Nikhil Merchant vs C.B.I. & Anr

3. The accused No.4-Company was granted financial assistance by the Andhra Bank, Opera House Branch under various facilities. On account of default in repayment of the loans, the Bank filed a suit for recovery of the amount payable and in addition, on 19th December, 1995, a complaint was made by the General Manager and the Chief Vigilance Officer of the Bank on the basis whereof investigations were undertaken by the CBI, which filed the above-mentioned charge sheet in the Court of the Special Judge on 30th December, 1998. The allegations under the charge sheet indicate that the accused persons conspired with each other in fraudulently diverting the funds of the Andhra Bank. Offences alleging forgery were also included in 3 the charge sheet. The above-mentioned suit between the Company and the Bank, to which the appellant herein was also a party, was disposed of on a compromise arrived at between the parties which was reduced into writing, and was filed in the suit. On the basis of the consent terms, the suit was compromised upon the defendants agreeing to pay the amounts due as per the schedule mentioned in the consent terms. What is of importance in this case is clause 11 of the consent terms, which reads as follows:-

7. After considering the said decision in the light of the submissions made on behalf of the respective parties, the High Court took the view that in the Duncans Agro case (supra) this 7 Court was considering the situation involving Section 420 IPC which was compoundable under Section 320(2) CrPC, while in the instant case, the charge sheet was also under Sections 467, 468, 471-A IPC along with the provisions of the Prevention of Corruption Act, which were non- compoundable. The High Court, therefore, held that neither of the said two cases would have application to the facts of this case and rejected the appellant's prayer for discharge from the criminal cases.

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.

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 19 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?

25. We, therefore, set aside the order passed by the High Court dismissing the petitioner's revision application No.49 of 2003 in Special Case No.80 of 1998 and quash the proceedings against the appellant. The appeal is accordingly allowed.

...................J (ALTAMAS KABIR) ...................J (MARKANDEY KATJU) New Delhi Dated: 20.8.2008