Court dismisses petition to quash FIR for lack of jurisdiction; settlement of civil liabilities doesn't absolve criminal liability.

The High Court of Punjab and Haryana dismissed the petition seeking to quash an FIR registered in Delhi, ruling that it lacked jurisdiction. The Court clarified that "other legal proceedings" under Section 446 of the Companies Act did not cover criminal cases. Additionally, the settlement of civil liabilities did not absolve the petitioners of criminal liability, leading to the dismissal of the petition as not maintainable.

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Issues Involved:
1. Jurisdiction of the High Court to quash an FIR registered in Delhi.
2. Interpretation of "other legal proceedings" under Section 446 of the Companies Act.
3. Whether criminal proceedings can be quashed due to the settlement of civil liabilities.

Issue-wise Detailed Analysis:

1. Jurisdiction of the High Court to Quash an FIR Registered in Delhi:
The primary question was whether the High Court of Punjab and Haryana had the jurisdiction to quash an FIR registered in Delhi. The petitioners argued that since the winding-up proceedings of the company were taken up by this Court, it should have jurisdiction. However, the respondents contended that the criminal proceedings were initiated in Delhi, and thus, only the Delhi courts had jurisdiction. The Court concluded that the allegations of cheating and fraud were related to the FIR registered in Delhi, and the Delhi Court had taken cognizance of the matter. Consequently, the petitioners could not approach the Punjab and Haryana High Court for quashing the FIR. The petition was dismissed on the grounds of being not maintainable.

2. Interpretation of "Other Legal Proceedings" under Section 446 of the Companies Act:
The Court examined whether the term "other legal proceedings" in Section 446(1) of the Companies Act included criminal proceedings. The Court referred to precedents, including *Pennar Paterson Ltd. Vs. Shikshak Sahakari Bank Ltd.*, which clarified that "other legal proceedings" did not encompass criminal proceedings. The objective of Section 446 was to protect the assets of the company and avoid expensive litigation, not to cover criminal misconduct by the company's directors. The Court concluded that criminal proceedings are not included in the term "other legal proceedings" under Section 446.

3. Whether Criminal Proceedings Can Be Quashed Due to the Settlement of Civil Liabilities:
The petitioners argued that since they had settled all dues with the Small Industries Development Bank of India (SIDBI) and other creditors, the FIR should be quashed to prevent misuse of judicial time. They cited the one-time settlement and the withdrawal of recovery certificates by SIDBI as evidence of resolved disputes. However, the respondents, including the CBI and SIDBI, maintained that the settlement of civil liabilities did not extinguish criminal liability. The Court agreed with this view, stating that the criminal proceedings could not be quashed merely because the civil liabilities were settled. The Court emphasized that the criminal liability of the directors could not be absolved through civil settlements, and the FIR could not be quashed on these grounds.

Conclusion:
The High Court of Punjab and Haryana dismissed the petition, ruling that it did not have jurisdiction to quash an FIR registered in Delhi. The Court also clarified that "other legal proceedings" under Section 446 of the Companies Act did not include criminal proceedings, and the settlement of civil liabilities did not nullify criminal liability. The petition was found to be not maintainable and was dismissed accordingly.

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