Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 831 OF 2014

(Arising out of Special Leave Petition (Crl.) No. 8914 OF

2013)

GOPAKUMAR B. NAIR ... APPELLANT (S)

VERSUS

C.B.I. & ANR. ... RESPONDENT (S)

J U D G M E N T

RANJAN GOGOI, J.

1.Leave granted.

2.The appellant is the second accused (hereinafter

referred to as ‘A-2’) in CC No. 48 of 2011 (RC 27(A)/2004) in

the Court of the Special Judge (SPE/CBI),

Thiruvananthapuram. He is aggrieved by the refusal dated

25.06.2013 of the High Court of Kerala to quash the

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Page 2 aforesaid criminal proceeding lodged by the respondent-

Central Bureau of Investigation (hereinafter for short ‘CBI’).

3.The allegations made against the accused-appellant in

the FIR dated 30.11.2004 are to the effect that the accused-

appellant alongwith one T.K. Rajeev Kumar (A-1), Branch

Manager, Indian Overseas Bank, Killippalam Branch,

Trivandrum and C. Sivaramakrishna Pillai (A-3) (since

deceased) had entered into a criminal conspiracy to obtain

undue pecuniary advantage for themselves. Specifically, it

was alleged that in furtherance of the aforesaid criminal

conspiracy the accused-appellant dishonestly applied for a

car loan of Rs. 5 lakhs and opened a bank account bearing

No. 1277 on 24.08.2002 without proper introduction.

Thereafter, according to the prosecution, the accused-

appellant furnished a forged agreement for purchase of a

second hand Lancer Car bearing No. KL-5L-7447 showing the

value thereof as Rs. 6.65 lakhs though the accused-appellant

had purchased the said vehicle for Rs. 5.15 lakhs only. It is

further alleged that A-1, by abusing his official position as

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Page 3 Branch Manager, dishonestly sanctioned Rs. 5 lakhs towards

car loan without prerequisite sanction inspection. It is also

alleged that A-1, who did not have the authority to do so,

sanctioned education loan of Rs.4 lakhs under the

Vidyajyothi Scheme to the accused-appellant for undergoing

a course on Digital Film Making at SAE Technology College,

Thiruvananthapuram. According to the prosecution, the

accused-appellant had submitted two forged receipts of the

aforesaid college showing payment of Rs. 1,60,000/- as fees

which amount was duly released in his favour though he

had actually paid Rs. 47,500/- to the college and had

attended the course only for three days.

4.It is the further case of the prosecution that A-1,

without being authorised to do so, sanctioned cash credit

facility of Rs. 17 lakhs to one M/s. Focus Infotainments of

which the accused-appellant is the proprietor and in this

regard had obtained inflated value of the collateral security

offered by the accused-appellant from deceased accused, A-

3. According to the prosecution in the valuation report

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Page 4 submitted by A-3 the value of the property offered as a

collateral security by A-2 was shown at Rs.17,34,675/-

though the subsequent valuation thereof by an approved

valuer was for Rs.8,56,600/-. The prosecution had also

alleged that after sanction of the said loan, A-1 wiped out

the over draft facility of Rs. 13,94,000/- given to the

accused-appellant without any authority by transferring the

said amount from the cash credit account which was not

only against the banking procedure but had also caused

undue pecuniary advantage to the accused-appellant to the

extent of Rs. 23,57,887/-. On the aforesaid facts,

commission of offences under Section 120-B IPC read with

Section 13(2) read with Section 13(1)(d) of the Prevention of

Corruption Act and Sections 420/471 IPC was alleged insofar

as the accused-appellant is concerned.

5.Based on the aforesaid allegations RC Case No.

27(A)/2004 dated 21.7.2005 was registered wherein

chargesheet had been filed against the accused-appellant

under the aforesaid sections of the Indian Penal Code as well

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Page 5 as the PC Act. It is not in dispute that charges under the

aforesaid provisions of law have been framed against the

accused-appellant in the court of the Special Judge

(SPE/CBI), Thiruvananthapuram on 29.07.2013.

6.Shri H.P. Raval, learned Senior Counsel appearing for

the accused-appellant had contended that all amounts due

to the bank from the accused-appellant has been tendered

in full in an out of court settlement between the parties. An

acknowledgement dated 30.3.2009 has been issued on

behalf of the bank to the aforesaid effect wherein it is also

stated that the bank has no further claims and charges

against the accused-appellant in view of the compromise

reached. Placing reliance on the decisions of this Court in

Nikhil Merchant vs. Central Bureau of Investigation

and Another

1

and Gian Singh vs. State of Punjab and

Another

2

and a recent pronouncement in CBI, ACB,

Mumbai vs. Narendra Lal Jain & Ors.

3

Shri Raval had

contended that in view of the settlement arrived at between

1

(2008) 9 SCC 677

2

(2012) 10 SCC 303

3

2014 (3) SCALE 137

5

Page 6 the bank and the accused-appellant, the High Court ought to

have exercised its power under Section 482 Cr.P.C. to quash

the criminal proceedings against the accused-appellant. Shri

Raval has taken the Court through the details of the

allegations made and the charges framed to contend that

the same are identical with those in Nikhil Merchant

(supra). The charges against the accused in both the cases

are identical; the same has been quashed in Nikhil

Merchant (supra) which decision has been endorsed by a

larger Bench in Gian Singh (supra) and also in Narendra

Lal Jain (supra). It is, therefore, contended that the criminal

proceeding against the accused-appellant is liable to be

quashed and the impugned order passed by the High Court

set aside.

7.On the contrary, Shri Sidharth Luthra, learned

Additional Solicitor General has submitted that the decision

in Nikhil Merchant (supra) turns on its own facts and what

has been approved in Gian Singh (supra) is merely the

principle of law laid down in Nikhil Merchant (supra),

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Page 7 namely, that quashing a non-compoundable offence under

Section 482 Cr.P.C., following the settlement between the

parties, does not amount to a circumvention of the

provisions of Section 320 of the Code of Criminal Procedure.

Notwithstanding the above, according to Shri Luthra,

whether a criminal proceeding should or should not be

interdicted midway would really depend on the facts of each

case. Shri Luthra has also drawn our attention to the

observations made in para 61 of the judgment in Gian

Singh (supra) wherein this Court had carved out an

exception by observing that,

“heinous and serious offences of mental

depravity or offences like murder, rape,

dacoity, etc. cannot be fittingly quashed even

though the victim or victim’s family and the

offender have settled the dispute. Such

offences are not private in nature and have a

serious impact on society. Similarly, any

compromise between the victim and the

offender in relation to the offences under

special statutes like the Prevention of

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Page 8 Corruption Act or the offences committed by

public servants while working in that

capacity, etc.; cannot provide for any basis

for quashing criminal proceedings involving

such offences.”

According to Shri Luthra in view of the above and having

regard to the charges framed in the present case the High

Court was fully justified in declining to quash the criminal

proceeding against the accused.

8.Insofar as the judgment in Narendra Lal Jain (supra) is

concerned, Shri Luthra has pointed out that in the aforesaid

case the accused was charged for the offence under Section

120B read with Section 420 of the IPC whereas in the

present case the charges against the accused-appellant are

under Section 120-B read with Section 13(2) read with

Section 13(1)(d) of the Prevention of Corruption Act and

Section 420/471 of the Indian Penal Code. It is submitted

that the offences under the Prevention of Corruption Act and

Section 471 of Indian Penal Code are not compoundable.

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Page 9 9.We have also heard Shri P. Suresh Kumar, learned

senior counsel for the respondent No.2-bank who had

admitted the payment of the entire amount due from the

accused-appellant under the transaction in question.

Learned counsel has, however, submitted that in written

acknowledgment issued by the Bank there is no mention

regarding any ‘settlement’ of the criminal case against the

accused-appellant insofar as the bank is concerned.

10.The charges framed against the accused-appellant, it

may be repeated, are under Section 120-B IPC read with

Section 13(2) read with Section 13(1)(d) of the PC Act and

Sections 420/471 of the IPC. It is true that in Nikhil

Merchant (supra) the charges framed against the accused

were also under Sections 120-B read with Section 5(2) and

5(1) (d) of the PC Act, 1947 (Section 13(2) read with 13(1)(d)

of the PC Act, 1988) and Sections 420, 467, 468, 471 of the

Indian Penal Code. However, in para 28 of the judgment in

Nikhil Merchant (supra) on a consideration of the totality of

the facts and circumstances in which the charges were

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Page 10 brought against the accused this Court had come to the

following conclusion:-

“28. 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 Ltd., Mumbai, in order to avail of the

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.”

The Court, thereafter, took into account the fact that

the dispute between the parties had been

settled/compromised and such compromise formed a part of

the decree passed in the suit filed by the bank. After holding

that the power under Section 482 Cr.P.C. to quash a criminal

proceeding was not contingent on the provisions of Section

320 of the Code of Criminal Procedure, and taking into

account the conclusion recorded in para 28 of the judgment,

as noticed above, the Court ultimately concluded that in the

facts of the case (Nikhil Merchant) it would be justified to

quash the criminal proceeding. In this regard, it is important

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Page 11 to note that the Court in Nikhil Merchant (supra) had come

to the conclusion that “the dispute involved herein has

overtones of a civil dispute with certain criminal overtones.”

11.The decisions in Nikhil Merchant (supra) as well as in

some other cases namely B.S. Joshi vs. State of

Haryana

4

and Manoj Sharma vs. State

5

were referred to a

larger Bench in Gian Singh (supra) for an authoritative

pronouncement as to whether in the said cases this Court

had “indirectly permitted compounding of non-

compoundable offences ”. The larger Bench hearing the

matter in its judgment

2

took the view that the,

“Quashing of offence or criminal proceedings on

the ground of settlement between an offender and

victim is not the same thing as compounding of

offence. …….. Strictly speaking, the power of

compounding of offences given to a court under

Section 320 is materially different from the

quashing of criminal proceedings by the High

Court in exercise of its inherent jurisdiction.”

[Para 57]

4

(2003) 4 SCC 675

5

(2008) 16 SCC 1

2

Gian Singh Vs. State of Punjab & Anr. (2012) 10 SCC 303

11

Page 12 Eventually, in para 61 the note of caution insofar as heinous

and grave offences and offences under special laws, as

already noticed, was sounded and it was held that Nikhil

Merchant (supra), B.S. Joshi vs. State of Haryana

(supra) and Manoj Sharma vs. State (supra) were correctly

decided.

12.Reference of a case to a larger Bench necessarily has to

be for a reconsideration of the principle of law on which the

case has been decided and not the merits of the decision.

The decision rendered by any Bench is final inter-parte,

subject to the power of review and the curative power. Any

other view would have the effect of conferring some kind of

an appellate power in a larger Bench of this Court which

cannot be countenanced. However, the principle of law on

which the decision based is open to reconsideration by a

larger Bench in an appropriate case. It is from the aforesaid

perspective that the reference in Gian Singh (supra) has to

be understood, namely, whether quashing of a non-

compoundable offence on the basis of a

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Page 13 compromise/settlement of the dispute between the parties

would be permissible and would not amount to overreaching

the provisions of Section 320 of the Code of Criminal

Procedure. In fact, this is the question that was referred to

the larger Bench in Gian Singh (supra) and not the merits of

the decision in Nikhil Merchant (supra).

13.The decision in Gian Singh (supra) holding the

decision rendered in Nikhil Merchant (supra) and other

cases to be correct is only an approval of the principle of law

enunciated in the said decisions i.e. that a non-

compoundable offence can also be quashed under Section

482 CrPC on the ground of a settlement between the

offender and the victim. It is not an affirmation, for there

can be none, that the facts in Nikhil Merchant (supra)

justified/called for the due application of the aforesaid

principle of law. Also, neither Nikhil Merchant (supra) nor

Gian Singh (supra) can be understood to mean that in a

case where charges are framed for commission of non-

compoundable offences or for criminal conspiracy to commit

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Page 14 offences under the PC Act, if the disputes between the

parties are settled by payment of the amounts due, the

criminal proceedings should invariably be quashed. What

really follows from the decision in Gian Singh (supra) is that

though quashing a non-compoundable offence under Section

482 CrPC, following a settlement between the parties, would

not amount to circumvention of the provisions of Section 320

of the Code the exercise of the power under Section 482 will

always depend on the facts of each case. Furthermore, in

the exercise of such power, the note of caution sounded in

Gian Singh (supra) (para 61) must be kept in mind. This, in

our view, is the correct ratio of the decision in Gian Singh

(supra).

14.The aforesaid principle of law may now be applied to

the facts of the present case. At the very outset a detailed

narration of the charges against the accused-appellant has

been made. The appellant has been charged with the

offence of criminal conspiracy to commit the offence under

Section 13(1)(d). He is also substantively charged under

14

Page 15 Section 420 (compoundable with the leave of the Court) and

Section 471 (non-compoundable). A careful consideration of

the facts of the case would indicate that unlike in Nikhil

Merchant (supra) no conclusion can be reached that the

substratum of the charges against the accused-appellant in

the present case is one of cheating nor are the facts similar

to those in Narendra Lal Jain (supra) where the accused

was charged under Section 120-B read with Section 420 IPC

only. The offences are certainly more serious; they are not

private in nature. The charge of conspiracy is to commit

offences under the Prevention of Corruption Act. The

accused has also been charged for commission of the

substantive offence under Section 471 IPC. Though the

amounts due have been paid the same is under a private

settlement between the parties unlike in Nikhil Merchant

(supra) and Narendra Lal Jain (supra) where the

compromise was a part of the decree of the Court. There is

no acknowledgement on the part of the bank of the

exoneration of the criminal liability of the accused-appellant

15

Page 16 unlike the terms of compromise decree in the aforesaid two

cases. In the totality of the facts stated above, if the High

Court has taken the view that the exclusion spelt out in Gian

Singh (supra) (para 61) applies to the present case and on

that basis had come to the conclusion that the power under

Section 482 CrPC should not be exercised to quash the

criminal case against the accused, we cannot find any

justification to interfere with the said decision. The appeal

filed by the accused is, therefore, dismissed and the order

dated 25.06.2013 of the High Court, is affirmed.

...…………………………CJI.

[P. SATHASIVAM]

.........………………………

J.

[RANJAN GOGOI]

.........………………………J.

[N.V. RAMANA]

NEW DELHI,

APRIL 7, 2014.

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