2008 (8) TMI 966 - SC - Indian Laws

SC Quashes Criminal Proceedings Citing Compromise, Prevents Misuse of Judicial Process Using Discretionary Powers.

Nikhil Merchant Versus Central Bureau of Investigation and Anr.

The SC set aside the HC's order and quashed the criminal proceedings against the appellant. The Court emphasized that despite the presence of ... Applications seeking to quash the criminal proceedings after the compromised between the parties - Financial Fraud with Bank - Bank filed a suit for recovery of the amount payable - Cheating and use of forged documents - learned ASG was urged that even if no steps have been taken by the CBI since the chargesheet was filed in 1998, the same would not be a ground for quashing the criminal proceedings once the chargesheet had been filed. HELD THAT:- The basic intention of the accused in this case appears to have been to misrepresent the financial status of the company, M/s Neemuch Emballage Limited, Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional amounts of credit to which the company was not otherwise entitled. Despite the ingredients and the factual content of an offence of cheating punishable u/s 420 IPC, the same has been made compoundable under Sub-section (2) of Section 320 Cr.P.C. with the leave of the Court. Of course, forgery has not been included as one of the compoundable offences, but it is in such cases that the principle enunciated in B.S. Joshi's case [2003 (3) TMI 721 - SUPREME COURT] becomes relevant. In the instant case, the disputes between the Company and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues of the Bank have been cleared and the Bank does not appear to have any further claim against the Company. What, however, remains is the fact that certain documents were alleged to have been created by the appellant herein in order to avail of credit facilities beyond the limit to which the Company was entitled. keeping in mind the decision of this Court in B.S. Joshi's case and the compromise arrived at between the Company and the Bank as also Clause 11 of the consent terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not be allowed to stand in the way in the quashing of the criminal proceedings, since, in our view, the continuance of the same after the compromise arrived at between the parties would be a futile exercise. We, therefore, set aside the order passed by the High Court dismissing the petitioner's revision application in Special Case and quash the proceedings against the appellant. The appeal is accordingly allowed. Issues Involved:1. Application for discharge from criminal complaint after compromise.2. Applicability of Section 320 CrPC for compounding offences.3. Relevance of decisions in previous cases (Duncans Agro Industries Ltd. and B.S. Joshi).4. Allegations of forgery and cheating.5. Exercise of inherent powers under Section 482 CrPC and Article 142 of the Constitution.Issue-wise Detailed Analysis:1. Application for discharge from criminal complaint after compromise:The appellant filed an application for discharge from the criminal complaint following a compromise between the Company and the Bank, invoking Clause 11 of the consent terms which stated that neither party had any claims against the other. The Special Judge rejected this application, and the High Court upheld the rejection, leading to this appeal.2. Applicability of Section 320 CrPC for compounding offences:The appellant argued that the compromise between the parties should lead to the quashing of the criminal proceedings, citing the compoundable nature of the offence under Section 420 IPC. However, the High Court noted that the charges also included non-compoundable offences under Sections 467, 468, 471 IPC and the Prevention of Corruption Act, thus Section 320 CrPC would not apply to the entire case.3. Relevance of decisions in previous cases (Duncans Agro Industries Ltd. and B.S. Joshi):The appellant relied on the Supreme Court's decisions in Duncans Agro Industries Ltd. and B.S. Joshi to argue that the criminal proceedings should be quashed following the compromise. The High Court distinguished these cases, stating that Duncans Agro involved only Section 420 IPC which is compoundable, while the present case involved additional non-compoundable offences. The appellant contended this interpretation was incorrect, as Duncans Agro also included non-compoundable offences. Additionally, B.S. Joshi's case was cited to highlight the High Court's inherent power to quash proceedings even for non-compoundable offences.4. Allegations of forgery and cheating:The charges against the appellant included allegations of forgery and cheating, with the prosecution asserting that false documents were created to obtain undue credit from the Bank. The Additional Solicitor General argued that the ingredients of forgery under Sections 463 and 464 IPC were met, making the offences non-compoundable and justifying the continuation of criminal proceedings.5. Exercise of inherent powers under Section 482 CrPC and Article 142 of the Constitution:The Supreme Court considered whether to exercise its inherent powers to quash the criminal proceedings despite the non-compoundable nature of some charges. The Court emphasized the principle from B.S. Joshi's case, which allows for quashing proceedings in the interest of justice when disputes are primarily civil with criminal facets. The Court noted that the compromise between the Company and the Bank had resolved the primary dispute, and continuing the criminal proceedings would be futile.Conclusion:The Supreme Court set aside the High Court's order and quashed the criminal proceedings against the appellant, emphasizing that technicalities should not obstruct justice when the primary dispute had been resolved through compromise. The appeal was allowed, highlighting the Court's discretion to quash proceedings in appropriate cases to prevent misuse of the judicial process.