'One Time Settlement With Banks No Ground To Quash Loan Fraud Case' : Supreme Court Rejects Plea Against ED Case

The Supreme Court on Wednesday refused a plea to quash a case registered by the Enforcement Directorate under the Prevention of Money Laundering Act over the loan fraud allegations in Telangana.

In the judgement dated 22^nd December, 2020, the Telangana High Court, while dealing with a batch of criminal petitions filed by Ishoo Narang and others seeking to quash the criminal charges against the, had noted that the banks' acceptance of OTS would not absolve the Petitioners.

"Such economic frauds adversely affect the financial and economic well-being of the Nation and have implications which lie beyond the domain of a mere dispute between Petitioner No. 4 and the above said banks, including Central Bank of India and Bank of Maharashtra. The mere fact that the banks which are already under stress to clear the NPAs from their books accepted the OTS, will not absolve the petitioners from criminal charges".

The issue in the judgement arose on account of the Petitioners' company having availed credit facilities from various banks under the multiple banking arrangements for the purpose of conducting business in procuring and selling of coal. However, an FIR was subsequently registered by the banks involved on the charge that the company had committed fraud and cheated the Banks, causing a loss worth crores.

Further, the High Court also noted that the complainants' banks had also specifically incorporated in the acceptance of the OTS proposals terms and conditions that the acceptance of the same would not absolve the criminal liability of the Petitioners and that OTS and criminal liability were different and distinct.

It was further elucidated that the Supreme Court had categorically held that, in economic offences, it was not proper for the High Corut to exercise its inherent powers under Section 482 CrPC to qaush the FIRs/charge sheets.