upon Central Bureau of Investigation v. Jagjit
Singh17 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 documents
as genuine. Thereafter, the Court proceeded to state that:-
17 (2013) 10 SCC 68614
“23......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 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to allow the proceedings to be withdrawn, or for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 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.”
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOs.2006-2009 OF 2014
State, Rep. by Inspector of Police
Central Crime Branch ... Appellant
Versus
R. Vasanthi Stanley & Anr. ... Respondents
Citation;(2016)1 SCC376
Dipak Misra, J.
The seminal issues that emanate for consideration,
unequivocally on the bedrock of fiscal sanctity and
decidedly on the plinth of prevalent mindset of borrowers
from public financial institutions including banks, are
whether a borrower or borrowers after availing finance by
creating mortgage on the base of certain documents which,
as alleged, are forged, and ingeniously adopt the same
modus operandi to avail the benefit from number of banks,2
who in due course facing the problem set the criminal law in
motion by lodging different FIRs and in the ultimate
eventuate in an adroit manner enter into settlements and
pay the amount and thereafter, knock at the doors of the
High Court seeking exercise of inherent jurisdiction under
Section 482 of the Code of Criminal Procedure (CrPC) or the
extraordinary jurisdiction under Article 226 of the
Constitution for quashment of the criminal proceedings;
and should the High Court on the foundation that the
continuance of the criminal proceedings would be a
Sisyphean endeavour after the settlement has taken place to
quash the same; and further whether a former Assistant
Commissioner of Commercial Taxes can be allowed to
advance a plea, obviously a remarkable one, that she had
signed the documents either as a guarantor or as a
co-applicant, showing deference to her late husband’s
desire; and, therefore, this Court, in exercise of power under
Article 136 of the Constitution, should not unsettle the
common order by which the High Court has quashed
criminal proceedings. Additionally, it has also become3
obligatory to decisively lay down whether continuance of
such proceedings would be an unnecessary load on the
criminal justice dispensation system and hence, there is
neither any warrant nor justification for interference with
the order of the High Court. We are invited by the astute
proponements to dwell upon the said issues, and we shall
do so in due course of our delineation.
2. The factual narrative has a narrow compass. The first
respondent, accused no.2, along with her husband
submitted an application for home loan to the Centurion
Bank of Punjab, presently known as HDFC Bank Ltd. for a
sum of Rs.6 lakhs by depositing the sale deed dated
31.10.2001. The HDFC Bank found that documents were
forged and accordingly filed a complaint with the
Commissioner of Police, Chennai on 20.12.2005 which
eventually gave rise to registration of FIR No. 579/06 dated
19.7.2006. Another FIR came to be lodged on 3.8.2006 by
Bank of India, Cathedral Branch from which the couple had
availed a loan of Rs.25 lakhs for a Company Development
(Medicrops and Medigel) on the grounds that the documents4
were forged. On 10.7.2006, Vijaya Bank, G.N. Chetty Road
Branch filed a complaint that the husband of the accused
had applied for a mortgage loan of Rs.18 lakhs with forged
documents by depositing the title deed and the wife stood as
a surety. Taking into consideration the complaints lodged by
the aforesaid banks, the Inspector of Police, Central Crime
Branch, Team-XII, Egmore Chennai, registered the FIRs and
commenced the investigation. When the matter stood thus,
the Syndicate Bank, Mylapore Branch filed a complaint with
the Commissioner of Police, Chennai on 11.01.2007 to the
effect that the husband of the first respondent herein had
submitted an application for grant of home improvement
loan for a sum of Rs.12 lakhs with forged documents and
the wife was the guarantor and on that basis another FIR
was registered and investigation took place. Thus, the first
respondent was a co-applicant in respect of the loans
availed from HDFC Bank and Bank of India and was a
guarantor in respect of the loans availed from Vijaya Bank
and Syndicate Bank. FIR Nos. in respect of HDFC Bank,
Bank of India, Vijaya Bank and Syndicate Bank were5
579/06, 643/06, 550/06 and 206/07 respectively. After
due investigation, chargesheets were filed before the Chief
Metropolitan Magistrate, Egmore, Chennai and Metropolitan
Magistrate, Saidepet, Chennai and the proceedings before
the trial court were instituted bearing CC No. 1624/2010,
CC No. 5669/2010, CC No. 6258/2010 and CC No.
11697/2010.
3. After placing of the chargesheets, the accused persons
moved the High Court in Criminal OP No. 14759-14762 of
2011 for quashing of the criminal proceedings. During the
pendency of the cases, the husband, accused No.1 breathed
his last and thereafter before the High Court it was
contended that she was not aware of any transaction done
by her husband as she was working as a public servant and
that apart she was not aware of the business activities
carried on by her husband; that she had signed the
documents as instructed by her husband without any
intention or knowledge to cheat the banks; that after demise
of her husband, she had come to know about the cases
pending against her due to the alleged involvement of her6
husband and immediately she had taken necessary steps to
settle the entire dues of the banks and, therefore, there was
no justification for continuance of the criminal proceedings.
The stand and stance put forth by the accused person was
combated by the prosecution on the ground that she was in
employment in Commercial Tax Department in the rank of
Assistant Commissioner and had availed voluntary
retirement and hence, she could not claim ignorance of the
transaction despite being a co-applicant to the loans by
executing the pronotes jointly along with her husband as a
borrower and being a guarantor in respect of the loans
availed of by her husband from two banks. The quashment
of the criminal proceedings was also resisted by the
respondent Bank in Criminal O.P. No. 14762 of 2011 that
certain loan availed of by her husband had remained
unpaid and One Time Settlement was arrived at without
prejudice to the rights regarding pending cases against her
before the learned 11th Metropolitan Magistrate, Saidapet,
Chennai. Learned counsel for the accused had placed
reliance on Nikhil Merchant v. Central Bureau of7
Investigation1
, Manoj Sharma v. State and others2
,
State of Karnataka v. L. Muneswamy3
, Madhvrao
Jiwajirao Scindia and others v. Sambhajirao
Chandrojirao Angre and others4
, Hira Lal Hari Lal
Bhagwati v. C.B.I., New Delhi5
, and Shiji @ Pappu and
others v. Radhika and another6
before the High Court for
quashing of the criminal proceedings. On behalf of the
prosecution, reliance was placed on Sushil Suri v. CBI and
Anr.7
4. The High Court adverted to the authorities cited at the
Bar and thereafter came to hold that as “No due certificate”
had been issued by the respective banking institutions and
further settlements had been arrived at under the scheme,
continuance of the prosecution would be an exercise in
futility and, therefore, quashing of the criminal proceedings
was required to prevent the abuse of the process of law.
Being of this view, the High Court has quashed all the
1
(2008) 9 SCC 677
2
(2008) 16 SCC 1
3
(1977) 2 SCC 699
4
(1988) 1 SCC 692
5
(2002) 5 SCC 257
6
(2011) 10 SCC 705
7
(2011) 5 SCC 7088
proceedings.
5. We have heard Mr. Subramonium Prasad, learned
senior counsel for the appellant and Mr. Vivek Tankha,
learned senior counsel for the first respondent.
6. It is submitted by Mr. Subramonium Prasad, learned
senior counsel for the State that regard being had to the
facts and circumstances of the case, it was absolutely
inapposite on the part of the High Court to quash the
criminal proceedings as the allegation by the prosecution
pertain to availing of loan by depositing documents which
were forged. It is urged by him that the plea taken by the
respondent-accused that she was unaware of any
transaction does not remotely appeal to the common sense
and, in any case, such a plea cannot be entertained for the
purpose of quashing criminal cases. It is further urged that
even if there are settlements and dues have been cleared, in
such type of cases the accused cannot be absolved from the
criminal culpability without the trial taking place.
7. Resisting the aforesaid submissions it is canvassed by
Mr. Tankha, learned senior counsel for the first respondent9
that when the High Court, considering the controversy from
all the requisite angles has quashed the proceedings, this
Court should not interfere with the impugned order in
exercise of its jurisdiction under Article 136 of the
Constitution. Learned senior counsel would contend that
when the respondent has already paid the amount due to
the Bank from her own savings and settled the matter with
grieved financial institutions, continuance of the criminal
proceeding is not desirable as it is unlikely to serve any
fruitful purpose. That apart, submits Mr. Tankha,
continuation of the proceeding would unnecessarily load the
criminal justice dispensation system as there is likelihood of
an order of acquittal at the end of the trial.
8. To appreciate the submissions advanced at the bar, we
may straightaway refer to the authority in State of
Maharashtra through CBI v. Vikram Anantrai Doshi
and others8
. In the said case, the accused was charged
for the offences punishable under Sections 120-B, 406, 420,
467, 468 and 471 IPC. The allegation in the said case was
that the accused no. 1 had obtained Letters of Credit from
8
2014 (10) SCALE 69010
the State Bank of India and Dena Bank in favour of
fictitious companies formed by the accused and used the
said Letters of Credit to siphon off the funds from the
banks. During the pendency of the case, the accused
settled the dispute with the Bank by paying the amount and
the Bank in turn had issued no due certificate. The Court
referred to case in CBI v. A. Ravishankar Prasad and
others9
, wherein the pronouncements in CBI v. Duncans
Agro Industries Ltd.10 and Nikhil Merchant (supra) were
distinguished. It is necessary to note that the Court in
Ravi Shankar Prasad’s case referred to Inder Mohan
Goswami v. State of Uttaranchal11 and stated thus:-
38. Let us consider the facts of this case and
apply the ratio of Goswami case where facts are
as follows:
(I) The allegations are that the accused have
committed serious offences such as forgery,
fabrication of documents and used those documents
as genuine.
(II) The allegations are that the respondentaccused
herein A. Ravishankar Prasad and A.
Manohar Prasad have entered into a conspiracy
with the Chairman and Managing Director
9
(2009) 6 SCC 351
10 (1996) 5 SCC 581
11 (2007) 12 SCC 111
and other officials of Indian Bank, Chennai
with the object of cheating Indian Bank in the
matter of recommending, sanctioning, disbursing
huge credit facilities running over hundreds
of crores.
(III) Trial of all four cases are at an advanced
stage in which 92 witnesses have already been
examined.
While applying the ratio of Goswami case, how
can any court in its legitimate exercise of power
under Section 482 CrPC quash the proceedings
against accused A. Ravishankar Prasad and A.
Manohar Prasad in the face of the aforesaid allegations?
In the instant case, wrong application of
the ratio of the said judgment has led to grave
miscarriage of justice.
39. Careful analysis of all these judgments
clearly reveals that the exercise of inherent powers
would entirely depend on the facts and circumstances
of each case. The object of incorporating
inherent powers in the Code is to prevent
abuse of the process of the court or to secure
ends of justice.
40. Both English and the Indian courts have
consistently taken the view that the inherent
powers can be exercised in those exceptional
cases where the allegations made in the first information
report or the complaint, even if are
taken on their face value and accepted in their
entirety do not prima facie constitute any offence
or make out a case against the accused. When we
apply the settled legal position to the facts of this
case it is not possible to conclude that the complaint
and the charge-sheet prima facie do not
constitute any offence against the respondents.”12
Being of this view, the Court in A. Ravishankar
Prasad (supra) allowed the appeal preferred by the CBI.
9. Apart from above, in Vikram Anantrai Doshi & Ors.
(supra) the Court referred to Gian Singh v. State of
Punjab and Another12, with regard to the power of the High
Court as regards the quashing of the criminal proceedings
on the basis of a compromise. This Court also referred to
Narinder Singh & Ors. v. State of Punjab & Anr.13
,
Dimpy Gujral v. Union Territory through
Administrator14 and State of Rajasthan v. Sambhu
Kevat15 and thereafter dwelt upon the ratio in CBI, ACB,
Mumbai v. Narendra Lal Jain & Ors.16 wherein the
charges were framed under Section 120-B read with Section
420 IPC. A passage from the said judgment was reproduced
which is to the following effect:-
“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
12 (2012) 10 SCC 303
13
(2014) 6 SCC 466
14 AIR 2012 SCW 5333
15 2013 (14) SCALE 235
16 (2014) 5 SCC 36413
charged for commission of the substantive
offence Under Section 471 Indian Penal Code.
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 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 Code of Criminal Procedure should
not be exercised to quash the criminal case
against the accused, we cannot find any
justification to interfere with the said decision.”
10. After distinguishing many a decision, the Court relied
upon Central Bureau of Investigation v. Jagjit
Singh17 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 documents
as genuine. Thereafter, the Court proceeded to state that:-
17 (2013) 10 SCC 68614
“23......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 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 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 in15
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.”
11. Recently, in CBI v. Maninder Singh18, the allegation
against the accused was that bill of lading presented by the
proprietors of the accused firms were found forged and
cases were registered under Section 120-B IPC read with
Section 420 IPC and Section 5(2) read with Section 5(1) (d)
of Prevention of Corruption Act, 1947 and further
substantive offences under Sections 420, 467, 468 and 471
IPC. The accused person arrived at a settlement with the
Bank and thereafter moved the High Court under Section
482 CrPC for quashing of the FIR. The High Court placed
reliance on the decision in Nikhil Merchant (supra) and
allowed the petition and directed for quashing of the
criminal proceedings. This Court placed reliance on
Vikram Anantrai Doshi and others (supra) and came to
18 2015 (9) SCALE 36516
hold as follows:-
“10. The allegation against the respondent is
'forgery' for the purpose of cheating and use of
forged documents as genuine in order to embezzle
the public money. After facing such serious
charges of forgery, the Respondent wants the proceedings
to be quashed on account of settlement
with the bank. The development in means of
communication, science & technology etc. have
led to an enormous increase in economic crimes
viz. phishing, ATM frauds etc. which are being
committed by intelligent but devious individuals
involving huge sums of public or government
money. These are actually public wrongs or
crimes committed against society and the gravity
and magnitude attached to these offences is concentrated
at public at large.
11. The inherent power of the High Court Under
Section 482 Code of Criminal Procedure should
be sparingly used. Only when the Court comes to
the conclusion that there would be manifest injustice
or there would be abuse of the process of
the Court if such power is not exercised, Court
would quash the proceedings. In economic offences
Court must not only keep in view that
money has been paid to the bank which has been
defrauded but also the society at large. It is not a
case of simple assault or a theft of a trivial
amount; but the offence with which we are concerned
is a well planned and was committed with
a deliberate design with an eye of personal profit
regardless of consequence to the society at large.
To quash the proceeding merely on the ground
that the accused has settled the amount with the
bank would be a misplaced sympathy.”
12. Testing the present controversy on the anvil of the17
aforesaid principles, we are disposed to think that the High
Court has been erroneously guided by the ambit and sweep
of power under Section 482 CrPC for quashing the
proceedings. It has absolutely fallaciously opined that the
continuance of the proceeding will be the abuse of the
process of the Court. It has been categorically held in
Janta Dal v. H.S. Chowdhary19, that the inherent power
under Section 482 CrPC though unrestricted and undefined
should not be capriciously or arbitrarily exercised, but
should be exercised in appropriate cases, ex debito justitiae
to do real and substantial justice for the administration of
which alone the courts exist. In Inder Mohan Goswami
(supra), it has been emphasised that inherent powers have
to be exercised sparingly, carefully and with great caution.
13. We will be failing in our duty unless we advert to the
proponements propounded with regard to other aspects.
They are really matters of concern and deserve to be
addressed. The submission as put forth is that the first
respondent is a lady and she was following the command of
her husband and signed the documents without being
19 (1992) 4 SCC 30518
aware about the transactions entered into by the husband
and nature of the business. The allegation in the
chargesheet is that she has signed the pronotes. That
apart, as further alleged, she is a co-applicant in two cases
and guarantor in other two cases. She was an Assistant
Commissioner of Commercial Taxes and after taking
voluntary retirement she has joined the public life, and
became a member of the ‘Rajya Sabha’. Emphasis is also
laid that she is a lady and there is no warrant to continue
the criminal proceeding when she has paid the dues of the
banks, and if anything further is due that shall be made
good. The assertions as regards the ignorance are a mere
pretence and sans substance given the facts. Lack of
awareness, knowledge or intent is neither to be considered
nor accepted in economic offences. The submission
assiduously presented on gender leaves us unimpressed.
An offence under the criminal law is an offence and it does
not depend upon the gender of an accused. True it is, there
are certain provisions in CrPC relating to exercise of
jurisdiction under Section 437, etc. therein but that19
altogether pertains to a different sphere. A person
committing a murder or getting involved in a financial scam
or forgery of documents, cannot claim discharge or acquittal
on the ground of her gender as that is neither
constitutionally nor statutorily a valid argument. The
offence is gender neutral in this case. We say no more on
this score.
14. As far as the load on the criminal justice dispensation
system is concerned it has an insegragable nexus with
speedy trial. A grave criminal offence or serious economic
offence or for that matter the offence that has the
potentiality to create a dent in the financial health of the
institutions, is not to be quashed on the ground that there
is delay in trial or the principle that when the matter has
been settled it should be quashed to avoid the load on the
system. That can never be an acceptable principle or
parameter, for that would amount to destroying the stem
cells of law and order in many a realm and further
strengthen the marrows of the unscrupulous litigations.
Such a situation should never be conceived of. 20
15. In view of the aforesaid analysis, we allow the appeal,
set aside the order passed by the High Court and direct the
trial magistrate to proceed in accordance with law.
.............................J.
[Dipak Misra]
.............................J.
[Prafulla C. Pant]
New Delhi
September 15, 2015
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOs.2006-2009 OF 2014
State, Rep. by Inspector of Police
Central Crime Branch ... Appellant
Versus
R. Vasanthi Stanley & Anr. ... Respondents
Citation;(2016)1 SCC376
Dipak Misra, J.
The seminal issues that emanate for consideration,
unequivocally on the bedrock of fiscal sanctity and
decidedly on the plinth of prevalent mindset of borrowers
from public financial institutions including banks, are
whether a borrower or borrowers after availing finance by
creating mortgage on the base of certain documents which,
as alleged, are forged, and ingeniously adopt the same
modus operandi to avail the benefit from number of banks,2
who in due course facing the problem set the criminal law in
motion by lodging different FIRs and in the ultimate
eventuate in an adroit manner enter into settlements and
pay the amount and thereafter, knock at the doors of the
High Court seeking exercise of inherent jurisdiction under
Section 482 of the Code of Criminal Procedure (CrPC) or the
extraordinary jurisdiction under Article 226 of the
Constitution for quashment of the criminal proceedings;
and should the High Court on the foundation that the
continuance of the criminal proceedings would be a
Sisyphean endeavour after the settlement has taken place to
quash the same; and further whether a former Assistant
Commissioner of Commercial Taxes can be allowed to
advance a plea, obviously a remarkable one, that she had
signed the documents either as a guarantor or as a
co-applicant, showing deference to her late husband’s
desire; and, therefore, this Court, in exercise of power under
Article 136 of the Constitution, should not unsettle the
common order by which the High Court has quashed
criminal proceedings. Additionally, it has also become3
obligatory to decisively lay down whether continuance of
such proceedings would be an unnecessary load on the
criminal justice dispensation system and hence, there is
neither any warrant nor justification for interference with
the order of the High Court. We are invited by the astute
proponements to dwell upon the said issues, and we shall
do so in due course of our delineation.
2. The factual narrative has a narrow compass. The first
respondent, accused no.2, along with her husband
submitted an application for home loan to the Centurion
Bank of Punjab, presently known as HDFC Bank Ltd. for a
sum of Rs.6 lakhs by depositing the sale deed dated
31.10.2001. The HDFC Bank found that documents were
forged and accordingly filed a complaint with the
Commissioner of Police, Chennai on 20.12.2005 which
eventually gave rise to registration of FIR No. 579/06 dated
19.7.2006. Another FIR came to be lodged on 3.8.2006 by
Bank of India, Cathedral Branch from which the couple had
availed a loan of Rs.25 lakhs for a Company Development
(Medicrops and Medigel) on the grounds that the documents4
were forged. On 10.7.2006, Vijaya Bank, G.N. Chetty Road
Branch filed a complaint that the husband of the accused
had applied for a mortgage loan of Rs.18 lakhs with forged
documents by depositing the title deed and the wife stood as
a surety. Taking into consideration the complaints lodged by
the aforesaid banks, the Inspector of Police, Central Crime
Branch, Team-XII, Egmore Chennai, registered the FIRs and
commenced the investigation. When the matter stood thus,
the Syndicate Bank, Mylapore Branch filed a complaint with
the Commissioner of Police, Chennai on 11.01.2007 to the
effect that the husband of the first respondent herein had
submitted an application for grant of home improvement
loan for a sum of Rs.12 lakhs with forged documents and
the wife was the guarantor and on that basis another FIR
was registered and investigation took place. Thus, the first
respondent was a co-applicant in respect of the loans
availed from HDFC Bank and Bank of India and was a
guarantor in respect of the loans availed from Vijaya Bank
and Syndicate Bank. FIR Nos. in respect of HDFC Bank,
Bank of India, Vijaya Bank and Syndicate Bank were5
579/06, 643/06, 550/06 and 206/07 respectively. After
due investigation, chargesheets were filed before the Chief
Metropolitan Magistrate, Egmore, Chennai and Metropolitan
Magistrate, Saidepet, Chennai and the proceedings before
the trial court were instituted bearing CC No. 1624/2010,
CC No. 5669/2010, CC No. 6258/2010 and CC No.
11697/2010.
3. After placing of the chargesheets, the accused persons
moved the High Court in Criminal OP No. 14759-14762 of
2011 for quashing of the criminal proceedings. During the
pendency of the cases, the husband, accused No.1 breathed
his last and thereafter before the High Court it was
contended that she was not aware of any transaction done
by her husband as she was working as a public servant and
that apart she was not aware of the business activities
carried on by her husband; that she had signed the
documents as instructed by her husband without any
intention or knowledge to cheat the banks; that after demise
of her husband, she had come to know about the cases
pending against her due to the alleged involvement of her6
husband and immediately she had taken necessary steps to
settle the entire dues of the banks and, therefore, there was
no justification for continuance of the criminal proceedings.
The stand and stance put forth by the accused person was
combated by the prosecution on the ground that she was in
employment in Commercial Tax Department in the rank of
Assistant Commissioner and had availed voluntary
retirement and hence, she could not claim ignorance of the
transaction despite being a co-applicant to the loans by
executing the pronotes jointly along with her husband as a
borrower and being a guarantor in respect of the loans
availed of by her husband from two banks. The quashment
of the criminal proceedings was also resisted by the
respondent Bank in Criminal O.P. No. 14762 of 2011 that
certain loan availed of by her husband had remained
unpaid and One Time Settlement was arrived at without
prejudice to the rights regarding pending cases against her
before the learned 11th Metropolitan Magistrate, Saidapet,
Chennai. Learned counsel for the accused had placed
reliance on Nikhil Merchant v. Central Bureau of7
Investigation1
, Manoj Sharma v. State and others2
,
State of Karnataka v. L. Muneswamy3
, Madhvrao
Jiwajirao Scindia and others v. Sambhajirao
Chandrojirao Angre and others4
, Hira Lal Hari Lal
Bhagwati v. C.B.I., New Delhi5
, and Shiji @ Pappu and
others v. Radhika and another6
before the High Court for
quashing of the criminal proceedings. On behalf of the
prosecution, reliance was placed on Sushil Suri v. CBI and
Anr.7
4. The High Court adverted to the authorities cited at the
Bar and thereafter came to hold that as “No due certificate”
had been issued by the respective banking institutions and
further settlements had been arrived at under the scheme,
continuance of the prosecution would be an exercise in
futility and, therefore, quashing of the criminal proceedings
was required to prevent the abuse of the process of law.
Being of this view, the High Court has quashed all the
1
(2008) 9 SCC 677
2
(2008) 16 SCC 1
3
(1977) 2 SCC 699
4
(1988) 1 SCC 692
5
(2002) 5 SCC 257
6
(2011) 10 SCC 705
7
(2011) 5 SCC 7088
proceedings.
5. We have heard Mr. Subramonium Prasad, learned
senior counsel for the appellant and Mr. Vivek Tankha,
learned senior counsel for the first respondent.
6. It is submitted by Mr. Subramonium Prasad, learned
senior counsel for the State that regard being had to the
facts and circumstances of the case, it was absolutely
inapposite on the part of the High Court to quash the
criminal proceedings as the allegation by the prosecution
pertain to availing of loan by depositing documents which
were forged. It is urged by him that the plea taken by the
respondent-accused that she was unaware of any
transaction does not remotely appeal to the common sense
and, in any case, such a plea cannot be entertained for the
purpose of quashing criminal cases. It is further urged that
even if there are settlements and dues have been cleared, in
such type of cases the accused cannot be absolved from the
criminal culpability without the trial taking place.
7. Resisting the aforesaid submissions it is canvassed by
Mr. Tankha, learned senior counsel for the first respondent9
that when the High Court, considering the controversy from
all the requisite angles has quashed the proceedings, this
Court should not interfere with the impugned order in
exercise of its jurisdiction under Article 136 of the
Constitution. Learned senior counsel would contend that
when the respondent has already paid the amount due to
the Bank from her own savings and settled the matter with
grieved financial institutions, continuance of the criminal
proceeding is not desirable as it is unlikely to serve any
fruitful purpose. That apart, submits Mr. Tankha,
continuation of the proceeding would unnecessarily load the
criminal justice dispensation system as there is likelihood of
an order of acquittal at the end of the trial.
8. To appreciate the submissions advanced at the bar, we
may straightaway refer to the authority in State of
Maharashtra through CBI v. Vikram Anantrai Doshi
and others8
. In the said case, the accused was charged
for the offences punishable under Sections 120-B, 406, 420,
467, 468 and 471 IPC. The allegation in the said case was
that the accused no. 1 had obtained Letters of Credit from
8
2014 (10) SCALE 69010
the State Bank of India and Dena Bank in favour of
fictitious companies formed by the accused and used the
said Letters of Credit to siphon off the funds from the
banks. During the pendency of the case, the accused
settled the dispute with the Bank by paying the amount and
the Bank in turn had issued no due certificate. The Court
referred to case in CBI v. A. Ravishankar Prasad and
others9
, wherein the pronouncements in CBI v. Duncans
Agro Industries Ltd.10 and Nikhil Merchant (supra) were
distinguished. It is necessary to note that the Court in
Ravi Shankar Prasad’s case referred to Inder Mohan
Goswami v. State of Uttaranchal11 and stated thus:-
38. Let us consider the facts of this case and
apply the ratio of Goswami case where facts are
as follows:
(I) The allegations are that the accused have
committed serious offences such as forgery,
fabrication of documents and used those documents
as genuine.
(II) The allegations are that the respondentaccused
herein A. Ravishankar Prasad and A.
Manohar Prasad have entered into a conspiracy
with the Chairman and Managing Director
9
(2009) 6 SCC 351
10 (1996) 5 SCC 581
11 (2007) 12 SCC 111
and other officials of Indian Bank, Chennai
with the object of cheating Indian Bank in the
matter of recommending, sanctioning, disbursing
huge credit facilities running over hundreds
of crores.
(III) Trial of all four cases are at an advanced
stage in which 92 witnesses have already been
examined.
While applying the ratio of Goswami case, how
can any court in its legitimate exercise of power
under Section 482 CrPC quash the proceedings
against accused A. Ravishankar Prasad and A.
Manohar Prasad in the face of the aforesaid allegations?
In the instant case, wrong application of
the ratio of the said judgment has led to grave
miscarriage of justice.
39. Careful analysis of all these judgments
clearly reveals that the exercise of inherent powers
would entirely depend on the facts and circumstances
of each case. The object of incorporating
inherent powers in the Code is to prevent
abuse of the process of the court or to secure
ends of justice.
40. Both English and the Indian courts have
consistently taken the view that the inherent
powers can be exercised in those exceptional
cases where the allegations made in the first information
report or the complaint, even if are
taken on their face value and accepted in their
entirety do not prima facie constitute any offence
or make out a case against the accused. When we
apply the settled legal position to the facts of this
case it is not possible to conclude that the complaint
and the charge-sheet prima facie do not
constitute any offence against the respondents.”12
Being of this view, the Court in A. Ravishankar
Prasad (supra) allowed the appeal preferred by the CBI.
9. Apart from above, in Vikram Anantrai Doshi & Ors.
(supra) the Court referred to Gian Singh v. State of
Punjab and Another12, with regard to the power of the High
Court as regards the quashing of the criminal proceedings
on the basis of a compromise. This Court also referred to
Narinder Singh & Ors. v. State of Punjab & Anr.13
,
Dimpy Gujral v. Union Territory through
Administrator14 and State of Rajasthan v. Sambhu
Kevat15 and thereafter dwelt upon the ratio in CBI, ACB,
Mumbai v. Narendra Lal Jain & Ors.16 wherein the
charges were framed under Section 120-B read with Section
420 IPC. A passage from the said judgment was reproduced
which is to the following effect:-
“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
12 (2012) 10 SCC 303
13
(2014) 6 SCC 466
14 AIR 2012 SCW 5333
15 2013 (14) SCALE 235
16 (2014) 5 SCC 36413
charged for commission of the substantive
offence Under Section 471 Indian Penal Code.
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 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 Code of Criminal Procedure should
not be exercised to quash the criminal case
against the accused, we cannot find any
justification to interfere with the said decision.”
10. After distinguishing many a decision, the Court relied
upon Central Bureau of Investigation v. Jagjit
Singh17 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 documents
as genuine. Thereafter, the Court proceeded to state that:-
17 (2013) 10 SCC 68614
“23......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 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 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 in15
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.”
11. Recently, in CBI v. Maninder Singh18, the allegation
against the accused was that bill of lading presented by the
proprietors of the accused firms were found forged and
cases were registered under Section 120-B IPC read with
Section 420 IPC and Section 5(2) read with Section 5(1) (d)
of Prevention of Corruption Act, 1947 and further
substantive offences under Sections 420, 467, 468 and 471
IPC. The accused person arrived at a settlement with the
Bank and thereafter moved the High Court under Section
482 CrPC for quashing of the FIR. The High Court placed
reliance on the decision in Nikhil Merchant (supra) and
allowed the petition and directed for quashing of the
criminal proceedings. This Court placed reliance on
Vikram Anantrai Doshi and others (supra) and came to
18 2015 (9) SCALE 36516
hold as follows:-
“10. The allegation against the respondent is
'forgery' for the purpose of cheating and use of
forged documents as genuine in order to embezzle
the public money. After facing such serious
charges of forgery, the Respondent wants the proceedings
to be quashed on account of settlement
with the bank. The development in means of
communication, science & technology etc. have
led to an enormous increase in economic crimes
viz. phishing, ATM frauds etc. which are being
committed by intelligent but devious individuals
involving huge sums of public or government
money. These are actually public wrongs or
crimes committed against society and the gravity
and magnitude attached to these offences is concentrated
at public at large.
11. The inherent power of the High Court Under
Section 482 Code of Criminal Procedure should
be sparingly used. Only when the Court comes to
the conclusion that there would be manifest injustice
or there would be abuse of the process of
the Court if such power is not exercised, Court
would quash the proceedings. In economic offences
Court must not only keep in view that
money has been paid to the bank which has been
defrauded but also the society at large. It is not a
case of simple assault or a theft of a trivial
amount; but the offence with which we are concerned
is a well planned and was committed with
a deliberate design with an eye of personal profit
regardless of consequence to the society at large.
To quash the proceeding merely on the ground
that the accused has settled the amount with the
bank would be a misplaced sympathy.”
12. Testing the present controversy on the anvil of the17
aforesaid principles, we are disposed to think that the High
Court has been erroneously guided by the ambit and sweep
of power under Section 482 CrPC for quashing the
proceedings. It has absolutely fallaciously opined that the
continuance of the proceeding will be the abuse of the
process of the Court. It has been categorically held in
Janta Dal v. H.S. Chowdhary19, that the inherent power
under Section 482 CrPC though unrestricted and undefined
should not be capriciously or arbitrarily exercised, but
should be exercised in appropriate cases, ex debito justitiae
to do real and substantial justice for the administration of
which alone the courts exist. In Inder Mohan Goswami
(supra), it has been emphasised that inherent powers have
to be exercised sparingly, carefully and with great caution.
13. We will be failing in our duty unless we advert to the
proponements propounded with regard to other aspects.
They are really matters of concern and deserve to be
addressed. The submission as put forth is that the first
respondent is a lady and she was following the command of
her husband and signed the documents without being
19 (1992) 4 SCC 30518
aware about the transactions entered into by the husband
and nature of the business. The allegation in the
chargesheet is that she has signed the pronotes. That
apart, as further alleged, she is a co-applicant in two cases
and guarantor in other two cases. She was an Assistant
Commissioner of Commercial Taxes and after taking
voluntary retirement she has joined the public life, and
became a member of the ‘Rajya Sabha’. Emphasis is also
laid that she is a lady and there is no warrant to continue
the criminal proceeding when she has paid the dues of the
banks, and if anything further is due that shall be made
good. The assertions as regards the ignorance are a mere
pretence and sans substance given the facts. Lack of
awareness, knowledge or intent is neither to be considered
nor accepted in economic offences. The submission
assiduously presented on gender leaves us unimpressed.
An offence under the criminal law is an offence and it does
not depend upon the gender of an accused. True it is, there
are certain provisions in CrPC relating to exercise of
jurisdiction under Section 437, etc. therein but that19
altogether pertains to a different sphere. A person
committing a murder or getting involved in a financial scam
or forgery of documents, cannot claim discharge or acquittal
on the ground of her gender as that is neither
constitutionally nor statutorily a valid argument. The
offence is gender neutral in this case. We say no more on
this score.
14. As far as the load on the criminal justice dispensation
system is concerned it has an insegragable nexus with
speedy trial. A grave criminal offence or serious economic
offence or for that matter the offence that has the
potentiality to create a dent in the financial health of the
institutions, is not to be quashed on the ground that there
is delay in trial or the principle that when the matter has
been settled it should be quashed to avoid the load on the
system. That can never be an acceptable principle or
parameter, for that would amount to destroying the stem
cells of law and order in many a realm and further
strengthen the marrows of the unscrupulous litigations.
Such a situation should never be conceived of. 20
15. In view of the aforesaid analysis, we allow the appeal,
set aside the order passed by the High Court and direct the
trial magistrate to proceed in accordance with law.
.............................J.
[Dipak Misra]
.............................J.
[Prafulla C. Pant]
New Delhi
September 15, 2015
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