ANIL BHAVARLAL JAIN & ANR.versusTHE STATE OF MAHARASHTRA & ORS.

                  [2024] 12 S.C.R. 1436 : 2024 INSC 1039

                         Anil Bhavarlal Jain & Anr.
                                     v.
                      The State of Maharashtra & Ors.
                   (Criminal Appeal No(s). 5581-5582 of 2024)
                                 20 December 2024
               [Vikram Nath and Prasanna B. Varale,* JJ.]


                               Issue for Consideration
          Whether criminal proceedings can be quashed on the basis of a
          settlement arrived at between the parties on the consent terms
          drawn and submitted before the Debt Recovery Tribunal.

                                      Headnotes†
          CrPC – s.482 – FIR and chargesheet filed against Appellants
          for offences punishable under Sections 409, 420 and 120B
          of the Indian Penal Code, 1860 along with Section 13(2) r/w
          13(1)(d) of the Prevention of Corruption Act, 1988 – High
          Court rejected petition under Section 482 of Code of Criminal
          Procedure, 1973 to quash FIR and chargesheet – Appeals
          dismissed – High Court justified in not exercising powers
          under Section 482:
          Held: FIR and chargesheet filed against Appellants for offences
          punishable under Sections 409, 420 and 120B of the Indian
          Penal Code, 1860 (“IPC”) along with Section 13(2) r/w 13(1)(d)
          of the Prevention of Corruption Act, 1988 (“PC Act”) – Appellants
          preferred writ petition in High Court for quashing of FIR and
          chargesheet under Section 482 of Code of Criminal Procedure, 1973
          (“CrPC”) – High Court rejected the petition observing that alternative
          remedy under CrPC available to Appellants – High Court’s order
          challenged – Appeals dismissed – Previous proceedings before
          Debt Recovery Tribunal (“DRT”), wherein the parties filed consent
          terms and agreed to a one-time settlement cannot be grounds
          for quashing criminal proceedings – Substantial injury caused to
          the public exchequer and consequently public interest has been
          hampered – Quashing of offences under the PC Act would have a
          grave and substantial impact not just on the parties involved, but
          also on the society at large – High Court justified in not exercising
          powers under Section 482.
*Author
[2024] 12 S.C.R.                                                                1437

     Anil Bhavarlal Jain & Anr. v. The State of Maharashtra & Ors.


     Criminal proceedings – Quashing of – On basis of settlement –
     Scope – Gian Singh v State of Punjab relied on – offences of mental
     depravity under IPC or offences of moral turpitude under special
     statutes like PC Act or offences committed by the public servants
     while working in that capacity, settlement between offender and
     victim has no legal sanction.
     Parbatbhai Aahir v. State of Gujrat & Anr relied on – economic
     offences affecting financial and economic well-being of the state
     have implications which lie beyond the domain of a mere dispute
     between the private disputants – economic offences stand on a
     different footing than other offences.
     State v. R Vasanthi relied on – grave criminal offence or serious
     economic offence or for that matter the offence that has the
     potentiality to create a dent in the financial health of the institutions
     is not to be quashed on the ground of delay in trial or on the basis
     of settlement of matter by the parties. [Para 13-15, 16,17]

                                Case Law Cited
     Gian Singh v. State of Punjab [2012] 8 SCR 753: (2012) 10 SCC
     303 – relied on.
     Parbatbhai Aahir v. State of Gujrat & Anr., 2017 SCC Online SC
     1189; State v. R Vasanthi Stanley, 2015 SSC Online SC 815 –
     referred to.

                                  List of Acts
     Code of Criminal Procedure, 1973; Penal Code, 1860; Prevention
     of Corruption Act, 1988.

                               List of Keywords
     Quashing of FIR and chargesheet; Alternate remedy; Non performing
     asset; One-time settlement; Diverted funds; Economic offences.

                              Case Arising From
     CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
     5581 of 2024
     From the Judgment and Order dated 26.07.2023 of the High Court
     of Judicature at Bombay in CRLWP No. 2546 of 2022
     With
     Criminal Appeal No. 5582 of 2024
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                                 Appearances for Parties
       Ms. Malvika Trivedi, Siddharth Bhatnagar Sr. Advs., Mahinder Singh
       Hura, Jasmeet Singh, Saif Ali, Pushpendra Singh Bhadoriya, Vijay
       Sharma, Pranav Menon, Ms. Ranjeeta Rohatgi, Vivek Punjabi,
       Ms. Shrika Gautam, Advs. for the Appellants.
       Mrs. Sonia Mathur, Sr. Adv., Samrat Krishnarao Shinde, Siddharth
       Dharmadhikari, Aaditya Aniruddha Pande, Bharat Bagla, Sourav
       Singh, Aditya Krishna, Ms. Preet S. Phanse, Adarsh Dubey, Mukesh
       Kumar Maroria, Mrs. Noor Rampal, Digvijay Dam, Shantanu
       Sharma, Mrs. Sakshi Kakkar, Sanjay Kr. Tyagi, Sanjay Kapur,
       Surya Prakash, Ms. Isha Virmani, Mrs. Shubhra Kapur, Ms. Mahima
       Kapur, Advs. for the Respondents.

                           Judgment/Order of the Supreme Court

                                       Judgment

       Prasanna B. Varale, J.

1.     Leave granted.
2.     In these appeals filed under Article 136 of Constitution of India,
       the appellant is seeking setting aside of the common order dated
       26.07.2023 passed by the High Court of Bombay in Criminal Writ
       Petition No. 2546 of 2022 and Criminal writ Petition no. 1960 of
       2022, wherein the High Court dismissed the petitions filed by the
       appellants herein, under Section 482 of Code of Criminal Procedure,
       19731 seeking quashing of the FIR bearing No. RC/026/2020/A-0010
       dated 24/07/2020, for offences punishable under Sections 409, 420
       and 120B of the Indian Penal Code, 18602 along with Section 13(2)
       r/w 13(1)(d) of the Prevention of Corruption Act, 19883 and the
       consequent chargesheet.
3.     The appellants in the Appeal arising from SLP(Crl.) No.10078 of
       2023 are the Directors of M/s Sun Infrastructure Pvt. Ltd.; 4 and



1    In short, “Cr.P.C.”
2    In short, “IPC”
3    In short, “PC Act”
4    In short, “the Company”
[2024] 12 S.C.R.                                                       1439

       Anil Bhavarlal Jain & Anr. v. The State of Maharashtra & Ors.



       appellants in the Appeal arising from SLP (Crl.) No.12776 of 2023
       are the employees of respondent no.3 Bank. The appellants in both
       the appeals are the named accused in the above-mentioned FIR.
4.     In the year of 2013, appellant nos. 1 and 2, being Directors of
       the Company, had obtained sanction for a building permit and
       commencement certificate for plot bearing Survey Nos. 145/1,
       145/3,141/1,149/2, 151, 152 and 155/2. 5 On 15.02.2014, the
       respondent no. 3-State Bank of India had sanctioned a loan of Rs.
       50 crores to the Company. On 30.10.2014, the Company opened a
       collateral security and mortgaged the commercial land. The appellant
       had made timely payments till 2017, while on 28/11/2017 the bank
       declared the loan account of the Company as Non-Performing Asset
       with an outstanding amount of Rs. 23.86 crores. The bank also
       started a recovery process and filed an application before the Debt
       Recovery Tribunal.6 On 18.12.2019, the Company and respondent
       no. 3 filed consent terms before the DRT amounting to Rs. 15 Crore.
       According to the consent terms, the Company paid Rs. 20 lacs on
       16.06.2020. Remaining amount of Rs. 14.88 crore was subsequently
       paid by the Company with interest and the loan account was closed
       as per the one-time settlement. Accordingly, the application before
       the DRT came to be disposed of.
5.     Respondent no. 3 lodged a complaint with respondent no. 2-Central
       Bureau of Investigation, against the appellants for diverging the
       funds from the loan account of respondent no. 2, SICOM Ltd. from
       whom they had allegedly availed a loan of Rs.25 Crores in 2013;
       and against the Company for changing the building plans of the
       project which resulted in the reduced value of the collateral security,
       without the consent of the Bank. On 24.07.2022, On the basis filed by
       respondent no.3, an FIR came to be registered against the appellant
       by Central Bureau of Investigation, Anti-Corruption Bureau, Mumbai.
       Charge sheet dated 31.12.2021 was filed by respondent no.2 in the
       above-mentioned FIR.
6.     The appellant preferred a Writ Petition before the High Court bearing
       WP No. 2546 of 2022 under Section 482 of Cr.P.C seeking quashing
       of the aforementioned FIR and chargesheet.


5    In short, “subject property”
6    In short, “DRT”
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7.   Vide order dated 26.07.2023, High Court rejected the said Writ
     Petition observing that the appellant has a substantive alternative
     remedy under the provisions of the Code of Criminal Procedure
     before the High Court.
8.   Learned Counsel for the appellant has made the following submissions:
     8.1. It is submitted that the appellants have already arrived at a
          compromise and the DRT after considering the settlement had
          disposed of the application filed by the respondent no. 3. The
          allegation that the bank suffered a loss of Rs. 11 crores is false
          and bogus since the bank received an amount of Rs. 47 crores
          as against a total disbursed amount of Rs. 33.5 crores. It was
          argued that there was a delay in registration of the present FIR
          insofar as the complaint was lodged by the respondent no. 2
          bank on 30th October 2019 but the FIR was registered on 24th
          July 2020 by respondent no. 2.
     8.2. It was further submitted that departmental inquiry by the bank
          against appellant no. 1 in appeal arising from SLP(Crl.) No.12776
          of 2023 was concluded and a final enquiry report was filed
          wherein charges as per the complaint dated 31.10.2019 were
          dropped and it was stated that the remaining charges are of
          a technical nature and had to be submitted to the Disciplinary
          Authority for consideration. It was submitted that the allegations
          in the complaint pertain to an act which was committed after
          they were relieved from their position and the new officer took
          charge of the said post, which was recorded in the departmental
          inquiry against appellant no.1.
     8.3. It was further stated that the provisions of the PC Act are not
          applicable to the appellants in appeal arising from SLP (Crl.)
          No.10078 of 2023, as there is no allegation of bribery against
          the present appellant.
     8.4. It was stated that there was a difference in the valuation report
          of the said property since the valuer appointed by the bank
          valued the properties at Rs. 107.7 Crores in the year 2014,
          and when it was again valued on 28.09.2018 after the account
          of the borrower company was declared as a Non-Performing
          Asset, it came down to Rs. 3.45 crores. He further stated that
          after the consent terms were filed, the same valuer valued the
          same property at Rs. 57.17 Crores on 23.01.2020.
[2024] 12 S.C.R.                                                       1441

       Anil Bhavarlal Jain & Anr. v. The State of Maharashtra & Ors.


9.    Learned counsel for respondent no.2 submitted before us that mere
      delay in lodging of the FIR ipso facto will not affect the merits of the
      case. The counsel further submitted that the settlement as arrived at
      between the bank and the accused persons would not absolve the
      appellants from the criminal offences which they have committed.
      The counsel relied on the judgment of this Court in Gian Singh vs
      State of Punjab 7 to state that in cases where societal interest is
      involved, it is not prudent to quash the proceedings or reduce the
      sentence. He further stated that mere fact of repayment of diverted
      funds and consequent settlement would not dilute the criminal
      offenses committed. He further submitted that the charges against
      the appellant were proved in the departmental proceedings.
10. Learned counsel for respondent no. 3 submitted before us that there
    are serious allegations of fraud and cheating levelled against the
    appellants in the FIR and a loss has been caused to the bank which
    ultimately is dealing with public money. The property of a lesser
    value was valued at exorbitant rates which was offered as security
    for the loan sanctioned. Further, there was diversion of funds which
    is also a criminal offence. It was further submitted that a perusal of
    the FIR does not lead to the conclusion that no cognizable offence
    is made out against the appellants. Moreover, under clause 15 of the
    consent terms, it was agreed between the parties that the criminal
    proceedings and the charges will continue as per law. It is well
    settled that when a settlement is arrived at between the creditor and
    debtor, the offence committed as such does not come to an end.
    Furthermore, in view of the misconduct, the Disciplinary Authority
    imposed a major penalty of reduction to a lower stage in the time
    scale of pay on the appellant employees.
11. We have heard the arguments and perused other relevant documents
    as also the judgment passed by the High Court.
12. The moot question which arises for our consideration in the present
    case is whether the criminal proceedings can be quashed based
    upon a settlement arrived at between the parties as per the consent
    terms drawn and submitted before the DRT.
13. The Counsel for the appellant heavily relied on the case of Gian
    Singh (supra) to state that their case is squarely covered by the


7    (2012) 10 SCC 303
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     said judgment. Relevant paragraph from the said judgment can be
     extracted as below:
          “60 … criminal cases having overwhelmingly and
          predominantly civil flavour stand on a different footing for
          the purpose of quashing particularly the offences arising
          from commercial, financial, mercantile, civil partnership
          or such like transactions or the offences arising out of
          matrimony related to dowry etc or the family disputes where
          the wrong is basically private or personal in nature and the
          parties have resolved their entire dispute. In this category
          of cases high court may quash criminal proceedings if in
          its view because of compromise between the offender and
          victim the possibility of conviction is remote and bleak and
          continuation of criminal case would put accused to great
          oppression and prejudice and extreme injustice would be
          caused to him by not quashing the criminal case. Despite
          full and complete settlement and compromise with the
          victim. In other words, the high Court must consider whether
          it would be unfair or contrary to the interest of justice to
          continue with the criminal proceedings or continuation of
          the criminal proceeding would tantamount to abuse of
          process of law...”
14. This Court in Gian Singh (supra) has dealt with the powers of
    the High Court under Section 482 r/w Section 320 of the CrPC
    and the consequent authority of the High Court to quash criminal
    proceedings, FIRs or complaints under its inherent jurisdiction as in
    contradistinction to the power with criminal courts for compounding
    offenses under Section 320 of the CrPC. The High Court observed
    that quashing was dependent on the unique circumstances of each
    case and though no fixed category can be established, heinous and
    severe offences should not be quashed even if the parties have
    settled. However, this Court in Gian Singh (supra) categorically
    made an observation that:
          “61. …….. The offences of mental depravity under the
          Indian Penal Code or offences of moral turpitude under
          special statutes like Prevention of Corruption Act or the
          offences committed by the public servants while working in
          that capacity, the settlement between offender and victim
          can have no legal sanction at all.”
[2024] 12 S.C.R.                                                              1443

      Anil Bhavarlal Jain & Anr. v. The State of Maharashtra & Ors.


15. In the light of above, the facts of the present case are distinguishable
    from the facts that came for consideration before this Court in the
    above case relied on by the appellants herein.
16. Another reference can be made to the judgment of this Court in
    Parbatbhai Aahir vs State of Gujrat and Anr.8 wherein it was
    observed that, economic offenses involving financial and economic
    well-being of the state have implications which lie beyond the domain
    of a mere dispute between the private disputants. The High Court
    would be justified in declining to quash where the offender is involved
    in an activity akin to a financial or economic fraud or misdemeanour.
    The consequences of the act complained of upon the financial or
    economic system will weigh in the balance. Thus, it can be concluded
    that economic offences by their very nature stand on a different footing
    than other offences and have wider ramifications. They constitute a
    class apart. Economic offences affect the economy of the country
    as a whole and pose a serious threat to the financial health of the
    country. If such offences are viewed lightly, the confidence and trust
    of the public will be shaken.
17. A profitable reference in this regard can be made to the judgment in
    State vs. R Vasanthi Stanley9 wherein this Court declined to quash
    the proceedings in a case involving alleged abuse of the financial
    system. It was observed as under:
            “15. …….. A grave criminal offence or serious economic
            offence or for that matter the offence that has the potentiality
            to create a dent in the financial health of the institutions
            is not to be quashed on the ground that there is delay in
            trial or the principle that when the matter has been settled
            it should be quashed to avoid the head on the system.
            That can never be an acceptable principle or parameter,
            for that would amount to destroying stem cells of law and
            order in many a realm and further strengthen the marrow
            of unscrupulous litigations. Such a situation should never
            be conceived of.



8   2017 SCC Online SC 1189
9   2015 SSC Online SC 815
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18. In the instant case, it is on record that consent terms were submitted
    by the parties before the DRT. It is admitted that the bank had
    suffered losses to the tune of Rs. 6.13 Crores approximately.
    Hence, a substantial injury was caused to the public exchequer and
    consequently it can be said that public interest has been hampered.
    Keeping in view the fact that in the present case a special statute
    i.e. PC Act has been invoked, we are of the view that quashing of
    offences under the said Act would have a grave and substantial
    impact not just on the parties involved, but also on the society at
    large. As such the High Court committed no error in declining to
    exercise its inherent powers in the present case, thereby refusing
    to quash the criminal proceedings.
19. For the reasons stated above, we are of the view that the High Court
    was justified in not exercising its jurisdiction under Section 482 of
    CrPC. The appeals are accordingly dismissed.
20. Pending application(s), if any, shall be disposed of accordingly.

     Result of the Case: Appeals dismissed.



     †
         Headnotes prepared by: Swathi H. Prasad, Hony. Associate Editor
                                 (Verified by: Shibani Ghosh, Adv.)