Madras High Court
N.Ravichandran vs State on 7 July, 2025
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
2025:MHC:1583
Crl.O.P.Nos.30938 and 30939 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ORDERS RESERVED ON : 17.06.2025
ORDERS PRONOUNCED ON : 07.07.2025
CORAM:
THE HONOURABLE MR. JUSTICE D.BHARATHA CHAKRAVARTHY
Crl.O.P.Nos.30938 and 30939 of 2024
& Crl.M.P.Nos.17630 and 17653 of 2024
Crl.O.P.No.30938 of 2024:
1.N.Ravichandran
2.M/s True Value Homes India Pvt.Ltd.,
Represented by its Director, Mr.N.Ravichandran
TVH Novella - 1st and 2nd Floor
3rd Cross Street, R.A.Puram
Chennai – 600 028.
3.M/s TVH Energy Resource Pvt.Ltd.,
Represented by its Director, Mr.T.Selvamani
TVH Novella, 3rd Cross Street
R.A.Puram, Chennai – 600 028. ...Petitioners 1 to 3 /
Accused 6 to 8
-Vs-
1.State, Represented by
The Inspector of Police
CBI, ACB,
Chennai.
2.Devender Kumar
Chief Regional Manager
Indian Overseas Bank
Regional Office
Chennai – 600 001. ... Respondents
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Crl.O.P.Nos.30938 and 30939 of 2024
Crl.O.P.No.30939 of 2024:
1.M/s Truedome EPC India Pvt. Ltd.,
Represented by its Directors
T.Elayaraja & T.Arivunithi
TVH Novella, 3rd Floor
No.16/17, 3rd Cross Street
R.A.Puram, Chennai – 600 028.
2.T.Elayaraja
3.T.Arivunithi
4.T.Selvamani ... Petitioners /
Accused 1 to 4
Vs.
1.State by
Inspector of Police
CBI/SPE/ACB/Chennai
(RC 032 2021 A 0022)
2.Devender Kumar
Chief Regional Manager
Indian Overseas Bank
Regional Office
Chennai – 600 001.
3.The Deputy Director
Directorate of Enforcement, Chennai Zonal
Officer – 1,No.2, 5th and 6th Floor,
BSNL Administrative Building, Kushkumar Road,
Nungambakkam, Chennai – 600 034.
(R3 impleaded vide order of this Court
dated 07.07.2025 in Crl.M.P.No.11872 of 2025) ... Respondents
Common Prayer: Criminal Original petitions filed under Section 528 of
BNSS, to call for the records in C.C.No.2358 of 2024 on the file of the learned
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Crl.O.P.Nos.30938 and 30939 of 2024
Additional Chief Metropolitan Magistrate Court, Egmore, Chennai and quash
the proceedings as against the petitioners and pass such further or other
orders.
In Crl.O.P.No.30938 of 2024:
For the petitioners : Mr.Om Prakash
Senior Counsel
for M/s.Aparajitha Vishwanath
For the respondents : Mr.K.Srinivasan
Special Public Prosecutor for R1
Ms.V.Rajeswari for R2
In Crl.O.P.No.30939 of 2024:
For the petitioners : Mr.Vijayanarayan
Senior Counsel
for M/s.Aparajitha Vishwanath
For the respondents : Mr.K.Srinivasan
Special Public Prosecutor for R1
Ms.V.Rajeswari for R2
Mr.N.Ramesh
Special Public Prosecutor
for Enforcement Directorate for R3
COMMON ORDER
A. The Petitions:
These two matters arise under of the same case and as such, they are
taken up, heard, and disposed of by this common order.
1.1. In Crl.O.P.No.30939 of 2024, the petitioners are (i) M/s. Truedom
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Crl.O.P.Nos.30938 and 30939 of 2024EPC India Pvt. Ltd., (ii) T.Elayaraja, (iii) T.Arivunithi, and (iv) T.Selvamani,
who are named as accused 1 to 4 in C.C.No.2358 of 2024.
1.2. (i) Ravichandran, (ii) M/s. True Value Homes India Pvt. Ltd., and
(iii) M/s. TVH Energy Resource Pvt. Ltd. are the petitioners 1 to 3 in
Crl.O.P.No.30938 of 2024, and they are arrayed as accused 6 to 8 in
C.C.No.2358 of 2024.
B. The Brief Facts:
2. The case of the prosecution is that between 2013 and 2016, all the
accused conspired to cheat the Indian Overseas Bank. They applied for and
received a Rs.30 Crores term loan by making false representations to the
Bank, leading it to believe that the 1st accused, M/s Truedome EPC India Pvt.
Ltd., was engaged in genuine wind energy projects. As a result, the loan was
approved on 28.03.2013, and the amount was disbursed on 30.03.2013 into
the loan account No. 0060 0327 1300 007 of the 1st accused company.
2.1. On the same day, the 4th accused, representing the 1st accused,
submitted a letter to the Chief Manager of Indian Overseas Bank, requesting
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the transfer of funds to three different firms: M/s Ecodome Power Pvt. Ltd.,
M/s Mark Green Developers Pvt. Ltd., and M/s Sri Balaji Traders, amounting
to Rs.13.5 Crores, Rs.12.5 Crores, and Rs.4 Crores respectively. Accordingly,
the funds were transferred to these entities. The Director of M/s Ecodome
Power Pvt. Ltd. is the 4th accused, and another Director, Mr. Arun Nehru, is
the elder brother’s son of the 6th accused, N. Ravichandran, who is the
Managing Director of M/s True Value Homes Pvt. Ltd. The company M/s
Ecodome Power Pvt. Ltd. did not conduct any business or utilize the funds in
relation to the wind turbine generator project with M/s Trishe Renewable
Energy Solutions Pvt. Ltd. However, the entire amount was transferred to the
account of the 7th accused, M/s True Value Homes Pvt. Ltd.
2.2. Similarly, M/s Mark Green Developers Pvt. Ltd., in whose favour
Rs.12.5 Crores was transferred, did not have any proper business and
transferred this amount to the account of the 7th accused – M/s True Value
Homes Pvt. Ltd. M/s Sri Balaji Traders also transferred Rs.2 Crores into the
accounts of M/s True Value Homes Pvt. Ltd. and another Rs.2 Crores to M/s
TVH Energy Resources Pvt. Ltd. The majority of the funds pooled into the
account of M/s True Value Homes Pvt. Ltd. was used on the same day, i.e.,
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30.03.2013, to settle its term loan with M/s Punjab National Bank.
Additionally, Rs.28.08 Crores, out of the loan amount sanctioned by Indian
Overseas Bank, was used for this purpose.
2.3. Thereafter, even though the original sanction terms were amended
and the initial holiday period of one year was extended to two years, in 2016,
the loan account became a Non-Performing Asset. Subsequently, by a
communication dated 18.11.2019, the 1st accused – Company was required to
pay Rs. 31.5 Crores as a one-time settlement. The settlement amount was to be
paid in two installments: Rs. 21.50 Crores on or before 15.12.2019 and Rs. 10
Crores on or before 15.01.2020. The One Time Settlement sanction letter was
issued on 29.11.2019. The 1st accused did not adhere to this, and
consequently, after receiving another request letter from the 2nd accused – T.
Elayaraja, the bank issued a revised OTS proposal for a full and final
settlement of Rs. 33.42 Crores, including the delayed period interest of Rs.
1.91 Crores, to be paid on or before 30.09.2021. After obtaining an extension,
a sum of Rs. 8.34 Crores of the OTS amount was paid on time, but the
remaining amounts were not paid within the stipulated period.
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2.4. At this juncture, a complaint was forwarded by the Bank on
24.12.2021, based on which a case was registered in R.C.No.032/2021 A 0022
for alleged offences under Section 420, and 120B read with Section 420 of
IPC. During the investigation of the complaint, the Indian Overseas Bank
agreed to accept a further delayed period interest of Rs.2,67,68,876.75/- over
and above the amount already due, and the 1st accused paid the sum of
Rs.25.08 Crores on 11.05.2022. Thereafter, the Indian Overseas Bank
calculated an additional Rs.37 Lakhs as belated payment interest, which was
paid and accepted as full and final settlement on 23.02.2023, and a no-
objection certificate was issued by the Bank stating that the loan account was
entirely cleared. It is at this stage, on 22.08.2024, that the present final report
was laid and taken on file as C.C.N.2358 of 2024 before the Additional Chief
Metropolitan Magistrate, Chennai, and summons were issued to the accused.
All the accused except the accused No. 5 are before this Court.
C.The Submissions:
3. Heard M r . V i j a y a Na r a y a n , Mr.Sankaran ar ay an an, and M r . O m
Pr ak a s h , the learned Senior Counsel, who argued the matter in detail. Since
their arguments overlap, they are summarized point wise.
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3.1. First, they would submit that on a perusal of the transactions and
even as per the final report, except Section 120-B IPC for which no specific
material was placed on record, the only other offence being under Section 420
of IPC, is compoundable in nature. The alleged transactions does not make out
an offence under Section 420 of IPC, in as much as for a term loan of Rs.30
Crores, a property ad-measuring 53,540 sq.ft in Old No.15 & 16, New Door
No.55 at Dr.Muthulakshmi Salai, also known as Lattice Bridge Road, Adyar,
Chennai – 600 020 was given as security by the guarantor, viz., M/s Vicoans
Infrastructure and Environment Engineering Pvt. Ltd., which is the owner of
the property and the accepted valuation report of the valuers approved by the
bankers, estimated the fair market value of the property as Rs.128.30 Crores,
even as on 23.03.2013. A mortgage deed was duly executed. Therefore, in this
case, it can never be argued by the prosecution that there was an intention to
cheat the bank, at the inception. Like every other default loan account, after
the loan was serviced for some time, thereupon, it became a Non Performing
Asset and the proceedings were pending before the Debt Recovery Tribunal.
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3.2. In the year 2019, an OTS proposal has been granted and had the
Company paid the OTS within the first deadline itself, even the compliant
would not have emanated from the Bank. Even after extension of time, the 1 st
accused – Company was able to make only a part payment, the complaint
emanated from the Bank. But once the Bank extended the time and the entire
OTS amount was settled amicably, which included the belated payment of
interest, absolutely no offence under Section 420 of IPC ever made out and
therefore, the transactions firstly are completely civil in nature. Criminal
colour was sought to be given by mentioning the purpose for which the loan
was sought and the purpose of which the loan was used. Even then, it is the
contention of the learned Senior Counsel that the loan itself was granted under
the insta fund scheme, which is based more on the security rather than the
purpose of business.
3.3. The learned Senior Counsel would submit that the further
investigation does not reveal that the Company had never entered into any
agreement with the concerned entities, nor does it suggest that the Company
was not engaged in the business of wind energy. The only allegation, which
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has been raised belatedly, appears to be that the part payment under the One-
Time Settlement (OTS) was not made, and that the funds were allegedly
diverted to the group concern, namely, the 7 accused. Thus, the action, though
th
potentially questionable as ‘fraud’ within the meaning of the circular issued by
the Reserve Bank of India for the purpose of classifying the account as
fraudulent, does not, by itself, constitute a criminal offence, as fraud under
such circulars is not synonymous with cheating as defined under criminal law.
Thus, either at the inception of the transaction or when the transactions
concluded by a memorandum of understanding by way of OTS finally, by
paying the interest on belated payment, no offence under Section 420 of IPC
was made out and therefore, the complaint is liable to be quashed.
3.4. The learned Senior Counsel would further submit that when the
bank has received the amount towards full and final settlement and the matter
amicably settled between the parties and the bank is not claiming any further
amount due, by the dicta of the Judgments of the Hon’ble Supreme Court of
India in this regard, this Court should exercise the power under Section 482 of
the Code of Criminal Procedure and quash the case, as the proceedings are
predominantly civil in nature, and considering the commercial wisdom, the
bank has settled the transactions and it would be oppressive on the accused to
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continue the prosecution. In any event, when the cause of action itself has
arisen on account of the part non-payment of the OTS amount, the same
subsequently being paid and the bank accepting the same as full quit by
adding another Rs.37 Lakhs as belated payment interest, the possibility of
further prosecution is very bleak, and therefore, on that score also, the case is
liable to be quashed.
3.5. In support of their submissions for the proposition that the
classification of the fraudulent account is violative of principles of natural
justice, and the consequential FIR should be quashed, the Judgment of the
Hon’ble Supreme Court of India in State Bank of India and Others Vs.
Rajesh Agarwal and Others1, is relied upon. To contend that the ingredients
of Section 420 of IPC are not made out in the instant case, the following four
Judgments are relied upon:
Sl. Citation Case Name
No.
1. (2021) 18 SCC 70 N.Radhavender Vs. State of Andhra Pradesh,
CBI
2. (2024) SCCOnLine SC 339 A.M.Mohan Vs. State represented by SHO &
Anr.
3. (2024) SCCOnLine SC 726 Sharif Ahmed & Anr. Vs. State of Uttar Pradesh
& Anr.
4. (2025) SCCOnLine Bom Ganesh Tukaram Vs. Nilesh Ramdas Tal & Anr.
1 (2023) 6 SCC 1
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Sl. Citation Case Name
No.
929
3.6. For the proposition that in view of the amicable settlement of the
loan amount, this Court should exercise the power under Section 482 of the
Code of Criminal Procedure and quash the proceedings, the following
Judgments were relied upon:
Sl. Citation Case Name
No.
1. (2014) 5 SCC 364 CBI Vs. Narendra Lal Jain & Ors.
2. (2024) SCCOnLine SC 2696 Tarina Sen Vs. Union of India & Anr.
3. (2024) SCCOnLine Del Lalit Kishore & Ors. Vs. CBI & Anr.
5792
4. (2025) SCCOnLine SC 788 Suresh V. Singal & Ors Vs. State of Gujarat &
Ors.
5. (2025) SCCOnLine SC 1257 N.S.Gnaneshwaran Vs. Inspector of Police &
Anr.
3.7. Per contr a, the learned Special Public Prosecutor appearing on
behalf of the 1 respondent – CBI would submit that the proposition that once
st
the loan amount is subsequently settled, this Court should quash the case is
incorrect in law. Even though in some individual cases the proceedings are
quashed, the law laid down by the Hon’ble Supreme Court of India in Gian
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Singh’s case (cited supra) and in other Judgments have been followed till
date. Therefore, if the transactions are such amounting to grave fraud,
especially in financial matters, when the loan amount is as large as Rs.30
Crores in the instant case, the Court should not interfere with the matter.
3.8. In the instant case, the facts are alarming. After representing to the
bank that they are going to conduct a business relating to wind energy, on the
same day, within hours, the entire loan amount has been siphoned off to other
shell entities and ultimately transferred to the 7 accused, for the purpose of
th
repayment of loan to another bank. The said conduct has to be taken into
account by this Court. Further, the loan was not repaid, thus the account
became NPA. When a false representation is made, inducing the bank to part
away with a loan amount of Rs.30 Crores and subsequently when the accused
did not repay the same and cheated, the offence under Section 420 of IPC was
made out, and merely because subsequently the amount has been repaid will
not undo the offence and considering the nature of transactions, this is not a fit
case for interference by this Court.
3.9. In this case, on a perusal of the memorandum of understanding
entered into at the time of OTS, it can be seen that the bank has specifically
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stated that the existing criminal cases will continue and therefore, there is no
question of quashing this case on compromise. In support of his submissions,
the learned Special Public Prosecutor would rely upon the following
Judgments:
Sl. Citation Case Name
No.
1. (2013) 10 SCC 686 Central Bureau of Investigation Vs. Jagjit Singh
2. (2014) 15 SCC 29 State of Maharashtra through CBI Vs. Vikram
Anantrai Doshi & Ors.
3. (2016) 1 SCC 389 Central Bureau of Investigation Vs. Maninder
Singh
4. (2016) 1 SCC 376 State of Tamil Nadu Vs. R.Vasanthi Stanley &
Anr.
5. (2023) SCC OnLine Mad Eventus Integrated Management Pvt. Ltd. Vs.
2712 State, Inspector of Police and Another
6. Crl.O.P.No.16754 of 2024 M/s Springfield Shelters Pvt. Ltd. And Ors. Vs.
Deputy Superintendent of Police and Ors.
3.10. The learned Special Public Prosecutor would also rely upon the
Judgment in Kothari Polymers Limited and Others Vs. CBI2 to contend that
even if the case is to be quashed, the Hon’ble Supreme Court of India had
imposed appropriate costs, so as to cover the possible expenses.
3.11. M s . V . R a j e s w a r i , the learned counsel appearing on behalf of the 2nd
respondent – Bank, at the outset would submit that it is true that pursuant to
2 (2022) SCC Online SC 2078
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the OTS the entire amount was settled and that no further amount is claimed
by the Bank. However, while entering into the OTS amount, since the bank
had to forego a portion of the notional amount due, even though the Bank had
realised the book amount due and the belated payment interest, the Bank had
not expressly undertaken to withdraw the criminal complaint, and therefore,
though there is a settlement of the account with reference to the loan
transaction, there is no express clause for compromise regarding the criminal
case. The Bank thus takes a position to that extent.
3.12. Mr.N.Ramesh, the learned Special Public Prosecutor appearing on
behalf of the Enforcement Directorate would submit that the Enforcement
Directorate has also registered an ECIR under the Money Laundering Act,
2002, based on the present predicate offences and would take the same stand
as the CBI.
4. I have considered the rival submissions made on either side and
perused the material records of the case.
D.The Questions:
5. The following questions arise for consideration in the instant case:-
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(i) Whether the final report filed in C.C.No.2358 of 2024 is liable to be
quashed as no offence under Section 420 of IPC is ever made out ?
(ii) Whether the final report in C.C.No.2358 of 2024 is liable to be
quashed on account of the fact that subsequently the entire loan amount was
settled through OTS scheme with the Bank ?
E.Question No.(i):
6. On a plain reading of Section 420 of IPC and the Judgments that are
relied upon, which are cited supra on the propositions it would be clear that,
(a) the primary ingredient is that there must be a deception of a person.
(b) The person should have been fraudulently or dishonestly induced to
deliver any property belonging to him.
(c) The same should have been done with an intention to cheat that a
person, at the time of inducement itself.
6.1. In this case, the letter dated 11.03.2013 of the 1 st accused is stated
to be the application for sanction of the loan of Rs.30 Crores. It is a three-page
communication. It first details about the 1st accused – Company and its
Directors. Thereafter, it details about the business that it is engaged in,
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windmill, turbines and towers. Further, it details about the project executed by
the company with an organization, viz., M/s. Liatenat Sriram. It further states
that they have availed credit facilities from Indian Bank for the 49.50 MW
project being a overdraft facility of Rs.26.80 Crores, by offering collateral
security with a market value of Rs.44.73 Crores. Though, the project is
completed by making investments and the other approvals were also in place,
there was a problem with reference to the grid connectivity by the Tamil Nadu
Electricity Board, as otherwise, they would have earned a profit of more than
Rs.30 Crores. But the profit is restricted to only Rs.1.15 Crores in the said
project. They have also completed another 30 MW project.
6.2. It is further stated that they have now bagged two more contracts
worth about Rs.60.48 Crores from M/s Trishe Renewable Energy Solutions
Pvt. Ltd. for setting up 100.80 MW project at Moolanur in Tiruppur District.
They have already infused a sum of Rs.13.67 Crores to execute the said works
and for servicing the overall facility with Indian Overseas Bank. Thus, their
business prospects look very bright and therefore they need funds to augment
their working capital position. Stating so, they sought the present limit for
execution of the two fresh contracts, promising that all transactions will be
routed through the current account maintained with the Indian Overseas Bank
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and an immovable property security at Nallambakkam village was also
initially offered. It is essential to extract the relevant portion of the said
application which reads thus:-
“The Company had already completed 30 MW of setting
up of windmills for Shriram Lietner and Regen Power tech and
has hands on experience on the field. The profits earned on these
contracts were retained in the business and are used to service the
existing loan and a part of the profit was utilized for executing the
49.50 MW of Shriram Lietner contract. The promoters have
bagged a further two contracts worth Rs.60.48 Crores from M/s
Trishe Renewable Energy Solutions Private Limited for setting up
100.80 MW comprising of 48 nos. at Moolanoor, Tirupur
District.
The promoters have already infused Rs.13.67 Crores to
execute the works and for servicing the facility with Indian Bank.
As explained they have bagged the referred two contracts, which
shall infuse some cashflow to the system. Further the present
limit is sought for execution of the two fresh contracts. In the past
for executing the 30 MW contracts (2 nos), all the transactions
were routed through the current account maintained with Indian
Overseas Bank, which goes to speak about our efficiency of
executing the contract.
As our growth in business and prospects look very bright,
we need to go in for bank support to augment our working capital
position.
We enclose our Balance sheet as also financial
projections. We request you to sanction us a MCC limit of Rs.30
Crores to meet the mismatch in our cash flows. We shall offer
adequate security of land situated at Nallambakkam village
standing in the name of the partnership firm, where Shri
T.Elayaraja is a partner.”
6.3. Though it can be seen from the above that there was no categorical
statement as if they were going to use the funds only to the transactions with
M/s Trishe Renewable Energy Solutions Pvt. Ltd., still it points out that it is
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for their working capital purposes. But the entire amount was transferred to
their three group Concerns, within hours, who in-turn again, transferred
almost the entire amount, to 7th accused, for the purpose of repaying the loan.
From the materials, it is clear that a false representation was made to the Bank,
with reference to the purpose for which the funds will be used. Therefore,
there is a deception.
6.4. It can be contended on behalf of the Bank that only on the
representation that the 1st accused will utilise the funds for its own purposes,
the loan amount was parted. It is true that a security of almost four times of
the loan amount was given and a mortgage deed was also executed. But at the
same time, it has to be seen that after making a representation and taking away
the money, the loan amount was not repaid in time. The Bank took action
under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (“SARFAESI Act“) to auction the
secured asset, but it is stated before this Court that in spite of five attempts, the
property could not be sold, as there were no bidders. It is stated that on
account of the same, an OTS settlement was entered into considering the
commercial prudence. Even though originally time was granted, the OTS
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amount was not paid in time. Even after the second extension of time, only the
part-payment of Rs.8.34 Crores was made and the major amount remained
unpaid and once the deception was made and the amounts were parted and the
same was not paid and the security not being sold; the OTS amount has not
been realized; on the day of forwarding the complaint, the Bank was at a loss.
Therefore, the offence under Section 420 of IPC was prima facie made out.
6.5. The contention on behalf of the accused that there was no other
impediment to the sale of the secured asset, and regarding the circumstances
under which the mortgaged property was not sold, and whether the Bank had
actually reduced the upset price of the property in accordance with the rules if
there were no bidders, are to be further examined. It is also submitted that
there was a dispute regarding the portion of the property. On the face of it, the
offence under Section 420 of IPC is made out, and to contend that no offence
is made out would require an exercise of appreciating and further evaluating
the evidence that would come on record, including the defence version;
therefore, this question is answered in favour of the prosecution and against
the petitioners. It cannot be said that there are not materials at all to proceed
for the offences under Section 120-B read with 420 of IPC and Section 420
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IPC.
F.Question No.(ii)
7. In view of the subsequent clearing of the entire loan account, whether
this Court should exercise its extraordinary powers under Section 482 of
Cr.P.C., and quash the proceedings against the petitioners ?.
7.1. In this regard, both sides presented detailed arguments, and it is
essential to consider the legal position before moving to the facts of the
present case. The following are the relevant Judgments of the Hon’ble
Supreme Court of India :
Sl. Date of Cause Title and Proposition
No. Decision Citations
1. 29.04.1987 Y.Suresh Babu Vs. This is a case of offence under section 326
State of A.P. and Ors. of IPC, when the compromise the issue, the
[1987 (2)JT SC 361] Hon’ble Supreme Court of India set aside
the conviction and sentence, upon
compromise and permitted the case to be
closed. It was specifically mentioned that the
decision shall not be treated as a precedent.
Thus at best was an exercise of extraordinary
power under Article 142 of the Constitution
of India
2. 14.03.1988 Mahesh Chand and This is the case of an offence under section
ors. Vs. State of 307 the accused was a practicing lawyer, the
Rajasthan parties settled the issue again after
conviction, the same was set aside and the
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[1990 Supp (1)SCC trial was permitted and allowed to record the
681] compromise and compound the offence. The
decision in Y.Suresh Babu cited (supra) was
also referred. Thus it can be seen that this
can also be treated as exercise of power
under Article 142 of Constituion of India.
3. 09.07.1996 Central Bureau of The Hon’ble supreme court was considering
Investigation,SPE, SIU the quashing of First Information report for
(X), New Delhi Vs. the offences under section 409,
Duncan Agro 420,467,468,471 of the IPC. The allegations
Industries Ltd., inter alia where that when there has been
Calcutta transferor company and transferee company,
[(1996) 5 SCC 591] it was represented to the bank as if the
earlier charge has been completely satisfied
while no repayment was made, by making
other false representation the credit limit was
sanctioned. A stock worth about Rs. 12
Crores were also fraudulently disposed of
without payment to the bank and also same
hypothecated to the bank after considering
the various ingredient to be proved under
section 420 of Indian Penal Court, the
Hon’ble supreme court of India held that
basically it was a matter of civil dispute
since the bank has already filed suits and the
issue was compromised upon receiving
payments and considering the time lack that
the First Information report lodged in the
year 1987 and no action has been taken as
against the erring official of the bank the
High Court was right in quashing the FIR.
4. 04.05.1999 Surendra Nath The Three Judges bench of the Supreme
Mohanty and Anr. Vs. court of India, held the earlier judgment in
State of Orissa Suresh Babu itself states that it shall not be
[(1999) 5 SCC 238] treated as a precedent. Further held that the
Judgments in Ram Pujan and Ors. Vs. State
of Uttar Pradesh (1973) 2 SCC 456 and
Mahesh Chand and ors. Vs. State of
Rajasthan 1990 Supp (1)SCC 681 cited
(Supra) were not in accordance with law and
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held that the offences can be compounded if
only they are covered under table I or table II
under Section 320 of the Code of Criminal
Procedure.
5. 13.03.2003 B.S. Joshi and Others For the first the Hon’ble supreme court
Vs. State of Haryana ofIndia considered the issue in detail. It
and Another considered the parameters laid down by the
[(2003) 4 SCC 675] constitution bench in State of Haryana and
Ors. Vs. Ch. Bhajan lal and Ors. 1992 Supp
(1)SCC 335 and took note of the fact that the
extraordinary powers under section 482 of
the code of Criminal Procedure can be
exercised to secure the ends of Justice. The
court considered the earlier judgement in
State of Karnataka Vs. L,Muniswamy and
Ors. 1977 2 SCC 699 where the exercise of
power can be made,if the materials are
inadequate. Thereafter more specifically
considering the issue involved is that of
family affair and that not compounding the
offences such as 498A would be counter
productive and act against the interest of
women expressly laid down the law that the
High Court in exercise of its inherent powers
can quash the criminal proceedings or First
Information Report or Complaint and
Section 320 of the code does not limit or
affect the powers under section 482 of the
Code.
6. 20.08.2008 Nikhil Merchant Vs. The Hon’ble Supreme Court of India was
Central Bureau of considering the quashing of a charge sheet
Investigation and Ors. laid for offences under section 120B r/w
[( 2008 ) 9 SCC 677] section 420,467,468,471 and Sections 5(2),
5(1)d of Prevention of Corruption Act,1947
and under section 13 (2) and 13 (1) (d) of
Prevention of Corruption Act,1988 and after
considering the judgments in Duncan’s Agro
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and B.S. Joshi (cited supra) the Supreme
Court considered that a compromise has
been arrived between bank and the company.
The dues are settled and the bank does not
have any further claim in that background if
certain documents are forged to have been
created by the company in order to avail
credit facilities beyond the limit to which the
company was actually entitled to, the dispute
has overtone of a civil dispute with certain
criminal facets. The court held that in view
of the compromise and the terms the
criminal proceeding can be quashed.
7. 16.10.2008 Manoj Sharma Vs. The Hon’ble Supreme Court of India was
State and Others considering quashing of a FIR under Section
[(2008) 16 SCC 1] 420, 468, 471 r/w 34 and Section 120B of
Indian Penal Code, 1860. After considering
that the De facto complainant compromised
the issue, the Supreme court held that the
dispute is of private nature in such cases
pragmatic view can be taken and
proceedings be quashed.
8. 08.04.2009 Rumi Dhar Vs. State of The Hon’ble Supreme Court of India was
West Bengal and Ors. again considering the dismissal of the
[2009 (6) SCC 364] discharge application on the ground that
parties have settled the issue. It is a case
where it is alleged that the overdrawal
benefit granted and availed without
furnishing the security and the individuals
and the officials of the bank were prosecuted
Under Section 120B, 420,467, 468 and 471
of Indian Penal Code . The parties were
repaid the entrie amount and further no due
to the bankeventhough the Duncan’s Agro
and Nikhil Merchant cited (Supra)were
brought the notice of the Supreme Court of
India. The Supreme Court of India held that
it would not direct quashing of a case
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involving crime against society and thus
directed the proceedings be continued.
9. 24.09.2012 Gian Singh Vs. State of This is the case in Three Judges bench of
Punjab Supreme Court of India concerned with the
case where the petitioner is convicted under
[(2012) 10 SCC 303]
Section 420 and 120B of Indian Penal Code
and considered the issue in detail. Firstly, it
held that the line of Judgments holding the
view that when section 320 of Code of
Criminal Procedure,1973 holds only certains
offences can be compoundable then if non
compoundable offences are quashed under
section 482 the same would run counter to
section 320 and therefore the inherent
powers should not be exercised in violation
of section 320 is not a correct legal position.
It held that the exercise of power namely
Compounding and quashing under section
482 are different exercises and section 320
will not bar the exercise of power. It
expressly held that the view taken in
Simrikihia V. Dolley Mukerjee and chhabi
mukerjhee and Ors. 1990 (2) SCC 437;
Dharam paul and Ors. V. Ram Shri and Ors.
(1993) 1 SCC 435; Arun Shankar Shukla Vs.
State of Uttar Pradesh and Ors. 1999 6 SCC
146 ; Ishwar Singh V. State of Madhya
Pradesh (2008)15 SCC 667 does not lay
down the correct position of law. Secondly,
it held that the Judgment in B.S. Joshi and
Others V. State of Haryana and Another
[(2003) 4 SCC 675;Nikhil Merchant v.
Central Bureau of Investigation and Ors.
[( 2008 ) 9 SCC 677]; Manoj Sharma Vs.
State and Others (2008) 16 SCC 1 , Shiji
alias PAPPU and Others V. Radhika and
Ors. (2011)10 SCC 705, Kulwinder Singh
and Ors. Vs. State of Punjab and Anr. (2007)
4 CTC 769, Abasaheb Yadav Honmane Vs.
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State of Maharashtra 2008 2 Mah LJ 856
and Madan Mohan Abbot Vs. State of
Punjab (2008)4 SCC 582 holding that the
powers under section 482 can be exercised
for quashing the even the non-compoundable
offences under certain circumstances and the
correct view.
If then consider the dictum in Nikhil
Merchant, Manoj Sharma Etc., and the
contra opinion expressed in Rumi Dhar V.
State of West Bengal and Ors. 2009(6) SCC
364;
Ashok Sadurangani Vs. Union of India 2012
(11) SCC 321 and laid down the law in
paragraph 58 and 61 of the Judgment. Thus
essentially it held that while no category can
be prescribed heinous and serious offences
of mental depravity, murder, rape, dacoity
cannot be quashed. Even the victim or the
victim’s family settled the issues. Similarly
compromise between victim and the
offender under Special law of Prevention of
corruption Act or the offences committed by
the public servant cannot be quashed. The
criminal cases having overwhelmingly and
predominantly civil flavor particularly of
they arise from commercial financial
mercantile civil partnership are like
transactions and the offences arising out of
matrimony relating to dowry are family
disputes which are all basically private an
personal in nature and if the parties have
resolved the dispute considering that because
of the possibility firstly the conviction is
remote and bleak and the continuation of the
case would put the accused in great
oppression and prejudice to the accused
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despite full and complete settlement and
compromise with the victim. Thus,
essentially to prevent abuse of process
despite settlement and to secure the ends of
justice if it is appropriate the High Court
within its jurisdiction to quash the criminal
proceedings.
10. 01.10.2013 Central Bureau of The Hon’ble Supreme Court of India was
Investigation Vs. Jagjit considering the prayer to quash the final
Singh report for alleged offences under Section 420
[(2013) 10 SCC 686] and 471 of the Indian Penal Code with
allegations of obtaining loan with forged
documents and further investigation
revealing involvement of officials under
Section 13(2) r/w 13(1)(d) of Prevention of
Corruption Act,1988. The Hon’ble SC held
that the offences when committed in relation
with banking activities including under
Section 420 and 471 have harmful effect on
the public and threaten the wellbeing of the
society. Thus would be offences involving
moral turpitude committed by the public
servants therefore cannot be quashed.
11. 28.02.2014 CBI, ACB, Mumbai Vs. The Three Judges bench of the Hon’ble
Narendra Lal Jain and Supreme Court of India was concerned with
Ors. the case where 2 charge sheet were filed
[2014 (5) SCC 364] under Section 120B, 420 of Indian Penal
Code and Section 5(2) and 5 (1) d of
Prevention of Corruption Act, 1947 whereby
it is alleged that inflated figures of the credit
worthiness of the companies were
represented and higher amounts of loans
were obtained from the bank. After noting
down the principles laid down in Gian Singh
and considering that the civil liability of the
accused to pay the amount to the bank to
settle amicably and bank having no
subsisting grievance held that the
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proceedings would likely to become
oppressive and partake the character of same
prosecution and therefore it would be
appropriate to invoke the jurisdiction under
Section 482 of Code of Criminal Procedure.
12. 19.09.2014 State of Maharashtra Considering the case of obtaining of credit
Vs. Vikram Anantrai facilities where the accused persons
Doshi, concealed the facts relating to their dues
[(2014) 15 SCC 29] outstanding and mislead the bank by
furnishing wrong statements, the Hon’ble
Supreme Court of India concluded that such
financial frauds cannot be termed as a
personal wrong. The society is the ultimate
victim as the offences are grave creating a
dent in the economic spine of the nation an
held that such offences cannot be quashed .
The view taken in Gopakumar B. Nair V.
CBI and Ors. (2014) 5 SCC 880 was
followed. The judgment in Narinder singh
and Ors. V. state of Punjab and Ors. (2014)
6 SCC 466 where the Hon’ble Supreme
court of India delineated the
procedure/factors to be considered and
followed by the High Court pursuant to Gian
Singh’s case was also reiterated.
13. 28.08.2015 Central Bureau of In a case of offences under Section
Investigation Vs. 420,467,468,471 r/w Section 120B of Indian
Manider singh Penal Code the Supreme Court considering
[(2016) 1 SCC 389] the fact that the forged documents of FBP
Etc., were submitted to availed credit
facilities held that financial forgery being
well planned with an eye on personal profit
regardless of not considering the society
cannot be quashed on compromise. The view
taken in Vikram Anantrai’s case was
reiterated.
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14. 15.09.2015 State of Tamil Nadu In this case the Hon’ble Supreme Court of
Vs. Vasanthi Stanley India was concerned with the fact situation
and Ors. of quashing the pending criminal
[(2016) 1 SCC 376] proceedings. Where the allegations of
borrowing by submitting forged documents
and were prosecuted under Section 120B,
406, 420, 467, 468 and 471 of Indian Penal
Code,1860 and the husband of the accused
having died and the entire issues of the bank
having settled the court reiterated the law
laid down on Vikram Anantrai Doshi and set
aside the order of the High Court quashing
the proceedings.
15. 16.02.2022 Kothari Polymers ltd. In this case the Hon’ble Supreme Court of
And Ors. Vs. India was concerned with quashing of a First
SIU(X)/SPE/CBI [2022 Information Report for alleged offence under
SCC online SC 2078] Section 120B, 420 of IPC and 13(2) r/w
13(1)(d) of Prevention of Corruption
Act,1988.The allegation is that by making
two sets of title documents in respect of
same property without disclosing to the other
bank, two banks wereapproachedand loans
were obtained by playing fraud. The High
Court dismissed the quash application on the
ground that the offence has a serious impact
on the society. The Supreme Court
considered the fact that no permission was
granted to prosecute the bank officers.
Considering the fact that the only family
members alone were not prosecuted and that
18 years have elapsed, the Supreme court of
India quash the prosecution on terms to
make would the wastage of time of the
prosecution agency by imposing a cost of
Rs.25Lakhs on the appellant. The Hon’ble
Supreme Court of India also held that the
case is having predominantly civil character
the courts may be liberal in accepting the
settlement and quashing the criminal
proceedings.
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16. 03.10.2024 Tarina Sen Vs. Union The Hon’ble Supreme Court of India was
of India and Anr. concerned about the quashing of the pending
[2024 SCC Online SC criminal proceeding before the special Judge
Bhubaneswarfor the offences under Section
2696]
120B, 420, 468,471 of Indian Penal Code
and Section 13(2) r/w 13(1)(d) of Prevention
of Corruption of Act,1988. The allegations
were two car loans were advanced by the
Manager of the bank for a sum of
Rs.8,00,000/- and Rs.11,83,600/- without
any security whatsoever only by getting post-
dated cheques which bounced. Subsequently,
the Court considered that the matter has been
compromised between the borrowers and the
bank. The amount settled under the One
Time Settlement and the Loan account has
been closed. Relying upon a similar
judgment Special Leave Petition Crimianl
No. 4353 of 2018 the Supreme Court held
that the criminal proceedings would not be
justifiable those further held that possibility
of a conviction is remote and bleak and
continuation of the proceeding would be
oppressive.
17. 03.10.2024 K.Bharthi Devi V. State In this matter the Hon’ble Supreme Court of
of Telangana India was considering a prayer to quash the
[2024 INSC 750] final report for the offences under section
120B, 420,409,467,468 and 471 of Indian
Penal Code and Section 13(2) r/w13(1)(d) of
Prevention of Corruption Act,1988. The
facts are that various credit facilities were
sanctioned by the bank. Subsequently the
account was classified as Non-Performing
Assets and an application to recover the
amount was filed before the Debt Recovery
Tribunal (DRT), Hyderabad. Pending the
same it was found that the original
documents which was deposited for creation
of Equitable Mortgage were fake,forged and
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fabricated and hence the criminal case
pending the DRT proceedings the borrower
settled the amount by One Time Settlement.
The petition to quash was dismissed by the
High Court. The Hon’ble Supreme Court of
India noting the earlier dicta and considering
the law laid down in Gian Singh the Hon’ble
Supreme Court consider both the line of
judgments where the allegations either
constitute predominantly civil nature with
criminal aspects and other cases where
serious criminal offences are committed.
The court found that the possibility of
conviction is remote and bleak and the
continuation of Criminal case would put the
Accused in great oppression and prejudice
by not quashing the criminal case.
The court also consider the earlier ruling in
CBI Vs. Saadhuram Singhla 2007 (5) SCC
350 and came to the conclusion that
possibility of conviction is remote and bleak
and quash the proceedings by setting aside
the judgment of the High Court.
18. 16.04.2025 Suresh C.Singhal and The Hon’ble Supreme Court of India was
others Vs. State of concerned with quashing of the proceedings
Gujarat and Ors. for Sections 420, 467, 468 and 471 read with
[2025 SCC Online SC 120B of the Indian Penal Code, 1860 and it
considered that the offences under section
788]
13(2) read with Section 13(1)(d) of the
Prevention of Corruption Act,1988,
subsequently findings on the said offences
were dropped. When the case was pending
the appellant settled with bank and the bank
issued No DueCertificate(NOC). The
Supreme Court of India considered the fact
that some of the offences being
compoundable the same footing of the case
Bharathi Devi held that the disputed
involved is primarily civil nature. The
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aggrieved party if any would be the bank
which has got no grievance. And the
settlement is made in the early stages the
High Court can exercise power under
Section 482 of Code of Criminal
Procedure,1973 by showing benovolence
and the assessment of the circumstances and
materials as mentioned and accordingly held
that the High Court should have exercised
the powers and quashed the proceedings.
19. 28.05.2025 N.S.Gnaneshwaran In this case the Hon’ble Supreme Court of
Etc. Vs. Inspector of India was concerned with quashing of
Police and Anr. proceedings for alleged offences under
[2025 SCC Online SC Section 120B r/w 420, 467, 468, 471 of IPC
and Section 13 (2) r/w13 (1) d of Prevention
1257]
of Corruption Act,1988. The allegationsin
this case is that the accused after obtaining
funds in respect of concern, through multiple
transactions involving the network of
fictitious identities diverted the funds
pendency of the trial by way of One Time
Settlement the issue was settled between the
bank and petitioner. The application for
quash was rejected on the ground that the
trial has already begin. The Supreme Court
considered that proceedings culminated into
a comprehensive One Time Settlement by
which the bank has received the outstanding
amount and no residual claim surviving and
the bank not raising any objections to the
closure of the matter held that no meaningful
purpose would be served particularly when
the dispute between the parties have been
resolved and quashed the proceedings.
7.2. Thus, from the detailed analysis of numerous decisions, it is evident
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that the law regarding the quashing of criminal cases involving non-
compoundable offences, where parties allege settlement, has been clearly laid
down by the Hon’ble Supreme Court of India in Gian Singh‘s case (cited
supra). It is essential to refer to paragraph Nos. 58 and 61 of that judgment:
“58. Where the High Court quashes a criminal proceeding
having regard to the fact that the dispute between the offender
and the victim has been settled although the offences are not
compoundable, it does so as in its opinion, continuation of
criminal proceedings will be an exercise in futility and justice in
the case demands that the dispute between the parties is put to an
end and peace is restored; securing the ends of justice being the
ultimate guiding factor. No doubt, crimes are acts which have
harmful effect on the public and consist in wrongdoing that
seriously endangers and threatens the well-being of the society
and it is not safe to leave the crime-doer only because he and the
victim have settled the dispute amicably or that the victim has
been paid compensation, yet certain crimes have been made
compoundable in law, with or without the permission of the
court. In respect of serious offences like murder, rape, dacoity,
etc., or other offences of mental depravity under IPC or offences
of moral turpitude under special statutes, like the Prevention of
Corruption Act or the offences committed by public servants
while working in that capacity, the settlement between the
offender and the victim can have no legal sanction at all.
However, certain offences which overwhelmingly and
predominantly bear civil flavour having arisen out of civil,
mercantile, commercial, financial, partnership or such like
transactions or the offences arising out of matrimony, particularly
relating to dowry, etc. or the family dispute, where the wrong is
basically to the victim and the offender and the victim have
settled all disputes between them amicably, irrespective of the
fact that such offences have not been made compoundable, the
High Court may within the framework of its inherent power,
quash the criminal proceeding or criminal complaint or FIR if it
is satisfied that on the face of such settlement, there is hardly any
likelihood of the offender being convicted and by not quashing
the criminal proceedings, justice shall be casualty and ends of
justice shall be defeated. The above list is illustrative and not
exhaustive. Each case will depend on its own facts and no hard-
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……
……
61. The position that emerges from the above discussion
can be summarised thus : the power of the High Court in
quashing a criminal proceeding or FIR or complaint in exercise
of its inherent jurisdiction is distinct and different from the power
given to a criminal court for compounding the offences under
Section 320 of the Code. Inherent power is of wide plenitude
with no statutory limitation but it has to be exercised in accord
with the guideline engrafted in such power viz. : (i) to secure the
ends of justice, or (ii) to prevent abuse of the process of any
court. In what cases power to quash the criminal proceeding or
complaint or FIR may be exercised where the offender and the
victim have settled their dispute would depend on the facts and
circumstances of each case and no category can be prescribed.
However, before exercise of such power, the High Court must
have due regard to the nature and gravity of the crime. Heinous
and serious offences of mental depravity or offences like murder,
rape, dacoity, etc. cannot be fittingly quashed even though the
victim or victim’s family and the offender have settled the
dispute. Such offences are not private in nature and have a
serious impact on society. Similarly, any compromise between
the victim and the offender in relation to the offences under
special statutes like the Prevention of Corruption Act or the
offences committed by public servants while working in that
capacity, etc.; cannot provide for any basis for quashing criminal
proceedings involving such offences. But the criminal cases
having overwhelmingly and predominatingly civil flavour stand
on a different footing for the purposes of quashing, particularly
the offences arising from commercial, financial, mercantile, civil,
partnership or such like transactions or the offences arising out of
matrimony relating to dowry, etc. or the family disputes where
the wrong is basically private or personal in nature and the parties
have resolved their entire dispute. In this category of cases, the
High Court may quash the criminal proceedings if in its view,
because of the compromise between the offender and the victim,
the possibility of conviction is remote and bleak and continuation
of the criminal case would put the accused to great oppression
and prejudice and extreme injustice would be caused to him by
not quashing the criminal case despite full and complete
settlement and compromise with the victim. In other words, the
High Court must consider whether it would be unfair or contrary
to the interest of justice to continue with the criminal proceeding
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or continuation of the criminal proceeding would tantamount to
abuse of process of law despite settlement and compromise
between the victim and the wrongdoer and whether to secure the
ends of justice, it is appropriate that the criminal case is put to an
end and if the answer to the above question(s) is in the
affirmative, the High Court shall be well within its jurisdiction to
quash the criminal proceeding.”
7.3. There is no quarrel over the proposition that the High Court will be
well within its jurisdiction to quash the proceedings on compromise, if the
offence is predominantly civil in nature, private in nature, completely settled
between the parties with no claim subsisting and the continuance of the
proceedings is a bleak prospect for the prosecution and would be oppressive
on the accused to be continued, even after settlement. The power is to be
exercised with a great amount of prudence and responsibility, to secure the
ends of justice.
7.4. However, the question regarding the instances of various frauds
committed by parties concerning banking transactions, obtaining loans, and
defaulting on and subsequently settling them through methods like OTS, with
the bank, has been addressed by the Hon’ble Supreme Court of India in the
cases mentioned above. In some cases, cases were quashed, while in others,
they were not. But a proper and combined reading of all the judgments cited
above related to this subject shows that the common thread for the conclusion
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reached. It is not the classification or categorisation of the particular offence,
such as 468, 471 of IPC, or offences under Section 120 B read with 420 of
IPC which is paramount. Instead, it is the nature of the allegations that the
Court must examine. By considering the facts and circumstances of each case,
one has to determine whether the case involves a purely commercial or private
transaction between the bank and the borrower, or if it has broader
implications affecting society or the financial system as a whole.
7.5. In these cases, the nature of facts and circumstances must be
examined. First, the Court must be satisfied that the case is primarily
commercial or civil in nature and that the criminal aspects are not of utmost
depravity and seriousness, which could have a likely impact on society as a
whole or the country’s financial system. The second step involves assessing
whether the case has been fully settled and whether the Bank has any
remaining claims. If the case has reached a complete and final settlement and
the bank has no pending claims, then the Court moves to the third step to
evaluate whether continuing the prosecution is prudent and likely to succeed
in prosecuting the accused. Additionally, the Court must consider whether
continuing the proceedings would be unfair, oppressive, or constitute an abuse
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of the legal process, considering the nature of the settlement or compromise,
the circumstances of the alleged default, efforts made by the accused, the time
elapsed, and the stage at which quashing is requested. In the interest of justice,
the Court may, in fit cases, decide to quash the proceedings. In appropriate
cases, costs can also be imposed.
G.The consideration and findings:
8. Now, addressing the facts of this case, the following are relevant for
consideration:
(i) The loan amount was Rs. 30 Crores, which was quite a high amount
in 2013 when the borrowing took place.
(ii) Before the default in payment, the primary wrongful act of the
accused was that when they needed funds to immediately repay a loan taken
by the seventh accused company from Punjab National Bank, they dishonestly
obtained a loan in the name of the first accused company, falsely claiming it
was for working capital. They used the money to repay the loan on the same
day, routing it through three entities controlled by them, which had no actual
business.
(iii) The loan was granted without adhering to certain norms. After
disbursal, no inspection was carried out to verify the purpose for which the
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Crl.O.P.Nos.30938 and 30939 of 2024funds were used, even though the bank officials transferred the funds in three
tranches within hours of disbursement, leading to the loan being repaid to
another bank. Following a default, an original application was filed for
recovery of the amount due, and SARFAESI action was initiated. Although
the secured asset is a property in a prime location in Chennai, it is stated that
there were no bidders five times due to a dispute over a minor part of the
property. It is unclear if the upset price was lowered for subsequent auctions.
When a one-time settlement was offered despite the default, the bank did not
treat the offer as withdrawn, unlike in other cases, but granted two extensions
after payment of revised amounts. Despite the valuable security, a One-Time
Settlement (OTS) was approved due to an expected delay of about a year in
recovering the amount through auction. From the collected materials, it
appears that Regional Office officials (LW-2 & 3) blame the Branch Managers
for norm violations during the loan approval, while the Branch Official (LW-
21) claims that the Regional Office handled the entire process because of the
high value of the application.
(iv) There is no evidence that the petitioners conspired with or paid any
quid pro quo to any of the bank’s officials, and the bank did not file any
complaint against its officers. Nor did the CBI uncover any evidence against
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public servants; only the companies and their directors are prosecuted for
offences under Section 120(B) read with 420 and 420 of IPC, with the only
non-compoundable offence being 120(B)of IPC.
(v) The matter was amicably resolved between the parties through the
memorandum of settlement, and the relevant portions read as follows:
“9. A n y Suit/ C l a i m/ C o m p l a i n t filed by the
B o r r o w e r s/ G u a r a n t o r s again st the Ba n k sho ul d be withd r a w n
befo r e rele a s e of the secu r iti e s.
10. This co m p r o m i s e settle m e n t will not have any beari n g
what s o e v e r on the ong o i n g crim i n a l case s/pr o c e e d i n g s , if any
pen di n g the court s again st the B o r r o w e r/ G u a r a n t o r s .
11. Br a n c h sho ul d ensu r e that all the secu r itie s are insur e d
for full value till the full realis ati o n of the O T S am o u n t.
12. This settle m e n t will not affect our Ba n k ’ s right and
oblig a ti o n to shar e any infor m a t i o n in the cou r s e of any crim i n a l
pro c e e d i n g s (if any), or to provi d e con s e n t for crim i n a l
pro c e e d i n g s in case so dire ct e d by any statut o r y auth o r it y. ”
Thus, it can be observed that a cumulative reading of the above, along with
other clauses in the memorandum of settlement, indicates there will be no
further complaints; however, if any ongoing prosecution exists, it will not be
withdrawn. Clearly, it can be seen that the bankers, although able to settle the
matter amicably, cannot withdraw the complaint or promise to do so, since the
offences are non-compoundable; hence, such clauses are included. But at that
time, no prosecution was pending. Time was extended, and the amount was
revised on the same terms. However, before the final amount was paid, the
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Bank filed the complaint in view of the default in payment within the time
extended.
(vi) Before this Court, the bank is not outrightly admitting that the issue
has been compromised with reference to the criminal case. It states that it had
to forgo a portion of its notional outstanding when it settled the issue with the
petitioners. It is observed that the original borrowal as on 28/03/2013 was 30
crores. When the account became NPA on 30/06/2016, the outstanding,
including interest and penal interest, was Rs. 27,12,79,620/-. On 27/12/2018,
the DRT-II passed a decree for Rs . 37,96,49,463/-. The original OTS was
sanctioned for Rs. 31.50 crores. Since it was not paid in time, the OTS was
accepted again with delayed period interest. It is stated that the Book
outstanding as on 31/12/2020 is Rs. 24,98,39,153/-. Against the Notional
Dues up to Rs. 31/03/2021, amounting to Rs. 38,88,89,946/-, the OTS was
accepted at Rs. 33,41,58,904/-. After this offer, Rs. 8.34 crores was paid in
time, but the remaining balance was not paid, leading to the lodging of this
First Information report. The balance was paid on 11/05/2022, including
further delayed interest of Rs. 37 Lakhs, which the bank accepted, and a NOC
was issued on 23/02/2023. Subsequently, on 22/08/2024, the instant final
report was filed.
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(vii) The bank agrees that no additional amount is due and payable on
behalf of the petitioners/accused and NOC has already been issued.
(viii) In the absence of any other material, the complaint itself was
triggered only due to partial payment and non-payment of the balance amount
accepted during one-time settlement, and as such, it would be a challenge for
the prosecution to prove the intention to cause loss to the bank, especially at
the inception of the transaction.
8.1. Thus, after weighing all the facts, the balance would tilt in favour
of accepting the petitioners’ prayer by quashing the case based on an amicable
settlement of the dues to the bank. The enforcement directorate also did not
record any other allegations, and the learned counsel adopted only the
objections raised by the prosecution. Since the entire loan amount was used to
repay the loan of the group company to another bank on the same day, and it is
clear that bank officials were aware of this from the start, with another bank
realising the amount due, this tilts the case more towards a commercial
consideration and does not demonstrate a serious offence against society.
8.2. At the same time, considering the amount involved and the time
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taken for the petitioners to settle the amount, as held by the Hon’ble Supreme
Court of India i n Kothari Polymers‘ case (cited supra), I am of the view that a
sum of Rs.30 Lakhs be imposed as costs on the petitioners, of which
Rs.15 Lakhs be paid to the Central Bureau of Investigation towards
investigation and prosecution costs, and Rs.15 Lakhs be paid towards the costs
of the Court. These costs shall be paid to the Tamil Nadu Mediation and
Conciliation Centre, Chennai, which shall utilise the funds for purchasing
chairs, tables, computers, and other infrastructural materials for the District
Centres and Taluk Sub-Centres.
H. T h e Result:
9. In view, therefore, these Criminal Original Petitions are ordered on
the following terms:
(a)The petitioners shall jointly pay the costs of Rs. 30 Lakhs, of which
a sum of Rs.15 Lakhs shall be paid to the 1st respondent and another sum of
Rs.15 Lakhs shall be paid to the Tamilnadu Mediation and Conciliation
Centre, High Court of Madras, Chennai – 104, within eight weeks of receiving
the web copy of the order;
(b) Upon payment of the above sum and production of the receipts
before the Trial Court, the final report filed in C.C. No. 2358 of 2024, on the
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Crl.O.P.Nos.30938 and 30939 of 2024file of the Additional Chief Metropolitan Magistrate, Egmore, Chennai, shall
stand quashed;
(c) Failure to pay the above sum, these Crl.O.P. Nos.30938 and 30939
of 2024 shall stand dismissed.
(d)Connected miscellaneous petitions are closed.
Jer 07.07.2025
Neutral Citation : Yes/No
To
1.The Additional Chief Metropolitan Magistrate, Egmore, Chennai.
2.The Inspector of Police, CBI, ACB, Chennai.
3.The Deputy Director, Directorate of Enforcement, Chennai Zonal
Officer – 1, No.2, 5th and 6th Floor, BSNL Administrative Building,
Kushkumar Road, Nungambakkam, Chennai – 600 034.
4.The Public Prosecutor
High Court of Madras.
D.BHARATHA CHAKRAVARTHY. J,
Jer
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Crl.O.P.Nos.30938 and 30939 of 2024
07.07.2025
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