Holding

The High Court erred in exercising its inherent powers under Section 482 CrPC to quash the proceedings; the quashing was an abuse of process and the trial must proceed.

Summary

The Central Bureau of Investigation (CBI) appealed against the Madras High Court’s order quashing criminal proceedings against A. Ravishankar Prasad and others for alleged conspiracy, forgery and fraud involving Indian Bank. The respondents had settled civil dues of Rs.157 crore, and argued that the settlement extinguished criminal liability under sections 120‑B r/w 420 IPC and 13(2) r/w 13(1)(d) of the Prevention of Corruption Act. The Supreme Court examined the scope of the High Court’s inherent powers under Section 482 of the CrPC and held that the High Court mis‑applied those powers, as the charge‑sheet disclosed a prima facie case and the trial was at an advanced stage with 92 witnesses examined. The Court emphasized that settlement of civil claims does not bar criminal prosecution and that quashing the case would amount to an abuse of process. Consequently, the Supreme Court set aside the High Court’s order, directed the trial to continue on a day‑to‑day basis, and allowed the appeals.

Issues considered

The propriety of exercising inherent powers under Section 482 CrPC to quash criminal proceedings at an advanced stage of trial.
Whether a settlement of civil dues and repayment of loan extinguishes criminal liability under IPC 120‑B r/w 420 and the Prevention of Corruption Act.
The existence of a prima facie case based on the charge‑sheet against the respondents.
The appropriate scope and limits of the High Court’s inherent powers to prevent abuse of process.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 120-B, s. 420
Prevention of Corruption Act, 1988s. 13(2) r/w 13(1)(d)

Subjects

inherent powersSection 482 CrPCquashing criminal proceedingsbank fraudsettlement and criminal liabilityconspiracyIPC 120-BIPC 420Prevention of Corruption Actabuse of processtrial stage

Judgment

[2009] 9 S.C.R. 1025
J
\
CENTRAL BUREAU OF INVESTIGATION A
v.
A. RAVISHANKAR PRASAD & ORS
(Criminal Appeal No. 1082-1085 of 2009)
MAY 15, 2009
B
[DALVEER BHANDARI AND HARJIT SINGH BEDI, JJ.]

·"'"' Code of Criminal Procedure, 1973 - s.482 - Inherent
powers of High Court under - Nature and scope of - Bank
fraud - Allegation of clandestine dealings and systematic c
fraud by respondents in collusion with bank officials to receive
pecuniary advantage - Cases against respondents under
s. 120-B rlw s.420 /PC - Application by respondents uls.482
CrPC - Allowed by High Court - Propriety of - Held: Not
). proper- Inherent power u/s. 482 CrPC should not be exercised D
• to stifle a legitimate prosecution - On facts, prima facie .
adequate material was available on record to proceed against
the respondents - Trial of case was at advanced stage and
quashing proceedings at such stage was an abuse of the'
process of Court - Also, since respondents and the bank E
officials shared charges under s. 120-B rlw s.420 /PC,
'y
quashing charges against the respondents would have very
.;..:
serious repercussions on pending cases against the bank
officials - Mere pgyment of dues by respondents under a
settlement did not exempt them from criminal proceedings - F
Because of unnecessary interference by High Court under
s. 482 CrPC, trial of case could not be completed and
concluded - Trial Court directed to conduct trial on day to day
basis - Penal Code, 1860 ~ s.420 rlw s. 1208 - Prevention

• of Corruption Act, 1988 - s.13(2) rlw s.13(1)(d) .

According to the appellant, the respondents entered
G

into a conspiracy with the Chairman and Managing
Director and other officials of the Indian Bank with the

1025 H
1026 SUPREME COURT REPORTS [2009] 9 S.C.R.

A object of cheating the Bank in the matter of
recommending, sanctioning and disbursing huge credit
'
facilities running over hundreds of crores and committed
serious offences such as forgery, fabrication of
documents and used those documents as genuine.
B
On completion of investigation, charge-sheets were
filed and four cases were registered against the bank
officials and the respondents and their group concerns
under section 120-B r/w section 420 IPC. The bank
C officials were also proceeded against under sectio~ 13(2)
r/w section 13(1)(d) of the Prevention of Corruption Act,
1988.

As regards the recovery proceedings initiate~ before
the Debt Recovery Tribunal, the respondents entered into
D a· compromise with the Bank and settled the entire
outstanding dues by paying an amount of Rs.157 crores
and consequently the petitions filed before the Debt
Recovery Tribunal were dismissed as settled out of
Court.
E
Respondents filed application under section 482
CrPC whereupon the High Court quashed the entire
criminal proceedings against them.

In appeals to this Court, it was contended that the
F sa~ettlement between the parties. did. not absolve the
respondents from criminal liability and the High Court
erred in quashing criminal proceedings against them,
particularly when active trial in the cases was in progress
and 92 witnesses were already examined and when
G quashing of criminal. proceedings against the f
respondents would have grave impact and repercussion
on the criminal proceedings pending against the
Chairman and the Managing Director and other officials
of the Bank.
H
CENTRAL BUREAU OF INVESTIGATION v. A. 1027
RAVISHANKAR PRASAD
~
\,
Allowing the appeals, the Court A

HELD: 1.1. The High Court possesses inherent
powers under section 482 CrPC. These inherent powers
of the High Court are meant to act ex debito justitiae to
do real and substantial justice, for the administration of B
which alone it exists, or to prevent abuse of the process
of the court. Inherent power under Section 482 CrPC can
··-' be exercised in following category of cases: (I) to give
effect to an order under the Code; (ii) to prevent abuse
of the process of court, and (iii) to otherwise secure the
ends of justice. This court time and again has observed
c
that the extraordinary power under section 482, Cr.P.C.
should be exercised sparingly and with great care and
caution. The court would be justified in exercising the
power when it is imperative to exercise the power in order
to prevent injustice. [Para 15] (1036-A-D] D
)_
>
1.2. The powers possessed by High Court under
Section 482 CrPC are very wide and the very plenitude
of the power requires great caution in its exercise. The
court must be careful to ensure that its decision in E
exercise of this power is based on sound principles. The
inherent power should not be exercised to stifle a
·. - y
legitimate prosecution. The High Court should normally
refrain from giving a prima facie decision in a case where
all the facts are incomplete and hazy; more so, when the F
evidence has not been collected and produced before the
court and the issues involved, whether factual or legal,
are of such magnitude that they cannot be seen in their
true perspective without sufficient material. Of course, no
hard and fast rule can be laid down with regard to cases
-. > in which the High Court will exercise its extraordinary
G
jurisdiction of quashing the proceedings at any stage.
[Para 21] [1037-F-H; 1038-A-B]

1.3. The exercise of inherent powers would entirely
H
1028 SUPREME COURT REPORTS (2009] 9 ~.C.R.
lit
f
A depend on the facts and circumstances of the each case.
The object of incorporating inherent powers in the Code
of Criminal Procedure is to prevent abuse of the process
of the court or to secure ends of justice. [Para 40] (1045-
D-E]
B
1.4. Both English and the Indian courts have
consistently taken the view that the inherent powers can
be exercised in those exceptional cases where the ~-
allegations made in the first information report or the
complaint, even if are taken on their f~ce value and
c accepted in their entirety do not prima facie constitute any
offence or make out a case against the accused. [Para
41] [1045-E-G]

Smt. Rumi Dhar v. State 9f West Bengal & Another JT ·
D 2009 (5) SC 321, relied on.
1

-;(
~
lnder Mohan Goswami & Anr. v. State of Uttarachal & Ors.
2007 (12) SCALE 15 - explained.

R.P. Kapur v. State of Punjab (1960) 3 SCR 388; State
E of Kamataka v. L. Muniswamy & Others (1977) 2 SCC 699;.
State of Haryana & Others v. Bhajan Lal & Others 1992 Supp.
(1) SCC 335; Janata Dal v. H. S. Chowdhary & Others (1992)
'!.......
4 SCC 305; Central Bureau of Investigation, SPE, SIU(X),
· New Delhi v. Duncans Agro Industries Ltd., Calcutta (1996)
F 5 SCC591; Union of India & Others v. B.R. Bajaj & Others .
(1994} 2 SCC 277; B.S. Joshi & Others v. State of Haryana
& Another (2003) ~ SCC 675; Nikhil Merchant v. Central
Bureau of Investigation & Another(2008) 9 SCC 677; Jagdish
Chanana and Others v. State ofHaryana & Another 2008 (4)
G Scale 411 ·and Madan Mohan Abbot v. State of Punjab -(-
(2008) 4 sec 582, referred to.

Connelly v. OPP (1964) AC 1254 and OPP v. Humphrys
(1977) AC 1- referred to.
H 2.1. In the present case, the charge-sheet gives
CENTRAL BUREAU OF INVESTIGATION v. A 1029
RAVISHANKAR PRASAD
.
• details of the clandestine dealings and systematic fraud A
committed by the respondents in collusion with the bank
officials. Details and particulars regarding respective
individual roles of the respondents in receiving pecuniary
advantages from the bank officials in a clandestine
manner have been enumerated. By no stretch of 8
imagination, it can be said that allegations in the
complaint and charge-sheet taken at their face value do
--' not constitute offences alleged. In the instant case, the
charge-sheet clearly reveal substantial material on record
"I
making a clear case under section 120-8 r/w section 420 c
IPC against the respondents and their connivance with
the bank officials. Prima facie, this is one case wher~
adequate material is available on record to proceed
against the respondents. [Paras 14, 35 and 42] [1035-E-
H; 1044-B; 1046-A]
D
,, } 2.2. The High Court in the impugned judgment
erroneously invoked inherent power of the court under
section 482 CrPC. The High Court ought to have
considered the entire material available to establish a
case against the respondents under section 120-8 read E.
with section 420 IPC. It is significant that the respondents
,.. and the bank officials share the charges under section
,., 120-8 read with section 420 IPC. Quashing the charges
against the respondents would also have very serious
repercussions on the pending cases against the bank F
officials. [Para 43] [1046-8-C]

2.3. In four cases, 92 witnesses have already been
examined. The trial of the case was at the advanced
stage. At this sage, the High Court seriously erred in
-~
G
quashing the charges against respondent nos.1 and 2.
Quashing the proceedings at that stage was clearly an
abuse of the process of the court. The court neither
considered the entire material nor appreciated the legal
position in proper perspective. Because of unnecessary
H
1030 SUPREME COURT REPORTS (2009] 9 S.C.R.

f
..
-A interference by the High Court under section 482 CrPC,
the trial of the cases could not be completed and
\
concluded. Mere re-payment of loan under a settlement
cannot exempt the accused from the criminal proceeding
in the facts of this case. The Trial Court is directed to
B conduct the trial on day to day basis and parties are
directed to cooperate with the trial court. [Paras 44, 45,
46 and 48] [1046-0-G; 1047-A-B] :I--

Case Law Reference: • ,,,
c (1964) AC 1254 referred to Para 18
(1977) AC 1 referred to Para 19 '..•

(1960) 3 SCR 388 referred to Para 20
(1977) 2 sec 699 referred to Para 22
D -i .
1992 Supp. (1) sec 335 referred to Para 23 '4

(1992) 4 sec 305 referred to Para 24
(1996) 5 sec 591 referred to Para 26
E
(1994) 2 sec 211 referred to Para 29
(2003) 4 sec 675 referred to Para 30 'f
I_,"'

(2008) 9 sec 677 referred to Para 31
F 2008 (4)' Scale 411 referred to Para 32
(2008) 4 ·sec 582 referred to Para 33
JT 2009 (5) SC 321 relied on Para 34

G 2007(12) SCALE 15 explained Para 36
~-
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 1082-1085 of 2009.

H
CENTRAL BUREAU OF INVESTIGATION v. A 1031
RAVISHANKAR PRASAD
.,)
~
From the Judgment & Order dated 30.4.2008 of the High A
Court of Madras in Crl. Original Petition Nos. 4764 of 2008 to
4767 of 2008.

B.Dutta, ASG., Rajni Ohri Lal, Binu Tamta and 8. Krishna
Prasad for the Appellant. B
V.J. Francis, A Radhakrishnan and Anupam Mishra for the
~~ Respondents.

The Judgment of the Court was delivered by

DALVEER BHANDARI, J. 1. Leave granted.
c
2. The Central Bureau of Investigation is seriously ·
aggrieved by the judgment of the High Court of judicature at
Madras dated 30.4.2008 by which the High Court has quashed
the entire criminal proceedings and CC Nos.80, 81 and 82 of D
)
~
200t against the respondents herein namely, A. Ravishankar
Prasad and A Manohar Prasad.

3. According to the appellant, the respondents herein have
committed serious offences, such as forgery, fabrication of E
documents and using the said documents as genuine. T h e
respondents, A Ravishankar Prasad and A Manohar Prasad
y also entered into conspiracy with the Chairman and Managing
.-
Director and other officials of the Indian Bank, Chennai with the
object of cheating the Indian Bank in the matter of
F
recommending/sanctioning/disbursing huge credit facilities in
the form of:

"(1) Letter of Credit (LC);

(2) Open Cash Credit (OCC) G
-)
(3) Secured- Temporary Overdrafts (SOD/TOO)

(4) Bank Guarantee (BG)

H
1032 SUPREME COURT REPORTS [2009) 9 S.C.R.

A (5) Blocked Loan; and
,. I.,

(6) Taking over of liabilities from other banks and other
branches of Indian Bank without proper appraisal,
without following banking norms, beyond the
delegated powers and without ensuring the end use
B
of the funds in the name of M/s Ravishankar Films
Pvt.Ltd., M/s Gemini Arts Pvt.Ltd., M/s Gemini
Pictures Circuit Pvt.Ltd. and M/s Prasad Properties i. -
and Investments Pvt.Ltd. represented by respondent
no.1 A. Ravishankar Prasad and respondent no.2
c A. Manohar Prasad who fraudulently produced false
documents through their employees and used the
same as genuine and defrauded the Indian Bank
huge amounts running into hundreds of crores and
obtained pecuniary advantage for themselves and
D others."
-J:
-I
4. On completion of investigation charge-sheets were filed
and four cases were registered against M. Gopalakrishnan,
formerly CMD, Indian Bank, Chennai and other public servants,
E bank officials and A. Ravishankar Prasad and A. Manohar
Prasad and their group concerns under section 120-B read
with section 420 and section 13(2) read with section 13(1)(d)
of Prevention of Corruption Act, 1988. 'f
..
5. On 28.3.2007 the respondents herein have settled the
F entire outstanding dues by paying an amount of Rs.157 crores
during March 2007 and the petitions before the Debt Recovery
Tribunal, Chennai have been dismissed as settled out of court.

6. Respondent nos.1 and 2 had preferred application
G under section 482 of the Cr.P.C. before the High Court of -{, -
Madras, to quash the proceedings against them contending
inter alia that the witnesses so far examined by the prosecution
have not stated anything against the respondents. It is also
urged that the respondents had entered into a compromise with
H
CENTRAL BUREAU OF INVESTIGATION v. A. 1033
RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]
.. ~
the Indian Bank and have settled the entire outstanding dues A
and legal charges to the bank on the recovery certificate issued
"'- to the ORT, Chennai. In this view of the matter, proceedings
against the respondents need to be quashed.

7. In pursuance of the show cause notice issued by the B
High Court, the CBI contended that the cases were registered
on the basis of written complaint filed by the General Manager,
- ..t Indian Bank, Chennai. It was submitted that the active trial in
the case was in progress and 92 witnesses have already been
examined. The CBI also urged that the settlement of the loan
transactions between the parties would not absolve the
c
respondents herein from the criminal liability. According to the
CBI, the Madras High Court without properly scrutinizing the
materials produced by the prosecution quashed the
proceedings against the respondents.
D
~
. 8. The High Court has given undue weightage to the
settlement entered between the bank and the respondents. The
settlement has absolved the respondents at the most from the
civil lrability but as far as criminal liability under section 120-B
read with section 420 IPC is concerned, the respondents share E
the charges with the Chairman and the Managing Director and
other officials of the Bank. Therefore, quashing of the complaint
:y against the respondents was wholly unwarranted and against
.... the settled position of law. The High Court did not comprehend
the ratio of the series of judgments of this court and erroneously F
quashed the proceedings.

9. The High Court ought to have appreciated that quashing
of the criminal proceedings against the respondents herein
would also have grave impact and repercussion on the criminal
proceedings pending against the Chairman and the Managing G
->
,,... Director and other officials of the Bank under section 120-B
read with section 420 IPC and section 13(2) read with section
13(1)(d) of Prevention of Corruption Act, 1988.

10. Before we examine the legal position, it has become H
1034 SUPREME COURT REPORTS [2009) 9 S.C.R.

,_ ....
A imperative to recapitulate some averments and material
incorporated in the charge-sheet filed against the respondents.
The charges incorporated that during the course of investigation ""
the complicity of some public servants and private persons have
come to notice and their names have been included in the list
B of accused persons. In the charge-sheet it is incorporated that
the senior bank officials in order to favour respondents A.
Ravishanker Prasad and A. Manohar Prasad representing ·
.,.._
various companies have defrauded the bank.

11. The respondents obtained pecuniary advantage for
c themselves and for the accused persons mentioned above,
causing huge wrongful loss to the Indian Bank T. Nagar (BOT)
Branch to an extent of Rs.5935.65 Lakhs as on 16.6.1997 by
M/s Ravishankar Films Pvt. Ltd. (A-12) (now M/s Ravishankar
Industries Pvt. Ltd.) and to an extent of Rs.750 Lakhs (excluding
D interest) to the Indian Bank Kotturpuram Branch, Chennai in the
i
account of Mis Tamil Nadl)I Video Corporation to the tune of ...
Rs.675 Lakhs (excluding interest) to Indian Bank, Alwarpt
Branch, Chennai in the account of M/s Media Communication
Services to the tune of Rs.725 Lakhs (excluding interest) to
E Indian Bank, Abhiramapuram Branch, Chennai in the account
of M/s Sri Balaji Finance and Investments to the tune of Rs. 700
Lakhs (excluding interest) to Indian Bank, Peters Road Branch,
Chennai in the account of M/s Kalyani Audio Enterprises (as 'f
on 29.5.1997) and thereby A-1 to A-31 have committed ....
F offences punishable under sections 120(B) read with sections
420, 467, 468, 471 Indian Penal Code and section 13(2) read
with section 13(1)(d) of Prevention of Corruption Act, 1988.

12. In furtherance of aforesaid criminal conspiracy in the
course of the same transactions, A. Ravishankar Prasad (A-
G
1O) vide letter dated 20.8.90 addressed to the Branch Manager, ·<-
Indian Bank, T. Nagar (Bon Branc_h, Chennai requested for the
following credit limits viz., Open Cash Credit (OCC) facility of
""
Rs.390 Lakhs, Medium Term Loan (MTL) of Rs.60 lakhs and
Letter of Credit (LC) of Rs.100 lakhs in favour of M/s
H
CENTRAL BUREAU OF INVESTIGATION v. A 1035

' .... RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]

Ravishankar Films Pvt.Ltd. (A-12) (now changed its name as A
.... M/s Ravishankar Industries Pvt.Ltd) .

13. In furtherance of aforesaid criminal conspiracy based
on the letter of A-10, S. Ravindran (A-13) the then Branch
Manager, without undertaking any pre-sanction verifications
B
about the credit worthiness of the company has recommended
for an Open Cash Credit (OCC) facility of Rs.390 lakhs, Medium
- l Term Loan (MTL) of Rs.60 lakhs and Letter of Credit (LC) of
Rs.100 lakhs in favour of Mis Ravishankar Films Pvt.Ltd. (A-
12). While forwarding the proposal, he exaggerated information
about the profile of the company. While this proposal was
c
pending for sanction, V.R. Chidambaram (A-30), the then Zonal
Manager of Indian Bank, Chennai had permitted an ad hoc
TOD facility of Rs.50 lakhs on 25.10.90 over phone, without
ascertaining the requirement of the firm for such huge funds.
However, S. Ravindran (A-13) released the entire amount of D
t
• Rs. 50 lakhs on 24.10.90 itself. This amount was disbursed by
S. Ravindran (A-13) to the sister concerns of Mis Ravishankar
Films Pvt.Ltd. (A-12) as per the request of the Directors of the
company A Ravishankar Prasad (A-10) and A Manohar
Prasad (A-11) and while doing so he failed to ensure proper E
end use of the banks funds.

:
.. v 14. The charge-sheet annexed with the paperbook running
from pages 78 to 191 gives details of the clandestine dealings
and systematic fraud committed by the respondents in collusion F
with the bank officials. By recapitulating all details we would
unnecessarily burden this judgment. Regarding investigation of
this case, we would like to observe that this case seems to be
one of the very few well-investigated cases. In this case, details
and particulars regarding respective individual roles of the
G
-+
. respondents in receiving pecuniary advantages from the bank
officials in a clandestine manner have been enumerated. By no
stretch of imagination, it can be said that allegations in the
complaint and charge-sheet taken at their face value do not
constitute offences alleged.
H
1036 SUPREME COURT REPORTS [2009) 9 S.C.R.

A 15. Undoubtedly, the High Court possesses inherent
,. .. . _

powers under section 482 of the Code of Criminal Procedure. p.,.. .
These inherent powers of the· High Court are meant to act ex
debito justitiae to do real and substantial justice, for the
administration of which alone it exists, or to prevent abuse of
B the process of the court. Inherent power under Section 482
<;r.P.C. can be exercised in following category of cases:

(i) to give effect to an order under the Code; i..-

(ii) to prevent abuse of the process of court, and
c
(iii) to otherwise secure the ends of justice.

This court time and again has observed that the extraordinary
power under section 482, Cr.P.C. should be exercised
sparingly and with great care and caution. The court would be
D justified in exercising the power when it is imperative to exercise
the power in order to prevent injustice. In order to understand
.. ~

the nature and scope of power under section 482 Cr.P.C. it has
become necessary to recapitulate the ratio of the decided
cases.
E
16. Reference to the following cases would reveal that the
courts have consistently taken the view that they must use the

--
'{
court's extraordinary power only to prevent injustice and secure
the ends of justice.
F
17. We have largely inherited the provisions of inherent
powers from the English jurisprudence, therefore the principles
decided by the English courts would be of relevance for us. It
is generally agreed that the Crown Court has inherent power
to protect its process from abuse. The English courts have also
G used inherent power to achieve the same objective. ~:__

18. In Connelly v. OPP [1964) AC 1254, Lord Devlin while
""
dealing with similar provisions under the English law stated that
where particular criminal proceedings constitute an abuse of
H process, the court is empowered fo refuse to allow the
CENTRAL BUREAU OF INVESTIGATION v. A. 1037
RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]
.....
-\
indictment to proceed to trial. A
. 19. Lord Salmon in OPP v. Humphrys [1977] AC 1
stressed the importance of the inherent power when he
observed that it is only if the prosecution amounts to an abuse
of the process of the court and is oppressive and vexatious that B
the judge has the power to intervene. He further stated that the
court's power to prevent such abuse is of great constitutional
-..t . importance and should be jealously preserved.
;.·
20. In R.P. Kapur v. State of Punjab (1960) 3 SCR 388,
this Court summarized some categories of cases where , c
inherent power can and should be exercised to quash the

- proceedings:
(i) where it manifestly appears that there is a legal bar
against the institution or continuance of the D
t proceedings;
~

(ii) where the allegations in the first information report
or complaint taken at their face value and accepted
'>
in their entirety do not constitute the offence
alleged; E

(iii) where the allegations constitute an offence, but
'(
·there is no legal evidence adduced or the evidence
""\
..;_ «!

adduced clearly or manifestly fails to prove the
charge. F
21. The powers possessed by the High Court under
Section 482 of the Code are very wide and the very plenitude
of the power requires great caution in its exercise. The court
must be careful to ensure that its decision in exercise of this
... -t power is based on sound principles. The inherent power should G
not be exercised to stifle a legitimate prosecution. The High /
Court should normally refrain from giving a prima facie decision
in a case where all the facts are incomplete and hazy; more
so, when the evidence has not been collected and produced
H
~
1038 SUPREME COURT REPORTS [2009) 9 S.C.R.
I.·
}- . ,
A before the court and the issues involved, whether factual or
legal; are of such magnitude that they cannot be seen in their
-~
true perspective without sufficient material. Of course, no hard
and fast rule can be laid down with regard to cases in which .I
the High Court will exercise its extraordinary jurisdiction of
~
B quashing the proceedings at any stage. ~
·.1
j ..
22. This Court had an occasion to deal with the concept
of inherent powers in State of Kamataka v. L. Muniswamy & -l-
Others (1977) 2 SCC 699. The court again reiterated that the
wholesome power under Section 482 Cr.P.C. entitles the High -t>
c Court to quash a proceeding when it comes to the conclusion
that allo~ing the proceeding to continue would be an abuse of
the process of the court or that the ends of justice require that -:
the proceeding ought to be quashed. The High Courts have
been· invested with inherent powers, both in civil and criminal
D matters, to achieve a salutary public purpose, A court
1
proceeding ought not to be permitted to degenerate into a ~

weapon of harassment or persecution. The court observed in
. this case that ends of justice are higher than. the ends of mere
law though justice must be administered according to laws i
E made by the legislature. This case has been followed in a large ./

'•
number of subsequent cases of this Court and other courts.

23. In another leading case State of Haryana & Others v. t .... ,
Bhajan Lal & Others 1992 Supp. (1) SCC 335, this Court in.
"'
F the backdrop of interpretation of various relevant provisions of
the Cr.P.C. under Chapter XIV and of the principles of law
enunciated by this Court in a series of decisions relating to the
exercise of the extraordinary power under Article 226 of the
Constitution of India.or the inherent powers under Section 482
Cr.P .C. gave the following categories of cases by way of
G
illustration wherein such power could be exercised either to
prevent abuse of the process of the court or otherwise to secure
the ends of justice. Thus, tbis Court made it clear that it may
~--
... ·~

not be possible to lay down any. precise, clearly defined and

H
CENTRAL BUREAU OF INVESTIGATION v. A. 1039
RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]
....
t
sufficiently channelised and inflexible guidelines or rigid A
formulae and to give an exhaustive list to myriaC: kinds of cases
wherein such power snould be exercised:

(1) Where the allegations made in the first information
report or the complaint, even if they are taken at
B
their face value and accepted in their entirety do not
prima facie constitute any offence or make out a
... }- case against the accused .

(2) Where the allegations in the first information report
and other materials, if any, accompanying the FIR c
do not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1)
of the Code except under an order of a Magistrate
within the purview of Section 155(2) of the Code.
D
-+ (3) Where the uncontroverted allegations made in the
;.
FIR or complaint and the evidence collected in
support of the same do not disclose the
commission of any offence and make out a case
against the accused.
E
'<
(4) Where, the allegations in the FIR do not constitute
y a cognizable offence but constitute only a non-
,r cognizable offence, no investigation is permitted by
:t"
a police officer without an order of a Magistrate as
contemplated under Section 155(2) of the Code. F
(

(5) Where the allegations made in the FIR or complaint
are so absurd and inherently improbable on the
basis of which no prudent person can ever reach a
just conclusion that there is sufficient ground for . G

....- > (6)
proceeding against the accused .

Where there is an express legal bar engrafted in
,
'
any of the provisions of the Code or the concerned
Act (under which a criminal proceeding is instituted)
H
1040 SUPREME COURT REPORTS [2009) 9 S.C.R.

A to the institution and continuance of the
proceedings and/or where there is a specific , ·•
provision in the Code or .the concerned Act,
providing efficacious redress for the grievance of
the aggrieved party.
B
(7) Where a criminal proceeding is manifesUy attended
with mala fide and/or where the proceeding is
maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a
view to spite him ·due to private and personal
c g·rudge-:.

24. This Court again in Janata Dal v. H. S. Chowdhary &
Others (1992) 4 SCC 305 observed that in what circumstances
the inherent powers should be exercised:-
D
"132. The criminal courts are clothed with inherent power +... '
to make such orders as may be necessary for the ends of
justice. Such power though unrestricted and undefined
should not be capriciously or arbitrarily exercised, but
should be exercised in appropriate cases, ex debito
E
justitiae to do real and substantial justice for the
administration of which alone the courts exist. The powers
possessed by the High Court under Section 482 of the
Code are very wide and the very plentitude of the power
requires great caution in its exercise. Courts must be
F careful to see that its decision in exercise of this power is
based on sound principles."

25. The learned counsel for the respondents submitted
written submissions and relied on some of the decided cases
G of this court.

26.-The decision in Central Bureau of Investigation, SPE,
SIU(X), New Delhi v. Duncans Agro Industries Ltd., Calcutta
-
(1996) 5 S.CC 591 was relied upon by the learned counsel for
H ~the respondents. The court observed that for the purpose of
CENTRAL BUREAU OF INVESTIGATION v. A. 1041
....., RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]
~
quashing the complaint, it is necessary to consider whether the A
allegations in the complaint prima facie make out an offence
or not. It is not necessary to scrutinize the allegations for the
purpose of deciding whether such allegations are likely to be
upheld in the trial. Any action by way of quashing the complaint
is an action to be taken at the threshold before evidences are B
led in support of the complaint. For quashing the complaint by
y t way of action at the threshold, it is, therefore, necessary to
consider whether on the face of the allegations incorporated
in a complaint or F.l.R., a criminal offence is constituted or not.

27. In this case, the court further held that looking to the
c
facts of the case it appears that after completion of civil suit
further investigation in connection with complaints may not be
expedient. In concluding para, it was observed as under:-

4 "In the facts of the case, it appears to us that there is D
.> enough justification for the High Court to hold that the case
was basically a matter of civil dispute. The Banks had
already filed suits for recovery of the dues of the Banks
on account of credit facility and the said suits have been
compromised on receiving the payments from the E
companies concerned. Even if an offence of cheating is
prima facie constituted, such offence is a compoundable
-i
~ offence and compromise decrees passed in the suits
instituted by the· Banks, for all intents and purposes,
amount to compounding of the offence of cheating". F
28. The tenor of the judgment indicates that quashing of
the complaint would depend on the facts of the each case.

29.ln Union of India & Others v. B.R. Bajaj & Others
- ) (1994) 2 sec 277 the court after examining this court's G
judgment in Ch. Bhajan La/'s case (supra) observed that at the
stage of FIR the court should refrain from interfering when the
FIR discloses commission of a cognizable offence.

30. In B.S. Joshi & Others v. State of Haryana & Another
H
/

1042 SUPREME COURT REPORTS [2009] 9 S.C.R.

.. \.·

A (2003) 4 sec 675 the court reiterated the legal position that
!"."
the court's inherent powers have no limit but should be
exercised with utmost care and caution. Inherent powers must
be utilized with the sole purpose to prevent the abuse of the
.process of the court or to otherwise secure the eQ,ds of j1:1stice.
B In exercise of inherent powers, proper scrutiny of facts and
circumstances of concerned case are absolutely imperative.

31. In Nikhil Merchant v. Central Bureau of Investigation -\ ~
& Another (2008) 9 sec 677, this court while relying on the
aforesaid judgment in B.S. Joshi's case (supra) observed that
c on overall view of the facts the court was satisfied that
technicality should not be allowed to stand in the way of
quashing of the criminal proceedings.

32. In Jagdish Chanana & Others v. State of Haryana &
D Another 2008 (4) Scale 411 this court observed as under:-
~-

"The fact that a compromise has indeed been recorded "
is admitted by all sides and in terms of the compromise
the disputes which are purely personal in nature and arise
out of commercial transactions, have been settled in terms
E ~
of the compromise with one of the terms of the
compromise being that proceedings pending in court may
be withdrawn or compromised or quashed, as the case Y,
may be. In thEf light of the compromise, it is unlikely that
the prosecution will succeed in the matter. We also see
F that the disp-ute. is a purely personal one and no public
policy is involved in the transaction that had been entered
into between the parties. To continue with the proceedings,
therefore, would be a futile exercise."

G 33. In Madan Mohan Abbot v. State of Punjab (2008) 4 _, -
sec 582 in which one of us (Bedi, J.) was the author of the
judgment observed as under:-

"We need to emphasise that it is perhaps advisable that
in disputes where the question involved is of a purely '
H
CENTRAL BUREAU OF INVESTIGATION v. A. 1043
....,,
RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]
I
t-
personal nature, the court should ordinarily accept the A
terms of the compromise even in criminal proceedings as
keeping the matter alive with no possibility of a result in
favour of the prosecution is a luxury which the courts,
grossly overburdened as they are, cannot afford and that
the time so saved can be utilized in deciding more effective B
and meaningful litigation. This is a common sense
approach to the matter based on ground of realities and
~-t
bereft of the technicalities of the law."

34. In a recently delivered judgment of this court in Smt.
Rumi Dhar v. State of West Bengal & Another JT 2009 (5)
c
SC 321, this court approved the observations of the Special
Judge. The observations of Special Judge are set out as
under:-

"The learned Special Judge in his order dated 16.12.2006 D
1 rejected the contention raised on behalf of the appellant
i>
herein, stating:

"I have gone through the record, citation and
considered the circumstances. It is true that the
E
accused has put a good gesture by paying of the
dues of the bank but I am at one with the Ld. PP
'-.( that this payment cannot exonerate the accused
J
from a prima facie charge. If I allow this, then I may
have to swallow in a case of bribery that the
accused has paid back the amount to the sufferer
F
the amount received as bribe. It is a question of trial
whether there was any criminal intention on the part
of this Lady accused in this crime. The criminal
intention is to be inferred from the evidence to be
adduced by the prosecution. Simply because the G
- 1
money has been returned, I cannot shut the mouth
of the prosecution from adducing evidence against
this accused. Thus, I do r.ot like to pass any order
in favour of the accused. The prayer for discharge
H
1044 SUPREME COURT REPORTS [2009] 9 S.C.R.
\.--
-+
A of accused no. 7, Rumi Dhar stands rejected. Let
the case proceed. Fix 7.2.07 for consideration of
charge. The sureties must produce all the accused
persons on that date."

35. The facts of the instant case are quite akin to Rumi
B
Dhar (supra)'s case. In the instant case, the charge-sheet
clearly reveal substantial material on record making a clear
case under section 120-B read with section 420 IPC against --\~

the respondents and their connivance with the bank officials.

c 36. The High Court in the impugned judgment has
misunderstood and misapplied the ratio of the three-Judge
Bench of this court in· lnder Mohan Goswami & Anr. V. State-
of Uttarachal & Ors. 2007(12) SCALE 15 to the facts of this
case. One of us (Bhandari, J.) was the author of the said
D judgment. The ratio of the said judgment is in para 24 at page
25 which reads as under:- t--
"'
"Inherent powers under section 482 Cr.P.C. though wide
have to be exercised sparingly, carefully and with great
caution and only when such exercise is justified by the tests
E
specifically laid down in this section itself. Authority of the
court exists for the advancement of justice. If any abuse of
the process leading to injustice is brought to the notice of y
\.
the court, then the Court would be justified in preventing
injustice by invoking inherent powers in absence of
F specific provisions in the Statute."

37. The court in para 27also observed that inherent power
should not be exercised to stifle a legitimate prosecution.

38. Let us consider the facts of this case and apply the
<3 .ratio of Goswami's case (supra) where facts are as follows:- -( -
(I) allegations are th.at accused have committed
_serious offences such as forgery, fabrication of
· documents C!nd used those documents as genuine;
H
'·
CENTRAL BUREAU OF INVESTIGATION v. A. 1045
RAVISHANKAR PRASAD {DALVEER BHANDARI, J.]
-.../
t (II) allegations are that accused/respondents herein, A. A
Ravishankar Prasad and A. Manohar Prasad have
entered into a conspiracy with the Chairman and
Managing Director and other officials of the Indian
Bank, Chennai with the object of cheating the Indian
Bank in the matter of recommending, sanctioning, B
disbursing huge credit facilities running over
hundreds of crores.
~ .
(Ill) Trial of all four cases are at advanced stage in
which 92 witnesses have already been examined.
c
39. While applying the ratio of Goswami's case (supra),
how can any court in its legitimate exercise of power under
section 4?4. Cr.P.C. quash the proceedings against accused
A. Ravishankar Prasad and A. Manohar Prasad in the face of
aforesaid allegations. In the instant case, wrong application of D
~ the ratio of the said judgment has led to grave miscarriage of
,j,

justice.

40. Careful analysis of all these judgments clearly reveals
that the exercise of inherent powers would entirely·depend on
E
the facts and circumstances of the each case. The object
incorporating inherent powers in the Code is to prevent abuse
"'(
of the process of the court or to secure ends of justice.
~-

41. Both English and the Indian courts have consistently
taken the view that the inherent powers can be exercised in F
those exceptional cases where the allegations made in the first
information report or the complaint, even if are taken on their
face value and accepted in their entirety do not prima facie
constitute any offence or make out a case against the accused.
... ) G
42. When we apply the settled legal position to the facts
of this case it is not possible to conclude that the complaint and
charge-sheet prima facie do not constitute any offence against
the respondents. It is also not possible to conclude that material
on record taken on face value make out no case under section
H
1046 SUPREME COURT REPORTS [2009] 9 S.C.R.

i,.....
A 120-B read with section 420 IPC against the respondents. -/
Prima facie, we are of the opinion that this is one case where
adequate material is available on record to proceed against
the respondents.

43. In our considered view it was extremely unfortunate that
B
the High Court in the impugned judgment has erroneously
invoked inherent power of the court under section 482 of the
Code of Criminal Procedure. The High Court ought to have -"\--.
considered the entire material .available to establish a case
against the respondents under section 120-B read with section
c 420 IPC. It is significant that the respondents and the other bank
officials share the charges under section 120-B read with
section 420 IPC. Quashing the charges against the
respondents would also have very serious repercussions on
the pending cases against the other bank officials.
D
44. In four cases, 92 witnesses have already been ~
examined. The trial of the case was at the advanced stage. At
..
this sage, the High Court has seriously erred in quashing the
charges against respondent nos.1 and 2.
E
45. Quashing the proceedings at that stage was clearly an
abuse of the process of the court. The court neither considered
the entire material nor appreciated the legal position in proper
y
perspective. The impugned judgment is wholly unsustaiQable ,.
in law and is accordingly set aside. Unfortunately, because of
F unnecessary interference by the High Court under section 482
Cr.P.C. the trial of this case could not be completed and
concluded.

46. Before parting with the case we would like to observe
G that mere re-payment of loan under a settlement cannot exempt
the accused from the criminal proceeding in the facts of this ( --
case.

47. We would like to observe that any observations made
in this case have been made to decide the present case. The
H
CENTRAL BUREAU OF INVESTIGATION v. A. 1047
RAVISHANKAR PRASAD [DALVEER BHANDARI, J.]
trial court may decide the case without being influenced by any A
observations made by this court.

48. In this view of the fact, in the interest of justice we direct
that the trial be now completed as expeditiously as possible.
The trial court is directed to conduct .!he trial on day to day basis 8
and parties are directed to cooperate with the trial court. The
trial court shall ensure that unnecessary adjournments be
avoided and trial be concluded as expeditiously as possible.

49. The appeals are consequently allowed and the
impugned judgment of the High Court is set aside. The appeals C
stand disposed of accordingly.
B.B.B. Appeals disposed of.