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Criminal Appeal No. 517 of 2014 (Arising out of Special Leave Petition (Crl) No. 6138 Of 2006 )CBI, ACB, MUMBAI Vs NARENDRA LAL JAIN & ORS
March, 04th 2014
                                             REPORTABLE


             IN THE SUPREME COURT OF INDIA
            CRIMINAL APPELLATE JURISDICTION
             CRIMINAL APPEAL NO.517 OF 2014
 (Arising out of Special Leave Petition (Crl) No. 6138 OF 2006)


CBI, ACB, MUMBAI                          ... APPELLANT (S)
                           VERSUS

NARENDRA LAL JAIN & ORS.                  ... RESPONDENT (S)




                        JUDGMENT




RANJAN GOGOI, J.


1.     Leave granted.


2.     The appellant, Central Bureau of Investigation (CBI)

ACB, Mumbai seeks to challenge an order dated 28.10.2005

passed by the High Court of Bombay quashing the criminal

proceedings against the respondents Narendra Lal Jain,

Jayantilal L. Shah and Ramanlal Lalchand Jain. The aforesaid



                                                              1
respondents had moved the High Court under Section 482

Code of Criminal Procedure, 1973 (for short "Cr.P.C.")

challenging the orders passed by the learned Trial Court

refusing   to   discharge   them   and   also   questioning   the

continuance of the criminal proceedings registered against

them. Of the three accused, Jayantilal L. Shah, the court is

informed, has died during the pendency of the present appeal

truncating the scope thereof to an adjudication of the

correctness of the decision of the High Court in so far as

accused Narendra Lal Jain and Ramanlal Lalchand Jain are

concerned.





3.     On the basis of two FIRs dated 22.03.1993, R.C. No.

21(A) of 1993 and R.C. No.22 (A) of 1993 were registered

against the accused-respondents and several officers of the

Bank of Maharashtra.         The offences alleged were duly

investigated and separate chargesheets in the two cases were

filed on the basis whereof Special Case No. 15 of 1995 and

Special Case No. 20 of 1995 were registered in the Court of the

Special Judge, Mumbai.       In the chargesheet filed, offences

under Sections 120-B/420 IPC and Sections 5(2) read with



                                                              2
Section 5(1)(d) of the Prevention of Corruption Act, 1947

corresponding to Sections 13(2) read with Section 13(1)(d) of

the Prevention of Corruption Act, 1988 (for short "PC Act")

were alleged against the accused persons.       In so far as the

present accused-respondents are concerned the gravamen of

the charge is that they had conspired with the bank officials

and had projected inflated figures of the creditworthiness of

the companies represented by them and in this manner had

secured more advances/loans from the bank than they were

entitled to.


4.      While the criminal cases were being investigated the

bank had instituted suits for recovery of the amounts claimed

to be due from the respondents. The said suits were disposed

of in terms of consent decrees dated 23.04.2001. Illustratively,

the relevant clause of the agreement on the basis of which the

consent decrees were passed reads as follows:


     "10. Agreed and declared that dispute between
     the parties hereto were purely and simply of
     civil nature and on payment mentioned as
     aforesaid made by the Respondents the
     Appellants have no grievance of whatsoever
     nature including of the CBI Complaint against
     the Respondents."


                                                             3
5.     Applications   for   discharge     were   filed   by   the

accused-respondents which were rejected by the learned Trial

Court by order dated 04.09.2011.        The learned Trial Court,

thereafter, proceeded to frame charges against the accused. In

so far as the present accused-respondents are concerned

charges were framed under Sections 120-B/420 of the Indian

Penal Code whereas against the bank officials, charges were

framed under the different provisions of the Prevention of

Corruption Act, 1988 (PC Act).           The challenge of the

respondents to the order of the learned Trial Court refusing

discharge and the continuation of the criminal proceedings as

a whole having been upheld by the High Court and the

proceedings in question having been set aside and quashed in

respect of the respondent, the CBI has filed the present appeal

challenging the common order of the High Court dated

28.10.2005.


6.     We have heard Mr. P.P. Malhotra, learned Additional

Solicitor General appearing on behalf of the appellant and Mr.

Sushil Karanjkar, learned counsel appearing on behalf of



                                                              4
Respondent Nos. 1 and 4.


7.        Shri Malhotra, learned Additional Solicitor General, has

taken us through the order passed by the High Court. He has

submitted that the High Court had quashed the criminal

proceeding registered against the accused-respondents only on

the ground that the civil liability of the respondents had been

settled by the consent terms recorded in the decree passed in

the suits.      Shri Malhotra has submitted that when a criminal

offence is plainly disclosed, settlement of the civil liability,

though arising from the same facts, cannot be a sufficient

justification for the premature termination of the criminal case.

Shri Malhotra has also submitted that the offence under

Section 120-B alleged against the accused-respondents is not

compoundable under Section 320 Cr.P.C.; so also the offences

under the PC Act. Relying on the decision of a three Judges

Bench of this Court in Gian Singh vs. State of Punjab and

Another1, Shri Malhotra has submitted that though it has

been held that the power of the High Court under Section 482

Cr.P.C. is distinct and different from the power vested in a

criminal Court for compounding of offence under Section 320
1    (2012) 10 SCC 303


                                                               5
of the Cr.P.C., it was made clear that the High Court must

have due regard to the nature and gravity of the offences

alleged before proceeding to exercise the power under Section

482 Cr.P.C. Specifically drawing the attention of the Court to

para 61 of the report in Gian Singh (supra) Shri Malhotra has

submitted that "any compromise between the victim and the

offender in relation to the offences under special statutes like

the Prevention of Corruption Act.... cannot provide for any

basis   for   quashing   criminal   proceeding   involving   such

offences". Shri Malhotra had contended that having regard to

the gravity of the offences alleged, which offences are prima

facie made out, in as much as charges have been framed for

the trial of the accused-respondents, the High Court was not

justified in quashing the criminal proceedings against the

accused-respondents.

8.      Per contra, the learned counsel for the respondents

(accused) have submitted that the High Court, while quashing

the criminal proceedings against the respondents (accused),

had correctly relied on the judgments of this Court in Central

Bureau of Investigation, SPE, SIU(X), New Delhi vs.




                                                              6
Duncans Agro Industries Ltd., Calcutta2 and B.S.Joshi

and Others vs. State of Haryana and Another3.                  Learned

counsel has submitted that though simultaneous criminal and

civil action on same set of facts would be maintainable, in

Duncans Agro Industries Ltd. (supra) it has been held that

the disposal of the civil suit for recovery, on compromise upon

receipt of payments by the claimants, would amount to

compounding of offence of cheating.            No error is, therefore,

disclosed in the order of the High Court insofar as the offence

under Section 420 IPC is concerned. As for the offence under

Section 120-B it is submitted that this Court in B.S. Joshi

(supra) has held that the power under Section 482 Cr.P.C. to

quash a criminal proceeding is not limited by the provisions of

Section     320    Cr.P.C.   and   even   if    an   offence   is   not

compoundable under Section 320 Cr.P.C., the same would not

act as a bar for the exercise of power under Section 482

Cr.P.C. As the dispute between the parties have been settled

on the terms of the compromise decrees, it is submitted that

the High Court had correctly applied the principles laid down

in B.S. Joshi (supra) to the facts of the present case.
2   (1996) 5 SCC 591
3   AIR 2003 SC 1387


                                                                    7
9.        Learned counsel has further pointed out that the

charges framed against the accused-respondents are under

Section 120-B/420 of the Indian Penal Code and the

respondents not being public servants, no substantive offence

under the PC Act can be alleged against them. The relevance of

the views expressed in para 61 of the judgment of this Court in

Gian Singh (supra), noted above, to the present case is

seriously disputed by the learned counsel in view of the

offences alleged against the respondents. Learned counsel has

also submitted that by the very same impugned order of the

High Court the criminal proceeding against one Nikhil

Merchant was declined to be quashed on the ground that

offences under Sections 468 and 471 of the IPC had been

alleged against the said accused. Aggrieved by the order of the

High Court the accused had moved this Court under Article

136 of the Constitution. In the decision reported in Nikhil

Merchant vs. Central Bureau of Investigation and Another4

this Court understood the charges/allegations against the

aforesaid Nikhil Merchant in the same terms as in the case of

the accused-respondents, as already highlighted. Taking into

4    (2008) 9 SCC 677


                                                            8
consideration the ratio laid down in B.S. Joshi (supra) and the

compromise between the bank and the accused Nikhil

Merchant (on the same terms as in the present case) the

proceeding against the said accused i.e. Nikhil Merchant was

quashed by the Court taking the view that the power and the

Section 482 Cr.P.C. and of this Court under Article 142 of the

Constitution cannot be circumscribed by the provisions of

Section 320 Cr.P.C.    It is further submitted by the learned

counsel that the correctness of the view in B.S. Joshi (supra)

and Nikhil Merchant (supra) were referred to the three

Judges Bench in Gian Singh (supra). As already noted, the

opinion expressed in Gian Singh (supra) is that the power of

the High Court to quash a criminal proceeding under Section

482 Cr.P.C. is distinct and different from the power vested in a

criminal court by Section 320 Cr.P.C. to compound an offence.

The conclusion in Gian Singh (supra), therefore, was that the

decisions   rendered   in   B.S.   Joshi   (supra)   and   Nikhil

Merchant (supra) are correct.

10.    In the present case, as already seen, the offence with

which the accused-respondents had been charged are under



                                                              9
Section 120-B/420 of the Indian Penal Code. 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 above. No subsisting grievance of the bank 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. To the latter offence the ratio laid

down in B.S. Joshi (supra) and Nikhil Merchant (supra)

would apply if the facts of the given case would so justify. The

observation in Gian Singh (supra) (para 61) will not be

attracted in the present case in view of the offences alleged i.e.

under Sections 420/120B IPC.

11.    In the present case, having regard to the fact that the

liability to make good the monetary loss suffered by the bank

had been mutually settled between the parties and the accused

had accepted the liability in this regard, the High Court had

thought it fit to invoke its power under Section 482 Cr.P.C. We

do not see how such exercise of power can be faulted or held to

be erroneous.   Section 482 of the Code inheres in the High

Court the power to make such order as may be considered

necessary to, inter alia, prevent the abuse of the process of law

                                                               10
or to serve the ends of justice.    While it will be wholly

unnecessary to revert or refer to the settled position in law

with regard to the contours of the power available under

Section 482 Cr.P.C. it must be remembered that continuance

of a criminal proceeding which is likely to become oppressive

or may partake the character of a lame prosecution would be

good ground to invoke the extraordinary power under Section

482 Cr.P.C.
12. We, therefore, decline to interfere with the impugned order dated 28.10.2005 passed by the High Court and dismiss this appeal. We, however, make it clear that the proceedings in Special Case No. 15/95 and 20/95 stands interfered with by the present order only in respect of accused-respondents Narendra Lal Jain and Ramanlal Lalchand Jain. ...............................CJI. [P. SATHASIVAM] ...................................J. [RANJAN GOGOI] ..................................J. [N.V.RAMANA] 11 NEW DELHI, FEBRUARY 28, 2014. 12 ITEM NO.1A COURT NO.1 SECTION IIA (For Judgment) S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Crl.A. No.517 of 2014 @ Petition(s) for Special Leave to Appeal (Crl) No.6138/2006 (From the judgement and order dated 28/10/2005 in RC No.22/1993, CRLA No.832/2002CRLWP No.1339/2005 CRLWP No.1636/2005 of The HIGH COURT OF BOMBAY) CBI,ACB,MUMBAI Appellant(s) VERSUS NARENDRA LAL JAIN & ORS. Respondent(s) (With appln(s) for c/delay in filing SLP) Date: 28/02/2014 This Appeal was called on for Judgment today. For Petitioner(s) Mr. P. Parmeswaran, AOR For Respondent(s) Mr. K.N. Rai, AOR Mr. Sunil Kumar Verma, AOR Hon'ble Mr. Justice Ranjan Gogoi pronounced the judgment of the Bench comprising Hon'ble the Chief Justice of India, His Lordship and Hon'ble Mr. Justice N.V. Ramana. Delay condoned. Leave granted. The appeal is dismissed in terms of the signed reportable judgment. 13 (Chetan Kumar) (Savita Sainani) Court Master Assistant Registrar (Signed Reportable Judgment is placed on the file) 14
 
 
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