Company settlement cannot extinguish criminal prosecution where serious offences must proceed before the criminal court.

A scheme of arrangement or settlement approved in company proceedings cannot validly provide for quashing, compounding, dismissal, or discharge of pending criminal proceedings. The clause requiring joint applications to terminate the criminal case was treated as impermissible because serious offences must be taken to their logical conclusion before the competent criminal court. A civil forum cannot dilute the consequences of criminal prosecution through a settlement covenant, and any lifting of attachment or disbursement of settlement funds does not affect the criminal case, which continues independently.

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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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