Madras HC Refuses To Quash CBI Case Against Textile Mill Partner In Alleged Rs 8-Crore Bank Fraud, Citing Signed Loan Documents

The petitioner, arrayed as A3, sought to quash C.C. No. 7 of 2011, pending before the Additional District Court No. II for CBI Cases, Coimbatore.

The prosecution alleged that the petitioner and her husband operated a textile-mill partnership that obtained credit facilities from United Bank of India through a conspiracy involving bank officials, despite the firm’s financial difficulties.

The petitioner argued that the loan account had been assigned to an asset reconstruction company, that she had paid the settlement amount and obtained a “No Dues Certificate,” and that repayment extinguished the basis for continuing the criminal case.

The CBI relied on documents signed by the petitioner in connection with the credit facilities and on the testimony of a bank manager concerning her role.

The trial had commenced; the petitioner’s earlier discharge application had been dismissed, and she had not challenged that dismissal.

The Court applied Section 528 of the BNSS, under which it considered whether to exercise its inherent power to quash the proceedings.

It relied on the principle that extinguishment of civil liability does not, by itself, extinguish criminal liability.

It also considered the categories set out in State of Haryana v. Bhajan Lal, AIR 1992 SC 604, as the framework for assessing whether the charge sheet warranted quashing.

The allegations included offences concerning cheating under Section 420 of the IPC.

The Court held that repayment and the “No Dues Certificate” did not automatically dispose of the criminal allegations, which concerned the alleged conspiracy to obtain credit through the bank and the petitioner’s asserted participation.

The documents signed by the petitioner and the bank manager’s evidence were material supporting the prosecution’s case, taking it beyond mere suspicion.

Given the charge-sheet allegations, the stage of the trial, and the unchallenged dismissal of the discharge application, the Court found no basis to quash the proceedings under the Bhajan Lal principles.

The connected miscellaneous petitions were closed.