IMPORTANT POINT
Criminal proceedings can be quashed where allowing criminal proceedings to continue would serve no meaningful purpose, particularly when dispute between parties has already been resolved through a full and final settlement.

JUDGMENT :

VIKRAM NATH, J.

1. Leave granted.

2. The present appeals arise out of order dated 19.11.2024 passed by the Madurai Bench of the High Court of Madras in Crl. O.P. (MD) Nos. 586 and 595 of 2024, whereby the High Court dismissed the petitions filed by the appellants under Section 482 of the Code of Criminal Procedure, 1973¹ [Cr.P.C.] seeking quashing of criminal proceedings initiated against them for offences under Section 120B read with Sections 420, 468, and 471 of the Indian Penal Code, 1860² [IPC] and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.³ [PC Act]

3. The facts relevant to the present appeals are as follows:

3.1. The appellants herein are arrayed as accused nos. 3 and 6 in C.C. No. 16 of 2006, arising out of FIR No. RC MA1 2005 0020, registered on the basis of a complaint dated 27.04.2005 lodged by the respondent no. 2-Bank. It was alleged that the accused persons caused wrongful loss to the Bank to the tune of Rs. 25.89 lakhs, leading to the filing of the charge sheet against nine accused, including the appellants.

3.2. The allegations against appellant no. 1, N.S. Gnaneshwaran, are that he was instrumental in orchestrating the fraudulent diversion of funds sanctioned to M/s Vinayaka Corporation. He is alleged to have facilitated the encashment of multiple cheques drawn from the fraudulently obtained credit limit, using a network of relatives, employees, and fictitious identities. It is further alleged that he forged signatures and diverted the funds through various accounts linked to his family members and associates.

3.3. Appellant No. 2, N.S. Madanlal, the brother of Gnaneshwaran, is alleged to have assisted in the scheme by operating a Bank account in the name of Bharathi Traders along with his wife, through which cheques were deposited and funds withdrawn. He is also accused of physically filling in cheques and ensuring their credit and encashment as part of the larger conspiracy to siphon off funds from the Bank.

3.4. Parallel to the criminal proceedings, the Bank initiated recovery proceedings in O.A. Nos. 186 of 2005 and 5 of 2006 before the Debt Recovery Tribunal, Chennai⁴ [DRT] which were later renumbered as T.A. Nos. 16 and 57 of 2007.

3.5. The High Court, vide order dated 07.01.2023, allowed the petition under Section 482 Cr.P.C. filed by accused no. 7, who is the wife of appellant no. 1, and quashed the FIR insofar as it pertained to her. The said order was assailed before this Court by way of Special Leave Petition, which came to be dismissed on 26.03.2021.

3.6. In identical cases being C.C. Nos. 13 of 2006 and 151 of 2010, which were initiated by the Central Bureau of Investigation (CBI) against the appellants and other accused based on the same set of transactions, a settlement was arrived at between the principal accused and the Bank for an amount of Rs. 52,79,000/-. Taking note of this compromise, the High Court proceeded to quash the proceedings against the accused on the ground of parity, and extended similar relief to the appellants herein vide order dated 26.09.2022.

3.7. Subsequently, the Bank floated a One Time Settlement (OTS) scheme, which was availed of by the main borrowers, namely accused nos. 4 and 5. Upon full repayment of the dues, the Bank recorded its satisfaction in the pending recovery proceedings, which were dismissed as settled vide order dated 15.12.2023. Thereafter, the Debt Recovery Certificates were recalled, and No Dues Certificates were issued to the borrowers.

3.8. In view of the settlement, the appellants moved the High Court under Section 482 Cr.P.C. seeking quashing of the criminal proceedings pending against them.

3.9. However, the High Court, vide the impugned order, dismissed the petitions on the ground that the stage of trial was advanced and held that the criminal proceedings could not be quashed merely on the basis of the OTS when a prima facie case was made out.

3.10. Aggrieved by the said decision, the appellants are befo