Case: Nikhil Merchant Vs. C.B.I.

the appellant showing inflated stocks to induce the Bank to provide additional credit facility and funds which it would not have otherwise been legally entitled to.16. Rebutting the submissions made on behalf of the appellant, the learned Additional Solicitor General referred to the provisions of Sections 463 and 464 IPC which relate to the definition of "forgery" and "the making of a false document". He pointed out that under the definition of forgery in Section 463 any person making any false document or false electronic record or part of a document or electronic record with intent to cause damage or injury to the public or to any person or to support any claim or title or to cause any person to part with any property or to enter into any expressed or implied contract or with intent to commit fraud or that fraud may be committed, commits forgery. Referring to Section 464 he submitted that a person is said to make a false document or false electronic record who dishonestly or fraudulently, inter alia, makes, signs, seals or executes a document or part of a document with the intention of causing it to be believed that such document was made, signed, sealed, executed, transmitted or affixed by or by authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed. The learned Additional Solicitor General submitted that in the instant case the preparation of such a false document with the intention of cheating comes squarely within the definition of forgery under Section 463 IPC.17. It was urged that all the ingredients of offences committed under Sections 468 and 471 as also Section 420 IPC are made out in the charge sheet, and hence, even if the matter was compromised between the parties, the criminal proceedings could not be compounded on that basis since the offences involved also include non-compoundable offences.18. It was urged that even if no steps have been taken by the CBI since the charge sheet was filed in 1998, the same would not be a ground for quashing the criminal proceedings once the charge sheet had been filed. He submitted that in view of the decision of this Court in Supreme Court Bar Association vs. Union of India (1998) 4 SCC 409 , this Court would possibly not be justified in giving directions in the instant case even under Article 142 of the Constitution, since the Constitution Bench had held that in exercise of its plenary powers under Article 142 this Court could not ignore any substantive statutory provision dealing with the subject. It is a residuary power, supplementary and complementary to the powers specifically conferred on the Supreme Court by statutes, exercisable to do complete justice between the parties where it is just and equitable to do so. It was further observed that the power under Article 142 of the Constitution was vested in the Supreme Court to prevent any obstruction to the stream of justice.19. The learned Additional Solicitor General submitted that the power under Article 142 is to be exercised sparingly and only in rare and exceptional cases and in the absence of any exceptional circumstances the appeal was liable to be dismissed.20. Having carefully considered the facts of the case and the submissions of learned counsel in regard thereto, we are of the view that, although, technically there is force in the submissions made by the learned Additional Solicitor General, the facts of the case warrant interference in these proceedings.21. The basic intention of the accused in this case appears to have been to misrepresent the financial status of the company, M/s Neemuch Emballage Limited, Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional amounts of credit to which the company was not otherwise entitled.22. Despite the ingredients and the factual content of an offence of cheating punishable under Section 420 IPC, 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. Joshis case (supra) 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 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?24. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S. Joshis 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 would be a futile exercise.25. We, therefore, set aside the order passed by the High Court dismissing the petitioners revision application No.49 of 2003 in Special Case No.80 of 1998 and quash the proceedings against the appellant.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Having carefully considered the facts of the case and the submissions of learned counsel in regard thereto, we are of the view that, although, technically there is force in the submissions made by the learned Additional Solicitor General, the facts of the case warrant interference in these proceedings.21. The basic intention of the accused in this case appears to have been to misrepresent the financial status of the company, M/s Neemuch Emballage Limited, Mumbai, in order to avail of credit facilities to an extent to which the company was not entitled. In other words, the main intention of the company and its officers was to cheat the Bank and induce it to part with additional amounts of credit to which the company was not otherwise entitled.22. Despite the ingredients and the factual content of an offence of cheating punishable under Section 420 IPC, 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. Joshis case (supra) 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 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?24. On an overall view of the facts as indicated hereinabove and keeping in mind the decision of this Court in B.S. Joshis 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 would be a futile exercise.25. We, therefore, set aside the order passed by the High Court dismissing the petitioners revision application No.49 of 2003 in Special Case No.80 of 1998 and quash the proceedings against the appellant.