2015 (9) TMI 1762 - SC - Indian Laws

Exercise of inherent jurisdiction Under Section 482 of the Code of Criminal Procedure (Code of Criminal Procedure) or the extraordinary jurisdiction Under Article 226 of the Constitution for quashment of the criminal proceedings - borrower or borrowers after availing finance by creating mortgage on the base of certain documents which as alleged are forged and ingeniously adopt the same modus operandi to avail the benefit from number of banks - setting the criminal law in motion by lodging different FIRs and in the ultimate eventuate in an adroit manner enter into settlements - Should the High Court on the foundation that the continuance of the criminal proceedings would be a Sisyphean endeavour after the settlement has taken place to quash the same? - Whether a former Assistant Commissioner of Commercial Taxes can be allowed to advance a plea obviously a remarkable one that she had signed the documents either as a guarantor or as a co-applicant showing deference to her late husband s desire? HELD THAT - In CBI v. Maninder Singh 2015 (8) TMI 1535 - SUPREME COURT the allegation against the accused was that bill of lading presented by the proprietors of the accused firms were found forged and cases were registered Under Section 120B Indian Penal Code read with Section 420 Indian Penal Code and Section 5(2) read with Section 5(1)(d) of Prevention of Corruption Act 1947 and further substantive offences Under Sections 420 467 468 and 471 Indian Penal Code. The accused person arrived at a settlement with the Bank and thereafter moved the High Court Under Section 482 Code of Criminal Procedure for quashing of the FIR. The High Court placed reliance on the decision in Nikhil Merchant 2008 (8) TMI 966 - SUPREME COURT and allowed the petition and directed for quashing of the criminal proceedings. The High Court has been erroneously guided by the ambit and sweep of power Under Section 482 Code of Criminal Procedure for quashing the proceedings. It has absolutely fallaciously opined that the continuance of the proceeding will be the abuse of the process of the Court. It has been categorically held in JANATA DAL VERSUS H.S. CHOWDHARY 1992 (8) TMI 301 - SUPREME COURT that the inherent power Under Section 482 Code of Criminal Procedure though unrestricted and undefined should not be capriciously or arbitrarily exercised but should be exercised in appropriate cases ex debito justitiae to do real and substantial justice for the administration of which alone the courts exist. In Inder Mohan Goswami 2007 (10) TMI 550 - SUPREME COURT it has been emphasised that inherent powers have to be exercised sparingly carefully and with great caution. Lack of awareness knowledge or intent is neither to be considered nor accepted in economic offences. The submission assiduously presented on gender leaves unimpressed. An offence under the criminal law is an offence and it does not depend upon the gender of an accused. True it is there are certain provisions in Code of Criminal Procedure relating to exercise of jurisdiction Under Section 437 etc. therein but that altogether pertains to a different sphere. A person committing a murder or getting involved in a financial scam or forgery of documents cannot claim discharge or acquittal on the ground of her gender as that is neither constitutionally nor statutorily a valid argument. The offence is gender neutral in this case. The order passed by the High Court is set aside - the trial magistrate directed to proceed in accordance with law - appeal allowed.

Summary

Issues Involved:

1. Whether the High Court can quash criminal proceedings under Section 482 of the Code of Criminal Procedure or Article 226 of the Constitution after a settlement between the borrower and the bank.
2. Whether the plea of ignorance by a co-applicant or guarantor, due to reliance on a spouse, is valid in economic offences involving forgery and fraud.
3. Whether the continuation of criminal proceedings is an unnecessary burden on the criminal justice system when settlements have been reached.
4. Whether gender can be a factor in deciding the continuation of criminal proceedings in economic offences.
5. The impact of economic offences on societal interests and the financial system.

Detailed Analysis:

1. Quashing of Criminal Proceedings Post-Settlement:
The judgment scrutinizes whether the High Court was correct in quashing criminal proceedings after settlements were reached between the accused and the banks. The court emphasized that settlements do not absolve criminal liability, especially in cases involving forgery and fraud. The Supreme Court held that economic offences are not merely private disputes but have broader societal implications. Therefore, the High Court's decision to quash the proceedings was deemed inappropriate, as it failed to consider the gravity of the alleged offences and their impact on the financial system.

2. Plea of Ignorance by Co-Applicant or Guarantor:
The accused claimed ignorance of the fraudulent transactions, asserting that she signed documents at her husband's behest without knowledge of their nature. The court rejected this plea, stating that lack of awareness or intent is not a valid defense in economic offences. The accused's position as an Assistant Commissioner of Commercial Taxes further undermined her claim of ignorance. The court emphasized that individuals involved in financial transactions, especially those holding responsible positions, cannot escape liability by pleading ignorance.

3. Burden on Criminal Justice System:
The judgment addressed the argument that continuing criminal proceedings would burden the justice system. The court dismissed this notion, asserting that serious economic offences should not be quashed merely because settlements have been reached or to reduce the system's load. Such offences have significant societal impacts and must be prosecuted to maintain the integrity of financial transactions and prevent abuse of legal processes.

4. Gender Considerations in Economic Offences:
The court addressed the argument that the accused's gender should influence the decision to continue criminal proceedings. It firmly stated that criminal liability is gender-neutral, and offences like forgery and fraud cannot be excused based on gender. The court emphasized that the law must be applied equally, regardless of the accused's gender, especially in serious economic offences.

5. Impact of Economic Offences:
The judgment highlighted the broader implications of economic offences, describing them as societal wrongs with the potential to destabilize financial systems. The court underscored that such offences are not merely civil disputes but have far-reaching consequences for society at large. Therefore, the legal system must address these offences with the seriousness they deserve, ensuring that settlements do not undermine the prosecution of criminal acts.

In conclusion, the Supreme Court set aside the High Court's order quashing the criminal proceedings, directing the trial magistrate to proceed in accordance with the law. The judgment reaffirmed the principle that economic offences, due to their societal impact, must be prosecuted irrespective of settlements, and that pleas of ignorance or gender cannot absolve individuals from criminal liability.