Repayment of bank dues does not bar quashing refusal where allegations disclose conspiracy, forgery and economic fraud.

The SC held that criminal proceedings cannot be quashed under inherent jurisdiction merely because bank dues were repaid or the bank dispute was settled, where the charge-sheet disclosed a prima facie serious economic offence. Allegations of conspiracy, forgery, cheating, use of false documents, fictitious invoices and fabricated machinery records showed an organised scheme to obtain finance, divert funds and claim depreciation on non-existent machinery. The Court reiterated that Section 482 CrPC must be used sparingly and only where no offence is disclosed or continuation would be an abuse of process. Repayment of financial loss did not erase the broader alleged criminality or the injury to the public exchequer.

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Issues: Whether criminal proceedings could be quashed under the High Court's inherent jurisdiction on the ground that the bank dues had been repaid and the dispute with the bank had effectively been settled, notwithstanding allegations of conspiracy, forgery, cheating and related offences involving a public exchequer loss.

Analysis: The allegations in the charge-sheet disclosed a coordinated scheme in which false documents, fictitious invoices and fabricated machinery records were allegedly used to obtain hire-purchase finance, divert funds through fictitious accounts and claim depreciation on machinery that was never purchased. The Court reiterated that the inherent power under Section 482 of the Code of Criminal Procedure, 1973 is to be exercised sparingly and only where the allegations, taken at face value, do not disclose an offence or where continuation of proceedings would amount to abuse of process. It distinguished the earlier compromise-based quashing line of cases, holding that repayment of bank dues does not erase criminality where the allegations disclose a serious economic offence affecting society and the public exchequer.

Conclusion: The charge-sheet disclosed a prima facie case and the proceedings were not liable to be quashed merely because the bank loan had been repaid.

Final Conclusion: The appeal failed because settlement of the bank liability did not extinguish the alleged criminal liability arising from the broader fraudulent scheme.

Ratio Decidendi: Repayment of the financial loss to the bank does not by itself justify quashing criminal proceedings when the allegations disclose a prima facie serious economic offence involving conspiracy, forgery and injury to the public exchequer.

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