Full Judgment Text
2025 INSC 1359
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). OF 2025
(Arising out of SLP(Crl.) No(s). 11108 of 2022)
CENTRAL BUREAU
OF INVESTIGATION ….APPELLANT(S)
VERSUS
M/S. SARVODAYA
HIGHWAYS LTD. AND ORS. ….RESPONDENT(S)
J U D G M E N T
Mehta, J.
1. Heard.
2. Leave granted.
3. The instant appeal at the instance of Central
1
Bureau of Investigation takes exception to the
th
judgment and final order dated 18 July, 2022
passed by the High Court of Punjab and Haryana at
Signature Not Verified
Digitally signed by
NEETU KHAJURIA
Date: 2025.11.26
17:02:39 IST
Reason:
1
Hereinafter, referred to as “appellant-CBI”.
1
2
Chandigarh in CRMM No. 31272 of 2018 (O&M) . By
the impugned judgment, the High Court allowed the
petition under Section 482 of the Code of Criminal
3
Procedure, 1973, [Section 528 of the Bharatiya
Nagarik Suraksha Sanhita, 2023 (BNSS)] filed by
4
respondent No. 1-M/s. Sarvodaya Highways Ltd.
and its Directors i.e. , respondent No. 2-Gurinder
Kumar Garg, respondent No.3-Aruna Garg,
respondent No.4-Aashutosh Garg and respondent
No.5-Aayush Garg, and thereby quashed the entire
proceedings arising out of the FIR RC No.
BD1/2015/E/0002/CBI/BS&FS/DLI registered by
the appellant-CBI for the offences punishable under
Section 120B read with Sections 406, 420, 467, 468
5
and 471 of the Indian Penal Code, 1860 and Sections
2
Hereinafter, referred to as “High Court”.
3
Hereinafter, referred to as “CrPC”.
4
Hereinafter, referred to as “respondent No.1-Company or defaulter
company”.
5
Hereinafter, referred to as “IPC”.
2
13(2) read with 13(1)(d) of the Prevention of
6
Corruption of Act, 1988 . Consequently, the
proceedings arising out of the chargesheet No.
th
RC.BD/2015/E/2002 dated 30 November, 2016
filed pursuant to investigation in the aforesaid FIR
also came to be quashed.
BRIEF FACTS
4. The FIR mentioned supra came to be lodged on
rd
3 February, 2015 at the instance of the Branch
Manager of the erstwhile State Bank of Bikaner and
7
Jaipur (now merged with State Bank of India) ,
alleging, inter alia , that the Bank had sanctioned
credit facility of Rs.50 crores under fund based-limits
and Rs.10 crores under non-fund based limits to
respondent No.1-Company through its Managing
Director. While applying for the loan, it was projected
6
Hereinafter, referred to as “PC Act”.
7
Hereinafter, referred to as “Bank”.
3
on behalf of respondent No.1-Company that it was
engaged in the construction of
residential/commercial complexes, townships,
highways, bridges and flyovers across India and had
been awarded 10 work orders to the tune of
Rs.348.24 crores. Acting on the aforesaid information
and financial standing provided by respondent No.1-
Company, the Bank sanctioned the credit facilities in
the above terms.
5. However, when the amounts were not repaid as
per the schedule and the accounts became irregular,
an internal inquiry was initiated and it was found
that lien of the Bank had not been marked in the
revenue records by the Patwari Halqa, Dhakoli,
Zirakpur and that the records had been manipulated.
The account of respondent No.1-Company was
8 th
declared to be a Non-Performing Asset on 28 July,
8
Hereinafter, referred to as “NPA”.
4
2013 by the Bank. The internal inquiry concluded
that a fraud of Rs.52.50 crores had been committed.
Consequent to these findings, a complaint was lodged
th
by the Branch Manager of the Bank on 9 January,
2015, on the basis of which the aforesaid FIR dated
rd
3 February, 2015 came to be registered with the
appellant-CBI, and investigation was commenced.
6. During the course of investigation, the
investigating agency ( i.e. , the appellant herein)
collected detailed evidence, oral and documentary,
and came to the conclusion that the officers of
respondent No.1-Company and the then Branch
Manager of the Bank, Mr. Nishan Lal, had connived
together to defraud the Bank by furnishing false
information and provided fabricated work orders for
procuring the cash credit limit, which was thereafter
utilized and remained unpaid.
5
7. The investigation further revealed that the
accused persons had submitted false and fabricated
stock statements and receivable statements, thereby
cheating the Bank, despite no actual work having
been executed by them. The investigating officer also
found that 3 out of the 10 work orders were entirely
fabricated, as the companies to whom these work
orders were allegedly issued expressly stated that
they had not issued any such orders to respondent
No.1-Company. The remaining 7 work orders were,
as a matter of fact, issued to the associate companies
of the defaulter, one of whose Directors was a
common Director in all these 7 companies. Based on
the evidence collected, the investigating agency drew
the following conclusions in the chargesheet:-
“It was therefore, further revealed in the
investigation by the Petitioner Department that
the said Respondents knowingly and dishonestly
submitted false and forged work orders
purportedly issued by the aforesaid companies
to induce the Respondent Bank to sanction
6
credit facilities to the Respondent No.1/A-1. In
addition to the aforesaid, the investigation
further confirmed that marking of hens on 3
properties, which were offered by the
Respondent No. 1/Accused Company, as
collateral securities to the Respondent Bank
were also forged.
The aforesaid facts constitute the commission of
offences against M/s Sarvodaya Highways Ltd.
(A-1) through its Directors (A-2) to (A-5), Sh.
Gurinder Kumar Garg (A-2), Smt. Aruna Garg (A-
3), Sh. Aashutosh Garg (A-4), Sh. Aayush Garg
(A-5) and Sh. Nishan Lal, the then Branch
Manager, SBBJ, Panchkula, all committed
offences punishable u/s 120 B r/w 420, 467,
468, 471 IPC and Section 13(2) r/w Section
13(1)(d) of PC Act, 1988 and substantive offences
thereof.”
8. Sanction was granted by the Competent
Authority to prosecute the Bank Manager, Mr.
Nishan Lal, and pursuant to conclusion of the
investigation, chargesheet came to be filed in the
9
Court of the Special Judge for CBI , Panchkula,
Haryana against respondent No. 1-Company, its
Directors and the Bank Manager for offences
punishable under Sections 120B read with Sections
9
Hereinafter, referred to as “trial Court”.
7
420, 467, 468, and 471 of the IPC and Section 13(2)
read with Section 13(1)(d) of the PC Act.
9. While the case was pending before the trial
Court, respondent No.1-Company claims to have
th
entered into a one-time settlement dated 5 March
2018 with the Bank. The cash credit liability was
settled on payment of Rs. 41 crores to the Bank. It is
on the basis of this one-time settlement that
respondent Nos. 1 to 5, being the defaulting company
M/s. Sarvodaya Highways Ltd., and its Directors,
approached the High Court by way of a petition under
Section 482 of the CrPC seeking quashing of the
th
aforesaid FIR and the chargesheet dated 30
November, 2016.
10. The learned Single Judge of the High Court was
persuaded to invoke the inherent jurisdiction under
Section 482 of the CrPC and quashed the proceedings
arising from the chargesheet based on the aforesaid
8
one-time settlement, vide judgment and order dated
th
18 July, 2022, which is subject matter of challenge
in this appeal by special leave.
SUBMISSIONS ON BEHALF OF APPELLANT
11. Mr. Vikramjit Banerjee, learned Additional
Solicitor General, representing the appellant-CBI
vehemently and fervently contended that the High
Court committed gross error in law in quashing the
proceedings arising out of the chargesheet based on
the one-time settlement entered into between the
defaulting company, i.e. , respondent No.1 and the
Bank. He submitted that the investigation conducted
by the appellant-CBI resulted into an unimpeachable
finding regarding fabricated documents having been
used to procure the cash credit facility. The one-time
settlement has been entered by the Bank under
compulsion because the account of the defaulter
company had been declared to be NPA and
9
proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 were also initiated.
Ultimately, realizing that it would not be possible to
recover the entire outstanding amount along with
interest, the Bank opted for a safer course of settling
the account by accepting a substantially lesser
amount than what would have been recovered had
the terms of the cash credit account been adhered to
by respondent No. 1-Company. Thus, significant loss
was suffered by the Bank which has a direct and
adverse bearing on the public exchequer.
12. The learned Additional Solicitor General placed
reliance on the following observations made by this
Court in the case of Gian Singh v. State of
10
Punjab , to urge that merely because a settlement
has been arrived at in respect of the loan account, the
10
(2012) 10 SCC 303.
10
same cannot, by itself, furnish a valid ground for
quashing the criminal proceedings:
“57. Quashing of offence or criminal proceedings
on the ground of settlement between an offender
and victim is not the same thing as compounding
of offence. They are different and not
interchangeable. Strictly speaking, the power of
compounding of offences given to a court under
Section 320 is materially different from the
quashing of criminal proceedings by the High
Court in exercise of its inherent jurisdiction. In
compounding of offences, power of a criminal
court is circumscribed by the provisions
contained in Section 320 and the court is guided
solely and squarely thereby while, on the other
hand, the formation of opinion by the High
Court for quashing a criminal offence or
criminal proceeding or criminal complaint is
guided by the material on record as to
whether the ends of justice would justify such
exercise of power although the ultimate
consequence may be acquittal or dismissal of
indictment.
…
61. The position that emerges from the above
discussion can be summarised thus : the power
of the High Court in quashing a criminal
proceeding or FIR or complaint in exercise of
its inherent jurisdiction is distinct and
different from the power given to a criminal
court for compounding the offences under
Section 320 of the Code. Inherent power is of
wide plenitude with no statutory limitation
but it has to be exercised in accord with the
guideline engrafted in such power viz. : (i) to
secure the ends of justice, or (ii) to prevent
abuse of the process of any court. In what
cases power to quash the criminal proceeding
or complaint or FIR may be exercised where
11
the offender and the victim have settled their
dispute would depend on the facts and
circumstances of each case and no category
can be prescribed. However, before exercise of
such power, the High Court must have due
regard to the nature and gravity of the crime.
Heinous and serious offences of mental
depravity or offences like murder, rape,
dacoity, etc. cannot be fittingly quashed even
though the victim or victim's family and the
offender have settled the dispute. Such
offences are not private in nature and have a
serious impact on society. Similarly, any
compromise between the victim and the
offender in relation to the offences under
special statutes like the Prevention of
Corruption Act or the offences committed by
public servants while working in that
capacity, etc.; cannot provide for any basis
for quashing criminal proceedings involving
such offences. But the criminal cases having
overwhelmingly and predominatingly civil
flavour stand on a different footing for the
purposes of quashing, particularly the offences
arising from commercial, financial, mercantile,
civil, partnership or such like transactions or the
offences arising out of matrimony relating to
dowry, etc. or the family disputes where the
wrong is basically private or personal in nature
and the parties have resolved their entire
dispute. In this category of cases, the High Court
may quash the criminal proceedings if in its
view, because of the compromise between the
offender and the victim, the possibility of
conviction is remote and bleak and continuation
of the criminal case would put the accused to
great oppression and prejudice and extreme
injustice would be caused to him by not
quashing the criminal case despite full and
complete settlement and compromise with the
victim. In other words, the High Court must
12
consider whether it would be unfair or contrary
to the interest of justice to continue with the
criminal proceeding or continuation of the
criminal proceeding would tantamount to abuse
of process of law despite settlement and
compromise between the victim and the
wrongdoer and whether to secure the ends of
justice, it is appropriate that the criminal case is
put to an end and if the answer to the above
question(s) is in the affirmative, the High Court
shall be well within its jurisdiction to quash the
criminal proceeding.”
[Emphasis supplied]
13. It was submitted that the investigation
establishes the submission of forged documents, and
misrepresentation by the respondent No. 1-Company
and its Directors for procuring the cash credit facility.
The material collected reveals grave economic
offences committed by the accused. The connivance
between the defaulter company, its Directors and the
Bank Manager to defraud the Bank stands
conclusively proved. Sanction for prosecution of the
Bank Manager has been duly granted by the
competent authority. It was argued that quashing of
13
the chargesheet by the High Court would, in effect,
result in the indirect exoneration of the Bank
Manager as well, and therefore, the impugned order
cannot be sustained in law.
14. Reliance was also placed by Mr. Banerjee on the
judgments of this Court in Central Bureau of
11
Investigation v. Jagjit Singh , State of
Maharashtra through CBI v. Vikram Anantrai
12
Doshi & Ors. , and Anil Bhavarlal Jain v. State
13
of Maharashtra .
15. In Jagjit Singh (supra), this Court stated that
offences involving bank fraud affect society at large,
observing as follows: -
“15. The debt which was due to the Bank was
recovered by the Bank pursuant to an order passed
by the Debts Recovery Tribunal. Therefore, it
cannot be said that there is a compromise between
the offender and the victim. The offences when
committed in relation with banking activities
including offences under Sections 420/471 IPC
have harmful effect on the public and threaten
11
(2013) 10 SCC 686.
12
2014 SCC OnLine SC 745.
13
2024 SCC OnLine SC 3823.
14
the well-being of the society. These offences fall
under the category of offences involving moral
turpitude committed by public servants while
working in that capacity. Prima facie, one may
state that the bank is the victim in such cases
but, in fact, the society in general, including
customers of the bank is the sufferer. In the
present case, there was neither an allegation
regarding any abuse of process of any court nor
anything on record to suggest that the offenders
were entitled to secure the order in the ends of
justice.”
[Emphasis supplied]
16. Further this court in Vikram Anantrai Doshi
(supra) stated that economic offences against banks
are social wrongs, and repayment or settlement
cannot justify quashing criminal proceedings. This
Court in Paragraph 26 observed as follows:-
“26. We are in respectful agreement with the
aforesaid view. Be it stated, that availing of money
from a nationalised bank in the manner, as alleged
by the investigating agency, vividly exposits fiscal
impurity and, in a way, financial fraud. The modus
operandi as narrated in the charge-sheet cannot be
put in the compartment of an individual or
personal wrong. It is a social wrong and it has
immense societal impact. It is an accepted principle
of handling of finance that whenever there is
manipulation and cleverly conceived contrivance to
avail of these kinds of benefits it cannot be
regarded as a case having overwhelmingly and
predominatingly civil character. The ultimate
victim is the collective. It creates a hazard in the
financial interest of the society. The gravity of the
15
offence creates a dent in the economic spine of the
nation. The cleverness which has been skillfully
contrived, if the allegations are true, has a serious
consequence. A crime of this nature, in our view,
would definitely fall in the category of offences
which travel far ahead of personal or private wrong.
It has the potentiality to usher in economic crisis.
Its implications have its own seriousness, for it
creates a concavity in the solemnity that is
expected in financial transactions. It is not such a
case where one can pay the amount and obtain a
“no dues certificate” and enjoy the benefit of
quashing of the criminal proceeding on the
hypostasis that nothing more remains to be done.
The collective interest of which the Court is the
guardian cannot be a silent or a mute spectator
to allow the proceedings to be withdrawn, or for
that matter yield to the ingenuous dexterity of
the accused persons to invoke the jurisdiction
under Article 226 of the Constitution or under
Section 482 of the Code and quash the
proceeding. It is not legally permissible. The
Court is expected to be on guard to these kinds
of adroit moves. The High Court, we humbly
remind, should have dealt with the matter
keeping in mind that in these kinds of
litigations the accused when perceives a tiny
gleam of success, readily invokes the inherent
jurisdiction for quashing of the criminal
proceeding. The Court’s principal duty, at that
juncture, should be to scan the entire facts to
find out the thrust of allegations and the crux
of the settlement. It is the experience of the
Judge that comes to his aid and the said
experience should be used with care, caution,
circumspection and courageous prudence. As we
find in the case at hand the learned Single Judge
has not taken pains to scrutinise the entire
conspectus of facts in proper perspective and
quashed the criminal proceeding. The said
quashment neither helps to secure the ends of
16
justice nor does it prevent the abuse of the process
of the court nor can it be also said that as there is
a settlement no evidence will come on record and
there will be remote chance of conviction. Such a
finding in our view would be difficult to record. Be
that as it may, the fact remains that the social
interest would be on peril and the prosecuting
agency, in these circumstances, cannot be treated
as an alien to the whole case. Ergo, we have no
other option but to hold that the order [Vikram
Anantrai Doshi v. State of Maharashtra, Criminal
Application No. 2239 of 2009, order dated 22-4-
2010 (Bom)] of the High Court is wholly
indefensible.
[Emphasis supplied]
17. It was submitted that this Court, in Anil
Bhavarlal Jain (supra), declined to quash criminal
proceedings on the ground that a settlement had
been arrived at between the parties, observing that,
as the case involved a special statute i.e., PC Act, and
that quashing the proceedings would have grave and
far-reaching consequences on the society at large.
This Court in paragraphs 17 and 18 observed as
follows: -
“17. A profitable reference in this regard can be
made to the judgment in State v. R Vasanthi
Stanley9 wherein this Court declined to quash the
17
proceedings in a case involving alleged abuse of the
financial system. It was observed as under:
“15. …….. A grave criminal offence or
serious economic offence or for that
matter the offence that has the
potentiality to create a dent in the
financial health of the institutions is not
to be quashed on the ground that there
is delay in trial or the principle that
when the matter has been settled it
should be quashed to avoid the head on
the system. That can never be an
acceptable principle or parameter, for
that would amount to destroying stem
cells of law and order in many a realm
and further strengthen the marrow of
unscrupulous litigations. Such a
situation should never be conceived of.”
18. In the instant case, it is on record that consent
terms were submitted by the parties before the
DRT. It is admitted that the bank had suffered
losses to the tune of Rs. 6.13 Crores approximately.
Hence, a substantial injury was caused to the
public exchequer and consequently it can be said
that public interest has been hampered. Keeping in
view the fact that in the present case a special
statute i.e. PC Act has been invoked, we are of the
view that quashing of offences under the said Act
would have a grave and substantial impact not just
on the parties involved, but also on the society at
large. As such the High Court committed no error
in declining to exercise its inherent powers in the
present case, thereby refusing to quash the
criminal proceedings.”
18. It was thus urged that the impugned judgment
does not stand to scrutiny and should be set aside
18
and the proceedings of the chargesheet should be
revived.
SUBMISSIONS ON BEHALF OF RESPONDENTS
19.
Per contra , Mr. Siddarth Dave, learned senior
counsel representing the respondents, vehemently
and fervently opposed the submissions advanced by
the learned ASG appearing for the appellant-CBI. It
was urged that not only has the Bank agreed to one-
time settlement but thereafter all the pledged assets
have also been released. The proceedings before the
Debt Recovery Tribunal have been closed on
instructions of the Bank. In these circumstances, it
was urged that continuation of the criminal
prosecution against the respondent No. 1-Company
and its Directors would serve no useful purpose and
would amount to an exercise in futility.
20. In support of his contentions, Mr. Dave placed
reliance on the judgments of this Court in Jaswant
19
14
Singh v. State of Punjab & Another , CBI New
15
Delhi v. B.B. Aggarwal & Others , and CBI, ACB,
16
Mumbai v. Narendra Lal Jain & Others . He
urged that the monetary disputes inter se between
the Bank and the defaulter company have been
settled and no dues settlement certificate has been
issued by the Bank and so also that the proceedings
before the Debt Recovery Tribunal stand closed with
the settling of the accounts. Hence, no useful
purpose would be served by continuing with the
criminal prosecution of the defaulter company and its
Directors. He urged that it is a lame prosecution,
which the appellant CBI wants to pursue in this
matter.
14
2021 SCC OnLine SC 1007.
15
2019 (5) RCR (Crl.) 573.
16
2014 (5) SCC 364.
20
ANALYSIS
21. We have given our thoughtful consideration to
the submissions advanced at bar and have gone
through the impugned order and also the material
placed on record.
22. The High Court, while quashing the
proceedings, assigned the following reasons: -
“After hearing learned counsel for the parties, I find
merit in the present writ petition, for the following
reasons:-
(a) It is admitted case that cash credit facility was
availed in the year 2012 and on account of account
being declared NPA, some proceedings were
initiated before DRT, where the petitioners had
paid back the amount as per settlement arrived at
between the petitioners and the bank.
(b) It is also admitted case of the bank that at no point
of time, the petitioners tried to sell off or siphon off
of the loan amount to any third party and it is a
simple case where the loan was not repaid in time,
for which it was declared NPA and once the
recovery proceedings were initiated before DRT, the
petitioners repaid the entire amount along with
interest to the respondent Bank in installments
and similarly, in the same manner, the respondent-
Bank was releasing the mortgaged properties by
issuing the letters, as noticed above.
(c) The respondent-Bank as well as CBI have filed
affidavits that the entire amount stands paid and
at no point of time, any action of the petitioner was
21
of any criminal intent except that the loan amount
was not paid in time.
In view of the observations made above and also in
view of judgment of the Hon’ble Supreme Court in
B.B. Aggarwal’s case (supra), present petition is
allowed and FIR bearing RC
No.BD1/2015/E/0002/CBI/BS&FS/DLI dated
03.02.2015 and final report dated 30.11.2016 as
well as the consequential proceedings arising out of
the FIR are ordered to be quashed.”
23. Having gone through the reasons assigned by
the High Court, it is apparent that while quashing the
proceedings on the basis of one-time settlement, the
High Court failed to advert to the following vital facts
of the case which were duly established during
investigation.
(i) That there was a specific finding in the
chargesheet that the defaulter company
through its directors had submitted
fabricated documents and misrepresented to
the Bank for the purpose of procuring the
cash credit facility.
22
(ii) That the appellant-CBI, on the basis of
evidence collected during investigation,
found that the offences of criminal
conspiracy, fabrication of documents, and
offences under the PC Act, were clearly made
out.
(iii) That sanction for prosecution had been duly
issued against the then Bank Manager, Mr.
Nishan Lal.
(iv) That the amount of settlement under the one-
time settlement did not cover the actual
amount due to the Bank and that there was
a deficit of more than 5 crores plus interest
which was a direct loss to the public
exchequer.
24. The High Court, while exercising jurisdiction
under Section 482 CrPC, did not consider these vital
facts and quashed the proceedings merely on the
23
basis of the alleged one-time settlement. The blanket
order quashing the chargesheet in its entirety would
have the effect of terminating the prosecution against
the Bank Manager as well, against whom prosecution
sanction has been granted.
25. There are plethora of judgments of this Court,
some of which we have referred to above, which
categorically hold that in cases involving economic
offences, it is not merely the Bank that stands
defrauded, but the society at large is also impacted.
26. It can be said without a shadow of doubt that
the one-time settlement would not fetch the entire
amount to which the Bank was otherwise entitled,
had the cash credit account been maintained
regularly. The settlement was made at around Rs.41
crores whereas, admittedly, the liability was of Rs. 52
crores approximately. One-time settlements are, as a
rule, effected under circumstances where the Bank
24
under duress is compelled to accept lesser amount in
order to secure the maximum possible recovery
against the defaulting account.
27.
In this background, we feel that the High Court
committed error apparent in the eyes of law by
quashing the proceedings.
28. In the case of Jaswant Singh (supra) , the
dispute involved was inter se between private parties
and the prosecution had been initiated only for the
offences punishable under Sections 406 and 420 of
the IPC. This Court thought it fit to quash the
proceedings considering the fact that the accused
and the complainant had settled all their disputes
amicably and no useful purpose would be served by
allowing the prosecution to continue.
29. In the case of B.B. Aggarwal (supra), this
Court upheld the order of the High Court quashing
the proceedings against the accused on the ground
25
that the civil suits filed by the Bank against the
defaulter companies and their directors for recoveries
of the outstanding dues, which were subsequently
transferred to Debt Recovery Tribunal stood settled
by entering into a one-time settlement.
30. On going through the aforesaid judgments, we
find that this Court did not consider the judgment in
the case of Gian Singh (supra) which expressly
prohibits quashing of proceedings of a criminal case
on strength of a compromise where loss to public
exchequer is evident and the offences under the PC
Act, 1988 are applied.
31. In the Case of Narendra Lal Jain (supra), the
offences were under Sections 420 and 120B of the
IPC. This Court held that Section 420 IPC was
compoundable whereas Section 120B IPC was not.
In this background, the Court was persuaded to
quash the proceedings holding that allowing the
26
criminal prosecution to continue would be nothing
short of an exercise in futility. Additionally, in
Narendra Lal Jain (supra) , there was no indication
about use of forged documents to procure the
loan/advance facilities from the Bank.
32. Furthermore, in none of these three cases did
the Court observe that the amount of the one-time
settlement did not cover the actual outstanding dues
of the Bank.
33. In this background, we are of the clear opinion
that the facts involved in the three precedents relied
upon by learned counsel for the respondents are
clearly distinguishable and the same have no
application to the case at hand.
34. Thus, we are of the opinion that the impugned
judgment and order do not stand to scrutiny and
deserves to be set aside. We, therefore, allow the
appeal, set aside the impugned judgment and order
27
and restore the proceedings arising out of the
th
chargesheet dated 30 November, 2016 before the
trial Court.
35.
We further make it clear that this order should
not be construed as making any observations on the
merits of the case which may prejudice the defence of
the accused persons before the trial Court which
shall proceed with the trial of the case uninfluenced
by any of the observations made hereinabove.
36. The appeal is allowed in these terms.
37. Pending application(s), if any, shall stand
disposed of.
….……………………J.
(VIKRAM NATH)
...…………………….J.
(SANDEEP MEHTA)
NEW DELHI;
NOVEMBER 11, 2025.
28
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). OF 2025
(Arising out of SLP(Crl.) No(s). 11108 of 2022)
CENTRAL BUREAU
OF INVESTIGATION ….APPELLANT(S)
VERSUS
M/S. SARVODAYA
HIGHWAYS LTD. AND ORS. ….RESPONDENT(S)
J U D G M E N T
Mehta, J.
1. Heard.
2. Leave granted.
3. The instant appeal at the instance of Central
1
Bureau of Investigation takes exception to the
th
judgment and final order dated 18 July, 2022
passed by the High Court of Punjab and Haryana at
Signature Not Verified
Digitally signed by
NEETU KHAJURIA
Date: 2025.11.26
17:02:39 IST
Reason:
1
Hereinafter, referred to as “appellant-CBI”.
1
2
Chandigarh in CRMM No. 31272 of 2018 (O&M) . By
the impugned judgment, the High Court allowed the
petition under Section 482 of the Code of Criminal
3
Procedure, 1973, [Section 528 of the Bharatiya
Nagarik Suraksha Sanhita, 2023 (BNSS)] filed by
4
respondent No. 1-M/s. Sarvodaya Highways Ltd.
and its Directors i.e. , respondent No. 2-Gurinder
Kumar Garg, respondent No.3-Aruna Garg,
respondent No.4-Aashutosh Garg and respondent
No.5-Aayush Garg, and thereby quashed the entire
proceedings arising out of the FIR RC No.
BD1/2015/E/0002/CBI/BS&FS/DLI registered by
the appellant-CBI for the offences punishable under
Section 120B read with Sections 406, 420, 467, 468
5
and 471 of the Indian Penal Code, 1860 and Sections
2
Hereinafter, referred to as “High Court”.
3
Hereinafter, referred to as “CrPC”.
4
Hereinafter, referred to as “respondent No.1-Company or defaulter
company”.
5
Hereinafter, referred to as “IPC”.
2
13(2) read with 13(1)(d) of the Prevention of
6
Corruption of Act, 1988 . Consequently, the
proceedings arising out of the chargesheet No.
th
RC.BD/2015/E/2002 dated 30 November, 2016
filed pursuant to investigation in the aforesaid FIR
also came to be quashed.
BRIEF FACTS
4. The FIR mentioned supra came to be lodged on
rd
3 February, 2015 at the instance of the Branch
Manager of the erstwhile State Bank of Bikaner and
7
Jaipur (now merged with State Bank of India) ,
alleging, inter alia , that the Bank had sanctioned
credit facility of Rs.50 crores under fund based-limits
and Rs.10 crores under non-fund based limits to
respondent No.1-Company through its Managing
Director. While applying for the loan, it was projected
6
Hereinafter, referred to as “PC Act”.
7
Hereinafter, referred to as “Bank”.
3
on behalf of respondent No.1-Company that it was
engaged in the construction of
residential/commercial complexes, townships,
highways, bridges and flyovers across India and had
been awarded 10 work orders to the tune of
Rs.348.24 crores. Acting on the aforesaid information
and financial standing provided by respondent No.1-
Company, the Bank sanctioned the credit facilities in
the above terms.
5. However, when the amounts were not repaid as
per the schedule and the accounts became irregular,
an internal inquiry was initiated and it was found
that lien of the Bank had not been marked in the
revenue records by the Patwari Halqa, Dhakoli,
Zirakpur and that the records had been manipulated.
The account of respondent No.1-Company was
8 th
declared to be a Non-Performing Asset on 28 July,
8
Hereinafter, referred to as “NPA”.
4
2013 by the Bank. The internal inquiry concluded
that a fraud of Rs.52.50 crores had been committed.
Consequent to these findings, a complaint was lodged
th
by the Branch Manager of the Bank on 9 January,
2015, on the basis of which the aforesaid FIR dated
rd
3 February, 2015 came to be registered with the
appellant-CBI, and investigation was commenced.
6. During the course of investigation, the
investigating agency ( i.e. , the appellant herein)
collected detailed evidence, oral and documentary,
and came to the conclusion that the officers of
respondent No.1-Company and the then Branch
Manager of the Bank, Mr. Nishan Lal, had connived
together to defraud the Bank by furnishing false
information and provided fabricated work orders for
procuring the cash credit limit, which was thereafter
utilized and remained unpaid.
5
7. The investigation further revealed that the
accused persons had submitted false and fabricated
stock statements and receivable statements, thereby
cheating the Bank, despite no actual work having
been executed by them. The investigating officer also
found that 3 out of the 10 work orders were entirely
fabricated, as the companies to whom these work
orders were allegedly issued expressly stated that
they had not issued any such orders to respondent
No.1-Company. The remaining 7 work orders were,
as a matter of fact, issued to the associate companies
of the defaulter, one of whose Directors was a
common Director in all these 7 companies. Based on
the evidence collected, the investigating agency drew
the following conclusions in the chargesheet:-
“It was therefore, further revealed in the
investigation by the Petitioner Department that
the said Respondents knowingly and dishonestly
submitted false and forged work orders
purportedly issued by the aforesaid companies
to induce the Respondent Bank to sanction
6
credit facilities to the Respondent No.1/A-1. In
addition to the aforesaid, the investigation
further confirmed that marking of hens on 3
properties, which were offered by the
Respondent No. 1/Accused Company, as
collateral securities to the Respondent Bank
were also forged.
The aforesaid facts constitute the commission of
offences against M/s Sarvodaya Highways Ltd.
(A-1) through its Directors (A-2) to (A-5), Sh.
Gurinder Kumar Garg (A-2), Smt. Aruna Garg (A-
3), Sh. Aashutosh Garg (A-4), Sh. Aayush Garg
(A-5) and Sh. Nishan Lal, the then Branch
Manager, SBBJ, Panchkula, all committed
offences punishable u/s 120 B r/w 420, 467,
468, 471 IPC and Section 13(2) r/w Section
13(1)(d) of PC Act, 1988 and substantive offences
thereof.”
8. Sanction was granted by the Competent
Authority to prosecute the Bank Manager, Mr.
Nishan Lal, and pursuant to conclusion of the
investigation, chargesheet came to be filed in the
9
Court of the Special Judge for CBI , Panchkula,
Haryana against respondent No. 1-Company, its
Directors and the Bank Manager for offences
punishable under Sections 120B read with Sections
9
Hereinafter, referred to as “trial Court”.
7
420, 467, 468, and 471 of the IPC and Section 13(2)
read with Section 13(1)(d) of the PC Act.
9. While the case was pending before the trial
Court, respondent No.1-Company claims to have
th
entered into a one-time settlement dated 5 March
2018 with the Bank. The cash credit liability was
settled on payment of Rs. 41 crores to the Bank. It is
on the basis of this one-time settlement that
respondent Nos. 1 to 5, being the defaulting company
M/s. Sarvodaya Highways Ltd., and its Directors,
approached the High Court by way of a petition under
Section 482 of the CrPC seeking quashing of the
th
aforesaid FIR and the chargesheet dated 30
November, 2016.
10. The learned Single Judge of the High Court was
persuaded to invoke the inherent jurisdiction under
Section 482 of the CrPC and quashed the proceedings
arising from the chargesheet based on the aforesaid
8
one-time settlement, vide judgment and order dated
th
18 July, 2022, which is subject matter of challenge
in this appeal by special leave.
SUBMISSIONS ON BEHALF OF APPELLANT
11. Mr. Vikramjit Banerjee, learned Additional
Solicitor General, representing the appellant-CBI
vehemently and fervently contended that the High
Court committed gross error in law in quashing the
proceedings arising out of the chargesheet based on
the one-time settlement entered into between the
defaulting company, i.e. , respondent No.1 and the
Bank. He submitted that the investigation conducted
by the appellant-CBI resulted into an unimpeachable
finding regarding fabricated documents having been
used to procure the cash credit facility. The one-time
settlement has been entered by the Bank under
compulsion because the account of the defaulter
company had been declared to be NPA and
9
proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 were also initiated.
Ultimately, realizing that it would not be possible to
recover the entire outstanding amount along with
interest, the Bank opted for a safer course of settling
the account by accepting a substantially lesser
amount than what would have been recovered had
the terms of the cash credit account been adhered to
by respondent No. 1-Company. Thus, significant loss
was suffered by the Bank which has a direct and
adverse bearing on the public exchequer.
12. The learned Additional Solicitor General placed
reliance on the following observations made by this
Court in the case of Gian Singh v. State of
10
Punjab , to urge that merely because a settlement
has been arrived at in respect of the loan account, the
10
(2012) 10 SCC 303.
10
same cannot, by itself, furnish a valid ground for
quashing the criminal proceedings:
“57. Quashing of offence or criminal proceedings
on the ground of settlement between an offender
and victim is not the same thing as compounding
of offence. They are different and not
interchangeable. Strictly speaking, the power of
compounding of offences given to a court under
Section 320 is materially different from the
quashing of criminal proceedings by the High
Court in exercise of its inherent jurisdiction. In
compounding of offences, power of a criminal
court is circumscribed by the provisions
contained in Section 320 and the court is guided
solely and squarely thereby while, on the other
hand, the formation of opinion by the High
Court for quashing a criminal offence or
criminal proceeding or criminal complaint is
guided by the material on record as to
whether the ends of justice would justify such
exercise of power although the ultimate
consequence may be acquittal or dismissal of
indictment.
…
61. The position that emerges from the above
discussion can be summarised thus : the power
of the High Court in quashing a criminal
proceeding or FIR or complaint in exercise of
its inherent jurisdiction is distinct and
different from the power given to a criminal
court for compounding the offences under
Section 320 of the Code. Inherent power is of
wide plenitude with no statutory limitation
but it has to be exercised in accord with the
guideline engrafted in such power viz. : (i) to
secure the ends of justice, or (ii) to prevent
abuse of the process of any court. In what
cases power to quash the criminal proceeding
or complaint or FIR may be exercised where
11
the offender and the victim have settled their
dispute would depend on the facts and
circumstances of each case and no category
can be prescribed. However, before exercise of
such power, the High Court must have due
regard to the nature and gravity of the crime.
Heinous and serious offences of mental
depravity or offences like murder, rape,
dacoity, etc. cannot be fittingly quashed even
though the victim or victim's family and the
offender have settled the dispute. Such
offences are not private in nature and have a
serious impact on society. Similarly, any
compromise between the victim and the
offender in relation to the offences under
special statutes like the Prevention of
Corruption Act or the offences committed by
public servants while working in that
capacity, etc.; cannot provide for any basis
for quashing criminal proceedings involving
such offences. But the criminal cases having
overwhelmingly and predominatingly civil
flavour stand on a different footing for the
purposes of quashing, particularly the offences
arising from commercial, financial, mercantile,
civil, partnership or such like transactions or the
offences arising out of matrimony relating to
dowry, etc. or the family disputes where the
wrong is basically private or personal in nature
and the parties have resolved their entire
dispute. In this category of cases, the High Court
may quash the criminal proceedings if in its
view, because of the compromise between the
offender and the victim, the possibility of
conviction is remote and bleak and continuation
of the criminal case would put the accused to
great oppression and prejudice and extreme
injustice would be caused to him by not
quashing the criminal case despite full and
complete settlement and compromise with the
victim. In other words, the High Court must
12
consider whether it would be unfair or contrary
to the interest of justice to continue with the
criminal proceeding or continuation of the
criminal proceeding would tantamount to abuse
of process of law despite settlement and
compromise between the victim and the
wrongdoer and whether to secure the ends of
justice, it is appropriate that the criminal case is
put to an end and if the answer to the above
question(s) is in the affirmative, the High Court
shall be well within its jurisdiction to quash the
criminal proceeding.”
[Emphasis supplied]
13. It was submitted that the investigation
establishes the submission of forged documents, and
misrepresentation by the respondent No. 1-Company
and its Directors for procuring the cash credit facility.
The material collected reveals grave economic
offences committed by the accused. The connivance
between the defaulter company, its Directors and the
Bank Manager to defraud the Bank stands
conclusively proved. Sanction for prosecution of the
Bank Manager has been duly granted by the
competent authority. It was argued that quashing of
13
the chargesheet by the High Court would, in effect,
result in the indirect exoneration of the Bank
Manager as well, and therefore, the impugned order
cannot be sustained in law.
14. Reliance was also placed by Mr. Banerjee on the
judgments of this Court in Central Bureau of
11
Investigation v. Jagjit Singh , State of
Maharashtra through CBI v. Vikram Anantrai
12
Doshi & Ors. , and Anil Bhavarlal Jain v. State
13
of Maharashtra .
15. In Jagjit Singh (supra), this Court stated that
offences involving bank fraud affect society at large,
observing as follows: -
“15. The debt which was due to the Bank was
recovered by the Bank pursuant to an order passed
by the Debts Recovery Tribunal. Therefore, it
cannot be said that there is a compromise between
the offender and the victim. The offences when
committed in relation with banking activities
including offences under Sections 420/471 IPC
have harmful effect on the public and threaten
11
(2013) 10 SCC 686.
12
2014 SCC OnLine SC 745.
13
2024 SCC OnLine SC 3823.
14
the well-being of the society. These offences fall
under the category of offences involving moral
turpitude committed by public servants while
working in that capacity. Prima facie, one may
state that the bank is the victim in such cases
but, in fact, the society in general, including
customers of the bank is the sufferer. In the
present case, there was neither an allegation
regarding any abuse of process of any court nor
anything on record to suggest that the offenders
were entitled to secure the order in the ends of
justice.”
[Emphasis supplied]
16. Further this court in Vikram Anantrai Doshi
(supra) stated that economic offences against banks
are social wrongs, and repayment or settlement
cannot justify quashing criminal proceedings. This
Court in Paragraph 26 observed as follows:-
“26. We are in respectful agreement with the
aforesaid view. Be it stated, that availing of money
from a nationalised bank in the manner, as alleged
by the investigating agency, vividly exposits fiscal
impurity and, in a way, financial fraud. The modus
operandi as narrated in the charge-sheet cannot be
put in the compartment of an individual or
personal wrong. It is a social wrong and it has
immense societal impact. It is an accepted principle
of handling of finance that whenever there is
manipulation and cleverly conceived contrivance to
avail of these kinds of benefits it cannot be
regarded as a case having overwhelmingly and
predominatingly civil character. The ultimate
victim is the collective. It creates a hazard in the
financial interest of the society. The gravity of the
15
offence creates a dent in the economic spine of the
nation. The cleverness which has been skillfully
contrived, if the allegations are true, has a serious
consequence. A crime of this nature, in our view,
would definitely fall in the category of offences
which travel far ahead of personal or private wrong.
It has the potentiality to usher in economic crisis.
Its implications have its own seriousness, for it
creates a concavity in the solemnity that is
expected in financial transactions. It is not such a
case where one can pay the amount and obtain a
“no dues certificate” and enjoy the benefit of
quashing of the criminal proceeding on the
hypostasis that nothing more remains to be done.
The collective interest of which the Court is the
guardian cannot be a silent or a mute spectator
to allow the proceedings to be withdrawn, or for
that matter yield to the ingenuous dexterity of
the accused persons to invoke the jurisdiction
under Article 226 of the Constitution or under
Section 482 of the Code and quash the
proceeding. It is not legally permissible. The
Court is expected to be on guard to these kinds
of adroit moves. The High Court, we humbly
remind, should have dealt with the matter
keeping in mind that in these kinds of
litigations the accused when perceives a tiny
gleam of success, readily invokes the inherent
jurisdiction for quashing of the criminal
proceeding. The Court’s principal duty, at that
juncture, should be to scan the entire facts to
find out the thrust of allegations and the crux
of the settlement. It is the experience of the
Judge that comes to his aid and the said
experience should be used with care, caution,
circumspection and courageous prudence. As we
find in the case at hand the learned Single Judge
has not taken pains to scrutinise the entire
conspectus of facts in proper perspective and
quashed the criminal proceeding. The said
quashment neither helps to secure the ends of
16
justice nor does it prevent the abuse of the process
of the court nor can it be also said that as there is
a settlement no evidence will come on record and
there will be remote chance of conviction. Such a
finding in our view would be difficult to record. Be
that as it may, the fact remains that the social
interest would be on peril and the prosecuting
agency, in these circumstances, cannot be treated
as an alien to the whole case. Ergo, we have no
other option but to hold that the order [Vikram
Anantrai Doshi v. State of Maharashtra, Criminal
Application No. 2239 of 2009, order dated 22-4-
2010 (Bom)] of the High Court is wholly
indefensible.
[Emphasis supplied]
17. It was submitted that this Court, in Anil
Bhavarlal Jain (supra), declined to quash criminal
proceedings on the ground that a settlement had
been arrived at between the parties, observing that,
as the case involved a special statute i.e., PC Act, and
that quashing the proceedings would have grave and
far-reaching consequences on the society at large.
This Court in paragraphs 17 and 18 observed as
follows: -
“17. A profitable reference in this regard can be
made to the judgment in State v. R Vasanthi
Stanley9 wherein this Court declined to quash the
17
proceedings in a case involving alleged abuse of the
financial system. It was observed as under:
“15. …….. A grave criminal offence or
serious economic offence or for that
matter the offence that has the
potentiality to create a dent in the
financial health of the institutions is not
to be quashed on the ground that there
is delay in trial or the principle that
when the matter has been settled it
should be quashed to avoid the head on
the system. That can never be an
acceptable principle or parameter, for
that would amount to destroying stem
cells of law and order in many a realm
and further strengthen the marrow of
unscrupulous litigations. Such a
situation should never be conceived of.”
18. In the instant case, it is on record that consent
terms were submitted by the parties before the
DRT. It is admitted that the bank had suffered
losses to the tune of Rs. 6.13 Crores approximately.
Hence, a substantial injury was caused to the
public exchequer and consequently it can be said
that public interest has been hampered. Keeping in
view the fact that in the present case a special
statute i.e. PC Act has been invoked, we are of the
view that quashing of offences under the said Act
would have a grave and substantial impact not just
on the parties involved, but also on the society at
large. As such the High Court committed no error
in declining to exercise its inherent powers in the
present case, thereby refusing to quash the
criminal proceedings.”
18. It was thus urged that the impugned judgment
does not stand to scrutiny and should be set aside
18
and the proceedings of the chargesheet should be
revived.
SUBMISSIONS ON BEHALF OF RESPONDENTS
19.
Per contra , Mr. Siddarth Dave, learned senior
counsel representing the respondents, vehemently
and fervently opposed the submissions advanced by
the learned ASG appearing for the appellant-CBI. It
was urged that not only has the Bank agreed to one-
time settlement but thereafter all the pledged assets
have also been released. The proceedings before the
Debt Recovery Tribunal have been closed on
instructions of the Bank. In these circumstances, it
was urged that continuation of the criminal
prosecution against the respondent No. 1-Company
and its Directors would serve no useful purpose and
would amount to an exercise in futility.
20. In support of his contentions, Mr. Dave placed
reliance on the judgments of this Court in Jaswant
19
14
Singh v. State of Punjab & Another , CBI New
15
Delhi v. B.B. Aggarwal & Others , and CBI, ACB,
16
Mumbai v. Narendra Lal Jain & Others . He
urged that the monetary disputes inter se between
the Bank and the defaulter company have been
settled and no dues settlement certificate has been
issued by the Bank and so also that the proceedings
before the Debt Recovery Tribunal stand closed with
the settling of the accounts. Hence, no useful
purpose would be served by continuing with the
criminal prosecution of the defaulter company and its
Directors. He urged that it is a lame prosecution,
which the appellant CBI wants to pursue in this
matter.
14
2021 SCC OnLine SC 1007.
15
2019 (5) RCR (Crl.) 573.
16
2014 (5) SCC 364.
20
ANALYSIS
21. We have given our thoughtful consideration to
the submissions advanced at bar and have gone
through the impugned order and also the material
placed on record.
22. The High Court, while quashing the
proceedings, assigned the following reasons: -
“After hearing learned counsel for the parties, I find
merit in the present writ petition, for the following
reasons:-
(a) It is admitted case that cash credit facility was
availed in the year 2012 and on account of account
being declared NPA, some proceedings were
initiated before DRT, where the petitioners had
paid back the amount as per settlement arrived at
between the petitioners and the bank.
(b) It is also admitted case of the bank that at no point
of time, the petitioners tried to sell off or siphon off
of the loan amount to any third party and it is a
simple case where the loan was not repaid in time,
for which it was declared NPA and once the
recovery proceedings were initiated before DRT, the
petitioners repaid the entire amount along with
interest to the respondent Bank in installments
and similarly, in the same manner, the respondent-
Bank was releasing the mortgaged properties by
issuing the letters, as noticed above.
(c) The respondent-Bank as well as CBI have filed
affidavits that the entire amount stands paid and
at no point of time, any action of the petitioner was
21
of any criminal intent except that the loan amount
was not paid in time.
In view of the observations made above and also in
view of judgment of the Hon’ble Supreme Court in
B.B. Aggarwal’s case (supra), present petition is
allowed and FIR bearing RC
No.BD1/2015/E/0002/CBI/BS&FS/DLI dated
03.02.2015 and final report dated 30.11.2016 as
well as the consequential proceedings arising out of
the FIR are ordered to be quashed.”
23. Having gone through the reasons assigned by
the High Court, it is apparent that while quashing the
proceedings on the basis of one-time settlement, the
High Court failed to advert to the following vital facts
of the case which were duly established during
investigation.
(i) That there was a specific finding in the
chargesheet that the defaulter company
through its directors had submitted
fabricated documents and misrepresented to
the Bank for the purpose of procuring the
cash credit facility.
22
(ii) That the appellant-CBI, on the basis of
evidence collected during investigation,
found that the offences of criminal
conspiracy, fabrication of documents, and
offences under the PC Act, were clearly made
out.
(iii) That sanction for prosecution had been duly
issued against the then Bank Manager, Mr.
Nishan Lal.
(iv) That the amount of settlement under the one-
time settlement did not cover the actual
amount due to the Bank and that there was
a deficit of more than 5 crores plus interest
which was a direct loss to the public
exchequer.
24. The High Court, while exercising jurisdiction
under Section 482 CrPC, did not consider these vital
facts and quashed the proceedings merely on the
23
basis of the alleged one-time settlement. The blanket
order quashing the chargesheet in its entirety would
have the effect of terminating the prosecution against
the Bank Manager as well, against whom prosecution
sanction has been granted.
25. There are plethora of judgments of this Court,
some of which we have referred to above, which
categorically hold that in cases involving economic
offences, it is not merely the Bank that stands
defrauded, but the society at large is also impacted.
26. It can be said without a shadow of doubt that
the one-time settlement would not fetch the entire
amount to which the Bank was otherwise entitled,
had the cash credit account been maintained
regularly. The settlement was made at around Rs.41
crores whereas, admittedly, the liability was of Rs. 52
crores approximately. One-time settlements are, as a
rule, effected under circumstances where the Bank
24
under duress is compelled to accept lesser amount in
order to secure the maximum possible recovery
against the defaulting account.
27.
In this background, we feel that the High Court
committed error apparent in the eyes of law by
quashing the proceedings.
28. In the case of Jaswant Singh (supra) , the
dispute involved was inter se between private parties
and the prosecution had been initiated only for the
offences punishable under Sections 406 and 420 of
the IPC. This Court thought it fit to quash the
proceedings considering the fact that the accused
and the complainant had settled all their disputes
amicably and no useful purpose would be served by
allowing the prosecution to continue.
29. In the case of B.B. Aggarwal (supra), this
Court upheld the order of the High Court quashing
the proceedings against the accused on the ground
25
that the civil suits filed by the Bank against the
defaulter companies and their directors for recoveries
of the outstanding dues, which were subsequently
transferred to Debt Recovery Tribunal stood settled
by entering into a one-time settlement.
30. On going through the aforesaid judgments, we
find that this Court did not consider the judgment in
the case of Gian Singh (supra) which expressly
prohibits quashing of proceedings of a criminal case
on strength of a compromise where loss to public
exchequer is evident and the offences under the PC
Act, 1988 are applied.
31. In the Case of Narendra Lal Jain (supra), the
offences were under Sections 420 and 120B of the
IPC. This Court held that Section 420 IPC was
compoundable whereas Section 120B IPC was not.
In this background, the Court was persuaded to
quash the proceedings holding that allowing the
26
criminal prosecution to continue would be nothing
short of an exercise in futility. Additionally, in
Narendra Lal Jain (supra) , there was no indication
about use of forged documents to procure the
loan/advance facilities from the Bank.
32. Furthermore, in none of these three cases did
the Court observe that the amount of the one-time
settlement did not cover the actual outstanding dues
of the Bank.
33. In this background, we are of the clear opinion
that the facts involved in the three precedents relied
upon by learned counsel for the respondents are
clearly distinguishable and the same have no
application to the case at hand.
34. Thus, we are of the opinion that the impugned
judgment and order do not stand to scrutiny and
deserves to be set aside. We, therefore, allow the
appeal, set aside the impugned judgment and order
27
and restore the proceedings arising out of the
th
chargesheet dated 30 November, 2016 before the
trial Court.
35.
We further make it clear that this order should
not be construed as making any observations on the
merits of the case which may prejudice the defence of
the accused persons before the trial Court which
shall proceed with the trial of the case uninfluenced
by any of the observations made hereinabove.
36. The appeal is allowed in these terms.
37. Pending application(s), if any, shall stand
disposed of.
….……………………J.
(VIKRAM NATH)
...…………………….J.
(SANDEEP MEHTA)
NEW DELHI;
NOVEMBER 11, 2025.
28