Criminal Cases Having Overwhelmingly Civil Character Should Be Quashed When Parties Settled Dispute : Supreme Court

The Supreme Court today (Oct. 3) observed that criminal cases arising out of civil transactions should be quashed when the parties have resolved their entire disputes among themselves.

“It could thus be seen that this Court reiterates the position that the criminal cases having overwhelmingly and predominantly civil character, particularly those arising out of commercial transactions or arising out of matrimonial relationship or family disputes should be quashed when the parties have resolved their entire disputes among themselves.”, the bench comprising Justices BR Gavai and KV Viswanathan said.

In the present case, the dispute involved predominantly had overtures of a civil dispute. The FIR and the charge sheet pertained to the dispute concerning the loan transaction availed by the accused persons on one hand and the Bank on the other hand. Based on the complaint of the bank, the CBI registered FIR for offences punishable under Sections 120-B read with 420, 409, 467, 468 and 471 of Indian Penal Code 1860 (“IPC” for short) and Section 13(1)(d) and 13(2) of the Prevention of Corruption Act 1988. Chargesheet was also filed.

Admittedly, the Bank and the accused persons have settled the matter.

Apart from the earlier payment received by the Bank either through Equated Monthly Instalments (EMIs) or the sale of the mortgaged properties, the borrowers have paid an amount of Rs.3,80,00,000/- under OTS. After receipt of the amount under OTS, the Bank also decided to close the loan account.

Setting aside the decision of the High Court, the court found it a fit case to quash the pending criminal proceedings against the appellants after noting that the criminal proceedings had an overwhelmingly and predominating civil flavor where the wrong is private or personal and the parties have resolved their entire dispute.

Referring to the three judge's decision of Gian Singh v. State of Punjab & Anr. (2012), the court observed as follows.

“It has been held that there are certain offences which overwhelmingly and predominantly bear civil flavour having arisen out of civil, mercantile, commercial, financial, partnership or such like transactions or the offences arising out of matrimony, particularly relating to dowry, etc. or a family dispute, where the wrong is basically to the victim and the offender and the victim have settled all disputes between them amicably, the High Court would be justified in quashing the criminal proceedings, even if the offences have not been made compoundable.”

The Court added that it would not be in the interest of justice to continue the criminal proceedings against the accused when the possibility of the conviction is remote and bleak after a full and final settlement and compromise with the victim/bank.

“Apart from that, it is further to be noted that in view of the settlement between the parties in the proceedings before the DRT, the possibility of conviction is remote and bleak. In our view, continuation of the criminal proceedings would put the accused to great oppression and prejudice.”, the court observed.

“In the result, we find that this was a fit case wherein the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quash the criminal proceedings.”, the court held.

Accordingly, the appeal was allowed and the impugned decision was set aside. Pending criminal proceedings stand quashed.

Appearance:

Shri Dama Seshadri Naidu, learned Senior Counsel for the appellants

Shri Vikramjeet Banerjee learned Additional Solicitor General (“ASG” for short) appearing for the CBI

Ms. Devina Sehgal, learned counsel for the respondent No.1-State

Mr. Himanshu Munshi, learned counsel for the respondent No.2-Bank

Case Title: K. BHARTHI DEVI AND ANR. VERSUS STATE OF TELANGANA & ANR

Citation : 2024 LiveLaw (SC) 775

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