Setting aside surcharge proceedings does not warrant quashing a criminal prosecution supported by prima facie evidence.

The petitioner, A3, was a Supervisor/Cooperative Sub-Registrar at Neyveli Cooperative Housing Society from 26 March 1999 to 25 March 2002.

Following an enquiry into alleged financial irregularities, the prosecution alleged that he had colluded with A1 and A2 and recommended loans totalling Rs.25 lakh without verifying construction progress or supporting certificates, causing loss to the Society.

A final report was filed for offences under Sections 120B, 408, 409, 467, 468 and 471 IPC.

The petitioner sought to quash the proceedings in C.C. No. 53 of 2016, relying on the setting aside of the departmental surcharge proceedings.

1. Whether the allegations and materials in the final report disclosed a prima facie case against the petitioner for the offences charged, warranting continuation of the criminal proceedings.

2. Whether the setting aside of the surcharge proceedings was a ground to quash the criminal prosecution.

The petition was brought under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

The judgment considered the charged offences under Sections 120B, 408, 409, 467, 468 and 471 of the Indian Penal Code.

It stated that, at the quashing stage, the court must consider whether the prosecution’s allegations and materials, taken at face value, disclose a prima facie case.

The prosecution must independently establish the ingredients of the offences, including matters such as dishonest intention, conspiracy, entrustment and dishonest conversion; the setting aside of departmental surcharge proceedings does not ordinarily, by itself, justify quashing a criminal case.

The Court found that the petitioner’s supervisory role included verifying construction progress and scrutinising records and certificates before recommending loan releases.

The prosecution alleged that he acted in collusion with A1 and A2, failed to make those checks, and recommended loans on the basis of bogus certificates despite discrepancies in the construction.

Taking the complaint, final report, witness statements and other materials at face value, the Court considered them sufficient to disclose a prima facie case for the offences charged.

The setting aside of the surcharge proceedings did not displace that independent criminal case.

It dismissed the Criminal Original Petition and closed the connected miscellaneous petitions.