Case: Central Bureau of Investigation Vs. A. Ravishankar Prasad &amp; Others

3. According to the appellant, the respondents herein have committed serious offences, such as forgery, fabrication of documents and using the said documents as genuine. The respondents, A. Ravishankar Prasad and A. Manohar Prasad also entered into conspiracy with the Chairman and Managing Director and other officials of the Indian Bank, Chennai with the object of cheating the Indian Bank in the matter of recommending/sanctioning/disbursing huge credit facilities in the formLetter of Credit (LC);(2) Open Cash Credit (OCC)(3) Secured- Temporary Overdrafts (SOD/TOO)(4) Bank Guarantee (BG)(5) Blocked Loan; and(6) Taking over of liabilities from other banks and other branches of Indian Bank without proper appraisal, without following banking norms, beyond the delegated powers and without ensuring the end use of the funds in the name of M/s Ravishankar Films Pvt.Ltd., M/s Gemini Arts Pvt.Ltd., M/s Gemini Pictures Circuit Pvt.Ltd. and M/s Prasad Properties and Investments Pvt.Ltd. represented by respondent no.1 A. Ravishankar Prasad and respondent no.2 A. Manohar Prasad who fraudulently produced false documents through their employees and used the same as genuine and defrauded the Indian Bank huge amounts running into hundreds of crores and obtained pecuniary advantage for themselves and others.On completion of investigation charge-sheets were filed and four cases were registered against M. Gopalakrishnan, formerly CMD, Indian Bank, Chennai and other public servants, bank officials and A. Ravishankar Prasad and A. Manohar Prasad and their group concerns under section 120-B read with section 420 and section 13(2) read with section 13(1)(d) of Prevention of Corruption Act, 1988.5. On 28.3.2007 the respondents herein have settled the entire outstanding dues by paying an amount of Rs.157 crores during March 2007 and the petitions before the Debt Recovery Tribunal, Chennai have been dismissed as settled out of court.6. Respondent nos.1 and 2 had preferred application under section 482 of the Cr.P.C. before the High Court of Madras, to quash the proceedings against them contending inter alia that the witnesses so far examined by the prosecution have not stated anything against the respondents. It is also urged that the respondents had entered into a compromise with the Indian Bank and have settled the entire outstanding dues and legal charges to the bank on the recovery certificate issued to the DRT, Chennai. In this view of the matter, proceedings against the respondents need to be quashed.7. In pursuance of the show cause notice issued by the High Court, the CBI contended that the cases were registered on the basis of written complaint filed by the General Manager, Indian Bank, Chennai. It was submitted that the active trial in the case was in progress and 92 witnesses have already been examined. The CBI also urged that the settlement of the loan transactions between the parties would not absolve the respondents herein from the criminal liability. According to the CBI, the Madras High Court without properly scrutinizing the materials produced by the prosecution quashed the proceedings against the respondents.8. The High Court has given undue weightage to the settlement entered between the bank and the respondents. The settlement has absolved the respondents at the most from the civil liability but as far as criminal liability under section 120-B read with section 420 IPC is concerned, the respondents share the charges with the Chairman and the Managing Director and other officials of the Bank. Therefore, quashing of the complaint against the respondents was wholly unwarranted and against the settled position of law. The High Court did not comprehend the ratio of the series of judgments of this court and erroneously quashed the proceedings.

Court's reasoning:
15. Undoubtedly, the High Court possesses inherent powers under section 482 of the Code of Criminal Procedure. These inherent powers of the High Court are meant to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court.The powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The court must be careful to ensure that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy; more so, when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material. Of course, no hard and fast rule can be laid down with regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage.Careful analysis of all these judgments clearly reveals that the exercise of inherent powers would entirely depend on the facts and circumstances of the each case. The object incorporating inherent powers in the Code is to prevent abuse of the process of the court or to secure ends of justice.41. Both English and the Indian courts have consistently taken the view that the inherent powers can be exercised in those exceptional cases where the allegations made in the first information report or the complaint, even if are taken on their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.42. When we apply the settled legal position to the facts of this case it is not possible to conclude that the complaint and charge-sheet prima facie do not constitute any offence against the respondents. It is also not possible to conclude that material on record taken on face value make out no case under section 120-B read with section 420 IPC against the respondents. Prima facie, we are of the opinion that this is one case where adequate material is available on record to proceed against the respondents.43. In our considered view it was extremely unfortunate that the High Court in the impugned judgment has erroneously invoked inherent power of the court under section 482 of the Code of Criminal Procedure. The High Court ought to have considered the entire material available to establish a case against the respondents under section 120-B read with section 420 IPC. It is significant that the respondents and the other bank officials share the charges under section 120-B read with section 420 IPC. Quashing the charges against the respondents would also have very serious repercussions on the pending cases against the other bank officials.44. In four cases, 92 witnesses have already been examined. The trial of the case was at the advanced stage. At this sage, the High Court has seriously erred in quashing the charges against respondent nos.1 and 2.45. Quashing the proceedings at that stage was clearly an abuse of the process of the court. The court neither considered the entire material nor appreciated the legal position in proper perspective. The impugned judgment is wholly unsustainable in law and is accordingly set aside. Unfortunately, because of unnecessary interference by the High Court under section 482 Cr.P.C. the trial of this case could not be completed and concluded.46. Before parting with the case we would like to observe that mere re-payment of loan under a settlement cannot exempt the accused from the criminal proceeding in the facts of this case.47. We would like to observe that any observations made in this case have been made to decide the present case. The trial court may decide the case without being influenced by any observations made by this court.48. In this view of the fact, in the interest of justice we direct that the trial be now completed as expeditiously as possible. The trial court is directed to conduct the trial on day to day basis and parties are directed to cooperate with the trial court. The trial court shall ensure that unnecessary adjournments be avoided and trial be concluded as expeditiously as possible.