Settlement of commercial dues with No Due Certificate warrants quashing of criminal proceedings for cheating and forgery.

The petitioners sought the quashing of a criminal complaint (M. Case No. 7 of 2002/Criminal Case No. 56 of 2003) filed by a bank alleging offences under IPC Sections 406, 420, 467, 468, 471, and 120(b).

The bank alleged that the company directors obtained a loan of Rs. 60,00,000/- by suppressing prior encumbrances and forging documents, leaving an unpaid balance of Rs. 42,00,000/-.

During the pendency of the proceedings, two accused directors expired.

The petitioners contended that the default occurred due to recession in 2002 and that they subsequently entered into a settlement in 2003.

The bank issued a "no due certificate" on January 3, 2008, after realizing all settlement amounts through cheques.

Whether the criminal proceedings against the petitioners should be quashed under Section 482 of the CrPC given that the underlying commercial dispute was amicably resolved and the dues were settled.

Inherent powers of the High Court to quash proceedings to prevent the abuse of the process of law.

Principle that where a dispute is predominantly commercial/civil in nature and the parties have reached a settlement, continuing criminal prosecution serves no meaningful purpose.

Procedural framework for investigation under Section 156(3) of the Criminal Procedure Code.

Substantive allegations under Indian Penal Code sections for criminal breach of trust (406), cheating (420), forgery (467, 468, 471), and criminal conspiracy (120(b)).

The Court observed that the dispute originated from a commercial loan transaction which the petitioners had since resolved by paying the settlement amount via cheques in late 2003.

Evidence showed that the bank issued "no due certificates" recording satisfaction of the debt.

The Court noted that despite being served notice twice (in 2023 and 2025), the respondent bank did not appear to contest the petition, suggesting a lack of interest in further prosecution.

The Court reasoned that since the parties had amicably settled and the financial injury was rectified, the "bona fide" of the accused was established and any further trial would be an exercise in futility and a waste of judicial time.

The Court allowed the petition and quashed the Criminal Complaint (M. Case No. 7 of 2002) and the consequential Criminal Case No. 56 of 2003 pending before the Metropolitan Magistrate.

The Court granted the bank liberty to revive the petition if the authenticity of the "no due certificate" was ever disputed and Rule was made absolute.