The Supreme Court held that criminal proceedings involving serious economic offences, especially those under the Prevention of Corruption Act, cannot be quashed merely because a financial settlement or one-time settlement has been reached with the bank. Such offences constitute a crime against society at large, and quashing would be contrary to the interests of justice.
Facts Of The Case:
An FIR was registered in 2015 following a complaint by the State Bank of Bikaner and Jaipur. The bank alleged that M/s Sarvodaya Highways Ltd. had fraudulently secured credit facilities of ₹60 crores by submitting fabricated work orders and financial statements to project a false financial standing. An internal inquiry later declared the account a Non-Performing Asset, uncovering an alleged fraud of ₹52.50 crores. The CBI investigation concluded that the company’s directors had conspired with the then branch manager to defraud the bank using forged documents, including three entirely fake work orders. A chargesheet was filed for offences including criminal conspiracy, cheating, forgery, and corruption under the Prevention of Corruption Act.Subsequently, the company entered a one-time settlement with the bank in 2018, paying ₹41 crores against the approximate liability of ₹52 crores. Relying on this settlement, the company and its directors sought quashing of the FIR and chargesheet before the Punjab & Haryana High Court, which granted the petition. The CBI appealed to the Supreme Court, arguing that the settlement could not extinguish criminal liability for serious economic offences involving forgery and corruption that caused a substantial loss to the public exchequer.
Procedural History:
The procedural history of this case began with the registration of an FIR by the CBI on February 3, 2015, based on a bank complaint. Following investigation, a chargesheet was filed on November 30, 2016, before the Special Judge for CBI in Panchkula. While the trial was pending, the accused company entered a one-time settlement with the bank in March 2018. Subsequently, the company and its directors filed a petition under Section 482 of the CrPC before the Punjab and Haryana High Court, seeking quashing of the FIR and chargesheet. The High Court allowed this petition and quashed the proceedings vide its order dated July 18, 2022. Aggrieved by this order, the CBI filed a Special Leave Petition before the Supreme Court, which granted leave and, upon hearing the appeal, set aside the High Court’s judgement and revived the criminal proceedings on November 11, 2025.
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Court Observation:
In its observations, the Supreme Court emphasized that the High Court committed a grave legal error by quashing the criminal proceedings solely on the basis of a one-time financial settlement. The Court noted that the chargesheet contained unimpeachable findings of the accused using forged documents and misrepresentation to secure credit, constituting serious economic offences and corruption under the Prevention of Corruption Act, 1988. It reiterated the principle from Gian Singh v. State of Punjab that offences which are not private in nature but have a larger societal impact, especially those involving public exchequer or special statutes like the PC Act, cannot be quashed merely due to a compromise. The Court held that such frauds are crimes against society at large, and allowing settlements to extinguish criminal liability would undermine the integrity of financial systems and the rule of law.
Final Decision & Judgement:
The Supreme Court allowed the CBI’s appeal and set aside the impugned judgment of the Punjab and Haryana High Court dated July 18, 2022. Consequently, the criminal proceedings arising from the chargesheet dated November 30, 2016, filed before the Special Judge for CBI, Panchkula, stand revived. The Court directed the trial court to proceed with the case on its own merits, uninfluenced by any observations made in this judgment. All pending applications, if any, were disposed of.
Case Details:
Case Title: Central Bureau of Investigation vs. M/S. Sarvodaya Highways Ltd. and Ors. Citation: 2025 INSC 1359 Criminal/Civil Appeal No.: (Arising out of SLP(Crl.) No(s). 11108 of 2022) Date of Judgement: November 11, 2025 Judges/Justice Name: Justice Vikram Nath and Justice Sandeep Mehta
Download The Judgement Here