Orissa High Court
M/S. Arss Damoh-Hirapur Tolls Private vs Republic Of India (Cbi) & Others ....... ... on 13 February, 2025
THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No.2091 of 2022
(In the matter of an application under Section 482 of the Code of Criminal
Procedure, 1973)
M/s. ARSS Damoh-Hirapur Tolls Private
Limited and others
....... Petitioners
-Versus-
Republic of India (CBI) & others ....... Opposite Parties
For the Petitioners : Mr. Gaurav Khana, Advocate
For the Opp. Parties : Mr. Sarthak Nayak, Advocate for CBI
Ms. Pratyusha Naidu, Advocate for O.P. No.3
CORAM:
THE HONOURABLE SHRI JUSTICE SIBO SANKAR MISHRA
Date of Hearing: 26.11.2024 :: Date of Judgment: 13.02.2025
S.S. Mishra, J. The petitioners by way of the present petition have
invoked the inherent jurisdiction of this Court seeking quashing of
proceeding emanating from the F.I.R. in connection with CBI/BS & FC
No. RCBSK2018E0003 dated 09.04.2018 registered at Head of Branch,
CBI, BS & FC, Kolkata, and the consequent Charge Sheet No. 2/2020,
dated 28.12.2020, under section 120-B r/w 420 of the Indian Penal Code
and section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988
before the Court of the Special Judge, CBI, Bhubaneswar, Odisha along
with the cognizance order dated 25.02.2021 passed by the learned
Special Judge (CBI-I), Bhubaneswar in T.R. No.04 of 2021, and the
supplementary Charge Sheet No.1/2022, dated 27.06.2022.
2. Heard Mr. Gaurav Khana, learned counsel for the petitioners, Mr.
Sarthak Nayak, learned counsel for the CBI and Ms. Pratyusha Naidu,
learned counsel for the Opposite Party No.3.
3. The prosecution has filed the charge sheet against seven persons
and two Companies, the petitioner no.1 is M/s. ARSS Damoh- Hirapur
Tolls Pvt. Ltd. (Accused no.4), petitioner no.2 is Sri Sunil Kumar
Agarwal (Accused no.1), petitioner no.3 is Sri Sumendra Keshari
Pattanaik (Accused no.2), petitioner no.4 is Sri Shiv Kumar Singla
(Accused no.3) and petitioner no.5 is Sri Subash Agarwal (Accused
no.5).
Page 2 of 25
4. The contention of the petitioners in nutshell is that, the petitioner
no.1 through rest of the petitioners (functionaries of petitioner no.1) has
been awarded concession agreement to construct the highway between
Damoh and Hirapur in the State of Madhya Pradesh by M/s. Madhya
Pradesh Road Development Cooperation Limited (MPRDCL). The said
project was to be executed on Build Operate Transfer (BOT) basis. As
such, the petitioner no.1 was to construct the patch of highway running
for 96 Kms and thereafter, it had the right to operate the same and collect
revenue in the form of toll collection from the said project.
5. The petitioner nos.2 to 5 approached the Central Bank of India,
Janpath Branch, 95 Janpath, Unit-III, Bhubaneswar and sought term loan
for the purpose of construction of the Highway under the concession
agreement. The bank, after long discussion and deliberation, sanctioned
a loan of Rs. 87 crores. It is to be noted, for the purpose of sanctioning
the loan, the bank has not taken any collateral, however, the bank had the
first lien over the revenue to be generated from the collection of tolls
after the construction of the Highway project. Pursuant to that, the loan
agreement dated 24.10.2011 was executed between the bank and the
Page 3 of 25
accused persons. Between 27.10.2011 to 26.03.2012 in six tranches a
total sum of Rs.56,29,06,708/- was disbursed by the bank and between
31.12.2012 to 02.05.2013, another Rs.6,03,91,961/- was disbursed to the
petitioner no.1. As per the terms of the loan agreement, the repayment of
the loan amount was to be started after 2 years from the Commercial
Operation Date (COD), however, during this period, the petitioners had
to service the interest component over that principal amount.
6. It is the contention of the petitioners that, during the period between
14.12.2011 to 28.12.2013, the petitioner no.1 i.e. M/s. ARRS Damoh
Hirapur Tolls Private Limited (ADHTPL) paid interest to the tune of Rs.
10.21 crores. It has been further contended by the petitioners that, due to
the default attributable to M/s. MPRDCL, the project could not be
executed in timely fashion and ultimately, the dispute between M/s.
ADHTPL and M/s. MPRDCL arose leading to cancelation of the
concession agreement. The petitioner no.1 (M/s. ADHTPL) purportedly
initiated arbitration proceedings against M/s. MPRDCL, which is still
pending.
Page 4 of 25
7. The petitioner no.1 fell in default in repayment of interest as well as
the principal loan amount. A complaint was made to the investigating
agency i.e. CBI alleging that, the petitioners herein, in connivance with
the senior bank officials of the Central Bank of India, Janpath Branch
hatched a conspiracy to dishonestly take loan on the basis of the
concession agreement for the road project and thereafter diverted the
loan amount before defaulting in the repayment of causing wrongful loss
to the bank. On the basis of such complaint, the CBI initiated the
investigation and finally submitted the charge sheet no.2/2020 dated
28.12.2020 under section 120-B r/w 420 of the Indian Penal Code and
Section 13(2)/13(1)(d) of the Prevention of Corruption Act against as
many as 9 accused persons including the petitioners in the present
petition. The two other accused persons other than the petitioners herein
are Sudarsan Raj (accused no.7), Chief Manager and Branch Head,
Central Bank of India, Janpath Branch, Bhubaneswar and Udaya Nath
Giri (accused no.8), Assistant General Manager and Branch Head,
Central Bank of India, Janpath Branch, Bhubaneswar, against whom the
allegations are that, they have misused their government official position
Page 5 of 25
to assist the accused persons in taking bogus loan and thereby caused
loss to the bank.
8. It has been argued on behalf of the petitioners that, nothing is due
against the bank, as the petitioners have repaid the loan to the
satisfaction of the bank under One Time Settlement (OTS) Offer,
whereby the petitioners were to pay a total sum of Rs. 40 crores towards
full and final settlement of the loan amount. It has been further submitted
on behalf of the petitioners that, in lieu of the repayment of the loan
under the OTS, the Debt Recovery Tribunal (DRT), Cuttack, vide its
order dated 27.11.2020, has closed the recovery proceedings initiated by
the bank against the petitioners.
9. As per the case setup by the prosecution in the charge sheet filed
before the learned trial Court, the main allegation against the petitioners
is that, the disbursal of the loan was not as per the sanctioned plan and in
terms of the loan agreement. It has been alleged by the prosecution that
disbursal of the loan amount to the tune of Rs.56,29,06,708/- was not as
per the sanctioned plan and instead of the said amount, the maximum
that could have been disbursed was Rs.13.05 crores. Further, it is alleged
Page 6 of 25
that the said huge amount has been disbursed by the accused bank
official in connivance with the petitioners without adhering to the terms
and conditions of loan agreement.
10. The petitioners have strenuously argued that after the settlement
and repayment of loan amount to the satisfaction of the bank under the
OTS, there will not be any loss to the bank and therefore, no fruitful
purpose will be served by subjecting the petitioners to suffer a protracted
criminal trial. In order to buttress their argument, the petitioners have
heavily relied upon the judgment of Hon'ble Apex Court in the case of
CBI vs. B B Aggarwal and Ors. (2019) 15 SCC 522 and Nikhil
Merchant vs. CBI and Anr. (2008) 9 SCC 677.
11. Per contra, Mr. Sarthak Naik, learned counsel for the CBI,
vehemently opposed the petition submitting that settlement of civil
liabilities does not per-se exonerate the petitioners from the criminal
liability for which the petitioners must face the trial. Mr. Naik has further
argued that, the petitioners, in connivance with the bank officials, have
caused huge loss to a national bank. It has been argued on behalf of the
prosecution the fact that the disbursement of Rs. 56,29,06,708/- in only
Page 7 of 25
six tranches of the term loan within period from 27.10.2011 to
26.03.2012 was not in conformity with the terms of the loan agreement,
which shows that the petitioners have hatched conspiracy with the
accused bank officials and got the loan amount disbursed and thereafter,
committed default and caused loss to the bank.
12. Mr. Nayak, further submits that it was a conditional One Time
Settlement (OTS). As per the agreed condition between the bank and the
petitioners, the criminal case is agreed to be proceeded with. Therefore,
the petitioners are forbidden to take recourse to the present petition
seeking quashing of the criminal cases initiated against them despite
having agreed to the terms. He has also submitted that the cases of the
present nature where serious economic offence are complained of, the
same cannot be quashed by invoking the inherent jurisdiction of this
Court under Section 482 Cr.P.C. To substantiate the said submission, he
has relied upon the judgment of the Hon'ble Supreme Court in the case
of State of Maharashtra Through Central Bureau of Investigation vrs.
Vikram Anantrai Doshi and others, reported in (2014) 15 SCC 29. He
Page 8 of 25
has emphasized paragraphs-14 & 26 of the said judgment, which read as
under:-
"14. To appreciate the complete picture in proper perspective
we think it seemly to refer to the relevant decisions in the
field. In Rumi Dhar vrs. State of W.B.5 while dealing with an
order declining to discharge the accused under Section 239 of
the Code by the learned Special Judge which has been
affirmed by the High Court, a two-Judge Bench referred to the
decision in CBI v Duncans Agro Industries Ltd.6 and Nikhil
Merchant v. CBI came to hold as follows:
It is now a well-settled principle of law that in a
given case, a civil proceeding and a criminal
proceeding can proceed simultaneously. Bank is
entitled to recover the amount of loan given to
the debtor. If in connection with obtaining the
said loan, criminal offences have been
committed by the persons accused thereof
including the officers of the bank, criminal
proceedings would also indisputably be
maintainable."
In the said case, the Court took note of the fact the
compromise entered into between Oriental Bank of Commerce
and the accused pertaining to repayment of loan could not
form the foundation of discharge of the accused. The two-
Judge Bench appreciated the stand of CBI before the High
Court that the criminal case against the accused had started
not only for obtaining loan but also on the ground of criminal
conspiracy with the bank officers and accordingly upheld the
order passed by the High Court.
26. We are in respectful agreement with the aforesaid view.
Be it stated, that availing of money from a nationalized bank
in the manner, as alleged by the investigating agency, vividly
exposits fiscal impurity and, in a way, financial fraud. The
modus operandi as narrated in the chargesheet cannot be put
in the compartment of an individual or personal wrong. It is a
Page 9 of 25
social wrong and it has immense societal impact. It is an
accepted principle of handling of finance that whenever there
is manipulation and cleverly conceived contrivance to avail of
these kind of benefits it cannot be regarded as a case having
overwhelmingly and predominantingly of civil character. The
ultimate victim is the collective. It creates a hazard in the
financial interest of the society. The gravity of the offence
creates a dent in the economic spine of the nation. The
cleverness which has been skillfully contrived, if the
allegations are true, has a serious consequence. A crime of
this nature, in our view, would definitely fall in the category of
offences which travel far ahead of personal or private wrong.
It has the potentiality to usher in economic crisis. Its
implications have its own seriousness, for it creates a
concavity in the solemnity that is expected in financial
transactions. It is not such a case where one can pay the
amount and obtain a "no due certificate" and enjoy the
benefit of quashing of the criminal proceeding on the
hypostasis that nothing more remains to be done. The
collective interest of which the Court is the guardian cannot
be a silent or a mute spectator to allow the proceedings to be
withdrawn, or for that matter yield to the ingenuous dexterity
of the accused persons to invoke the jurisdiction under Article
226 of the Constitution or under Section 482 of the Code and
quash the proceeding. It is not legally permissible. The Court
is expected to be on guard to these kinds of adroit moves. The
High Court, we humbly remind, should have dealt with the
matter keeping in mind that in these kind of litigations the
accused when perceives a tiny gleam of success, readily
invokes the inherent jurisdiction for quashing of the criminal
proceeding. The court's principal duty, at that juncture,
should be to scan the entire facts to find out the thrust of
allegations and the crux of the settlement. It is the experience
of the Judge that comes to his aid and the said experience
should be used with care, caution, circumspection and
courageous prudence. As we find in the case at hand the
learned Single Judge has not taken pains to scrutinize the
entire conspectus of facts in proper perspective and quashed
Page 10 of 25
the criminal proceeding. The said quashment neither helps to
secure the ends of justice nor does it prevent the abuse of the
process of the Court nor can it be also said that as there is a
settlement no evidence will come on record and there will be
remote chance of conviction. Such a finding in our view would
be difficult to record. Be that as it may, the fact remains that
the social interest would be on peril and the prosecuting
agency, in these circumstances, cannot be treated as an alien
to the whole case. Ergo, we have no other option but to hold
that the order of the High Court is wholly indefensible."
He has also relied upon many other judgments of different High
Courts and submitted that the defrauding of the bank by the petitioners is
an offence that affects to the society at large. Quashing of the proceeding
on the ground that the money has been paid back to the bank is of no
consequence as the crime has already been committed an offence under
the Prevention of Corruption Act has been initiated against the
petitioners. Economic offences involving financial and economic
wellbeing of the State have implications which lies beyond the domain
of a mere dispute between private disputants. Therefore, this Court
should decline to interfere with this matter at this stage. He has further
argued that the cases involving Prevention of Corruption Act should not
be quashed. He has also pointed out that the Directorate of Enforcement,
Bhubaneswar Zonal Office vide order dated 31.01.2023 has already
Page 11 of 25
passed a provisional attachment order against the petitioners. That apart,
the Enforcement Directorate has also instituted a complaint on
03.08.2023 under Section 45 read with Section 44 of the Prevention of
Money Laundering Act, 2002 (PMLA Act). Hence, interference by this
Court at this stage would have direct implication on the parallel
proceedings initiated against the petitioners under various other statutes.
13. Ms. Naidu, learned counsel for the opposite party No.3 (bank) has
highlighted the terms of OTS and drawn attention of this Court to the
letter dated 28.03.2019, whereby the OTS proposal of the petitioners
were accepted. It would be relevant to reproduce the contents of the said
letter:-
"BM/JABHUB/2018-19/538
Director
M/s. ARRS Damoh-Hirapur Tolls Pvt. Ltd
Plot No.38, Sector-A, Zone-D
Mancheswar Industrial Estate
Bhubaneswar.
Reg:- Your OTS proposal dated 07/03/2019.
Ref:- Your letter ARSS/CBI/2018-19/1209 dated
07/03/2019.
On the subject maker, please take the reference of
your above letter. We are pleased to inform you that
our higher authorities have accepted your OTS offer
of Rs.40.00 crore and approved the proposal on the
condition mentioned hereunder:-
Page 12 of 25
1.Upfront amount of Rs.4.00 crore deposited by you,
which is presently kept under "no lien", will be
accounted for immediately towards your dues.
2. You have to pay Rs.6.00 crore by 31/03/2019.
3. Remaining amount of Rs.30.00 crore to be paid in
three quarterly equal instalment of Rs. (10.00) crore
each by 30th June 2019, 30th September 2019 & 31st
December 2019 respectively and interest @ 10%
simple on reducing balance is to be recovered.
4. The said OTS has been approved with the
stipulation that entire dues of the group concern M/s
Anil Contractor Pvt. Ltd must be paid by 31/03/2019.
5. Criminal action will continue.
6. All litigation filed by you against the bank should
be withdrawn.
7. You will enter consent decree with the usual default
clause.
8. In case you fail to pay the compromise amount
within stipulated period entire concessions will stand
withdrawn and it will be treated as if there was no
compromise settlement in the account and in that case
all recovery proceeding will continue further.
Please acknowledge and ensure compliance
positively."
Relying upon the Clause-(5) of the aforementioned OTS, Ms.
Naidu, submits that the criminal action already initiated should continue,
as agreed upon by the bank and the petitioners.
14. Heard learned counsel for the parties and after perusing the
records, the issue for consideration by this court falls in a very narrow
compass as to whether subjecting the petitioners, who have repaid their
Page 13 of 25
loan liability to the satisfaction of the bank under the OTS, would serve
the ends of justice or would constitute an abuse of process of law?
15. For the purpose of deciding the issue in lis, it is essential to note
the admitted fact of the case that the loan was properly sanctioned by the
bank and there is no dispute that any forged document has been used in
order to get the loan sanctioned by the petitioners. Further, it is nobody's
case that any forged document is used to create any collateral against the
sanctioned loan rather, there was no collateral taken by bank for the
purpose of sanctioning the loan. It is further admitted fact on record that
the repayment of the loan was to be started after two years from the
Commercial Operation Date (COD). However, during this period, the
interest on the disbursed amount was to be paid by the petitioners. It is
further undisputed fact that the petitioners during the period between
14.12.2011 to 28.12.2013 have paid Rs. 10.21 crores to the bank towards
the interest. However, the prosecution has disputed that the said amount
on the ground that between 13.12.2012 to 02.05.2013, the bank has
disbursed Rs.6,03,91,961/- to the petitioner no.1, therefore, only an
Page 14 of 25
amount of Rs.4,14,74,608/- has been realized by bank as interest. This is
pure and simple banking reconciliation accounting.
16. The factum of repayment of Rs.40 Crores towards full and final
settlement of the loan amount under OTS is undisputed. After the OTS
amount was paid to the bank, the opposite party No.3 (bank) moved an
application before the learned Debts Recovery Tribunal to withdraw its
Original Application, in view of the fact that the petitioners had
deposited the settlement amount to the full and final satisfaction of bank.
The learned Tribunal vide its order dated 27.11.2020 dismissed the
Original Application of the opposite party No.3, the bank as withdrawn,
observing as follows:-
"it has been stated that during the pendency of the above
O.A. the defendants had entered into a compromise
settlement with the Bank and had deposited the entire
compromise amount amounting to Rs.40.00 Crores with the
bank towards full and final satisfaction of the Bank's dues.
In view of the above payment the loan account has been
closed, no cause of action exists to proceed with the
original application and the original application has
become infructuous. A prayer has been made to withdraw
the Original Application.
In view of the payment made under compromise in full and
final settlement of the dues of the bank and closure of the
loan account, the interest of justice warrants that the case
be closed."
Page 15 of 25
(emphasis supplied)
17. In this backdrop, the rival contention of the prosecution as well as
the petitioners is to be weighed.
18. The Hon'ble Supreme Court in the case of Nikhil Merchant
(supra) has held that in criminal cases having overtones of civil dispute
with criminal facets, the High Courts can exercise their inherent powers
and jurisdiction to quash the criminal proceedings, since in view of the
settlement between the parties, continuance of the criminal proceeding
would be a futile exercise. The relevant paragraphs of the said judgment
are extracted herein below :-
"30. In the instant case, the disputes between the Company
and the Bank have been set at rest on the basis of the
compromise arrived at by them whereunder the dues of the
Bank have been cleared and the Bank does not appear to have
any further claim against the Company. What, however,
remains is the fact that certain documents were alleged to
have been created by the appellant herein in order to avail of
credit facilities beyond the limit to which the Company was
entitled. The dispute involved herein has overtones of a civil
dispute with certain criminal facets. The question which is
required to be answered in this case is whether the power
which independently lies with this Court to quash the criminal
proceedings pursuant to the compromise arrived at, should at
all be exercised?
Page 16 of 25
31. On an overall view of the facts as indicated hereinabove
and keeping in mind the decision of this Court in B. S. Joshi
case [(2003) 4 SCC 675: 2003 SCC (Cri) 848] and the
compromise arrived at between the Company and the Bank as
also clause 11 of the consent terms filed in the suit filed by the
Bank, we are satisfied that this is a fit case where technicality
should not be allowed to stand in the way in the quashing of
the criminal proceedings, since, in our view, the continuance
of the same after the compromise arrived at between the
parties would be a futile exercise."
(emphasis supplied)
19. Similarly, in the case of B B Aggarwal (supra) wherein the facts
are almost identical to the facts of the present case, the Hon'ble Apex
Court has held that, when the parties have settled their dispute and
consent decree from the DRT has been obtained after repaying the
settlement amount, no live issue survives and therefore, it would be an
abuse of process of law to continue the criminal trial against the accused
person. The relevant paragraphs of the said judgment are extracted
herein below :
"12. The High Court was of the view that on resettlement of
accounts, the parties obtained the consent decree from DRT
and paid the entire sum, therefore, there is no live issue,
which now survives. The High Court then examined the
question as to whether the issue of criminality is involved so
as to allow the trial court to continue on its merits. After
examining this issue with reference to charges and
Page 17 of 25
documents, the High Court held that no criminality issue is
found involved notwithstanding the settlement of the case
between the parties.
13. We are also of the view that there arises no occasion to
prosecute the respondents as was rightly held by the High
Court while quashing the criminal case against the
respondents.
14. The learned counsel for the appellant, placing reliance on
the decision of this Court in Rumi Dhar v. State of W.B. [Rumi
Dhar v. State of W.B., (2209) 6 SCC 364: (2009) 2 SCC (Crl.
1074] contended that notwithstanding settlement of the civil
suits by the parties, the criminal case out of which these
appeals arises has to be brought to its logical end one way or
the other on merits and the High Court was, therefore, not
right in quashing the charge-sheet at its threshold under
Section 482 CrPC.
15. We find no merit in her submission. When we take into
account the entire undisputed controversy mentioned above,
we also find that there is no criminality issue surviving qua
those accused, who are alive so as to allow the prosecuting
agency to continue with the criminal trial on merits. Indeed, it
would be an abuse of process, as was rightly held by the High
Court to which we concur."
(emphasis supplied)
While delving upon the judgment of the Hon'ble Supreme Court
in the case of B.B. Agarwal (supra), it is appropriate to deal with the
submission of Mr. Nayak. It was specifically urged by Ms. Naidu,
learned counsel for the opposite party No.3 supported by Mr. Nayak that
the OTS letter dated 28.03.2019 mentioned at Clause-(5) that "Criminal
action will continue". Based on the same, it was argued before this
Page 18 of 25
Court that despite the full and final settlement under the OTS, the
criminal proceedings should not be quashed. It is relevant to mention
that the bank officials have no authority to scuttle the criminal
proceeding by mentioning it in OTS. Once criminal law set into motion,
the Court of Law assumes its jurisdiction and the same can only be
terminated in accordance with law. By way of a contract, the parties
cannot terminate a criminal proceeding. Therefore, it was beyond the
realm of the bank authorities to touch the criminal proceeding at the time
of OTS. It is only the High Courts while exercising their inherent powers
or the Hon'ble Supreme Court, which can direct quashing or closure of
the criminal proceedings in the OTS. In fact, a similar condition was
contained in the OTS in the case of B.B. Agarwal (supra), and the same
is reproduced in the detailed judgment of the Delhi High Court in
CRLMC No.5722-30 of 2006 passed on 18.04.2009 which had travelled
to the Supreme Court. Relevant would be to reproduce the said order:-
"14. Pursuant to the notice issued to it, PNB has filed
an affidavit of reply dated 6th April 2009 in which it
is inter alia stated as under:-
**** ***** ****
Page 19 of 25
"8. I say that during the year 2005 after initiation of
SARFAESI action, Mr. Sunil Patel claiming to be
director of applicant No.7 had given the One Time
Settlement proposal. I say that after negotiations with
said Mr. Sunil Patel, the Respondent No.5 accepted
the offer for Rs.1220.00 Lakhs on various terms and
conditions settled by the respondent No.5. The
acceptance along with the terms and conditions was
informed to the concern parties wherein it was clearly
mentioned that on payment of the entire compromise
amount the parties shall be released of their liabilities
and bank charge shall be released. Further, it was
also mentioned that as regards ongoing criminal
proceedings in a charge sheet filed by CBI, bank shall
not interfere with these matter except informing to
CBI that notwithstanding the criminal breach of trust
and criminal conspiracy, parties have settled their
civil liabilities with the bank.
**** **** ****
10. I say that in the aforesaid circumstances the
respondent No.5 have discharge (sic discharged) the
applicant No.6 and 7 from their civil liabilities
towards respondent No.5. I further say that the
acceptance of compromise by the respondent No.5 is
commercial decision taken by them without prejudice
to the ongoing investigation or outcome of the
criminal proceedings pending in the Hon'ble Court."
20. Similarly, the High Court of Chhattisgarh in the case of Smt.
Suman Devi Kela vrs. CBI in WPCR No.678 of 2019 was also dealing
with the case of quashing, where the accused persons had entered into an
OTS, wherein one of the conditions was that the bank will not withdraw
Page 20 of 25
the criminal proceedings being prosecuted by the CBI. The OTS
conditions are recorded of the said judgement, which reads as under:-
"(C) Bank will not withdraw any criminal
proceedings filed against the company and/or its
promoters/guarantor, however, settlement of the
account under OTS would be informed to CBI and
RBI."
21. The High Court also noted that such a condition is mentioned
because a bank employee is not empowered to compound the offence in
an OTS letter and thereafter, relying upon the decisions of the Hon'ble
Supreme Court in Nikhil Merchand (supra) and Gian Singh vrs. State
of Punjab reported in (2012) 10 SCC 303, whereas the Hon'ble Supreme
Court quashed the criminal proceedings against the accused persons on
the ground of OTS:-
"16........ In the settlement order of DRT dated
31.01.2018, this was recorded that the Bank will not
withdraw any criminal proceedings filed against the
company or its representatives, but the settlement of
the account under the OTS would be informed to the
CBI & RBI. The said action of the bank would
demonstrate the intention of the bank and it can be
logically inferred that the Bank was not empowered to
compound the offence despite the dues of the bank are
totally liquidated, however, the obligation to informant
CBI & RBI about the OTS was recorded."
Page 21 of 25
22. On the similar line, the Hon'ble Supreme Court in the case of
Alpic Finance Ltd. vs. Sadasivan and Anr. (2001) 3 SCC 513 has held
that the failure to repay the debt itself will not amount to commissioning
the offence of cheating punishable under Section 420 of the Indian Penal
Code (I.P.C.). To bring the charges under Section 420 of the I.P.C., it is
essential that the accused, at the time of taking loan, had intention to
defraud the lender and, for that purpose, the borrower had deceived the
lender to believe things which are false to be true. The relevant
paragraphs of the said judgment are extracted herein below:-
"10. The facts in the present case have to be
appreciated in the light of the various decisions of this
Court. When somebody suffers injury to his person,
property or reputation, he may have remedies both
under civil and criminal law. The injury alleged may
form the basis of civil claim and may also constitute
the ingredients of some crime punishable under
criminal law. When there is dispute between the
parties arising out of a transaction involving passing
of valuable properties between them, the aggrieved
person may have a right to sue for damages or
compensation and at the same time, law permits the
victim to proceed against the wrongdoer for having
committed an offence of criminal breach of trust or
cheating. Here the main offence alleged by the
appellant is that the respondents committed the
offence under Section 420 IPC and the case of the
appellant is that the respondents have cheated him
Page 22 of 25
and thereby dishonestly induced him to deliver
property. To deceive is to induce a man to believe that
a thing is true which is false and which the person
practising the deceit knows or believes to be false. It
must also be shown that there existed a fraudulent
and dishonest intention at the time of commission of
the offence. There is no allegation that the
respondents made any wilful misrepresentation. Even
according to the appellant, the parties entered into a
valid lease agreement and the grievance of the
appellant is that the respondents failed to discharge
their contractual obligations. In the complaint, there
is no allegation that there was fraud or dishonest
inducement on the part of the respondents and
thereby the respondents parted with the property. It is
trite law and common sense that an honest man
entering into a contract is deemed to represent that he
has the present intention of carrying it out but if,
having accepted the pecuniary advantage involved in
the transaction, he fails to pay his debt, he does not
necessarily evade the debt by deception."
23. In the facts of the present case, it is very much clear that the
genesis of the dispute lies in commercial activities and transactions. The
bank has sanctioned the loan and in the process of sanctioning, no forged
documents have been used. In our Country, delay in execution of
infrastructure projects leading to derailment of infrastructural projects
like construction of Highway and Bridges is not a new phenomenon.
Therefore, finding criminality in non-completion of the projects would
Page 23 of 25
be farfetched. The facts of the present case shows that the loan was taken
for the purpose of construction of the Highway project and interest of the
bank was secured by creating first lien over the revenue of the toll,
which was to be generated after commencement of the project. The
criminal proceedings cannot go into the real cause of disruption of the
highway project or, for that matter, whether the petitioners have
deliberately stalled the Highway project to cause loss to the bank,
particularly in view of the fact that the petitioners have repaid Rs.40
Crores to the bank under the OTS to the full and final settlement of the
loan amount.
24. The contention of the prosecution that the OTS agreement contains
stipulation to the effect that the criminal proceedings to be continued
even after the settlement of the loan amount would prohibit this Court
from exercising its inherent power cannot be sustained for a simple
reason that a private agreement cannot take away the inherent
jurisdiction of this court under Section 482 Cr. P.C. Moreover, in the
light of aforesaid discussion, this court is of the considered opinion that,
Page 24 of 25
no fruitful purpose would be served in keeping the criminal proceeding
pending and subjecting the petitioners to the rigors of protracted trial.
25. Accordingly, in the light of and following the judgments of the
Hon'ble Supreme Court in the cases of B B Aggarwal (supra.) & Nikhil
Merchant (supra.), the F.I.R. No. RCBSK2018E0003 dated 09.04.2018
registered at Head of Branch, CBI, BS & FC, Kolkata, the consequent
Charge Sheet No. 2/2020,dated 28.12.2020, under Section 120-B r/w
420 of the Indian Penal Code and Section 13(2) r/w 13(1)(d) of the
Prevention of Corruption Act, 1988, along with the cognizance order
dated 25.02.2021 passed by the learned Special Judge (CBI),
Bhubaneswar in T.R. No. 04 of 2021, and supplementary Charge Sheet
No. 1/2022, dated 27.06.2022 and the proceedings consequent thereto
are hereby stand quashed qua the petitioners.
26. The petition stands allowed, and the pending applications stand
disposed of.
......................
(S.S. Mishra)
Judge
th
Dated the 13 of February, 2025/Swarna
Signed by: SWARNAPRAVA DASH
Reason: Authentication
Location: High Court of Orissa
