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Anil Bhavarlal Jain v. State of Maharashtra (SC) : Law Finder Doc Id # 2676122
SUPREME COURT OF INDIA
Before:- Vikram Nath and Prasanna B. Varale, JJ.
Criminal Appeal No. 5581 of 2024 (@ Special Leave Petition (Crl.) No. 10078 of 2023) With Criminal
Appeal No. .... of 2024 (@ Special Leave Petition (Crl.) No. 12776 of 2023). D/d. 20.12.2024.
Anil Bhavarlal Jain & Anr. - Appellants
Versus
The State of Maharashtra & Ors. - Respondents
For the Appellants :- Ms. Malvika Trivedi, Sr. Advocate, Mr. Mahinder Singh Hura, Mr. Jasmeet
Singh, Mr. Saif Ali, Mr. Pushpendra Singh Bhadoriya, Mr. Vijay Sharma, Mr. Pranav Menon, Mr.
Saurav, Mr. Siddharth Bhatnagar, Sr. Advocate, Ms. Ranjeeta Rohatgi, Mr. Vivek Punjabi, Ms. Shrika
Gautam, Advocates.
For the Respondent :- Mr. Samrat Krishnarao Shinde, Mr. Siddharth Dharmadhikari, Mr. Aaditya
Aniruddha Pande, Mr. Mukesh Kumar Maroria, Mr. Sanjay Kapur, Mr. Surya Prakash, Mr. Arjun
Bhatia, Ms. Divya Singh Pundir, Mr. Devesh Dubey, Ms. Mahima Kapur, Ms. Shubhra Kapur,
Advocates.
IMPORTANT
Allegations of fraud and cheating against employees of Bank - Settlement between bank and
the creditor will not absolve employees of offences - Quashing of offences under the Prevention
of Corruption Act would have a grave and substantial impact not just on the parties involved,
but also on the society at large.
Indian Penal Code, 1860, Sections 409, 420 and 120B Prevention of Corruption Act, 1988 Section
13(2) r/w 13(1)(d) - Allegations of fraud and cheating against employees of Bank - Property of a
lesser value was valued at exorbitant rates which was offered as security for the loan
sanctioned - Settlement between bank and the creditor will not absolve employees of offences -
Quashing of offences under the Prevention of Corruption Act would have a grave and
substantial impact not just on the parties involved, but also on the society at large.
When a settlement is arrived at between the creditor and debtor, the offence committed as such
does not come to an end - In view of the misconduct, the Disciplinary Authority imposed a major
penalty of reduction to a lower stage in the time scale of pay on the appellant employees.
It is on record that consent terms were submitted by the parties before the DRT. It is admitted that
the bank had suffered losses to the tune of Rs. 6.13 Crores approximately. Hence, a substantial
injury was caused to the public exchequer and consequently it can be said that public interest has
been hampered. Keeping in view the fact that in the present case a special statute i.e. PC Act has
been invoked, we are of the view that quashing of offences under the said Act would have a grave
and substantial impact not just on the parties involved, but also on the society at large. As such the
High Court committed no error in declining to exercise its inherent powers in the present case,

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thereby refusing to quash the criminal proceedings.

[Para 18]
E/06618/12/24

Cases Referred :-
Gian Singh v. State of Punjab (2012) 10 SCC 303.
Parbatbhai Aahir v. State of Gujrat (2017) SCC Online SC 1189.
State v. R Vasanthi Stanley 2015 SSC Online SC 815.
Read impugned order dated 26.07.2023.
JUDGMENT
Prasanna B. Varale, J. - Leave granted.
2. In these appeals filed under Article 136 of Constitution of India, the appellant is seeking setting
aside of the common order dated 26.07.2023 passed by the High Court of Bombay in Criminal Writ
Petition No. 2546 of 2022 and Criminal writ Petition no. 1960 of 2022, wherein the High Court
dismissed the petitions filed by the appellants herein, under section 482 of Code of Criminal
Procedure, 1973 "Cr.P.C." seeking quashing of the FIR bearing No. RC/026/2020/A-0010 dated
24/07/2020, for offences punishable under Sections 409, 420 and 120B of the Indian Penal Code, 1860
"IPC" along with Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 "PC Act" and
the consequent chargesheet.
3. The appellants in the Appeal arising from SLP(Crl.) No.10078 of 2023 are the Directors of M/s Sun
Infrastructure Pvt. Ltd. "the Company"; and appellants in the Appeal arising from SLP (Crl.)
No.12776 of 2023 are the employees of respondent no.3 Bank. The appellants in both the appeals are
the named accused in the above mentioned FIR.
4. In the year of 2013, appellant nos. 1 and 2, being Directors of the Company, had obtained
sanction for a building permit and commencement certificate for plot bearing Survey Nos. 145/1,
145/3,141/1,149/2, 151, 152 and 155/2[5].On 15.02.2014, the respondent no. 3- State Bank of India had
sanctioned a loan of Rs. 50 crores to the Company. On 30.10.2014, the Company opened a collateral
security and mortgaged the commercial land. The appellant had made timely payments till 2017,
while on 28/11/2017 the bank declared the loan account of the Company as Non- Performing Asset
with an outstanding amount of Rs. 23.86 crores. The bank also started a recovery process and filed
an application before the Debt Recovery Tribunal "DRT". On 18.12.2019, the Company and
respondent no. 3 filed consent terms before the DRT amounting to Rs. 15 Crore. According to the
consent terms, the Company paid Rs. 20 lacs on 16.06.2020. Remaining amount of Rs. 14.88 crore was
subsequently paid by the Company with interest and the loan account was closed as per the one-
time settlement. Accordingly, the application before the DRT came to be disposed of.
[5 In short, "subject property"]

5. Respondent no. 3 lodged a complaint with respondent no. 2-Central Bureau of Investigation,
against the appellants for diverging the funds from the loan account of respondent no. 2, SICOM
Ltd. from whom they had allegedly availed a loan of Rs.25 Crores in 2013; and against the Company
for changing the building plans of the project which resulted in the reduced value of the collateral

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security, without the consent of the Bank. On 24.07.2022, On the basis filed by respondent no.3, an
FIR came to be registered against the appellant by Central Bureau of Investigation, Anti-Corruption
Bureau, Mumbai. Charge sheet dated 31.12.2021 was filed by respondent no.2 in the above-
mentioned FIR.
6. The appellant preferred a Writ Petition before the High Court bearing WP No. 2546 of 2022 under
section 482 of Cr.P.C., 1973 seeking quashing of the aforementioned FIR and chargesheet.
7. Vide order dated 26.07.2023, High Court rejected the said Writ Petition observing that the
appellant has a substantive alternative remedy under the provisions of the Code of Criminal
Procedure before the High Court.
8. Learned Counsel for the appellant has made the following submissions:
8.1. It is submitted that the appellants have already arrived at a compromise and the DRT after
considering the settlement had disposed of the application filed by the respondent no. 3. The
allegation that the bank suffered a loss of Rs. 11 crores is false and bogus since the bank received
an amount of Rs. 47 crores as against a total disbursed amount of Rs. 33.5 crores. It was argued that
there was a delay in registration of the present FIR insofar as the complaint was lodged by the
respondent no. 2 bank on 30th October 2019 but the FIR was registered on 24th July 2020 by
respondent no. 2.
8.2. It was further submitted that departmental inquiry by the bank against appellant no. 1 in
appeal arising from SLP(Crl.) No.12776 of 2023 was concluded and a final enquiry report was filed
wherein charges as per the complaint dated 31.10.2019 were dropped and it was stated that the
remaining charges are of a technical nature and had to be submitted to the Disciplinary Authority
for consideration. It was submitted that the allegations in the complaint pertain to an act which
was committed after they were relieved from their position and the new officer took charge of the
said post, which was recorded in the departmental inquiry against appellant no.1.
8.3. It was further stated that the provisions of the PC Act are not applicable to the appellants in
appeal arising from SLP (Crl.) No.10078 of 2023, as there is no allegation of bribery against the
present appellant.
8.4. It was stated that there was a difference in the valuation report of the said property since the
valuer appointed by the bank valued the properties at Rs. 107.7 Crores in the year 2014, and when
it was again valued on 28.09.2018 after the account of the borrower company was declared as a
Non-Performing Asset, it came down to Rs. 3.45 crores. He further stated that after the consent
terms were filed, the same valuer valued the same property at Rs. 57.17 Crores on 23.01.2020.
9. Learned counsel for respondent no.2 submitted before us that mere delay in lodging of the FIR
ipso facto will not affect the merits of the case. The counsel further submitted that the settlement as
arrived at between the bank and the accused persons would not absolve the appellants from the
criminal offences which they have committed. The counsel relied on the judgment of this Court in
Gian Singh v. State of Punjab (2012) 10 SCC 303 to state that in cases where societal interest is
involved, it is not prudent to quash the proceedings or reduce the sentence. He further stated that
mere fact of repayment of diverted funds and consequent settlement would not dilute the criminal
offenses committed. He further submitted that the charges against the appellant were proved in the
departmental proceedings.
10. Learned counsel for respondent no. 3 submitted before us that there are serious allegations of

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fraud and cheating levelled against the appellants in the FIR and a loss has been caused to the
bank which ultimately is dealing with public money. The property of a lesser value was valued at
exorbitant rates which was offered as security for the loan sanctioned. Further, there was diversion
of funds which is also a criminal offence. It was further submitted that a perusal of the FIR does
not lead to the conclusion that no cognizable offence is made out against the appellants. Moreover,
under clause 15 of the consent terms, it was agreed between the parties that the criminal
proceedings and the charges will continue as per law. It is well settled that when a settlement is
arrived at between the creditor and debtor, the offence committed as such does not come to an end.
Furthermore, in view of the misconduct, the Disciplinary Authority imposed a major penalty of
reduction to a lower stage in the time scale of pay on the appellant employees.
11. We have heard the arguments and perused other relevant documents as also the judgment
passed by the High Court.
12. The moot question which arises for our consideration in the present case is whether the
criminal proceedings can be quashed based upon a settlement arrived at between the parties as
per the consent terms drawn and submitted before the DRT.
13. The Counsel for the appellant heavily relied on the case of Gian Singh (supra) to state that their
case is squarely covered by the said judgment. Relevant paragraph from the said judgment can be
extracted as below:
"60 ... criminal cases having overwhelmingly and predominantly civil flavour stand on a
different footing for the purpose of quashing particularly the offences arising from commercial,
financial, mercantile, civil partnership or such like transactions or the offences arising out of
matrimony related to dowry etc or the family disputes where the wrong is basically private or
personal in nature and the parties have resolved their entire dispute. In this category of cases
high court may quash criminal proceedings if in its view because of compromise between the
offender and victim the possibility of conviction is remote and bleak and continuation of
criminal case would put accused to great oppression and prejudice and extreme injustice
would be caused to him by not quashing the criminal case. Despite full and complete
settlement and compromise with the victim. In other words, the high Court must consider
whether it would be unfair or contrary to the interest of justice to continue with the criminal
proceedings or continuation of the criminal proceeding would tantamount to abuse of process
of law..."
14. This Court in Gian Singh (supra) has dealt with the powers of the High Court under Section 482
r/w section 320 of the CrPC, 1973 and the consequent authority of the High Court to quash criminal
proceedings, FIRs or complaints under its inherent jurisdiction as in contradistinction to the power
with criminal courts for compounding offenses under section 320 of the CrPC, 1973. The High Court
observed that quashing was dependent on the unique circumstances of each case and though no
fixed category can be established, heinous and severe offences should not be quashed even if the
parties have settled. However, this Court in Gian Singh (supra) categorically made an observation
that:
"61. ........ The offences of mental depravity under the Indian Penal Code or offences of moral
turpitude under special statutes like Prevention of Corruption Act or the offences committed by
the public servants while working in that capacity, the settlement between offender and victim
can have no legal sanction at all."

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15. In the light of above, the facts of the present case are distinguishable from the facts that came
for consideration before this Court in the above case relied on by the appellants herein.
16. Another reference can be made to the judgment of this Court in Parbatbhai Aahir v. State of
Gujrat and Anr. (2017) SCC Online SC 1189 wherein it was observed that, economic offenses
involving financial and economic well-being of the state have implications which lie beyond the
domain of a mere dispute between the private disputants. The High Court would be justified in
declining to quash where the offender is involved in an activity akin to a financial or economic
fraud or misdemeanour. The consequences of the act complained of upon the financial or economic
system will weigh in the balance. Thus, it can be concluded that economic offences by their very
nature stand on a different footing than other offences and have wider ramifications. They
constitute a class apart. Economic offences affect the economy of the country as a whole and pose a
serious threat to the financial health of the country. If such offences are viewed lightly, the
confidence and trust of the public will be shaken.
17. A profitable reference in this regard can be made to the judgment in State v. R Vasanthi
Stanley (2015 SSC Online SC 815) wherein this Court declined to quash the proceedings in a case
involving alleged abuse of the financial system. It was observed as under:
"15. ........ A grave criminal offence or serious economic offence or for that matter the offence
that has the potentiality to create a dent in the financial health of the institutions is not to be
quashed on the ground that there is delay in trial or the principle that when the matter has
been settled it should be quashed to avoid the head on the system. That can never be an
acceptable principle or parameter, for that would amount to destroying stem cells of law and
order in many a realm and further strengthen the marrow of unscrupulous litigations. Such a
situation should never be conceived of.
18. In the instant case, it is on record that consent terms were submitted by the parties before the
DRT. It is admitted that the bank had suffered losses to the tune of Rs. 6.13 Crores approximately.
Hence, a substantial injury was caused to the public exchequer and consequently it can be said
that public interest has been hampered. Keeping in view the fact that in the present case a special
statute i.e. PC Act has been invoked, we are of the view that quashing of offences under the said
Act would have a grave and substantial impact not just on the parties involved, but also on the
society at large. As such the High Court committed no error in declining to exercise its inherent
powers in the present case, thereby refusing to quash the criminal proceedings.
19. For the reasons stated above, we are of the view that the High Court was justified in not
exercising its jurisdiction under section 482 of CrPC, 1973. The appeals are accordingly dismissed.
20. Pending application(s), if any, shall be disposed of accordingly.
.

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