LexNIKHIL MERCHANT versus CENTRAL BUREAU OF INVESTIGATION & ANR
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,_ I ~· [2008) 12 S.C.R. 236 k A NIKHIL MERCHANT v. CENTRAL BUREAU OF INVESTIGATION & ANR (Criminal Appeal NO 1302 of 2008) B AUGUST 20, 2008 [ALTAMAS KABIR AND MARKANDEY KAT JU, JJ] -~- Constitution of India, 1950: ~ c Articles 136 and 142 - Quashing of criminal proceed- ings on basis of settlement of dispute in civil suit "".'" Suit filed by Bank against a company and its Managing Director for recovery of dues - Besides, a criminal complaint also made - Charge-sheet filed for offences punishable under ss. 420,467,468 and 471 !PC and provisions of Prevention of D Corruption Act - Suit compromised with stipulation that par- ties withdrew all their allegations and counter allegations - •I Application by former Managing Director of the Company for ...,_ discharge from criminal case - HELD: This is a fit case where technicalities should not be allowed to prevail since continu- E ance of the criminal proceedings after the compromise de- t cree would be a futile exercise - Criminal proceedings against ; appellant are quashed - Penal Code, 1860 - ss. 420, 467, 468 and 4 71 - Prevention of Corruption Act, 194 7 - ss. 5( 1 )( d) and 5(2) - Prevention of Corruption Act, 1988 - ss. 13(1)(d) F and 13(2) - Code of Criminal Procedure, 1973 - ss.320(2) i-- and 482. A Company of which the appellant was the Manag- ing Director was granted financial assistance by the Andhra Bank. Since the company defaulted in repayment G of the loan, the Bank filed a suit for recovery against the company and the appellant. Besides, the Bank also made ~ ~ a criminal complaint pursuant whereto a charge-sheet was filed by the CBI against the company, the appellant and three officers of Andhra Bank for commission of of- H 236 NIKHIL MERCHANT v. CENTRAL BUREAU OF 237 INVESTIGATION & ANR -->- ,.. fences punishable uls 120-B, read with ss. 420,467,468 A and 471 IPC, ss. 5(2),5(1 )(d) of Prevention of Corruption Act, 1947 and s.13(2) rlw s.13(1)(d) of Prevention of Cor- ruption Act, 1988. The charge-sheet indicated that all the accused conspired in fraudulently diverting the funds of the Bank. The suit was, however, compromised, and B ~- clause 11 of the consent terms stipulated that parties with- drew all allegations and counter allegations against each ...... other. Consequently, the appellant filed an application for discharge from the criminal case. The appellant having remained unsuccessful before the trial court as also the c High Court, filed the instant appeal. The CBI contested the appeal on the grounds, inter alia, that apart from s.420 IPC, the appellant had been charged with other offences under the Penal Code as also the Prevention of Corruption Acts which were non-com- D ~ poundable; that power under Article 142 of the Constitu- ~ tion would be exercised sparingly and in rare and excep- tional cases, and in the absence of any special circum- stance, the appeal was liable to be dismissed. Allowing the appeal, the Court E HELD: 1.1 On an overall view of the facts of the in- stant case, and keeping in mind the decision of this Court in B. S. Josh i's case and the compromise arrived at be- tween the Company and the Bank as also clause 11 of F -j the consent terms filed in the suit filed by the Bank, this is a fit case where technicality should not be allowed to stand in the way of quashing of the criminal proceedings, since the continuance of. the same after the compromise arrived at between the parties would be a futile exercise. G [para 24] [247,B-C] "'' ~ Central Bureau of Investigation vs. Duncans Agro Indus- tries Ltd., 1996 (5) SCC 591; * B. S. Joshi and Ors. Vs. State of Haryana & Anr, 2003(4) SCC 675 - relied on. H 238 SUPREME COURT REPORTS [2008] 12 S.C.R. A 1.2 The main intention of the company and its offic- ers was to cheat the Bank and induce it to part with addi- tional amounts of credit to ,which the company was not otherwise entitled. Despite the ingredients and the fac- tual content of an offence of cheating punishable under B Section 420 IPC, the same has been made compound- able under Sub-section (2) of Section 320 Cr.P:C. with the leave of the Court. The ~isputes between the Company. and the Bank have been set at rest on the basis of the compromise arrived at by them whereunder the dues of c the Bank have been cleared and the Bank does not ap- pear to have any further claim against the Company. What, however, remains is the fact that certa
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