REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 661   OF 2009 (Arising out of SLP (Crl.) No.362 of 2008)

Smt. Rumi Dhar … Appellant

Versus

State of West Bengal and another … Respondents

J U D G M E N T

S.B. SINHA, J.

1. Leave granted.

2. Application of the provisions of Section 320 of the Code of Criminal

Procedure  (hereinafter  referred  to  as  ‘the  Code’)  is  in  question  in  this

application.  The said question arises in the following factual matrix.

3. Appellant  and her  husband (A-4) along with various other  persons

including the officers of the Oriental Bank of Commerce Khidirpur Branch,

Calcutta  (hereinafter  called  ‘the  Bank’)  were  prosecuted  for  alleged

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commission of offences under Sections 120-B/ 420/467/468 and 471 of the

Indian  Penal  Code.   The  officers  of  the  Bank  had also  been  prosecuted

under  Sections  13(2)  read  with  Section  13(1)(d)  of  the  Prevention  and

Corruption Act, 1988.   

4. A charge sheet was filed against the appellant and seven others.  She

was  inter  alia  charged  for  taking  the  benefit  of  overdrafts  between  the

period  8th February,  1993  to  5th March,  1993  without  furnishing  any

security.     

5. For the  purpose of  realisation  of the  said amount,  indisputably the

Bank filed an application  for  recovery thereof  before  the Debt  Recovery

Tribunal.  It is not in dispute that before the said Tribunal, appellant and the

Bank had entered into a settlement pursuant whereto or in furtherance a sum

of Rs.25.51 lacs was paid.   

6.  It  is  also  not  in  dispute  that  for  the  said  purpose,  the  C.B.I.  had

returned  the  title  deeds  in  respect  of  the  property  which  were  kept  as

security for obtaining the loan from the bank.  

7. On  or  about  22.02.2006  the  Appellant  filed  an  application  under

section 239 of the Code for discharge, inter alia, contending:-

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i) That having regard to the settlement arrived at between her and

the Bank no case for proceeding against her has been out.    

ii) That  she  having  already  paid  Rs.  25.51  Lacs  and  the  CBI

having returned the title deeds which had been kept as security

for the loan from the said bank, the criminal proceeding should

be dropped relying on or on the basis of the said settlement.

iii) That the dispute between the parties were purely civil in nature

and that  she had not  fabricated any document or cheated the

bank  in  anyway what  so  ever,  charges  could  not  have  been

framed against her.

8. In response to the said application the CBI had contended that mere

payment of loan to the bank could not exonerate the accused from a criminal

proceeding.

9. The learned Judge, Special Court Alipore in Special Case No. 3 of

1993 vide order dated 12.12.2006 dismissed the application of the appellant

noting that mere repayment could not exonerate the accused from the prima

facie charge in a criminal case.

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10. On or  about  06.03.2007  the  appellant  filed  a  revision  application

under section 401 and 402 of the CrPC before the High Court of Calcutta

which was registered as CRR No. 910 of 2007.

Before the High Court, it was argued that further continuation of the

criminal  proceeding,  despite  repayment  of  the  amount  of  loan  by  the

appellant, would amount to an abuse of the process of Court and the same

should, therefore, be quashed.

11. In the said revision application the CBI contended that the criminal

case against the appellant was started not only for obtaining loan but also on

the ground of criminal conspiracy with the bank officials. It was accordingly

contended that the court below had rightly rejected the application and the

impugned order does not warrant any interference.

12. On or about 17.07.2007 the learned Single Judge of the High Court

dismissed the revision application. The court after discussing the arguments

of both the parties opined :  

“I  have taken into consideration the submissions of the ld. Advocates for both the sides.  It is the case of  the prosecution that  the loan in question was sanctioned in favour of the petitioner by way of  forming  a  criminal  conspiracy,  which  was allegedly engineered  by the  bank officials.   It  is further  been  alleged  that  this  accused/petitioner also took part in the said conspiracy.  Now it is the

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admitted  position  that  after  investigation  charge sheet has also been filed against the petitioner and the matter is now fixed for framing of charge.  Ld. Trial  Judge  in  his  impugned order  discussed  the entire matter and thereafter he was of the opinion that merely because of the fact that the amount in question  has  already  been  paid  in  favour  of  the bank, that cannot exonerate the accused/petitioner, so far as the charge of conspiracy is concerned.”  

13. The  learned  judge  distinguished  the  case  of  CBI,  New  Delhi v.

Duncans Agro Industries Limited Calcutta, (1996) 5 SCC 591 relied on by

the appellant noting that the said case involved quashing of a criminal case

which was still  under investigation.  The judge noted that  the in the case

before him the application for quashing the criminal proceedings was filed

at a stage when the thorough investigation  of  the case had already been

completed and a charge sheet had been filed. The court concluded that the

trial judge was justified in rejecting the petition filed under Section 239 of

the Code the appellant.

14. Mr. Nagendra Rai, learned senior counsel appearing on behalf of the

appellant, would submit :

(1) Considering the fact that the Bank had filed a suit to recover money

before  the  DRT and  the  dispute  between  the  parties  having  been

settled and the amount in question having been repayed, continuation

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of  the  criminal  proceeding  would  be  nothing  but  an  abuse  of  the

process of law.

(2) Settlement  having been arrived  at  by and between the parties  and,

particularly having regard to the nature of allegations made against

the  appellant  herein,  the  High  Court  committed  a  serious  error  in

refusing  to  record  the  settlement  and  quashing  the  criminal

proceedings against her.

15. Mr. Amit Anand, learned counsel appearing on behalf of CBI, on the

other hand, would urge :

(i) No case has been made out for composition of the criminal offence,

as the settlement was arrived at by and between the appellant and the

bank only in respect of the civil dispute between the parties relating

to issuance of a certificate by the Debt Recovery Tribunal and not for

the purpose of withdrawal of the criminal case.

(ii) Having  regard  to  the  nature  of  evidence  collected  against  the

appellant  during  investigation  and  consequent  filing  of  a  charge

sheet, the High Court has rightly refused to exercise its discretionary

jurisdiction.

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16. Sub-section  (1)  of  Section  320  of  the  Code  specifies  the  offences

which  are  compoundable  in  nature;  Sub-section  (2)  providing  for  the

offences which are compoundable with the permission of the court.   

17. Appellant is said to have taken part in conspiracy in defrauding the

bank.  Serious charges of falsification of accounts and forgery of records

have also been alleged.  Although no charge against the appellant under the

Prevention of Corruption Act has been framed, indisputably, the officers of

the bank are facing the said charges.

18. It is now a well settled principle of law that in a given case, a civil

proceeding and a criminal proceeding can proceed simultaneously.  Bank is

entitled to recover the amount of loan given to the debtor.  If in connection

with obtaining the said loan, criminal offences have been committed by the

persons  accused  thereof  including  the  officers  of  the  bank,  criminal

proceedings would also indisputably be maintainable.  When a settlement is

arrived at by and between the creditor and the debtor, the offence committed

as such does not  come to an end.  The judgment of a tribunal  in a civil

proceeding  and  that  too  when  it  is  rendered  on  the  basis  of  settlement

entered into by and between the parties, would not be of much relevance in

a criminal proceeding having regard to the provisions contained in Section

43 of the Indian Evidence Act.

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19. The judgment in the civil proceedings will be admissibile in evidence

only for a limited purpose.  It is not a case where the parties have entered

into a compromise in relation to the criminal charges.  In fact, the offence

alleged  against  the  accused being  an offence against  the  society and the

allegations  contained  in  the  first  information  report  having  been

investigated by the Central Bureau of Investigation, the bank could not have

entered into any settlement at all.  The CBI has not filed any application for

withdrawal of the case.  Not only a charge sheet  has been filed, charges

have also been framed.  At the stage of framing charge, the appellant filed

an application for discharge.  One of the main accused is the husband of the

appellant.  The complicity of the accused persons was, thus, required to be

taken into consideration for the purpose of determining the application for

discharge upon taking a realistic view of the matter.  While considering an

application for discharge filed in terms of Section 239 of the Code, it was

for the learned Judge to go into the details of the allegations made against

each of the accused persons so as to form an opinion as to whether any case

at all has been made out or not as a strong suspicion in regard thereto shall

subserve the requirements of law.   

20. We may also  notice  that  the  learned Tribunal,  while  accepting  the

settlement arrived at by and between the appellant and the bank, opined :

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“It  is,  thus,  clear  from  this  evidence  that  the amount of Rs.25.51 lacs has already been paid by the respondents.  The objections of the appellant that  the  proposal  of  OTS  stands  withdrawn because the payment was not made by cheques or in  the manner given in  their  application  of  OTS has  no  merit.   There  is  no  need  of  formal  joint petition of compromise if the record shows in the applications of the parties and the contents therein their consent to the OTS could be derived from the other  documents  on  record  of  the  case.   As  is already  discussed  hereinabove  as  to  the application  of  the  CHB for  OTS dated  7.2.2004 the  consent  was  already  recorded  by  the  Ld. Recovery  Officer  in  his  order  dated  7,10.2004. The  balance  payment  of  Rs.22.21  lacs  by  the respondents certificate debtors was payable in 20 monthly  instalments  which  was  to  expire  by December  2005.   It  is  immaterial  that  how  the payment  is  being  made.   The  parties  under  the OTS is that the OTS is agreeable and consent was at an amount of Rs.25.51 lacs.  It is immaterial that the  payment  is  to  be  made  by  equated  monthly instalments  by  post  dated  cheques  or evenotherwise if the payment is made at an early date, then it is not wrong.  But if the payments are made  beyond  the  scheduled  date,  then  it  is  the breach  of  the  OTS  and  in  such  a  situation  the Tribunal may refuse to act upon the OTS.  In the present  case  the  amount  has  already  been  paid prior to December 2—5.  Thus, it cannot be said that  the  payments  as  per  compromise  are  not paid.”

21. The learned Special Judge in his order dated 16.12.2006 rejected the

contention raised on behalf of the appellant herein, stating :

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“I  have  gone  through  the  record  citation  and considered the  circumstances.   It  is  true that  the accd. has put a good gesture by paying of the dues of the bank but I am at one with the Ld. PP that this  payment  cannot  exonerate  the  accd.  from a prima  facie  charge.   If  I  allow this,  then  I  may have to swallow in a case of bribery that the accd. has  paid  back  the  amount  to  the  sufferer  the amount received as bribe.  It is a question of trial whether  there  was  any criminal  intention  on  the part of this Lady accd. in this crime.  The criminal intention is to be inferred from the evidence to be adduced by the prosecution.  Simply because the money has been returned, I cannot shut the mouth of the prosecution from adducing evidence against this accd.  Thus, I do not like to pass any order in favour of  the accd.   The prayer for discharge of accd.  No.7,  Rumi Dhar  stands  rejected.   Let  the case  proceed.   Fix  7.2.07  for  consideration  of charge.   The sureties  must  produce all  the accd. persons on that date.”

22. It has not been argued before us that the learned Judge, in arriving at

the said opinion, committed any error of law or the same otherwise suffers

from any illegality so as to enable the High Court to interfere with the same

matter.  A prima facie case has been found out against the appellant.  There

is  no  error  apparent  on  the  face  of  the  record  warranting  interference

therewith.

Strong  reliance  has  been  placed  by Mr.  Rai  on  a  decision  of  this

Court  in  Central  Bureau  of  Investigation,  SPE,  SIU(X),  New  Delhi v.

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Duncans Agro Industries Ltd., Calcutta [(1996) 5 SCC 591], wherein this

Court held :

“26. After giving our careful consideration to the facts  and  circumstances  of  the  case  and  the submissions  made  by the  respective  counsel  for the parties, it appears to us that for the purpose of quashing the complaint, it is necessary to consider whether  the  allegations  in  the  complaint  prima facie  make  out  an  offence  or  not.  It  is  not necessary  to  scrutinise  the  allegations  for  the purpose of deciding whether such allegations are likely to be upheld in the trial. Any action by way of quashing the complaint is an action to be taken at the threshold before evidences are led in support of the complaint.  For quashing the complaint  by way  of  action  at  the  threshold,  it  is,  therefore, necessary to consider  whether on the face of the allegations,  a  criminal  offence  is  constituted  or not. In recent decisions of this Court, in the case of Bhajan Lal (supra), P.P. Sharma (supra) and Janta Dal  (supra),  since  relied  on  by  Mr.  Tulsi,  the guiding  principles  in  quashing  a  criminal  case have been indicated.”

It was furthermore observed :

“27. In the instant case, a serious dispute has been raised  by  the  learned  Counsel  appearing  for  the respective party as to whether on the face of the allegations, an offence of criminal breach of trust is constituted or not. In our view, the expression 'entrusted  with  property'  or  'with  any  dominion over  property'  has  been used  in  a  wide sense in Section  405  I.P.C.  Such  expression  includes  all cases  in  which  goods  are  entrusted,  that  is, voluntarily handed over for a specific purpose and

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dishonestly disposed of in violation of law or in violation  of  contract.  The  expression  'entrusted appearing in Section 405 I.P.C. is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the  ownership  or  beneficial  interest  in  the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or  in  some  way for  his  benefit.  The  expression 'trust'  in  Section  405  I.P.C.  is  a  comprehensive expression  and  has  been  used  to  denote  various kinds  of  relationship  like  the  relationship  of trustee and beneficiary, bailor  and bailee,  master and  servant,  pledger  and  pledgee.  When  some goods  arc  hypothecated  by  a  person  to  another person,  the  ownership of  the goods  still  remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in  other  person and the offender must hold such property in trust for such other person or for his benefit.  In  a  case  of  pledge,  the  pledged  article belongs to some other person but the same is kept in  trust  by  the  pledgee.  In  the  instant  case,  a floating charge was made on the goods by way of security to cover up credit facility. In our view, in such case for disposing of the goods covering the security  against  credit  facility  the  offence  of criminal breach of trust  is  not  committed.  In the facts  and circumstances  of  the case,  it,  however, appears  to  us  that  the  Respondents  moved  the High  Court  only  in  1991  although  the  first  FIR was  filed  in  1987  and  the  second  was  filed  in 1989.  The  CBI,  therefore,  got  sufficient  time to complete  the  investigation  for  the  purpose  of framing the charge.”

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This is also not a case where unlike Duncans Agro Industries, no case

of criminal breach of trust had been made out.

Our attention has also been drawn to a recent decision of this Court in

Nikhil Merchant v. Central Bureau of Investigation & Anr. [(2008) 9 SCC

677],  wherein  this  Court  refused  to  refer  the  matter  to  a  larger  Bench,

stating:

“30. In the instant case, the disputes 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  the  Bank  have  been cleared and the Bank does not appear to have any further  claim  against  the  Company.  What, however,  remains  is  the  fact  that  certain documents were alleged to have been created by the  appellant  herein  in  order  to  avail  of  credit facilities beyond the limit to which the Company was  entitled.  The  dispute  involved  herein  has overtones of a civil dispute with certain criminal facets.  The  question  which  is  required  to  be answered in this case is whether the power which independently  lies  with  this  Court  to  quash  the criminal proceedings pursuant to the compromise arrived at, should at all be exercised?

31.  On an  overall  view of  the facts  as indicated hereinabove and keeping in mind the decision of this  Court  in  B.S.  Joshi's  case  (supra)  and  the compromise arrived at between the Company and the Bank as also Clause 11 of the consent  terms filed in the suit filed by the Bank, we are satisfied that this is a fit case where technicality should not

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be allowed to stand in the way in the quashing of the criminal  proceedings,  since,  in our view, the continuance  of  the  same  after  the  compromise arrived  at  between  the  parties  would  be  a  futile exercise.”

23. The jurisdiction of the Court under Article 142 of the Constitution of

India is not in dispute.  Exercise of such power would, however, depend on

the facts and circumstance of each case.  The High Court, in exercise of its

jurisdiction under Section 482 of the Code of Criminal procedure, and this

Court, in terms of Article 142 of the Constitution of India, would not direct

quashing  of  a case involving crime against  the  society particularly when

both the learned Special Judge as also the High Court  have found that a

prima facie case has been made out against the appellant herein for framing

charge.

24. For the reasons aforementioned, there is no merit in the appeal.  It is

dismissed accordingly.

……………………………….J. [S.B. Sinha]

..…………………………..…J.

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[Dr. Mukundakam Sharma]

New Delhi; April 8, 2009

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