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<h1>Company settlement cannot extinguish criminal prosecution where serious offences must proceed before the criminal court.</h1> A scheme of arrangement or settlement approved in company proceedings cannot validly provide for quashing, compounding, dismissal, or discharge of pending ... Seeking directions for convening a meeting of the Investors/Creditors, as well as Company Petition - sanction of the Scheme approved by the NSEL Investors Forum - Scheme of arrangement and criminal prosecution - Limits of civil forum in affecting criminal proceedings - Implementation of attachment-related settlement without dilution of criminal charges. Scheme of arrangement and criminal prosecution - Limits of civil forum in affecting criminal proceedings - HELD THAT:- The Court accepted implementation of the scheme in view of the stand of the enforcement authority and the need to address the grievances of the investors, but held that clause 24.6 of the scheme, which contemplated a joint application for quashing, compounding, dismissal or discharge of criminal proceedings, could not be countenanced. It held that the alleged offences were serious and had to be taken to their logical conclusion before the competent criminal court. A civil forum such as the NCLT could not determine or dilute the consequences of criminal prosecution by incorporating or accepting such a covenant in a consensual scheme. [Paras 10, 11, 13] The scheme was permitted to be implemented, but the lifting of attachment and disbursement to investors were expressly held not to dilute or affect the continuation of criminal proceedings, which were directed to proceed independently. Final Conclusion: The Court allowed the interim application in terms of the amended prayer and disposed of the connected appeals, applications and writ petition. It clarified that release of attached assets and distribution to investors under the sanctioned scheme would not dilute the criminal charges, which must continue to their logical conclusion. Issues: Whether a scheme of arrangement or settlement approved in company proceedings can provide for quashing, compounding, dismissal, or discharge of pending criminal proceedings and thereby dilute the effect of criminal prosecution.Analysis: The scheme clause seeking joint applications for quashing or dismissal of criminal proceedings was found impermissible. Serious offences alleged in the case were required to be carried to their logical conclusion before the competent criminal court. A civil forum could not determine or dilute the consequences of criminal prosecution by incorporating or accepting a settlement covenant to that effect. The clarification was also recorded that lifting of attachment or disbursement of settlement amounts would not affect the criminal case.Conclusion: Such a covenant in the scheme could not be sustained to the extent it sought to affect criminal proceedings, and the criminal prosecution would continue independently.
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