One time settlement does not bar prosecution where forged documents and alleged bank fund diversion disclose serious economic offences.

A one time settlement cannot extinguish criminal liability where the allegations disclose a coordinated scheme of cheating, forgery and diversion of bank funds. The charge-sheet materials alleged fabricated purchase orders, bills and lorry receipts used to obtain credit facilities, which established a prima facie case of serious economic offences. Quashing or discharge on the basis of settlement is confined to disputes of predominantly civil flavour; it does not apply where the conduct involves fraud, forged documents and wider public consequences. The accused were therefore not entitled to discharge or quashing, and the proceedings were held to continue to trial.

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Issues: Whether the accused were rightly discharged and the criminal proceedings quashed on the basis of the one time settlement, despite allegations of a criminal conspiracy involving cheating, forgery, fabricated documents and diversion of bank funds.

Analysis: The allegation was not of a mere borrower-bank dispute but of a coordinated scheme in which forged purchase orders, bills and lorry receipts were used to procure credit facilities and divert funds. The materials in the charge-sheet disclosed multiple instances of alleged fabrication and misuse of banking facilities, showing a prima facie case of offences under the penal law. The one time settlement resolved only the civil liability to the bank and could not erase criminal liability where the allegations disclosed serious economic wrongdoing affecting society. The power to quash or discharge on settlement is confined to cases having predominantly civil flavour, and not to cases involving serious fraud and forgery with wider public consequences.

Conclusion: The discharge and the refusal to interfere were unsustainable. The accused were not entitled to quashing or discharge on the basis of the settlement, and the matter was directed to proceed to trial.

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