In a significant ruling, the Supreme Court of India quashed the criminal proceedings against two appellants in a case involving charges of conspiracy, cheating, and forgery under the Indian Penal Code (IPC) and the Prevention of Corruption Act in a Bank Loan case. The case, titled Tarina Sen vs. Union of India, involved a long-standing dispute with a bank that had been settled through a one-time settlement (OTS). The Court, comprising Justices B.R. Gavai and K.V. Viswanathan, held that the continuation of criminal proceedings would not be justifiable after the borrower and the bank reached a settlement.
Key Facts of the Case
The appellants, Tarina Sen and another, were facing criminal charges related to a loan sanctioned by Allahabad Bank’s Bhubaneswar branch in 1998-1999. The bank had accused them of conspiring with the bank’s then-branch manager, Ajay Kumar Behera, and two directors of a firm named Indo Global Projects Ltd. (IGPL), to fraudulently secure loans without adequate security or repayment.
The loans in question were initially meant to purchase vehicles for Clarion Travels, a firm associated with the appellants. However, according to the bank’s complaint, no payments were ever made, and post-dated cheques provided as security bounced when presented for clearance. The Central Bureau of Investigation (CBI) had registered the case and proceeded with criminal charges under Sections 120-B, 420, 468, and 471 of the IPC and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988.
The Bank, however, filed case for debt recovery with the Debt Recovery Tribunal (DRT), and a one-time settlement was reached between the Bank and the appellants in 2011. With the settlement in place, the loan account was declared closed.
Supreme Court’s Observations and Ruling
In light of the settlement, the appellants approached the Orissa High Court under Section 482 of the Criminal Procedure Code (Cr.P.C.), seeking to quash the criminal proceedings. However, the High Court had allowed the trial to continue, stating that the appellants could raise their plea at an appropriate stage in the lower court.
The appellants then took the matter to the Supreme Court. The apex court, in its ruling dated October 3, 2024, emphasized that in cases where a matter has been settled between a borrower and a bank, especially in commercial or financial disputes, the continuation of criminal proceedings is not warranted. The court observed that in such cases, the possibility of conviction becomes remote, and the continuation of the trial could cause undue prejudice to the accused.
Justice B.R. Gavai, delivering the judgment, remarked, “The continuation of criminal proceedings would put the accused to great oppression and prejudice, especially when the wrong is essentially of a private or personal nature, and the parties have resolved their disputes in full.”
Legal Precedents Relied Upon:
The court referred to several key judgments, including:
- Nikhil Merchant vs. CBI (2008) and Gian Singh vs. State of Punjab (2012), where the apex court had held that in commercial and financial disputes, if the parties reach an amicable settlement, the court has the power to quash criminal proceedings.
- Central Bureau of Investigation vs. Narendra Lal Jain (2014), which upheld the quashing of criminal charges after an OTS between the borrower and the bank.
- Narinder Singh vs. State of Punjab (2014), where the court ruled that criminal proceedings could be terminated in cases arising out of personal or private wrongs if the parties have resolved their disputes.
The court reiterated its earlier stance that the objective of criminal law is to bring about justice, but when a dispute has been amicably resolved, continuing the criminal proceedings serves no legitimate purpose. In such cases, the court has the authority to quash the proceedings to prevent unnecessary hardship to the parties involved.
The Supreme Court, in its ruling, allowed the appeals, setting aside the Orissa High Court’s order. The criminal proceedings pending in the Special CBI Court in Bhubaneswar were quashed, bringing an end to a legal battle that had lasted for more than two decades.
This ruling is expected to have far-reaching implications for cases involving financial disputes, especially those that are settled outside the court through a one-time settlement or other means. It reinforces the principle that courts must take a pragmatic approach in such matters, prioritizing the resolution of disputes over the continuation of criminal trials
The Supreme Court’s decision in Tarina Sen vs. Union of India highlights the importance of balancing the scales of justice when dealing with commercial disputes that have been amicably resolved. By quashing the criminal proceedings, the court has provided much-needed relief to the appellants while upholding the principle that the continuation of criminal trials in such cases is not justified. This judgment serves as a precedent for future cases where private disputes are resolved through settlements, emphasizing the court’s role in preventing undue hardship to the accused.
