C.B.I Vs. SADHU RAM SINGLA & ORS.

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Crl.), 396 of 2017, Judgment Date: Feb 23, 2017

The question which arises before us is no longer res  integra  i.e.  whether
FIR and the consequential  proceedings  alleging  non-compoundable  offences
could be quashed by the High Court in exercise  of  its  jurisdiction  under
Section 482 of Cr.P.C. on the basis of the  settlement  arrived  at  between
the complainant and the respondents-accused.

In concluding hereinabove, we  are  not  unmindful  of  the  view
recorded in the decisions cited at the Bar that depending on  the  attendant
facts, continuance of the criminal proceedings, after a compromise has  been
arrived at between the complainant and the accused, would  amount  to  abuse
of process of Court and an exercise in futility since  the  trial  would  be
prolonged and ultimately, it may end in  a  decision  which  may  be  of  no
consequence to any of the parties.

REPORTABLE

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.396 OF 2017
(Arising out of SLP(Crl.) No.1010 of 2012)

Central Bureau of Investigation … Appellant(s)

:Versus:

Sadhu Ram Singla & Ors. ... Respondent(s)

J U D G M E N T

Pinaki Chandra Ghose, J.

Leave granted.
This appeal, by special leave, has been filed assailing the judgment and
order dated 2nd June, 2011 passed by the High Court of Punjab and Haryana
at Chandigarh in Criminal Miscellaneous No.M-2829 of 2011, whereby the High
Court while relying upon another judgment of the same High Court and on the
basis of settlement of dispute, quashed the criminal proceedings against
the respondents, being FIR No.SIA-2001-E-0006 dated 28.12.2001 under
Sections 420 and 471 of Indian Penal Code [in short ‘IPC’], registered at
Police Station, SIU(X)/SPE/CBI, New Delhi and the criminal proceedings
pending in the Court of learned Special Judicial Magistrate, CBI, Punjab,
Patiala.

Brief facts of the case are as follows: M/s. Rom Industries Ltd., Mansa
Road, Bhatinda (Punjab), which is respondent No.3 herein, (hereinafter
referred to as the “respondent-company”) was dealing with State Bank of
Patiala, Bhatinda (City) Branch (for short “the Bank”) since 1976 and was
availing the credit limits from a consortium of banks with the Bank as
leader and enjoyed total fund based credit limits from the banking system
to an extent of Rs.31,500.00 lacs in March, 1996. However, in the year
1996, due to destruction of stocks consisting of Deolided Cakes lying at
Bedi Port, Jamnagar in a cyclone storm that hit Bedi Port, Jamnagar on
19/20 June, 1996, it claimed to have suffered heavy loss to the extent of
Rs.38.08 crores. The destruction of stocks could not be corroborated by any
evidence. The respondent-company had been granted credit facilities against
hypothecation of stocks which included stocks lying at the port. But
allegedly after Bank verification of the stocks, it was found that the
respondent-company had fraudulently obtained higher credit limits on the
basis of stock statements which appeared forged and false. The respondent-
company approached the Bank for grant of adhoc export packing credit limit
of Rs.10 crores in February 1995, which was sanctioned on 09.03.1995.

Law was set into motion when FIR No.SIA-2001-E-0006 dated 28.12.2001 was
registered at Police Station, SIU(X)/SPE/CBI, New Delhi, by Shri K.
Balachandran, Chief Vigilance Officer of the State Bank of Patiala under
Section 120-B read with Sections 420, 467, 468 and 471 of IPC, against the
Board of Directors including respondent Nos.1 & 2. Charge-sheet was filed
before the learned Special Judicial, Magistrate, CBI, Patiala, Punjab,
against the respondents under Section 420/471 read with Section 120(B) of
IPC, for having entered into criminal conspiracy between 1995 to 1996 and
causing loss to State Bank of Patiala to the extent of Rs.28.49/- crores
through false stock statements, forged bank guarantee and dishonest misuse
of funds generated.

During the pendency of the proceedings before the Court of learned Special
Judicial Magistrate, CBI, Patiala, Punjab, a compromise was arrived at
between the Bank and the respondent-company under a One Time Settlement
scheme of the Bank, through which sums of Rs.6 crores and Rs.1.25 crores
were deposited by the respondents and acknowledged by the Bank vide letter
dated 11.11.2009. Thereafter the Bank released the securities and
guarantees of the respondents, withdrew the recovery proceeding pending in
the DRT and stated vide the aforesaid letter dated 11.11.2009 that nothing
was due from the respondents to the Bank. An application filed by
respondent No.1 for compounding of offences under Section 320(2) of IPC,
was dismissed by the Trial Court on the ground that Section 471 read with
468 of IPC is a non-compoundable offence.

Thereafter, the respondents approached the High Court, invoking its power
under Section 482 of the Criminal Procedure Code, 1973 (in short ‘Cr.P.C.)
for quashing FIR No.SIA-2001-E-0006 dated 28.12.2001 and also the resultant
proceedings pending before the Court of learned Special Judicial
Magistrate, CBI, Patiala, Punjab, on the basis of aforesaid settlement. The
High Court by its judgment dated 2nd June, 2011, relied on its Full Bench
judgment in the case of Kulwinder Singh & Ors. Vs. State of Punjab Anr.,
2007 (4) CTC 769, and on the basis of settlement of dispute, quashed the
criminal proceedings against the respondents.

The question which arises before us is no longer res integra i.e. whether
FIR and the consequential proceedings alleging non-compoundable offences
could be quashed by the High Court in exercise of its jurisdiction under
Section 482 of Cr.P.C. on the basis of the settlement arrived at between
the complainant and the respondents-accused. Since the question before us
revolves around clause 9 of Section 320 of Cr.P.C., the same is reproduced
herein as follows:
“320. Compounding of offences.-
(1) xxx xxx xxx
(9) No offence shall be compounded except as provided by this section.”

We have heard learned Additional Solicitor General appearing for the CBI
and learned senior counsel appearing for the respondents at length and
carefully examined the materials placed on record. We have also taken
notice of the fact that the counsel for the appellant in High Court had
sought time for filing the reply but no reply was filed. We have also taken
notice of the fact that the High Court while quashing the said FIR and
consequential proceedings, has relied on the Full Bench judgment of that
High Court in the case of Kulwinder Singh & Ors Vs. State of Punjab & Anr.,
2007 (4) CTC 769, in which reliance was placed on the judgment delivered by
this Court in the case of Mrs. Shakuntala Sawhney Vs. Mrs. Kaushalya
Sawhney & Ors., (1980) 1 SCC 63.

Learned Additional Solicitor General appearing for the CBI has drawn our
attention to the decision of this Court in Manoj Sharma Vs. State & Ors.,
(2008) 16 SCC 1, wherein it was observed by this Court:

“22. Since Section 320 CrPC has clearly stated which offences are
compoundable and which are not, the High Court or even this Court would not
ordinarily be justified in doing something indirectly which could not be
done directly. Even otherwise, it ordinarily would not be a legitimate
exercise of judicial power under Article 226 of the Constitution or under
Section 482 CrPC to direct doing something which CrPC has expressly
prohibited. Section 320(9) CrPC expressly states that no offence shall be
compounded except as provided by that Section. Hence, in my opinion, it
would ordinarily not be a legitimate exercise of judicial power to direct
compounding of a non-compoundable offence.”

We further wish to supply emphasis on the judgment delivered by this Court
in the case of State of Tamil Nadu Vs. R. Vasanthi Stanley & Anr., (2016) 1
SCC 376, wherein it was observed:
“15. As far as the load on the criminal justice dispensation system is
concerned it has an insegregable nexus with speedy trial. A grave criminal
offence or serious economic offence or for that matter the offence that has
the potentiality to create a dent in the financial health of the
institutions, is not to be quashed on the ground that there is delay in
trial or the principle that when the matter has been settled it should be
quashed to avoid the load on the system. That can never be an acceptable
principle or parameter, for that would amount to destroying the stem cells
of law and order in many a realm and further strengthen the marrows of the
unscrupulous litigations. Such a situation should never be conceived of.”

Further reliance was placed on the decision of this Court in the case of
Central Bureau of Investigation Vs. A. Ravishankar Prasad & Ors., (2009) 6
SCC 351, wherein it was held:
“39. Careful analysis of all these judgments clearly reveals that the
exercise of inherent powers would entirely depend on the facts and
circumstances of each case. The object of incorporating inherent powers in
the Code is to prevent abuse of the process of the court or to secure ends
of justice.”

Lastly, reliance was placed upon another judgment of this Court in Central
Bureau of Investigation Vs. Maninder Singh, (2016) 1 SCC 389, wherein it
was held by this Court:
“19. In this case, the High Court while exercising its inherent power
ignored all the facts viz. the impact of the offence, the use of the State
machinery to keep the matter pending for so many years coupled with the
fraudulent conduct of the respondent. Considering the facts and
circumstances of the case at hand in the light of the decision in Vikram
Anantrai Doshi case, (2014) 15 SCC 29, the order of the High Court cannot
be sustained.”

Resisting the aforesaid submissions it was canvassed by Mr. Bishwajit
Bhattacharya, learned senior counsel appearing for the respondents that
High Court has judiciously and rightly considered the facts and
circumstances of the present case. Relying upon the judgment of this Court
in Gian Singh Vs. State of Punjab & Anr., (2012) 10 SCC 303, learned senior
counsel appearing for the respondents strenuously urged that the offences
in the present case are not heinous offences. He further drew our attention
towards the relevant part of Full Bench judgment of the High Court in
Kulwinder Singh & Ors. Vs. State of Punjab & Anr. (supra), which was
reproduced in the impugned judgment and the same is reproduced hereunder:
“26. In Mrs. Shakuntala Sawhney v. Mrs. Kaushalya Sawhney & Ors.,(1980) 1
SCC 63, Hon'ble Krishna Iyer, J. aptly summed up the essence of compromise
in the following words :-

The finest hour of justice arrives propitiously when parties, despite
falling apart, bury the hatchet and weave a sense of fellowship or reunion.

27. The power to do complete justice is the very essence of every judicial
justice dispensation system. It cannot be diluted by distorted perceptions
and is not a slave to anything; except to the caution and circumspection,
the standards of which the Court sets before it, in exercise of such
plenary and unfettered power inherently vested in it while donning the
cloak of compassion to achieve the ends of justice. No embargo, be in the
shape of Section 320(9) of the Cr.P.C. or any other such curtailment, can
whittle down the power under Section 482 of the Cr.P.C.”

Since the present case pertains to the crucial doctrine of judicial
restraint, we are of the considered opinion that encroaching into the right
of the other organ of the government would tantamount clear violation of
the rule of law which is one of the basic structure of the Constitution of
India. We wish to supply emphasis on para 21 of the Manoj Sharma’s case
(supra) which is as follows:
“21. Ordinarily, we would have agreed with Mr. B.B. Singh. The doctrine of
judicial restraint which has been emphasised repeatedly by this Court e.g.
in Aravali Golf Club v. Chander Hass (2008) 1 SCC 683 and Govt. of A.P. v.
P. Laxmi Devi (2008) 4 SCC 720, restricts the power of the Court and does
not permit the Court to ordinarily encroach into the legislative or
executive domain. As observed by this Court in the above decisions, there
is a broad separation of powers in the Constitution and it would not be
proper for one organ of the State to encroach into the domain of another
organ.”

Having carefully considered the singular facts and circumstances of the
present case, and also the law relating to the continuance of criminal
cases where the complainant and the accused had settled their differences
and had arrived at an amicable arrangement, we see no reason to differ with
the view taken in Manoj Sharma’s case (supra) and several decisions of this
Court delivered thereafter with respect to the doctrine of judicial
restraint. In concluding hereinabove, we are not unmindful of the view
recorded in the decisions cited at the Bar that depending on the attendant
facts, continuance of the criminal proceedings, after a compromise has been
arrived at between the complainant and the accused, would amount to abuse
of process of Court and an exercise in futility since the trial would be
prolonged and ultimately, it may end in a decision which may be of no
consequence to any of the parties.

In view of the discussion we made in the preceding paragraphs, in our
opinion, it would be proper to keep the said point of law open. However,
in the given facts, we dismiss this appeal.

……..………………………J
(Pinaki Chandra Ghose)

……..………………………J
(Amitava Roy)
New Delhi;
February 23, 2017.

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