SCALE 235

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which are relevant for the present purpose are reproduced  

below :-

“(II)  When  the  parties  have  reached  the  settlement  and  on  that  basis  petition  for  quashing the criminal proceedings is filed, the  guiding factor in such cases would be to secure:

(i) ends of justice, or (ii)  to  prevent  abuse of  the  process  of  any  Court.

While exercising the power the High Court is to  form an opinion on either of the aforesaid two  objectives. (III) Such a power is not be exercised in those  prosecutions  which  involve  heinous  and  serious  offences  of  mental  depravity  or  offences like murder, rape, dacoity, etc. Such  offences are not private in nature and have a  serious  impact  on  society.  Similarly,  for  offences  alleged  to  have  been  committed  under  special  statute  like  the  Prevention  of  Corruption Act  or  the offences committed by  Public Servants while working in that capacity  are not to be quashed merely on the basis of  compromise  between  the  victim  and  the  offender.

(IV) On the other, those criminal cases having  overwhelmingly  and  pre-dominantly  civil  character,  particularly  those  arising  out  of  commercial  transactions  or  arising  out  of  matrimonial  relationship  or  family  disputes  should  be  quashed  when  the  parties  have  resolved  their  entire  disputes  among  themselves. (V) While exercising its powers, the High Court  is to examine as to whether the possibility of

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conviction is remote and bleak and continuation  of  criminal  cases  would  put  the  accused  to  great  oppression  and  prejudice  and  extreme  injustice  would  be  caused  to  him  by  not  quashing the criminal cases.”  

18.At  this  stage  it  is  apt  to  notice  a  three-Judge  Bench  

decision in  CBI, ACB, Mumbai v. Narendra Lal Jain &  

Ors.10 In the said case during the investigation pertaining to  

the culpability of the accused in the crime, the concerned  

bank had instituted suits for recovery of the amount claimed  

to  be  due  from  the  respondents  and  said  suits  were  

disposed in terms of the consent decrees.  On the basis of  

the said consent decrees an application for discharge was  

filed which was rejected by the trial court but eventually was  

allowed  by  the  High  Court.  Be  it  stated,  charges  were  

framed  under  Section  120-B/420  IPC  by  the  learned  trial  

Judge against the private parties.  As far as bank officials are  

concerned, charges were framed under different provisions  

of  the  Prevention  of  Corruption  of  Act,  1988.   Being  

dissatisfied with the said order,  the CBI  had preferred an  

10 2014 3 SCALE 137

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appeal  by obtaining special  leave and in that context the  

court  observed  that  the  accused  respondent  had  been  

charged under Section 120-B/420 IPC and the civil liability of  

the respondent to pay the amount had already been settled  

and further there was no grievance on the part of the bank.  

Taking note of the fact that offence under Section 420 of IPC  

is compoundable and Section 120-B is not compoundable,  

the Court eventually opined thus:-

“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  character  of  a  lame  prosecution  would  be  good  ground to  invoke the  extraordinary  power  under  Section 482 Cr.P.C.”

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19.   Slightly more recently in  Gopakumar B. Nair v. CBI  

and Anr.11 the Court referred to the paragraph 61 of Gian  

Singh’s Case, distinguished the decision in Narendra Lal  

Jain (supra) regard being had to the fact that the accused  

persons  were  facing  charges  under  Section  120-B  r/w  

Section 13(2)  r/w 13 (1)  (d)  of  the 1988 Act  and Section  

420/471 of  IPC  and came to  hold  that  substratum of  the  

charges against the accused-appellant were not similar to  

those in  Narendra Lal Jain  (supra)  wherein the accused  

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

only.  After so stating the Court observed as follows:-

“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 amount 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  unlike  the  terms  of  compromise  decree  in  the  aforesaid  two  

11 2014 4 SCALE 659

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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) (para61)  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.”       

20.  The  present  obtaining  factual  score  has  to  be  

appreciated  on  the  anvil  of  aforesaid  authorities.   On  a  

studied  scrutiny  of  the  principles  stated  in  Gain  Singh  

(supra) it is limpid that the three-Judge Bench has ruled that  

proceeding in respect of heinous and serious offences and  

the offences under prevention of corruption Act and all other  

offences committed by public servants while working in that  

capacity are not to be quashed.  That apart, the court has  

also  emphasized  on  offences  having  a  serious  impact  on  

society.  It has been further laid down that criminal cases  

having  overwhelmingly  and  predominantingly  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

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offences arising out of matrimony relating to dowry, etc. or  

the family disputes where the wrong is basically private or  

personal in nature.  In Narendra Lal Jain (supra) the three-

Judge Bench quashed the proceeding as the charges were  

famed under Section 120/420 IPC in respect of the private  

respondents.   In  Gopakumar  B.  Nair’s  case  the  court  

distinguished the decision in Narendra Lal Jain (supra) and  

opined  that  the  accused  had  also  been  charged  for  the  

commission of offence under Section 471 of IPC and on that  

basis declined to interfere with the order passed by the High  

Court which had refused to quash the criminal proceeding.  21. In  the  case  at  hand,  as  per  the  chargesheet  the  

respondents had got LCs issued from the bank in favour of  

fictitious companies propped up by them and the fictitious  

beneficiary companies had got letters of credits discounted  

by attaching their bogus bills.   The names of 10 fictitious  

companies have been mentioned in the chargesheet.  Thus,  

allegation of forgery is very much there. As is manifest from  

the  impugned  order,  the  learned  Single  Judge  has  not  

adverted to  the same.   It  is  not  a simple case where an

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accused has borrowed money from the bank and diverted it  

somewhere else and, thereafter, paid the amount.  It does  

not  fresco  a  situation  where  there  is  dealing  between  a  

private  financial  institution  and  an  accused,  and  after  

initiation of the criminal proceedings he pays the sum and  

gets the controversy settled.  The expose’ of facts tells a  

different story.  As submitted by the learned Counsel for CBI  

the manner in which the letters of credits were issued and  

the funds were siphoned has a foundation in criminal law.  

Learned counsel would submit that it does not depict a case  

which has overwhelmingly and predominatingly civil flavour.  

The intrinsic character is different.  Emphasis is laid on the  

creation of fictitious companies.  22.   In this context, we may usefully refer to a two-Judge  

Bench  decision  in  Central  Bureau  of  Investigation  v.   

Jagjit Singh12 wherein the court being moved by the CBI  

had overturned the order  of  the High Court  quashing the  

criminal proceeding and in that backdrop had taken note of  

the  fact  that  accused  persons  had  dishonestly  induced  

delivery of the property of the bank and had used forged  12 (2013) 10 SCC 686

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documents as genuine.  Proceeding further the Court opined  

as follows:-  “The  offences  when  committed  in  relation  with  banking  activities  including  offences  under  Sections 420/471 IPC have harmful  effect on the  public and threaten the well-being of the society.  These offences fall under the category of offences  involving  moral  turpitude  committed  by  public  servants  while  working  in  that  capacity.   Prima  facie, one may state that the bank is the victim in  such  cases  but,  in  fact,  the  society  in  general,  including customers of the bank is the sufferer.  In  the present case, there was neither an allegation  regarding any abuse of process of any court not  anything on record to suggest that the offenders  were entitled to secure the order in the ends of  justice.”

23.  We are in respectful agreement with the aforesaid view.  

Be it stated, that availing of money from a nationalized bank  

in  the  manner,  as  alleged  by  the  investigating  agency,  

vividly exposits fiscal impurity and, in a way, financial fraud.  

The modus operandi as narrated in the chargesheet cannot  

be  put  in  the  compartment  of  an  individual  or  personal  

wrong.   It  is  a  social  wrong and it  has  immense societal  

impact.   It  is an accepted principle of handling of finance  

that whenever there is manipulation and  cleverly conceived  

contrivance to  avail of these kind of benefits it cannot be

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regarded  as  a   case  having  overwhelmingly  and  

predominantingly of civil character.  The ultimate victim is  

the collective.  It creates a hazard in the financial interest of  

the society.  The gravity of the offence creates a dent in the  

economic  spine of  the nation.   The cleverness  which has  

been skillfully contrived,  if  the allegations are true,  has a  

serious consequence.  A crime of this nature, in our view,  

would definitely fall in the category of offences which travel  

far  ahead  of  personal  or  private  wrong.   It  has  the  

potentiality  to  usher  in  economic  crisis.   Its  implications  

have its own seriousness, for it creates a concavity in the  

solemnity that is expected in financial transactions.   It is not  

such a case where one can pay the amount and obtain a “no  

due  certificate”  and enjoy  the  benefit  of  quashing  of  the  

criminal  proceeding  on  the  hypostasis  that  nothing  more  

remains to be done.   The collective interest  of  which the  

Court is the guardian cannot be a silent or a mute spectator  

to allow the proceedings to be withdrawn, or for that matter  

yield to the ingenuous dexterity of the accused persons to  

invoke the jurisdiction under Article 226 of the Constitution

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or under Section 482 of the Code and quash the proceeding.  

It is not legally permissible.  The Court is expected to be on  

guard to these kinds of adroit moves.  The High Court, we  

humbly remind, should have dealt with the matter keeping  

in mind that in these kind of litigations the accused when  

perceives  a  tiny  gleam  of  success,  readily  invokes  the  

inherent jurisdiction for quashing of the criminal proceeding.  

The  court’s  principal  duty,  at  that  juncture,  should  be  to  

scan the entire facts to find out the thrust of allegations and  

the crux of the settlement.  It is the experience of the Judge  

comes to his aid and the said experience should be used  

with  care,  caution,  circumspection  and  courageous  

prudence.  As we find in the case at hand the learned Single  

Judge has not taken pains to scrutinize the entire conspectus  

of  facts  in  proper  perspective  and  quashed  the  criminal  

proceeding.  The said quashment neither helps to secure the  

ends of justice nor does it prevent the abuse of the process  

of  the  Court  nor  can  it  be  also  said  that  as  there  is  a  

settlement  no evidence will come on record and there will  

be remote chance of conviction.  Such a finding in our view

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would  be difficult  to  record.   Be  that  as  it  may,  the  fact  

remains that the social interest would be on peril and the  

prosecuting  agency,  in  these  circumstances,  cannot  be  

treated as an alien to the whole case.  Ergo, we have no  

other option but to hold that the order of the High Court is  

wholly indefensible.  24.  Ex consequenti,  the appeal is allowed, and the order  

passed by the High Court is set aside and it is directed that  

the  trial  shall  proceed  in  accordance  with  law.   We  may  

hasten to add that our observations in the present appeal  

are solely in the context of adjudicating the justifiability of  

order of quashing of the criminal proceeding and it would  

not have any bearing at the time of trial.  And we so clarify.

………………………………J.                                                         [Dipak Misra]

………………………………J.                                                         [Vikramajit Sen]

New Delhi; September 19, 2014.

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