Brief Facts
- The accused persons availed credit facilities from Indian Bank, however, due to non-payment, the loan account was classified as NPA. The Bank filed a recovery case before the Debts Recovery Tribunal (DRT) and during pendency of such proceedings, the Bank discovered that the mortgage documents were forged. Pursuant to the complaint of the Bank, CBI-EOW registered the FIR and a charge sheet was filed alleging serious offences under IPC and the Prevention of Corruption Act.
- While the criminal case was pending, the accused and the Bank entered into a One Time Settlement (OTS) of Rs. 3.8 crores, fully paid by November 2015, and No-Dues Certificate was issued. The DRT also disposed of the proceedings light of settlement between the parties.
- Accused filed a quashing petition before the High Court of judicature at Hyderabad under Section 482 CrPC and sought for quashing of the proceedings in light of settlement arrived between the parties. However, the High Court dismissed the quashing petition, holding that despite the private settlement, the offences alleged (forgery, fraud, criminal conspiracy) were serious crimes affecting society, and thus the criminal prosecution should continue. Aggrieved thereby, two of the accused persons (Accused Nos. 3 and 4) filed the appeal before Supreme Court of India.
Issues
- Categories of offences which can be quashed on the ground of settlement arrived between the parties.
- Factors to be considered by the High Court while considering the petition seeking quashing of the criminal proceedings on the basis of settlement arrived between the parties.
- Whether the power which independently lies with this Court (Supreme Court) to quash the criminal proceeding pursuant to the compromise arrived at, should at all be exercised?
Held
- Apex Court allowed the petition and quashed the proceedings on the basis of compromise between the accused persons and the Bank as the dispute was primarily having the civil flavour. Moreover, considering the NOC issued by the Bank, pursuant to the payment of the OTS amount, the chances of conviction of the accused persons were bleak.
- This Court reiterates the position that the criminal cases having overwhelmingly and predominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves
- The facts in the present case are similar to the facts in the case of Sadhu Ram Singla and others (supra) wherein a dispute between the borrower and the Bank was settled. In the present case also, undisputedly, the FIR and the chargesheet are pertaining to the dispute concerning the loan transaction availed by the accused persons on one hand and the Bank on the other hand. Admittedly, the Bank and the accused persons have settled the matter. Apart from the earlier payment received by the Bank either through Equated Monthly Instalments (EMIs) or sale of the mortgaged properties, the borrowers have paid an amount of Rs.3,80,00,000/- under OTS. After receipt of the amount under OTS, the Bank had also decided to close the loan account. The dispute involved predominantly had overtures of a civil dispute
- Apart from that, it is further to be noted that in view of the settlement between the parties in the proceedings before the DRT, the possibility of conviction is remote and bleak. In our view, continuation of the criminal proceedings would put the accused to great oppression and prejudice.
Relevant Paras
- 23, 31, 34, 35, 39