One Time Settlement can quash criminal proceedings in cases lacking evidence of fraud or forgery.

ORDER :

A. BADHARUDEEN, J.

Accused No.2 in Crime No. RC0332024A0005/2024, registered by the ACB, Cochin, has filed this Criminal Miscellaneous Case seeking to quash all proceedings in the said crime.

2. Heard the learned counsel for the petitioner as well as the learned Special Public Prosecutor appearing for the CBI. Perused the relevant decisions placed by the learned counsel for the petitioner. Also gone through the statement filed by the investigating officer, along with the statements submitted by the Central Bank of India, Palakkad branch, dated 23.12.2024.

3. In this matter, crime was registered alleging commission of offences punishable under Sections 406 and 420 r/w Section 120B of the Indian Penal Code (hereinafter referred to as ‘IPC’ for short) as well as under Section 13 (2) r/w Section 13 (1)(d) of the Prevention of Corruption Act, 1988 , (hereinafter referred to as ‘PC Act,1988’ for short) by the accused, acting on a complaint filed by Sri. Ujjwal Kumar Chandra, Regional Head, Central Bank of India, Regional Office, Cochin. The allegation in the FIR is that the unknown Public servants of Central Bank of India, along with Directors of M/s.Shalom Micro Finance Ltd, namely, Shri Jaison Joy M.J. (Managing Director), Shri.Job Manthottathil Joy (Addl. Director), Shri.Sivadas Chettoor (Addl.Director), Smt.Velandy Saraswathi (Addl.Director), Shri.Emmanuel Vijayanand Muray (Nominee Director), Shri.Sivasankaran Kannan (Addl. Director), Shri.Janardhanan V.K. (Director) and Shri.Raju Aruvummackal Cherian (Addl. Director) and unknown others were involved in this case. The prosecution case is that the Directors of M/s.Shalom Finance Ltd. availed 4 term loans for the period from January 2010 to March 2013 to the tune of Rs.1132 lakh. The borrowers mortgaged 3 acres of land and School building of the Guarantor as security towards the loan. The company represented by its Directors and its guarantors committed default in repayment of the loan as agreed by them and the account had been classified as NPA on 31.12.2013 by the Bank. The total loss sustained to the Central Bank of India is Rs.7,25,94,608/-. As per the complaint, Central Bank of India assigned Forensic Audit to M/s.Grandmark & Associates, Chartered Accountant, Kochi and the finding disclosed that this is a clear case of embezzlement of funds, fraud, breach of trust, misappropriation and cheating by the company and its borrowers to amass illegal wealth. These findings were accepted by the bank.

4. The learned counsel for the petitioner argued that, as per the complaint produced as Annexure I, in paragraph No.6, the loan availed by the petitioner and his company is stated as Rs.1132 lakh (Rupees Eleven Crore and thirty two lakh only). The total outstanding amount with accrued interest as on 31.07.2017 was Rs.89,17,2,829/. After granting decree by the Debts Recovery Tribunal for the said amount with future interest, the petitioner availed One Time Settlement (OTS) provided by the Bank for the closure of the loan. Ultimately, altogether 3.40 Crore was repaid apart from the earlier repayments made, under the OTS and no liability to the bank is subsisting as above. It is also pointed out that, at the time of filing OA No.216/2015 before the Debt Recovery Tribunal-I, Ernakulam, no allegation regarding commission of any criminal offences alleged.

5. The learned counsel for the petitioner placed decision of the Apex Court in N.S. Gnaneshwaran Etc V. Inspector of Police and Another , reported in 2025 SCC OnLine SC 1257, to point out that in a similar case, the Apex Court quashed the proceedings. He also referred another decision of the Apex Court in K.Bharthi Devi and Ors . Vs. State of Telangana and Ors, reported in (2024) 10 SCC 384, with reference to paragraph Nos.16, 24 to 29 and 31 to 35, wherein also, the Apex Court quashed the proceedings in a case involving same set of facts. In paragraph Nos.34 and 35 of the above judgment, the Apex Court held as under:

“34. The facts in the p