* 1 * IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 1703 OF 2008 Chattisgarh Distilleries Ltd & Ors. .....Applicants v/s. Central Bureau of Investigation & Ors. ....Respondents ======= Mr.V.K.Thanka, Senior Counsel with Mr.S.S.Dube and Mr.Nagendra Dube, Advocate for applicants. Mr.V.C. Gupte, advocate for Central Bureau of Investigation- New Delhi and Smt.A.S.Pai- advocate for Central Bureau of Investigation- Mumbai- for respondents no.1. Mr.H.J.Dedhia, APP for State-respondent no.2. Mr.O.A.A Das, advocate for respondent no.3. CORAM: SMT.R.P.SONDURBALDOTA, J. DATED: 20TH MARCH, 2009. JUDGMENT : 1. Heard counsel for both sides. 2. Applicant no.1 Chattisgarh Distilleries Ltd is a company registered under the Indian Companies Act, 1956. It was formerly known as Kedia Castle Dellion Industries Ltd (KCDIL for short). Applicants no.2 and 3 at the relevant time were directors of KCDIL as well as Kedia Distilleries Ltd (KDL for short), another company registered under the Indian Companies * 2 * Act. Both KCDIL and KDL were engaged in manufacturing of foreign liquor. The applicants have filed this application under Section 482 Cr.P.C. The application leaves much to be desired whether in the matter of its' contents or frame of the prayer. 3. It can be seen that the prayer clause is absolutely vague, lacking in essentials of particulars of the proceedings desired to be quashed. One is left to gather the particulars of the proceedings from the title of the application. The proceedings in respect of which the application is filed are (i) CBI Trial No.29 of 2003 arising out of CBI Case No. RC5(E) 99-BS&FC/519 at the instance of CBI, New Delhi and (ii) CBI Trial No.375/CP of 2002 arising out of CBI No.RC9 (E)/ 2001/BS&FC/Mumbai at the instance of CBI, Bombay. Apart from the applicants, there are several more persons arrayed as accused in the two cases. They are Shri.S.L.Dave, former Managing Director, (BOI-AME), Mumbai, Mr.Gordhar Kathuria, former Chairman, BIO-AMC,Mumbai, Mr.Pradeep Kumar Deora, Director and authorised signatory of KCDIL Mr.Sandeep Kumar Mansinghka, Proprietor of Braham Shakti Borewells and Mr.T.K.Sunderaraman Chief Manager-Bank of India Lease Finance Branch, Mumbai. The proceedings filed are for the offences punishable under Section 120(B), 420, 465, 467 and 471 IPC and * 3 * under Section 13(2) read with Section 13(1)(c) & (d) of Prevention of Corruption Act, 1988. Just as the prayer clause of the application does not contain particulars of the proceedings sought to be quashed, the application is lacking in the particulars of the prosecution case. They are required to be gathered from the copies of the charge-sheet annexed to the application. 4. In the application, the applicants state that applicants no.2 and 3 on behalf of KCDIL, as well as, KDL had entered into commercial transactions with Bank of India as disclosed in the complaint. KCDIL offered one time settlement of the dues under the commercial transactions of payment of Rs.415 lakhs in full and final discharge of the liabilities against all dues of the Bank. The offer was accepted by the bank vide it's letter dated 15th February, 2008. KCDIL then paid Rs.415 lakhs to the Bank which acknowledged its receipt. Therefore, according to the applicants they have been absolved of the liabilities in respect of Case No. RC5(E)99-BS&FC/519 and Case No.375(CP) of 2002. The applicants pray that the compromise be accepted and the two proceedings quashed, by applying ratio of the decision of the apex court in Jagdish V/s.State of Haryana reported in 2008 (2) SCALE page 411 and Madanmohan V/s.Puneet reported in 2008(4)SCALE page 159. They * 4 * contend that the two cases arise out of the credit facilities given by the bank to the applicant and as such the dispute was purely personal in nature between the two contesting parties. Since the parties have arrived at settlement of the commercial transactions, no useful purpose will be served in continuing the proceedings. It is to be noted at this stage that only one of the offences alleged against the applicant i.e. the offence punishable under Section 420IPC is compoundable. All the other offences are not compoundable. 5. Before adverting to the facts of the two cases, it will be convenient to understand the position in law as emerging from various decisions cited by both the sides. The first two decisions relied upon by the applicants are the two decisions referred to in the application itself. In the circumstance, reference to these decisions will have to be made first. In the case of Jagdish Chanana & Ors. V/s.State of Haryana & Anr. reported in 2008(4) SCALE page 411, the apex court was considering appeal against the order rejecting prayer for quashing of the F.I.R registered under Section 419, 420, 465, 468, 469, 471, 472, 474 read with Section 34 IPC. The application for quashing was made on the ground of compromise of the dispute which was purely personal in nature and arising out of commercial transactions. One of the terms of the * 5 * compromise was that the proceedings pending in the court may be withdrawn or compromised or quashed as the case may be. The apex court found that the dispute was purely personal in nature and no public policy was involved in the transactions that had been entered into between the parties. Therefore, it observed that it was unlikely that the prosecution will succeed in the matter and hence quashed the proceedings. The judgment does not refer to the facts of the prosecution case. Nonetheless, it is clear from the judgment that the order of quashing of the proceedings was passed in view of facts and circumstances of the case before the Apex Court. 6. In the second decision referred to in the application Madan Mohan Abbot v/s.State of Punjab reported in 2008(4) SCALE Page 159. The proceeding before the apex court was an appeal against judgment whereby an application for quashing of F.I.R. registered under section 379, 406, 409, 418 and 506 read with Section 34 IPC was rejected. The parties in the said proceedings had filed compromise purshis contending that the dispute therein was purely personal in nature and arose out of commercial transactions. The parties had settled the dispute in terms of the compromise with one of the terms being “ proceedings in the court may be withdrawn or compromised or quashed as the case may be”. The High Court had rejected the * 6 * application for quashing the proceedings on the basis of the compromise. The Apex Court allowed the appeal and quashed the proceedings with the following observations. “5......We notice from a reading of the F.I.R and the other documents on record that the dispute was purely a personal one between two contesting parties and that it arose out of extensive business dealings between them and that there was absolutely no public policy involved in the nature of the allegations made against the accused. We are, therefore, of the opinion that no useful purpose will be served in continuing with the proceedings in the light of the compromise and also in the light of the fact that the complainant has, on 11th January, 2004, passed away and the possibility of a conviction being recorded has thus to be ruled out. We need to emphasize that it is perhaps advisable that in disputes where the question involved is of a purely personal nature, the Court should ordinarily accept the terms of the compromise even in criminal proceedings as keeping the matter alive with no possibility of a result in favour of the prosecution is a luxury which the courts, grossly overburdened as they are, cannot afford and that the time so saved can be utilized in deciding more effective and meaningful litigation. This is a common sense approach to the matter based on ground of realities and bereft of the technicalities of law.” . In other words what had weighed with the Apex Court was i) the facts of the case disclosing the dispute to be purely personal one between the disputing parties (ii) dispute arising out of extensive business dealings (iii) the nature of allegations against the accused did not involve public policy and (iv) the litigation no more being a meaningful litigation. 7. During the course of arguments, Mr.Thanka learned counsel for the applicants relied upon one more decision of the * 7 * Apex Court in the case Nikhil Merchant V/s.Central Bureau of Investigation reported in 2008 (11) SCALE page 379. In this case, CBI had filed chargesheet against five persons under Section 120(B) read with Section 420, 467, 468, 471A and Article 136 and 142 of the Prevention of Corruption Act, 1947 and Section 5(2) and 5(1)(d) of Prevention of Corruption act, 1988 and Section 13(2) and 13(1)(d.) Alongwith the applicants before the apex court who were a company and its former Managing Director, the other accused were three officials of Andhra Bank. The company was granted financial assistance by Andhra Bank under various facilities. On account of default of repayment of the loans, the bank had filed civil proceedings for recovery of the amount due. Simultaneously, there were complaints made by the General Manager and the Chief Vigilance Officer of the bank on the basis of which investigation was undertaken by CBI, which resulted into criminal proceedings that were sought to be quashed by the application. It was alleged in the chargesheet that the accused persons had conspired with each other in fradulently diverting the funds of Andhra Bank. The offences alleged included forgery. Subsequently, the civil proceedings between the company and the bank were disposed off in terms of the compromise arrived at between the parties. One of the terms of the compromise was * 8 * of, the parties withdrawing all the allegations and counter allegations made against each other. On the compromise of the the suit, the company and its former Managing Director, filed an application for discharge from the criminal complaint. The application was rejected by the Special Judge. The said order was carried in revision to the High Court. Before the High Court reliance was placed upon the decisions of the apex court in the case of Central Bureau of Investigation v/s. Duncans Agro Industries Ltd reported in 1996(5)SCC page 591 and B.S.Joshi and Ors. V/s.State of Haryana & anr. reported in 2003 (4) SCC page 675. The High Court had held that both the decisions of the Apex Court were not applicable to the facts of the case since the chargesheet also included offences under Prevention of Corruption Act which are non-compoundable and had dismissed the application. 8. The arguments advanced in the appeal before the Apex Court were that since the disputes out of which the criminal proceedings had arisen, had been compromised between the appellant and the bank, continuing with the complaint would amount to misuse of the process of the court. Secondly, after filing of the chargesheet by the CBI in the year 1998, no steps including framing of charge had been taken till the year 2006. The bank had also not taken any action against its employees * 9 * against whom the chargesheet had been filed. Since the matter had been pending for 14 years after lodging of the complaint by the bank, it amounted to nothing but harassment of the applicants. It was lastly submitted that the contents of the chargesheet and the allegations made therein, at the best made out a case not for forgery but for cheating which was compoundable. Therefore, the ratio in both, the Duncans Agro Industries case (supra) and B.S.Joshi's case (supra) would apply. The learned Additional Solicitior General on the other hand urged that the allegations contained in the chargesheet filed was under Section 120B, Section 420, 467, 468, 471 IPC and also under Prevention of Corruption Act. Most of the offences under Indian Penal Code and the offences under Prevention of Corruption Act were non-compoundable. The facts of the case did make out offence of forgery. Therefore, though the matter was compromised between the parties criminal proceedings could not be compounded. It was further urged that in exercise of plenary powers under Article 142 of the Constitution of India the court could not ignore any substantial statutory provision. It is a residuary power supplementary and complimentary to the powers specifically conferred on the Supreme Court by statutes exercisable to do complete justice between the parties where it is just and * 10 * equitable to do so. The power is to be exercised sparingly and only in exceptional circumstances. 9. The Apex Court after considering the facts of the case and the arguments of the counsel was of the view that although technically there was force in the submissions made by the learned Additional Solicitor General, the facts of the case warranted interference.(emphasis supplied) It was further of the view that the basic intention of the accused in the case appeared to have been to misrepresent the financial status of the company in order to avail of the credit facility to the extent of which the company was not entitled to. Subsequently, the disputes between the company and the bank were set at rest on the basis of the compromise arrived at, wherein the dues of the bank had been cleared and the bank did not have any further claim against the company. In that circumstance, the apex court allowed the appeal with the following observations : “22. Despite the ingredients and the factual content of an offence of cheating punishable under Section 420 I.P.C., the same has been made compoundable under Sub- Section (2) of Section 320 Cr.P.C.with the leave of the court. Of course, forgery has not been included as one of the compoundable offences, but it is in such cases that the principle enunciated in B.S.Joshi'case becomes relevant. 23. 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 bnak have been cleared and the bank does not appear to have any further claim against the company. What, however, * 11 * 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 not 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. 24. On on 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 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 should be a futile exercise.” . It can be seen from the above judgment that what had once again weighed with the Apex Court was the facts and circumstances of the case before it. 10. Since there is a reference made to the decision of B.S.Joshi's case (supra), it will be necessary to consider that decision though the applicants have not specifically relied upon the same. In fact B.S.Joshis' case was the first case in which what is being described as new emerging jurisprudence was first argued and appreciated. The question for determination of the Apex Court in the case, was about the scope and ambit of Section 482 Cr.P.C. arising out of an application for quashing proceedings under Section 498A and 406 IPC. The wife had filed * 12 * proceedings against the husband, his parents and his younger brother. Later, she filed an affidavit that the FIR was registered at her instance due to temperamental differences and implied imputations. She had finally settled the dispute with the family and she and her husband had agreed for mutual divorce. After filing the petition for divorce, the proceeding for quashing of the FIR had been filed. The application for quashing was rejected by the High Court since the offences are non-compoundable under Section 320 of the Code and therefore it was not permissible for the Court to quash the FIR. The Apex Court answered the question arising before it as follows “It is, thus clear that Madhu Limaye's case does not lay down any general proposition limiting power of quashing the criminal proceedings of FIR or complaint as vested in Section 482 of the Code or extraordinary power under Article 226 of the Constitution of India. We are, therefore, of the view that if for the purpose of securing the ends of justice, quashing of FIR becomes necessary, Section 320 would not be a bar to the exercise of power of quashing. It is, however, a different matter depending upon the facts and circumstances of each case whether to exercise or not such a power.” (emphasis supplied). It then considered the facts and circumstances of the case and quashed the proceedings with following observations “There is no * 13 * doubt that the object of introducing Chapter XX-A containing Section 498A in the Indian Penal Code was to prevent the torture to a woman by her husband or by relatives of her husband. Section 498A was added with a view to punishing a husband and his relatives who harass or torture the wife to coerce her or her relatives to satisfy unlawful demands of dowry. The hyper-technical view would be counter productive and would act against interests of women and against the object for which this provision was added. There is every likelihood that non-exercise of inherent power to quash the proceedings to meet the ends of justice would prevent women from setting earlier. That is not the object of Chapter XXA of Indian Penal Code.” 11. The next decision cited by Mr.Thanka is the latest decision of the Apex Court in Manoj Sharma V/s.State and Ors.reported in Manu/SC/8122/2008 in which the F.I.R under Sections 420, 468, 471, 34, 120B IPC was sought to be quashed on the ground of compromise, relying upon B.S.Joshi's case (supra). It was alleged in the complaint, that the appellant who was accused no.1 had forged documents in respect of a vehicle and thereafter indulged in cheating and deposited the cheques received from the complainant against financing of the vehicle in different accounts. It was also alleged in the * 14 * F.I.R that the appellant sold the vehicle of the complainant to some other party by making forged signature and by playing fraud with him. This dispute was compromised and as per the settlement, the complainant paid Rs.45,000/- to the appellant and also to accused no.1 and filed an affidavit stating that he was withdrawing all the allegations against the accused persons. The learned counsel for the State had urged that the decision rendered in B.S.Joshi's case possibly required a second look. While deciding the request, the Apex Court observed : “6.....What was decided in B.S.Joshi's case was the power and authority of the High Court to exercise jurisdiction under Section 482 Cr.P.C. or under Article 226 of the Constitution to quash offences which are not compoundable. The law stated in the said case simply indicates the powers of the High Court to quash any criminal proceeding of First Information Report or complaint whether it is compoundable or not. The ultimate exercise of discretion under Section 482 Cr.P.C. or under Article 226 of the Constitution is with the court which has to exercise such jurisdiction in the facts of each case. It has been explained that the said power is in no way limited by the provisions of Section 320 Cr.P.C. We are unable to disagree with such statement of law.” . It was then considered that the dispute between the complainant and the accused was of private nature and once the complainant decided not to pursue the matter further, a greater pragmatic view of the matter could have been taken and the F.I.R quashed. 12. Justice Markandey Katju who formed part of the Bench * 15 * deciding Manoj Sharma's case gave a separate concurring judgment expressing his concern over the issue though on the facts, he was of the opinion that the proceedings deserved to be quashed. After noting the provision of Section 320 Cr.P.C., various decisions of the Apex Court as regards the judicial restraints to be followed while exercising the inherent powers of the High Court under Section 482 Cr.P.C., the creative solution found in B.S.Joshi's case (supra) to get over the limitations put by Section 320 Cr.P.C., he sounded a note of caution in following words. “23. There can be no doubt that a case under Section 302 IPC or other serious offences like those under Sections 395, 307 or 304B cannot be compounded and hence proceedings in those provisions cannot be quashed by the High Court in exercise of its power under Section 482 Cr.P.C. Or in writ jurisdiction on the basis of compromise. However, in some other cases, (like those akin to a civil nature) the proceedings can be quashed by the High Court if the parties have come to an amicable settlement even though the provisions are not compoundable. Where a line is to be drawn will have to be decided in some later decisions of this court, preferably by a larger bench (so as to make it more authoritative). Some guidelines will have to be evolved in this connection and the matter cannot be let at the sole unguided discretion of Judges, otherwise, there may be conflicting decisions and judicial anarchy. A judicial discretion has to be exercised on some objective guiding principles and criteria, and not on the whims and fancies of individual judges. Discretion, after all, cannot be the Chancellor's foot. 24. I am expressing this opinion because Shri.B.B.Singh, learned counsel for the respondent has rightly expressed his concern that the decision in B.S.Joshi's case (supra) should not be understood to have meant that Judges can quash any kind of criminal case merely because there has been a compromise between the parties. After all, a crime is an offence against society, and not merely against a private * 16 * individual.” 13. Lastly, there is a decision of the Madras High Court cited by Mr.Thanka in A.D. Sudhindra V.s Inspector of police CBI & Ors. reported in MANU/TN/1588/2008. Mr.Thanka, submits that Madras High Court has quashed proceedings filed concerning offences identical to those in the present case and hence the same can be safely followed. If one carefully peruses the facts of the case before the Madras High Court, it can be seen that the entire loan obtained by the applicant from the bank had been paid along with interest much prior to the filing of the complaint by an anonymous person. The Bank had not suffered any financial loss. Even after repayment of the loan, the bank still had in its' possession fixed deposits of the guarantor to the tune of Rs.5.25 crores as security. There was no complaint from the bank, and the court found that the very registration of the FIR was contrary to the facts. Such were the facts that deserved quashing of the FIR. 13. The common string seen running through all the above decisions is that the decision to quash the proceedings was taken on the facts and circumstances of the respective case. There was no compulsion to quash the complaint or criminal proceedings merely because there was compromise between the complainant and the accused. The facts of each case indicated * 17 * that the dispute was purely personal one, between the contesting parties and there was absolutely no public