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Synopsis

The Supreme Court has emphasised that the criminal cases having overwhelmingly and predominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves. 

A bench of Justices BR Gavai and KV Vishwanathan allowed an appeal filed by K Bharthi Devi and another woman against the Telangana High Court's order of September 1, 2017 which refused to quash a charge sheet filed against them in CBI court, Nampally Hyderabad for obtaining of credit facilities in bank account on the basis of fake, forged and fabricated documents.

"In view of the settlement between the parties in the proceedings before the Debt Recovery Tribunal, the possibility of conviction is remote and bleak. In our view, continuation of the criminal proceedings would put the accused to great oppression and prejudice," the bench said.

The court noted the specific role that was attributed in the chargesheet was pertaining to accused no 1, and both the appellants have been arraigned as wives of the Accused Nos 1 and 2. 

As per facts of the case, K Suresh Kumar (Accused No 1), the sole proprietor of M/s Sirish Traders, a firm engaged in processing of Uradh Dhall, was granted various credit facilities in the group loan account by the Indian Bank, Osmanganj Branch, Hyderabad. The credit facilities were secured by collateral security executed by the accused persons including the present appellants who are Accused No 3 and 4.

Since the borrowers or mortgagors failed to service the interest and re-pay the dues, the group loan account was declared a Non-Performing Asset on March 31, 2010. 

To realise the outstanding amount, the Bank filed an original application before the DRT, Hyderabad for recovery of amounts due.

During the pendency of the proceeding, the Bank came to know that some of the title documents executed by the accused persons by virtue of which equitable mortgage was created were not original documents, rather the same were fake, forged and fabricated. 

The Bank, accordingly, lodged a written complaint of September 3, 2012. Based on the said complaint, the CBI-EOW, Chennai registered an FIR on September 15, 2012. 

The CBI-EOW Chennai after investigation prima facie found offences punishable under Sections 120-B read with 420, 409, 467, 468 and 471 of IPC and Section 13(1)(d) and 13(2) of the Prevention of Corruption Act 1988 have been committed. The CBI filed charge-sheet on December 27, 2013 in the trial court.

During the pendency of proceedings before the DRT, the accused settled the matter by offering and paying one time settlement.

The High Court, however, by final judgment and order dismissed the criminal petition filed by the Accused Nos 1 to 5 to quash the proceedings holding that the settlement arrived at was only a private settlement and was not a part of any decree given by any court. The charges include the use of fraudulent, fake and forged documents that were used to embezzle public money and if these are proved, they would be grave crimes against the society as a whole and hence, merely due to a private settlement between the Bank and the accused, it cannot be said that the prosecution of the accused persons would amount to abuse of process of the court.

Senior advocate Dama Seshadri Naidu, appearing for the appellants, submitted the women before this court had no active role to play. The appellant No 1 is the wife of accused No 2 and appellant No 2 is the wife of Accused No 1. 

In addition to the total amount paid by the borrowers to the tune of Rs 7,78,25,143, the bank has also realized an amount of Rs 1,07,54,000 by auctioning the mortgaged properties.

In view of one time settlement, an amount of Rs 3,80,00,000 was also paid to the respondent Bank and as such, it has closed the loan account. The counsel, therefore, submitted that the continuance of the proceedings against the appellants would be an exercise in futility.

The CBI, however, submitted that merely because the matter is settled between the Bank and the borrowers, it does not absolve the accused persons of their criminal liability. 

The court also noted a perusal of the chargesheet would reveal that the specific role is attributed to Accused No 1, K Suresh Kumar. The allegations against the present appellants are that they were involved in criminal conspiracy.

The court pointed out it has been held that there are certain offences which overwhelmingly and predominantly bear civil flavour having arisen out of civil, mercantile, commercial, financial, partnership or such like transactions or the offences arising out of matrimony, particularly relating to dowry, etc or a family dispute, where the wrong is basically to the victim and the offender and the victim have settled all disputes between them amicably, the High Court would be justified in quashing the criminal proceedings, even if the offences have not been made compoundable.

The court also noted the possibility of conviction is remote and bleak and continuation of the criminal case would put the 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 the present case also, undisputedly, the FIR and the chargesheet are pertaining to the dispute concerning the loan transaction availed by the accused persons on one hand and the Bank on the other hand. Admittedly, the Bank and the accused persons have settled the matter. Apart from the earlier payment received by the Bank either through Equated Monthly Instalments (EMIs) or sale of the mortgaged properties, the borrowers have paid an amount of Rs 3,80,00,000 under OTS. After receipt of the amount under OTS, the Bank had also decided to close the loan account. The dispute involved predominantly had overtures of a civil dispute," the bench said.

The court found that this was a fit case wherein the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quash the criminal proceedings.

The court allowed the appeal and set aside the judgment of the High Court and quashed the criminal proceedings against the appellants.