The court held that the continuation of criminal cases against the petitioner was meaningless due to the compromise of the offense of cheating, the absence of forgery allegations, and the failure to establish the petitioner as a public servant.

These applications have been filed for quashing of the proceedings in R.C. No. 12/EOW/86 and investigations in R.C. No. 13/EOW/86, R.C. No. 14/EOW/86 and R.C. No. 15/EOW/86 dated 17th December, 1986 under Section 420/468/471 of the I.P.C. and Section 5(1)(d) and 5(2) of the Prevention of Corruption Act, 1947. This application in R.C. No. 12/EOW/86 is taken up together with other applications being of the same nature and against the same person.

2. On 18.12.1986, the Deputy Manager of the Tamilnad Mercantile Bank Ltd. lodged a complaint before the Superintendent of Police, Central Bureau of investigation, Economic Offence Wing, 234/14, Acharya Jagadish Chandra Bose Road, Calcutta by writing a letter against the petitioner Pawan Kumar Ruia and others under Section 120B read with Sections 420/468/471 of the Indian Penal Code and Sec. 5(1)(d) and 5(2) of the Prevention of Corruption Act, 1947 stating inter alia, as follows:-

During the period from January 1984 to June 1984, Charles Solomon, the then Calcutta Branch Manager misused his official position and power and committed fraud, conspiracy and cheating in a pre-planned manner thereby cheating the said Bank with a view to secure personal gain wrongfully and dishonestly in the following manner:-

i) Issuance of unauthorized overdrafts Rs.1,00,41,745/-

ii) Unauthorized credit extended through clearing

cheques outstanding account Rs.27,492 lakhs

iii) Drawing against clearing Rs.39,20,965/

iv) Illegal book transfers Rs.2,21,08,000/-

v) Other surreptitious and unauthorized Nil

vi) Total loss Rs.5,01,054,90/-

3. In the year 1983, 41 Public limited Companies had been floated and the capital issue was in a questionable manner. Pawan Kumar Ruia, Chartered Accountant hatched up a plan to utilize the facilities of the Bank to dupe the Government into believing that the companies floated had genuine base of promoters and in the process cheated the Government as well which can be found from the facts mentioned below:-

1. The accused P.K. Ruia was the common Chartered Accountant of all the companies which were floated. The registered offices of the companies were shown to be same in a group. When demands were made by the Bank for payment of its dues most of the letters were returned with the remark 'Not known'. All the companies which received the said letters replied in same voice, in same words.

2. It would appear on proper scrutiny that most of the Directors were more or less the same common persons.

3. The so-called promoters utilised initially many Savings Bank and Current Accounts opened by them in the Tamilnad Mercantile Bank Ltd. in all cases the basis of allotment was from the date of closure of the subscription. The allotments were made immediately and the said companies withdrew the subscription on the very same day, Mr. Solomon, acting as banker to the issue did not even bother to claim for or realise the Bank's Commission and expenses and charges and thereby caused a total loss of Rs.5,01,054,90/- in the year 1983 as such the Bank was duty bound to institute various suits to realise its dues.

4. The Ruia's group of companies and the companies promoted by him were involved in many book transfers. Such transaction ran into crores of rupees in a single day, although the amount standing to their credit was a few hundred rupees only. Rupees 1,52,78,656/- were involved on March 19, 1985 relating to 52 accounts, 164 debit instruments and 91 credit instruments. By taking recourse to unauthorized overdrafts, which were settled by cross transfers on the day, the accused defrauded the Government, Government agencies and the Tamilnad Mercantile Bank Ltd. The employees of Ruia were appointed as Directors in most of the said companies and Ruia was appointed as auditor in most of the cases. Although the Directors made declarations to the Stock Exchange that the brokerage was paid by cheques, operations of the account did not reveal so. On verification of DD's, TT's and MT'