N.S. GNANESHWARAN ETC. versus THE INSPECTOR OF POLICE & ANR.

Citation: [2025] 5 S.C.R. 667 · Decided: 28-05-2025 · Supreme Court of India · Bench: VIKRAM NATH · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2025] 5 S.C.R. 667 : 2025 INSC 787
N.S. Gnaneshwaran Etc. 
v. 
The Inspector of Police & Anr.
(Criminal Appeal No(s). 2871-2872 of 2025)
28 May 2025
[Vikram Nath* and Sandeep Mehta, JJ.]
Issue for Consideration
Whether the criminal proceedings against the appellants for offences 
u/s.120B r/w ss.420, 468, 471, Penal Code, 1860 and u/s.13(2) r/w 
s.13(1)(d), Prevention of Corruption Act, 1988 ought to be quashed.
Headnotes†
Code of Criminal Procedure, 1973 – s.482 – FIR on the basis 
of complaint filed by the respondent no.2-Bank against the 
appellants alleging that the accused persons caused wrongful 
loss of Rs.25.89 lakhs to the Bank – In identical cases on the 
same set of transactions, a settlement was arrived at between 
the principal accused and the Bank – Appellants sought 
quashing of the criminal proceedings pending against them, 
High Court dismissed the petitions – Interference with:
Held: Admittedly, dispute between the parties had culminated in 
a comprehensive One Time Settlement wherein the Bank had 
received the entire outstanding amount – Recovery proceedings 
before the Debt Recovery Tribunal were dismissed as settled, 
and no residual claim survives – Further, in identical proceedings 
against the appellants, the charge sheets were quashed by 
High Court taking note of the settlement reached in the recovery 
proceedings – SLPs thereagainst were dismissed by this Court thus, 
appellants are entitled to the same relief – There is no continuing 
public interest to allow the matter to proceed further – Criminal 
proceedings pending against the appellants, quashed – Penal 
Code, 1860 – ss.420, 468, and 471 – Prevention of Corruption 
Act, 1988 – s.3(2) r/w s.13(1)(d). [Paras 7-10]
List of Acts
Code of Criminal Procedure, 1973; Penal Code, 1860; Prevention 
of Corruption Act, 1988.
* Author
668
[2025] 5 S.C.R.
Supreme Court Reports
List of Keywords
Quashing; Criminal proceedings; Dispute settled; Wrongful loss to 
the Bank; Fraudulent diversion of funds sanctioned; Identical cases; 
Same set of transactions; Settlement arrived; One Time Settlement 
(OTS); Bank received the entire outstanding amount; Debt Recovery 
Tribunal; Recovery proceedings; Recovery proceedings before 
the tribunal settled; No residual claim; Settlement reached in the 
recovery proceedings; No continuing public interest; Pending 
criminal proceedings quashed.
Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No(s). 
2871-2872 of 2025
From the Judgment and Order dated 19.11.2024 of the High Court 
of Judicature at Madras at Madurai in CRLOP(MD) Nos. 586 and 
595 of 2024
Appearances for Parties
Adv. for the Appellants:
K. Krishna Kumar.
Advs. for the Respondents:
Sabarish Subramanian, Vishnu Kant, Ms. Rajnandini, Ms. Shikha 
Bharti.
Judgment / Order of the Supreme Court
Judgment
Vikram Nath, J.
1.	
Leave granted.
2.	
The present appeals arise out of order dated 19.11.2024 passed by 
the Madurai Bench of the High Court of Madras in Crl. O.P. (MD) 
Nos. 586 and 595 of 2024, whereby the High Court dismissed the 
petitions filed by the appellants under Section 482 of the Code of 
Criminal Procedure, 19731, seeking quashing of criminal proceedings 
1	
CrPC.
[2025] 5 S.C.R. 
669
N.S. Gnaneshwaran Etc. v. The Inspector of Police & Anr.
initiated against them for offences under Section 120B read with 
Sections 420, 468, and 471 of the Indian Penal Code, 18602, and 
under Section 13(2) read with Section 13(1)(d) of the Prevention of 
Corruption Act, 19883.
3.	
The facts relevant to the present appeals are as follows:
3.1.	 The appellants herein are arrayed as accused nos. 3 and 6 
in C.C. No. 16 of 2006, arising out of FIR No. RC MA1 2005 
0020, registered on the basis of a complaint dated 27.04.2005 
lodged by the respondent no.2 – Bank. It was alleged that the 
accused persons caused wrongful loss to the Bank to the tune 
of Rs.25.89 lakhs, leading to the filing of the charge sheet 
against nine accused, including the appellants.
3.2.	 The allegations against appellant no.1, N.S. Gnaneshwaran, 
are that he was instrumental in orchestrating the fraudulent 
diversion of funds sanctioned to M/s Vinayaka Corporation. 
He is alleged to have facilitated the encashment of multiple 
cheques drawn from the fraudulently obtained credit limit, using 
a network of relatives, employees, and fictitious identities. It 
is further alleged that he forged signatures and diverted the 
funds through various accounts linked to his family mem

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