Inherent power cannot quash serious bank fraud proceedings merely because the bank was repaid and settled.

Criminal proceedings for forgery and cheating arising from a bank fraud cannot be quashed merely because the accused settled with the bank and repaid dues. Where the allegations disclose a planned economic offence involving forged documents, multiple credit transactions and public money, the societal impact remains relevant and the matter is not treated as a purely private dispute. The inherent power under Section 482 of the Code of Criminal Procedure must be used sparingly, only to prevent manifest injustice or abuse of process, and not to terminate prosecution for serious financial fraud on the basis of compromise alone. The order quashing the proceedings was therefore unsustainable and was set aside.

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Issues: Whether criminal proceedings for forgery and cheating arising from a bank fraud could be quashed under the inherent power despite settlement with the bank.

Analysis: The allegations concerned a planned economic offence involving forged documents, multiple credit transactions, and public money. The High Court had relied on settlement with the bank to quash the proceedings, but the case was materially different from matters where the dispute was predominantly civil or where compromise had fully extinguished the controversy. In economic offences of this nature, the effect on society at large is a relevant consideration. The inherent power under Section 482 of the Code of Criminal Procedure, 1973 is to be exercised sparingly and only to prevent manifest injustice or abuse of process, and not to terminate a prosecution for serious financial fraud merely because the bank has been repaid.

Conclusion: The order quashing the proceedings was unsustainable and was set aside.

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