Criminal case quashed as the accused has repaid the amount due to the bank

Usually, higher judiciary encourages quashing of criminal proceedings where it is a commercial crime, if the parties have settled the matter. However, in cases of bank frauds, where the money involved is public money, the Courts take a rather serious view. For example, in the case of ….. the Supreme Court has taken the stand that even though the commercial element has .

However, in Nikhil Merchant the Supreme Court had moved forward to quash the case of a bank fraud, wherein the accused have allegedly created few documents to avail credit facility from the bank. The Court framed the question whether the power of the Supreme Court should be exercised in a case where the bank had clearly stated that there is no further pending claim against the accused persons. Taking into consideration the overall facts and the decision of Supreme Court in B.S. Joshi v. State of Haryana, (2003) 4 SCC 675 : 2003 SCC (Cri) 848, the Supreme Court moved to quash the criminal proceedings as the Court as able to infer a dominant civil overtures than a criminal case. The relevant portion of the decision is extracted hereunder:

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 case [B.S. Joshi v. State of Haryana, (2003) 4 SCC 675 : 2003 SCC (Cri) 848] 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 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.”

Nikhil Merchantv. CBI [(2008) 9 SCC 677 : (2008) 3 SCC (Cri) 858]

Cases Referred:

B.S. Joshi v. State of Haryana, (2003) 4 SCC 675 : 2003 SCC (Cri) 848,


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