Criminal proceedings for bank fraud may be quashed if dues are settled and no-due certificate is issued.

The applicant sought the quashing of FIR C.R. No. I-681 of 2002 (Naranpura Police Station), the supplementary charge-sheet, and proceedings in Criminal Case No. 4693 of 2006

The original FIR, lodged by the Director of Sabarmati Co-operative Bank against 14 individuals, did not initially name the applicant

A supplementary charge-sheet later named the applicant as Accused No. 2, alleging that in 1996-1997, he withdrew ₹7,00,000 via unauthorized overdraft facilities and later sold mortgaged property without bank consent, totaling an alleged embezzlement of ₹30,11,677

Subsequently, the applicant cleared all dues, and the bank issued a "No Due Certificate" on 27.03.2023

Identical allegations against co-accused had already been quashed by the High Court in separate petitions

1. Whether the criminal proceedings against the applicant should be quashed under Section 482 of the CrPC following a settlement and the issuance of a "No Due Certificate" by the complainant bank

2. Whether the continuation of proceedings constitutes an abuse of the process of law when the dispute is primarily civil in nature and has been resolved

The court relied on the precedent established by the Hon’ble Supreme Court in Nikhil Merchant v. CBI (2008) 9 SCC 67, which holds that when a dispute with civil overtones and criminal facets is resolved through compromise and the bank's dues are cleared, technicalities should not prevent the quashing of proceedings as further prosecution would be a "futile exercise"

The Court observed that while the applicant was accused of forgery and embezzlement regarding overdrafts and unauthorized sale of mortgaged property, the underlying dispute was essentially commercial

The Court noted that the applicant had since repaid the outstanding amounts, evidenced by the bank’s No Due Certificate dated 27.03.2023

Applying the ratio from Nikhil Merchant, the Court reasoned that because the bank no longer held any claims and the applicant had not personally forged the documents (as contended), the criminal facets were superseded by the settlement

Furthermore, parity was applied as the proceedings against co-accused facing identical allegations had already been quashed by the same Court

Keeping these factors in mind, the Court determined that continuing the trial would be a gross abuse of the judicial process

The Court held that in light of the settlement and the "No Due Certificate" issued by the bank, the interest of justice required the cessation of criminal proceedings