The Supreme Court quashed criminal proceedings under Sections 120B, 420, 468, and 471 IPC, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, against the appellants. This decision was based on a comprehensive One Time Settlement with the Bank, full repayment of dues, and dismissal of recovery proceedings. The Court noted that continuing the proceedings would serve no purpose, especially given similar cases against co-accused were also quashed on grounds of settlement
Facts Of The Case:
N.S. Gnaneshwaran and N.S. Madanlal, accused nos. 3 and 6 respectively, are the appellants in this case. They were facing criminal proceedings in C.C. No. 16 of 2006, arising from FIR No. RC MA1 2005 0020, based on a complaint lodged by respondent no.2 – Bank on April 27, 2005. The allegations were that the accused caused a wrongful loss of Rs. 25.89 lakhs to the Bank. N.S. Gnaneshwaran was accused of orchestrating the fraudulent diversion of funds sanctioned to M/s Vinayaka Corporation, facilitating cheque encashment through a network of relatives and fictitious identities, and forging signatures. His brother, N.S. Madanlal, was alleged to have assisted by operating a bank account and physically filling and encashing cheques as part of the conspiracy.Parallel to the criminal proceedings, the Bank initiated recovery proceedings before the Debt Recovery Tribunal, Chennai, which were later settled through a One Time Settlement (OTS) scheme. The main borrowers repaid the dues, leading to the dismissal of recovery proceedings and the issuance of No Dues Certificates. The appellants sought quashing of the criminal proceedings based on this settlement, but the High Court dismissed their petitions, stating that the trial was advanced and a prima facie case existed. This led the appellants to file the present appeals. In identical cases, the High Court had quashed proceedings against other accused and the appellants based on a settlement between the principal accused and the Bank.
Procedural History:
The present appeals stem from the Madurai Bench of the High Court of Madras’s order dated November 19, 2024, which dismissed the appellants’ petitions seeking to quash criminal proceedings under Section 482 CrPC. These proceedings, C.C. No. 16 of 2006, arose from FIR No. RC MA1 2005 0020, alleging offenses under IPC and the Prevention of Corruption Act. Earlier, the High Court had quashed the FIR against accused no.7 (appellant no.1’s wife) on January 7, 2023, a decision upheld by the Supreme Court on March 26, 2021. Additionally, in identical CBI cases (C.C. Nos. 13 of 2006 and 151 of 2010), the High Court quashed charges after a settlement with the Bank, extending similar relief to the appellants on September 26, 2022. Following a One Time Settlement where the main borrowers repaid dues, resulting in the dismissal of recovery proceedings on December 15, 2023, the appellants again sought to quash the criminal proceedings. However, the High Court dismissed their petitions, citing an advanced trial stage and a prima facie case. This led to the current appeals before the Supreme Court
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Court Observation:
The Supreme Court observed that continuing the criminal proceedings would serve no useful purpose, given that the dispute had culminated in a comprehensive One Time Settlement (OTS). The Bank had received the entire outstanding amount, and the recovery proceedings before the Debt Recovery Tribunal had been dismissed as settled, with no residual claim surviving. The Court noted that the Bank had not raised any objection to the closure of the matter and had issued formal acknowledgments of satisfaction Furthermore, the Court found it significant that in identical proceedings filed by the Central Bureau of Investigation (CBI) against the appellants, the charge sheets were quashed by the High Court after noting the settlement reached in the recovery proceedings. The special leave petitions challenging those quashing orders were dismissed by the Supreme Court, rendering them final. The Court therefore saw no reason to deny the appellants the same relief, as the facts and legal position were identical in the present matter. The Court concluded that allowing the criminal proceedings to continue would serve no meaningful purpose, especially since the dispute was resolved through a full and final settlement after the alleged commission of the offense, and there was no continuing public interest.
Final Decision & Judgement:
The Supreme Court ultimately decided to quash the proceedings pending in C.C. No. 16 of 2006 against the appellants, N.S. Gnaneshwaran and N.S. Madanlal. Consequently, the appeals were allowed. The Court reasoned that no useful purpose would be served by continuing the criminal proceedings, as the dispute had culminated in a comprehensive One Time Settlement (OTS) with the Bank, leading to the full recovery of the outstanding amount and the dismissal of recovery proceedings. The Bank had also issued formal acknowledgments of satisfaction and raised no objections to the closure of the matter. The Court also highlighted the principle of parity, noting that in identical CBI cases against the appellants, the High Court had already quashed the charge sheets based on settlements, and these decisions were upheld by the Supreme Court. Given that the facts and legal position were the same, the Court found no justification for allowing the present matter to proceed further. The pending applications, if any, were also disposed of.
Case Details:
Case Title: N.S. Gnaneshwaran Etc. Versus The Inspector of Police & Anr. Citation: 2025 INSC 787 Criminal Appeal No.: 17481-17482 of 2024 Date of Judgment: May 28, 2025 Judges/Justice Name: Vikram Nath, and Sandeep Mehta
Download The Judgement Here