2. The brief facts of the case are that petitioner No.1 was
incorporated with Sri Hazur Singh as its Managing Director. The
Hazur Singh son i.e. Sri S.Sutinder Singh/petitioner No.2 and
the business of distribution of consumer electronic goods i.e.
Mobiles, Electronics, Home appliances items etc. in the State of
Andhra Pradesh. For its smooth business operations, petitioner
Bank of India. Subsequently, SBI sanctioned a cash credit of Rs.80
Rs.206 crores. When petitioner No.1 company got gravely impacted
Rs.160 crores. Since, the renewal and restructuring proposed by
w.e.f 31.03.2014. Subsequently, petitioner No.1 company
30.11.2016 on terms and conditions as mentioned in the letter. A
pending dues between the parties had accorded a complete closure.
interest for the delayed period in accordance with the letter.
3. Subsequently, No Dues Certificate has been issued to
the DRT, Hyderabad was also not pressed by the SAMB.
Subsequently to issue "No Dues Certificate" and withdrawing I.A.
promoters/directors for fraud, cheating and other offences. Upon
Sections 13(2), r/w 13(1) (d) of PC Act against the petitioners.
4. Heard Sri Vikram Chowdary, learned Senior Counsel
5. Learned counsel for the petitioners contended that CBI
"The allegations in the complaint disclose that
commission of offences".
SKS,J
6. He further submits that where a borrower enters into a One
Time Settlement (OTS) and honorably pays his dues to the
satisfaction of the bank and "No Dues Certificate" is issued to him,
it would tantamount to a breach of sovereign commitment in case
criminal proceedings are initiated much after the
settlement/closure of such accounts. The commercial transactions
in our country are governed by principles of equity and justice
apart from the rule of law. The commercial understanding between
the bank and the borrower must be accorded a high level of
sanctity. The present case depicts an extremely sordid state of
affairs where one wing of State Bank of India has actively and
aggressively entered into a settlement with petitioner No.1 company
and another wing (SAMB)/respondent No.5 has acted in an
absolutely contrary manner and based upon stale findings of some
purported forensic audit (kept under wraps and never shared with
the petitioners), chose to register a case much after the matter was
settled, closed and accorded a quietus for all intents and purposes.
7. The petitioners availed loan from SBI on 05.02.2010 and
cash credit limit of Rs.80 crores and a Bank Guarantee limit of
Rs.10 crores and on 04.08.2010 vide renewal, SBI enhanced credit
limit of Rs.108 crores and Bank Guarantee was left unchanged to
Rs.10 crores. Thereafter, the officials of SBI approached petitioner
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No.1 company constantly encouraged it to avail more loans with
the intent to meet the bank's lending targets are met. Limits were
increased from time to time and SBI earned interest. On
14.05.2011, the credit facility enhanced to Rs.148crores. On
07.09.2011, the credit facility enhanced to Rs.175 crores. On
25.10.2012, the SBI also enhanced credit facility to Rs.206 crores.
In the year, 2014, the State of Andhra Pradesh was bifurcated into
two parts and due to administrative and other problems, the
petitioner No.1 company suffered a lot. Due to the same, the
petitioner No.1 company got gravely impacted on various losses.
On 28.04.2014, SBI restructured the loan by transferring/adjusted
some portion of working capital to term loan and applied recovered
interest. By way of renewal with restructuring, the total limit
sanctioned was Rs.160 crores. On 29.10.2014, the bank took a
drastic action and the account of the company was classified as
NPA retrospectively w.e.f 31.03.2014. In 2015 various efforts were
made by the petitioner No.1 company to improve the business
functioning by taking on more dealerships of other mobile
companies, but unfortunately all in vain. Therefore, the petitioner
No.1 company approached SBI for a One Time Settlement (OTS)
and it is accepted on 12.01.2017. The petitioner No.1 company
offers to pay Rs.78 crores towards full and final settlement of total
dues amounting of Rs.210.44 crores. On 02.02.2017, a Joint
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Memorandum of Compromise was filed by the complainant Bank
and the bank withdrawn the case from the Debts Recovery
Tribunal (DRT).
8. He further submitted that later the Bank letter dated
13.12.2019 subsequent to issuing "No Dues Certificate" and
withdrawing IA filed before the DRT-II, Hyderabad for the recovery
of dues, but SBI vide a letter dated 13.12.2019 requested the CBI,
BSFB, Bangalore to register FIR against petitioner No.1 company
and its promoters/directors for fraud, cheating and other offences,
which is against the settled rules of law and judgment of Hon'ble
Apex Court in CBI Vs. Duncans Agro Industries Ltd 1, it was held
as under:
"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 companies
concerned. Even if an offence of cheating is prima
facie constituted, such offence is a compoundable
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".
(1996 ) 5 SCC 591
SKS,J
9. He relied upon the judgment of Hon'ble Apex Court in Nikhil
Merchant v. CBI 2, it was held as under:
30. "The disputes between the Company and
the Bank have been set at rest on the basis of the
compromise arrived at by them where under the
dues of the Bank have been cleared and the Bank
does not appear to have any further claim against
the company.
10. To the latter offence the ratio laid down in B.S. Joshi v.
State of Haryana 3, the compromise proceedings are quashed. He
further submitted that, in the present case, the issue between the
Bank and petitioner No.1 Company that there is no continuation of
further proceedings, as such, he prayed the Court to quash the
proceedings against the petitioners. As such, further proceedings
are not necessary, in view of the terms of compromise between the
parties and also the law laid down by the Supreme Court in CBI vs.
Narendra Lal Jain 4, it was held as under:
13."The civil liability of the respondents to pay
the amount to the Bank has already been settled
amicably. The terms of such settlement have been
extracted and no subsisting grievance of the Bank
(2008) 9 SCC 677
(2003) 4 SCC 675 and 2003 SCC (Cri) 848
(2014) 5 SCC 364
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in this regard has been brought to the notice of
the Court. While the offence under Section 420
IPC is compoundable the offence under Section
120-B is not".
11. On the other hand, learned Special Public Prosecutor for CBI
appearing on behalf of the respondent Nos.3 and 4 submitted that
compounding the offence by paying a meagre amount is not a
ground to quash the proceedings against the petitioners. In
support of his contention, he relied upon the judgment of the
Hon'ble Supreme Court in Prabatbhai Aahir alias Parbatbhai
Bhimsingbhai Karmur and ors. Vs State of Gujarat and Anr 5,
wherein at para 15 (x), it was held as under:
"The economic offences involving the financial
and economic well being of the State have
implications which lie beyond the domain of a
mere dispute between private disputants. The
High Court would be justified in declining to
quash where the offender is involved in an activity
akin to a financial or economic fraud or
misdemeanour. The consequences of the act
complained of upon the financial or economic
system will weigh in the balance."
AIR 2017 SC 4843
SKS,J
12. He also relied upon the judgment of the Hon'ble Supreme
Court in Central Bureau of Investigation Vs. Hari Singh Ranka
and others 6, wherein at para No.16 it was held as under:
16. "The OTS merely deals with the civil liability
that too by making of payment of Rs.25 crores
whereas outstanding liability was Rs.44 crores.
Though, it was submitted that loss caused was
approximately Rs.13 crores. Be that as it may, we
are not on the civil liability. Ultimately the
amount which has been settled in OTS scheme
cannot be legally sufficient to wipe out the
criminal liability of the accused persons. OTS
could wipe off only the civil liability of the accused
not the criminal one."
13. In the present case, a perusal of the record discloses that
the parties have entered into compromise and settled the amount
for Rs.78 crores and outstanding amount of Rs.28.10 crores as on
30.11.2016 along with interest for the delayed period was agreed to
be paid on certain terms and conditions as mentioned in the letter
of payment settlement by the petitioners. But the said amount was
not paid as agreed in OTS. In Ishoo Narang Vs. The State of
(2019) 16 SCC 687
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Telangana and others 7, wherein at para No.49, this Court held
as under;
"The total OTS payment done by the petitioner
No.4 is only a small fraction of total dues. The
allegation against the petitioner No.4 is that it has
caused a massive loss of Rs.182.99 crores to the
public sector banks and the same is also
specifically mentioned in the complaints. The said
money ultimately belongs to the public and tax
payers. Thus, prima facie, the petitioners have
committed fraud not only against one or two
banks, but against the public in general and it is a
"Loan Fraud" and it is an economic offence."
14. Law laid down in the above case shows that mere payment of
amount is not a ground for quashing proceedings, in the present
case also petitioner offered to pay Rs.78 crores towards full and
final settlement of total dues Rs.210.44 crores which is only a 1/3rd
of the liability and bank issued no due certificate and filed I.A. for
withdrawal of DRT proceedings.
15. Whereas, at this stage, it is pertinent to note the recent
judgment of the Hon'ble Supreme Court in Tarina Sen v. Union of
Criminal Petition Nos.3966, 3982 and 4272 of 2020
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India and Another 8, wherein in paragraph No.14 and 15, it is held
as under:
14. By a separate judgment of the even date in Criminal
Appeal arising out of Special Leave Petition (Criminal) No.
4353 of 2018 wherein similar facts arose for consideration,
we have held that when the matter has been compromised
between the borrower and Bank, the continuation of the
criminal proceedings would not be justifiable.
15. Relying on the earlier judgments of this Court, we have
held that in the matters arising out of commercial, financial,
mercantile, civil, partnership or such like transactions or the
offences arising out of matrimony relating to dowry, etc. or
family disputes where the wrong is basically private or
personal in nature and the parties have resolved their entire
dispute, the High Court should exercise its powers under
Section 482 CrPC for giving an end to the criminal
proceedings. We have held that the possibility of conviction
in such cases is remote and bleak and as such, the
continuation of the criminal proceedings would put the
accused to great oppression and prejudice."
16. In the light of the above Judgment, it is clear that in cases
involving commercial, financial, or personal transactions, where
parties have resolved their disputes, the continuation of criminal
proceedings is unjustifiable. In the present case, the parties have
resolved their disputes and considering the facts and
circumstances of the case, this Court deems it fit to quash the
2024 SCC OnLine SC 2696
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proceedings against the petitioner vide FIR:RC0782021E0006 of
2021 dated 16.12.2021 registered under Sections 420, 468, 471,
120B of IPC and Sections 13(2), r/w 13(1) (d) of PC Act.
17. Accordingly, this Writ Petition is allowed. There shall be no
order as to costs.
Miscellaneous applications, if any pending, shall also stand
closed.
_______________
K. SUJANA, J
Date: 04.02.2025
dsu
SKS,J
THE HONOURABLE SMT. JUSTICE K. SUJANA
P.D. ORDER IN
WRIT PETITION.No.45020 of 2022
Date: 04.02.2025
DSU
