& ANR. Vs. Union of India & Ors.
[Writ Petition (CRL.)
No.26 of 2011]
J U D G M E N T
ALTAMAS KABIR, J.
issue which has been raised in this writ petition is whether an offence which is
not compoundable under the provisions of the Criminal Procedure Code, 1973,
hereinafter referred to as the "Cr.P.C.", can be quashed in the facts
and circumstances of the case.
writ petitioner No.1, Ashok Sadarangani, opened a Current Account No.314 in the
name of his proprietary concern, M/s. Internat Impex, Mumbai, with the Bank of
Maharashtra, Overseas Branch, Mumbai. The said account was subsequently converted
by the Bank into Cash Credit Account No.3 and Cash Credit facility of Rs.125 lacs,
Import Letter of Credit facility of Rs.100 lacs, Bank Guarantee facility of Rs.20
lacs and Forward Contracts upto a limit of Rs.300 lacs, were sanctioned and such
decision was conveyed to the Petitioner No.1 by the Bank by its letter dated 7th
July, 1999. On 16th October, 1999, the Bank sought additional collateral security
of Rs.56 lacs from the Petitioner No.1, who, on 29th December, 1999, submitted
a Lease Deed dated 29th December, 1999, in respect of an immovable property leased
to M/s. Nitesh Amusements Pvt. Ltd. by Shri Homi D. Sanjana and his family members,
through their Constituted Attorney, Shri Kersi V. Mehta. The Petitioners herein
were Directors of the aforesaid company.
December, 2000, six irrevocable Import Letters of Credit for a total sum of
Rs.188.01 lacs were opened by the Bank of Maharashtra on behalf of M/s. Internat
Impex, Mumbai, for import of "houseware items & rechargeable
lanterns" and "velvet four-way and upholstery materials". The documents
relating to the said Letters of Credit, including Bills of Lading, Invoice and Bills
of Exchange, were accepted and collected by the Petitioner No.1 on behalf of the
firm from the Bank and he undertook to make payment on the due date.
However, the Petitioners
defaulted in payment of their liability of about 188 lacs towards the Bank. On 10th
April, 2003, R.C.No.3/E/2003/CBI/EOW/MUM in Case No.3/CPW/2004, was registered
at the behest of the Bank of Maharashtra. On 30th June, 2003, on the complaint
of the Union Bank of India, Special Case No.3 of 2004, in CBI Case
R.C.No.8/E.2003/MUM, was registered by the Central Bureau of Investigation,
hereinafter referred to as "CBI", against the Petitioners alleging that
they had secured the credit facilities by submitting forged property documents as
collaterals and utilized such facilities in a dishonest and fraudulent manner
by opening Letters of Credit in respect of foreign supplies of goods, without actually
bringing any goods but inducing the Bank to negotiate the Letters of Credit in favour
of foreign suppliers and also by misusing the Cash Credit facility.
was filed in the said Special Case No.3 of 2004 on 14th January, 2004. At about
the same time, a criminal case, being No.236 of 2001, was registered against
Shri Kersi Mehta and others under Section 120-B, r/w 465, 467, 468 and 471 of the
Indian Penal Code, hereinafter referred to as the "IPC". The said case
was registered primarily on the accusation that Shri Kersi Mehta, in connivance
with the Petitioner No.1, had sought to sell or dispose of the property belonging
to Shri Homi D. Sanjana, situated at Kandivli and Aksha and that the Powers of
Attorney dated 11.1.1996 and 24.1.1999, which had been used by Shri Kersi Mehta
in the transactions, were not genuine.
2000 a Civil Suit, being S.C. Suit No.4849 of 2000, was filed by Shri Homi D. Sanjana,
in the City Civil Court at Bombay, against Shri Kersi Mehta and various Government
authorities, in which the relief sought for was for a direction upon Shri Kersi
Mehta to deliver up to the Court the said two Powers of Attorney for cancellation
of the same.
is a matter of record that, although, the Petitioner No.1 has surrendered and is
on bail and facing trial, the Petitioner No.2 is yet to be arrested in
connection with the case.
the criminal case against the Petitioners was proceeding, the Union Bank of India
wrote to the Petitioner No.1 on 27th September, 2010, offering a One-Time Settlement
of the disputes relating to the transactions in question. Subsequently, on 27th
September, 2010, a compromise proposal relating to the transaction between the Petitioners
and the Bank was also mooted by the Asset Recovery Branch at Mumbai of the Bank
of Maharashtra and a communication was addressed to the Petitioner No.1, which,
however, made it clear that such compromise should not be construed as settlement
of 6criminal complaints/investigations/ proceedings pending in the court against
As has been submitted
during the course of hearing of the writ petition, pursuant to such offer of One-Time
Settlement, dues of both the Banks have been cleared by the Petitioners and they
have, therefore, entered into a compromise with the Petitioners indicating that
they had no further claim against the Petitioners.
is in this background that a separate application was made in the writ petition,
being Criminal Misc. Petition No.1110 of 2012, for stay of further proceedings in
R.C.No.3/E/2003/CBI/EOW/ MUM filed by the CBI and pending before the Additional
Metropolitan Magistrate, 19th Court, Esplanade, Mumbai, and also Special Case
No.3 of 2004 in CBI Case RC No.8/E/2003/MUM filed by the CBI before the Special
Judge at Mumbai, together with Criminal Case No.236 of 2001, registered with Kherwadi
Police Station, Bandra (East), Mumbai. The same has also been taken up for consideration
along with the writ petition for final disposal.
in support of the writ petition, Shri Mukul Rohatgi, learned Senior Advocate, submitted
that the issue, which has fallen for consideration in the writ petition, has
been considered in great detail in several decisions of this Court. Learned counsel
submitted that in some cases this Court had exercised its powers under Article 142
of the Constitution of India to quash proceedings which were not compoundable, but
the common thread which runs through almost all the judgments is that the power
to interfere with even non-compoundable cases was not doubted, but the same was
required to be used very sparingly and only in special circumstances.
Rohatgi submitted that the facts of this case are almost identical to the facts
of the case in Nikhil Merchant Vs. Central Bureau of Investigation & Anr. [(2008)
9 SCC 677], which was decided on 20th August, 2008. Shri Rohatgi submitted that
as far back as in 1996, a similar issue had come for consideration before this Court
in Central Bureau of Investigation, SPE, SIU(X), New Delhi Vs. Duncans Agro 8Industries
Ltd., Calcutta [(1996) 5 SCC 591], in which the provisions of Section 320 Cr.P.C.
were considered in regard to offences which constituted both civil and criminal
wrong, including the offence of cheating.
In the said case, this
Court while considering the aforesaid issue held that compromise in a civil suit
for all intents and purposes amounted to compounding of the offence of cheating.
Furthermore, in the said case, the investigations had not been completed even till
1991, even though there was no impediment to complete the same. Having further regard
to the fact that the claim of the Bank had been satisfied and the suit instituted
by the Banks had been compromised on receiving their dues, this Court was of the
view that the complaint and the criminal action initiated thereupon, should not
be pursued any further.
Rohatgi then referred to the decision of this Court in Nikhil Merchant's case (supra),
to which one of us (Kabir, J.) was a party. In the said case, what was urged
was that though an offence may not be compoundable, it did 9not take away the powers
of this Court to quash such proceedings in exercise of its inherent jurisdiction
under Article 142 of the Constitution, and even Section 320 Cr.P.C. could not fetter
such powers, as had been earlier held in B.S. Joshi Vs. State of Haryana [(2003)
4 SCC 675]. It had also been contended on behalf of the Union of India that the
power under Article 142 of the Constitution was to be exercised sparingly and only
in rare cases and not otherwise.
The fact that such a
power vested in the Supreme Court under Article 142 of the Constitution or the High
Court under Section 482 Cr.P.C. was never in doubt, only the manner of its
application was in issue and it was held that such power was to be used
sparingly in order to prevent any obstruction to the spring of justice. Taking an
over all view of the facts in the said case and keeping in mind the decision in
B.S. Joshi's case and the compromise arrived at between the company and the
Bank and the consent terms, this Court took the view that technicality should not
be allowed to stand in the way of quashing of the criminal proceedings, since the
continuance of the same after the compromise had been arrived at between the
parties, would be a futile exercise.
Reference was also made
to another decision of this Court in Manoj Sharma Vs. State & Ors. [(2008)
16 SCC 1], where following the decisions rendered in B.S. Joshi's case and in Nikhil
Merchant's case (supra) and after referring to various other decisions, this Court
ultimately came to the conclusion that continuance of the criminal proceedings before
the trial court would be an exercise in futility and, accordingly, quashed the
buttress his aforesaid submissions, Mr. Rohatgi then referred to and relied
upon the decision in Shiji @ Pappu & Ors. Vs. Radhika & Anr. [(2011) 10
SCC 705], where also the question of quashing of proceedings relating to non-compoundable
offences after a compromise had been arrived at between the rival parties, was under
After examining the powers
of the High Court under Section 482 Cr.P.C., the learned Judges came to the conclusion
that in the facts and circumstances of the case, the continuance of proceedings
would be nothing but an empty formality and that Section 482 Cr.P.C. in such circumstances
could be justifiably invoked by the High Court to prevent the abuse of the
process of law. The learned judges, who decided the said case, took into
consideration the decisions rendered by this Court in B.S. Joshi's case, Nikhil
Merchant's case and also Manoj Sharma's case (supra) in arriving at the
Rohatgi submitted that application of the law as laid down in the Duncans Agro Industries's
case, and, thereafter, in B.S. Joshi's case, followed in Nikhil Merchant's case,
as also in Manoj Sharma's case (supra), gave sufficient indication that the
powers under Article 142 of the Constitution, as far as the Supreme Court is
concerned, and Section 482 Cr.P.C., as far as the High Courts are concerned,
could not be fettered by reason of the fact that an offence might not be compoundable
but in its own facts was capable of being quashed.
the other hand, learned Additional Solicitor General, Shri Mohan Jain, urged that
even if the Banks and the Petitioners had settled their disputes and had also entered
into a compromise settlement, that did not absolve the Petitioners of the
offence, which they had already committed under the criminal laws, which was explicitly
indicated in the settlement itself. Shri Jain submitted that the gravity of the
offence would be revealed from the various transactions which were effected by the
writ petitioners in order to camouflage their intention of offering as security
a property in respect of which they had no title.
As innocent as it may
seem to be, it is more than a coincidence that the Petitioners offered as security
a leasehold property which had been acquired from one Shri Kersi Mehta, who had
used a Power of Attorney alleged to have been executed by Shri Homi D. Sanjana and
his family members and in respect whereof a criminal case had been filed by Shri
Homi against the said Kersi Mehta and the writ petitioners. Shri Jain contended
that the entire transaction was based on a fraud perpetrated on Shri Homi D. Sanjana
and his family members and, in fact, no title to the property in question had
ever passed to the Petitioners.
Jain submitted that in Rumi Dhar (Smt.) Vs. State of West Bengal & Anr. [(2009)
6 SCC 364], a Bench of two Judges while considering the maintainability of criminal
action where the liability was both civil and criminal, had occasion to consider
the effect of a judgment in civil proceedings in respect of a loan obtained by
fraud. As an off-shoot of the aforesaid question, another question raised was regarding
the continuance of the criminal proceedings after settlement and repayment of a
loan, wherein it was held that where settlement is arrived at by and between the
creditor bank and debtor, the offence committed as such, does not come to an end.
The judgment of a tribunal
in civil proceedings and, that too, when it is rendered on the basis of the settlement
entered into between the parties, would not be of much relevance in a criminal proceeding
in view of the provisions of Section 43 of the Indian Evidence Act, 1872, which
provides that judgments in civil proceedings will be admissible in evidence only
for limited purposes. However, in deciding the said matter, the Bench took note
of the decision in Nikhil Merchant's case (supra), as also the judgment rendered
in Duncans Agro Industries case (supra).
While considering the
said judgments, the learned Judges ultimately observed that the jurisdiction of
the Court under Article 142 of the Constitution of India is not in dispute, but
that exercise of such power would depend on the facts and circumstances of each
After referring to
the decision in Nikhil Merchant's case (supra), this Court also held that the
High Court, in exercise of its jurisdiction under Section 482 Cr.P.C. and the
Supreme Court in terms of Article 142 of the Constitution, would ordinarily
direct the quashing of a charge involving a crime against society,
particularly, when both quashing of a case, continuance whereof after the settlement
is arrived at between the parties, would be a futile exercise. Reference was then
made to another decision of this Court in Sushil Suri Vs. Central Bureau of Investigation
& Anr. [(2011) 5 SCC 708], in which the Bench was called upon to deliberate
upon the very same issue, as has been raised in the present writ petition.
In the said case, after
discussing earlier 15decisions, including those rendered in B.S. Joshi's case
(supra) and in Nikhil Merchant's case (supra), the Court, while placing reliance
on the decision in Rumi Dhar's case (supra), observed that while the jurisdiction
of the Court under Article 142 of the Constitution was not in dispute, the exercise
of such power would, however, depend on the facts and circumstances of each
learned Additional Solicitor General contended that having regard to the divergent
views expressed by different Benches of this Court, when the same issue surfaced
in Gian Singh Vs. State of Punjab & Anr., SLP (Crl.) No. 8989 of 2010, wherein
the decisions in B.S. Joshi's case, Nikhil Merchant's case and Manoj Sharma's case
(supra) came to be considered, the Bench comprised of two Judges, was of the
view that the said decisions required reconsideration and directed that the matter
be placed before a larger Bench to consider the correctness of the said three decisions.
Shri Jain urged that as the same issue which was involved in the present case
was also the subject matter of the reference to 16a larger Bench, this Court should
abstain from pronouncing judgment on the issue which was the subject matter in the
said reference. Shri Jain urged that in the circumstances mentioned hereinabove,
no relief could be given to the Petitioners on the writ petition and the same was
liable to be dismissed.
carefully considered the facts and circumstances of the case, as also the law
relating to the continuance of criminal cases where the complainant and the accused
had settled their differences and had arrived at an amicable arrangement, we see
no reason to differ with the views that had been taken in Nikhil Merchant's case
or Manoj Sharma's case (supra) or the several decisions that have come
It is, however, no coincidence
that the golden thread which runs through all the decisions cited, indicates
that continuance of a criminal proceeding after a compromise has been arrived
at between the complainant and the accused, would amount to abuse of the process
of court and an exercise in futility, since the trial could be prolonged and ultimately,
may conclude in a decision which may be of any consequence to any of the other parties.
Even in Sushil Suri's
case on which the learned Additional Solicitor General had relied, the learned Judges
who decided the said case, took note of the decisions in various other cases,
where it had been reiterated that the exercise of inherent powers would depend entirely
on the facts and circumstances of each case. In other words, not that there is any
restriction on the power or authority vested in the Supreme Court in exercising
powers under Article 142 of the Constitution, but that in exercising such powers
the Court has to be circumspect, and has to exercise such power sparingly in the
facts of each case.
issue, which has been referred to a larger Bench in Gian Singh's case (supra) in
relation to the decisions of this Court in B.S. Joshi's case, Nikhil Merchant's
case, as also Manoj Sharma's case, deal with a situation which is different
from that of the present case. While in the cases referred to hereinabove, the main
question was whether offences which were not compoundable, under Section 320 Cr.P.C.
could be quashed under Section 482 Cr.P.C., in Gian Singh's case the Court was of
the view that a non-compoundable offence could not be compounded and that the
Courts should not try to take over the function of the Parliament or executive.
In fact, in none of the
cases referred to in Gian Singh's case, did this Court permit compounding of non-compoundable
offences. On the other hand, upon taking various factors into consideration,
including the futility of continuing with the criminal proceedings, this Court
ultimately quashed the same.
addition to the above, even with regard to the decision of this Court in Central
Bureau of Investigation Vs. Ravi Shankar Prasad & Ors. [(2009) 6 SCC 351], this
Court observed that the High Court can exercise power under Section 482 Cr.P.C.
to do real and substantial justice and to prevent abuse of the process of Court
when exceptional circumstances warranted the exercise of such power.
circumstances in a given case were held to be such as to attract the provisions
of Article 142 or Articles 32 and 226 19of the Constitution, it would be open to
the Supreme Court to exercise its extraordinary powers under Article 142 of the
Constitution to quash the proceedings, the continuance whereof would only amount
to abuse of the process of Court. In the instant case the dispute between the petitioners
and the Banks having been compromised, we have to examine whether the continuance
of the criminal proceeding could turn out to be an exercise in futility without
anything positive being ultimately achieved.
was indicated in Harbhajan Singh's case (supra), the pendency of a reference to
a larger Bench, does not mean that all other proceedings involving the same issue
would remain stayed till a decision was rendered in the reference. The reference
made in Gian Singh's case (supra) need not, therefore, detain us. Till such
time as the decisions cited at the Bar are not modified or altered in any way, they
continue to hold the field.
the present case, the fact situation is different from that in Nikhil
Merchant's case (supra). While in Nikhil Merchant's case the accused had
misrepresented the financial status of the company in question in order to avail
of credit facilities to an extent to which the company was not entitled, in the
instant case, the allegation is that as part of a larger conspiracy, property
acquired on lease from a person who had no title to the leased properties, was
offered as collateral security for loans obtained.
Apart from the above,
the actual owner of the property has filed a criminal complaint against Shri Kersi
V. Mehta who had held himself out as the Attorney of the owner and his family
members. The ratio of the decisions in B.S. Joshi's case and in Nikhil Merchant's
case or for that matter, even in Manoj Sharma's case, does not help the case of
the writ petitioners. In Nikhil Merchant's case, this Court had in the facts of
the case observed that the dispute involved had overtures of a civil dispute with
criminal facets. This is not so in the instant case, where the emphasis is more
on the criminal intent of the Petitioners than on the civil aspect involving
the dues of the Bank in respect of which a compromise was worked out.
the different fact situation of this case and those in B.S. Joshi's case or in Nikhil
Merchant's case (supra), we are not inclined to grant the reliefs prayed for in
the writ petition and the same is accordingly dismissed.
will, however, be no order as to costs.