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Quashing of criminal case sec.420/120 B- Bank is the complainant – Accused who is not a public servant refund the civil liability to the Bank – Bank has no grievance against the Accused – 420 is compoundable where as sec.120 B not and To the latter offence the ratio laid down in B.S. Joshi (supra) and Nikhil Merchant (supra) would apply if the facts of the given case would so justify. The observation in Gian Singh (supra) (para 61) will not be attracted in the present case in view of the offences alleged i.e. under Sections 420/120B IPC.- CBI, ACB, MUMBAI . … APPELLANT (S) VERSUS NARENDRA LAL JAIN & ORS. … RESPONDENT (S) = 2014(Feb.Part) judis.nic.in/supremecourt/filename=41278

Quashing of criminal case sec.420/120 B- Bank is the complainant – Accused who is not a public servant refund the civil liability to the Bank – Bank has no grievance against the Accused – 420 is compoundable where as sec.120 B not and To the latter offence the ratio laid down in B.S.  Joshi  (supra) and Nikhil Merchant (supra) would apply if  the  facts  of  the  given  case would so justify.  The observation in Gian Singh (supra) (para 61) will  not be attracted in the present case in view of the offences alleged i.e.  under Sections 420/120B IPC.=

 

Central  Bureau  of  Investigation  (CBI)  ACB,  Mumbai

seeks to challenge an order dated 28.10.2005 passed by  the  High  Court  of

Bombay quashing the criminal proceedings against  the  respondents  Narendra

Lal Jain, Jayantilal L. Shah and  Ramanlal  Lalchand  Jain.   The  aforesaid

respondents had moved the High Court under  Section  482  Code  of  Criminal

Procedure, 1973 (for short “Cr.P.C.”) challenging the orders passed  by  the

learned Trial Court refusing to discharge  them  and  also  questioning  the

continuance of the criminal proceedings registered  against  them. =

 

 

 In the present case, as already  seen,  the  offence  with  which  the

accused-respondents had been charged are  under  Section  120-B/420  of  the

Indian Penal Code.  The civil  liability  of  the  respondents  to  pay  the

amount to the bank has already been settled  amicably.  

The  terms  of  such

settlement have been extracted above.  No subsisting grievance of  the  bank

in this regard has been brought to the  notice  of  the  Court.   

  Learned counsel has  further  pointed  out  that  

the  charges  framed

against the accused-respondents are under Section 120-B/420  of  the  Indian

Penal Code and the respondents not being  public  servants,  no  substantive

offence under the PC Act can be alleged against them. The relevance  of  the

views expressed in para 61 of the judgment  of  this  Court  in  Gian  Singh

(supra), noted above, to the present  case  is  seriously  disputed  by  the

learned counsel in view of the offences  alleged  against  the  respondents.

Learned counsel has also submitted that by the very same impugned  order  of

the High Court the criminal  proceeding  against  one  Nikhil  Merchant  was

declined to be quashed on the ground that offences under  Sections  468  and

471 of the IPC had been alleged against the said accused.  Aggrieved by  the

order of the High Court the accused had moved this Court under  Article  136

of the Constitution.  

In  the  decision  reported  in  Nikhil  Merchant  vs.

Central Bureau of Investigation and Another[4]  this  Court  understood  the

charges/allegations against the aforesaid Nikhil Merchant in the same  terms

as in the case of the accused-respondents, as already  highlighted.   

Taking

into consideration the ratio  laid  down  in  B.S.  Joshi  (supra)  and  the

compromise between the bank and the accused Nikhil  Merchant  (on  the  same

terms as in the present case) the proceeding against the said  accused  i.e.

Nikhil Merchant was quashed by the Court taking the view that the power  and

the Section 482  Cr.P.C.  and  of  this  Court  under  Article  142  of  the

Constitution cannot be  circumscribed  by  the  provisions  of  Section  320

Cr.P.C.   It  is  further  submitted  by  the  learned  counsel   that   the

correctness of the view in B.S. Joshi (supra) and  Nikhil  Merchant  (supra)

were referred to the three Judges Bench in Gian Singh (supra).   As  already

noted, the opinion expressed in Gian Singh (supra) is that the power of  the

High Court to quash a criminal  proceeding  under  Section  482  Cr.P.C.  is

distinct and different from the power vested in a criminal court by  Section

320 Cr.P.C. to compound an offence.  The conclusion in Gian  Singh  (supra),

therefore, was that the decisions rendered in B.S. Joshi (supra) and  Nikhil

Merchant (supra) are correct.

While  the

offence under Section 420 IPC is compoundable the offence under Section 120-

B is not.  

To the latter offence the ratio laid down in B.S.  Joshi  (supra)

and Nikhil Merchant (supra) would apply if  the  facts  of  the  given  case

would so justify.  The observation in Gian Singh (supra) (para 61) will  not

be attracted in the present case in view of the offences alleged i.e.  under

Sections 420/120B IPC.

11.   In the present case, having regard to the fact that the  liability  to

make good the monetary  loss suffered by the bank had been mutually  settled

between the parties and the accused  had  accepted  the  liability  in  this

regard, the High Court had thought it fit to invoke its power under  Section

482 Cr.P.C.  We do not see how such exercise of  power  can  be  faulted  or

held to be erroneous.  Section 482 of the Code inheres  in  the  High  Court

the power to make such order as may be considered necessary to, inter  alia,

prevent the abuse of the process of law or to serve  the  ends  of  justice.

While it will be wholly unnecessary  to  revert  or  refer  to  the  settled

position in law with regard to the contours of  the  power  available  under

Section 482 Cr.P.C. it must be remembered that  continuance  of  a  criminal

proceeding  which  is  likely  to  become  oppressive  or  may  partake  the

character of  a  lame  prosecution  would  be  good  ground  to  invoke  the

extraordinary power under Section 482 Cr.P.C.

12.   We, therefore, decline to interfere  with  the  impugned  order  dated

28.10.2005 passed by the High Court and dismiss this appeal.   We,  however,

make it clear that the proceedings in  Special  Case  No.  15/95  and  20/95

stands interfered with by the present order  only  in  respect  of  accused-

respondents Narendra Lal Jain and Ramanlal Lalchand Jain.

2014(Feb.Part) judis.nic.in/supremecourt/filename=41278

P SATHASIVAM, RANJAN GOGOI, N.V. RAMANA

REPORTABLE

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.517 OF 2014
(Arising out of Special Leave Petition (Crl) No. 6138 OF 2006)
CBI, ACB, MUMBAI . … APPELLANT (S)

VERSUS

NARENDRA LAL JAIN & ORS. … RESPONDENT (S)

 
J U D G M E N T
RANJAN GOGOI, J.

1. Leave granted.

2. The appellant, Central Bureau of Investigation (CBI) ACB, Mumbai
seeks to challenge an order dated 28.10.2005 passed by the High Court of
Bombay quashing the criminal proceedings against the respondents Narendra
Lal Jain, Jayantilal L. Shah and Ramanlal Lalchand Jain. The aforesaid
respondents had moved the High Court under Section 482 Code of Criminal
Procedure, 1973 (for short “Cr.P.C.”) challenging the orders passed by the
learned Trial Court refusing to discharge them and also questioning the
continuance of the criminal proceedings registered against them. Of the
three accused, Jayantilal L. Shah, the court is informed, has died during
the pendency of the present appeal truncating the scope thereof to an
adjudication of the correctness of the decision of the High Court in so far
as accused Narendra Lal Jain and Ramanlal Lalchand Jain are concerned.

3. On the basis of two FIRs dated 22.03.1993, R.C. No. 21(A) of 1993 and
R.C. No.22 (A) of 1993 were registered against the accused-respondents and
several officers of the Bank of Maharashtra. The offences alleged were
duly investigated and separate chargesheets in the two cases were filed on
the basis whereof Special Case No. 15 of 1995 and Special Case No. 20 of
1995 were registered in the Court of the Special Judge, Mumbai. In the
chargesheet filed, offences under Sections 120-B/420 IPC and Sections 5(2)
read with Section 5(1)(d) of the Prevention of Corruption Act, 1947
corresponding to Sections 13(2) read with Section 13(1)(d) of the
Prevention of Corruption Act, 1988 (for short “PC Act”) were alleged
against the accused persons. In so far as the present accused-respondents
are concerned the gravamen of the charge is that they had conspired with
the bank officials and had projected inflated figures of the
creditworthiness of the companies represented by them and in this manner
had secured more advances/loans from the bank than they were entitled to.

4. While the criminal cases were being investigated the bank had
instituted suits for recovery of the amounts claimed to be due from the
respondents. The said suits were disposed of in terms of consent decrees
dated 23.04.2001. Illustratively, the relevant clause of the agreement on
the basis of which the consent decrees were passed reads as follows:

“10. Agreed and declared that dispute between the parties hereto were
purely and simply of civil nature and on payment mentioned as
aforesaid made by the Respondents the Appellants have no grievance of
whatsoever nature including of the CBI Complaint against the
Respondents.”

 

5. Applications for discharge were filed by the accused-respondents
which were rejected by the learned Trial Court by order dated 04.09.2011.
The learned Trial Court, thereafter, proceeded to frame charges against the
accused. In so far as the present accused-respondents are concerned
charges were framed under Sections 120-B/420 of the Indian Penal Code
whereas against the bank officials, charges were framed under the different
provisions of the Prevention of Corruption Act, 1988 (PC Act). The
challenge of the respondents to the order of the learned Trial Court
refusing discharge and the continuation of the criminal proceedings as a
whole having been upheld by the High Court and the proceedings in question
having been set aside and quashed in respect of the respondent, the CBI has
filed the present appeal challenging the common order of the High Court
dated 28.10.2005.

6. We have heard Mr. P.P. Malhotra, learned Additional Solicitor General
appearing on behalf of the appellant and Mr. Sushil Karanjkar, learned
counsel appearing on behalf of Respondent Nos. 1 and 4.

7. Shri Malhotra, learned Additional Solicitor General, has taken us
through the order passed by the High Court. He has submitted that the High
Court had quashed the criminal proceeding registered against the accused-
respondents only on the ground that the civil liability of the respondents
had been settled by the consent terms recorded in the decree passed in the
suits. Shri Malhotra has submitted that when a criminal offence is
plainly disclosed, settlement of the civil liability, though arising from
the same facts, cannot be a sufficient justification for the premature
termination of the criminal case. Shri Malhotra has also submitted that
the offence under Section 120-B alleged against the accused-respondents is
not compoundable under Section 320 Cr.P.C.; so also the offences under the
PC Act. Relying on the decision of a three Judges Bench of this Court in
Gian Singh vs. State of Punjab and Another[1], Shri Malhotra has submitted
that though it has been held that the power of the High Court under Section
482 Cr.P.C. is distinct and different from the power vested in a criminal
Court for compounding of offence under Section 320 of the Cr.P.C., it was
made clear that the High Court must have due regard to the nature and
gravity of the offences alleged before proceeding to exercise the power
under Section 482 Cr.P.C. Specifically drawing the attention of the Court
to para 61 of the report in Gian Singh (supra) Shri Malhotra has submitted
that “any compromise between the victim and the offender in relation to the
offences under special statutes like the Prevention of Corruption Act….
cannot provide for any basis for quashing criminal proceeding involving
such offences”. Shri Malhotra had contended that having regard to the
gravity of the offences alleged, which offences are prima facie made out,
in as much as charges have been framed for the trial of the accused-
respondents, the High Court was not justified in quashing the criminal
proceedings against the accused-respondents.
8. Per contra, the learned counsel for the respondents (accused) have
submitted that the High Court, while quashing the criminal proceedings
against the respondents (accused), had correctly relied on the judgments of
this Court in Central Bureau of Investigation, SPE, SIU(X), New Delhi vs.
Duncans Agro Industries Ltd., Calcutta[2] and B.S.Joshi and Others vs.
State of Haryana and Another[3]. Learned counsel has submitted that though
simultaneous criminal and civil action on same set of facts would be
maintainable, in Duncans Agro Industries Ltd. (supra) it has been held that
the disposal of the civil suit for recovery, on compromise upon receipt of
payments by the claimants, would amount to compounding of offence of
cheating. No error is, therefore, disclosed in the order of the High Court
insofar as the offence under Section 420 IPC is concerned. As for the
offence under Section 120-B it is submitted that this Court in B.S. Joshi
(supra) has held that the power under Section 482 Cr.P.C. to quash a
criminal proceeding is not limited by the provisions of Section 320 Cr.P.C.
and even if an offence is not compoundable under Section 320 Cr.P.C., the
same would not act as a bar for the exercise of power under Section 482
Cr.P.C. As the dispute between the parties have been settled on the terms
of the compromise decrees, it is submitted that the High Court had
correctly applied the principles laid down in B.S. Joshi (supra) to the
facts of the present case.
9. Learned counsel has further pointed out that the charges framed
against the accused-respondents are under Section 120-B/420 of the Indian
Penal Code and the respondents not being public servants, no substantive
offence under the PC Act can be alleged against them. The relevance of the
views expressed in para 61 of the judgment of this Court in Gian Singh
(supra), noted above, to the present case is seriously disputed by the
learned counsel in view of the offences alleged against the respondents.
Learned counsel has also submitted that by the very same impugned order of
the High Court the criminal proceeding against one Nikhil Merchant was
declined to be quashed on the ground that offences under Sections 468 and
471 of the IPC had been alleged against the said accused. Aggrieved by the
order of the High Court the accused had moved this Court under Article 136
of the Constitution. In the decision reported in Nikhil Merchant vs.
Central Bureau of Investigation and Another[4] this Court understood the
charges/allegations against the aforesaid Nikhil Merchant in the same terms
as in the case of the accused-respondents, as already highlighted. Taking
into consideration the ratio laid down in B.S. Joshi (supra) and the
compromise between the bank and the accused Nikhil Merchant (on the same
terms as in the present case) the proceeding against the said accused i.e.
Nikhil Merchant was quashed by the Court taking the view that the power and
the Section 482 Cr.P.C. and of this Court under Article 142 of the
Constitution cannot be circumscribed by the provisions of Section 320
Cr.P.C. It is further submitted by the learned counsel that the
correctness of the view in B.S. Joshi (supra) and Nikhil Merchant (supra)
were referred to the three Judges Bench in Gian Singh (supra). As already
noted, the opinion expressed in Gian Singh (supra) is that the power of the
High Court to quash a criminal proceeding under Section 482 Cr.P.C. is
distinct and different from the power vested in a criminal court by Section
320 Cr.P.C. to compound an offence. The conclusion in Gian Singh (supra),
therefore, was that the decisions rendered in B.S. Joshi (supra) and Nikhil
Merchant (supra) are correct.
10. In the present case, as already seen, the offence with which the
accused-respondents had been charged are under Section 120-B/420 of the
Indian Penal Code. The civil liability of the respondents to pay the
amount to the bank has already been settled amicably. The terms of such
settlement have been extracted above. No subsisting grievance of the bank
in this regard has been brought to the notice of the Court. While the
offence under Section 420 IPC is compoundable the offence under Section 120-
B is not. To the latter offence the ratio laid down in B.S. Joshi (supra)
and Nikhil Merchant (supra) would apply if the facts of the given case
would so justify. The observation in Gian Singh (supra) (para 61) will not
be attracted in the present case in view of the offences alleged i.e. under
Sections 420/120B IPC.
11. In the present case, having regard to the fact that the liability to
make good the monetary loss suffered by the bank had been mutually settled
between the parties and the accused had accepted the liability in this
regard, the High Court had thought it fit to invoke its power under Section
482 Cr.P.C. We do not see how such exercise of power can be faulted or
held to be erroneous. Section 482 of the Code inheres in the High Court
the power to make such order as may be considered necessary to, inter alia,
prevent the abuse of the process of law or to serve the ends of justice.
While it will be wholly unnecessary to revert or refer to the settled
position in law with regard to the contours of the power available under
Section 482 Cr.P.C. it must be remembered that continuance of a criminal
proceeding which is likely to become oppressive or may partake the
character of a lame prosecution would be good ground to invoke the
extraordinary power under Section 482 Cr.P.C.
12. We, therefore, decline to interfere with the impugned order dated
28.10.2005 passed by the High Court and dismiss this appeal. We, however,
make it clear that the proceedings in Special Case No. 15/95 and 20/95
stands interfered with by the present order only in respect of accused-
respondents Narendra Lal Jain and Ramanlal Lalchand Jain.

.…………………………CJI.
[P. SATHASIVAM]
……..………………………J.
[RANJAN GOGOI]

 

……….……………………J.
[N.V.RAMANA]
NEW DELHI,
FEBRUARY 28, 2014.

———————–
[1] (2012) 10 SCC 303
[2] (1996) 5 SCC 591
[3] AIR 2003 SC 1387
[4] (2008) 9 SCC 677

———————–
11

 

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