K. BHARTHI DEVI AND ANR. vs. STATE OF TELANGANA AND ANR.

Case Analysis

K. BHARTHI DEVI AND ANR. vs. STATE OF TELANGANA AND ANR.

December 14, 2024

A) ABSTRACT / HEADNOTE

This case examines the judicial discretion of quashing criminal proceedings under Section 482 of the Code of Criminal Procedure, 1973 in disputes predominantly civil in nature, specifically involving commercial transactions resolved through mutual settlement. The petitioners, accused of using forged documents to obtain loans, contested the High Court’s dismissal of their plea for quashing the criminal charges post-settlement with the bank under a One-Time Settlement (OTS) scheme. The Supreme Court, aligning with precedents in cases like B.S. Joshi v. State of Haryana and Gian Singh v. State of Punjab, held that criminal cases predominantly civil in character, with minimal prospects of conviction, warrant quashing. The Court emphasized that continued prosecution in such circumstances would amount to abuse of judicial process and cause undue prejudice to the accused.

Keywords:
Section 482 CrPC, Quashing of Criminal Proceedings, Civil Dispute, One-Time Settlement (OTS), Forged Documents.

B) CASE DETAILS

i) Judgment Cause Title
K. Bharthi Devi and Anr. v. State of Telangana and Anr.

ii) Case Number
Criminal Appeal No. 4113 of 2024

iii) Judgment Date
03 October 2024

iv) Court
Supreme Court of India

v) Quorum
Justices B.R. Gavai and K.V. Viswanathan

vi) Author
Justice B.R. Gavai

vii) Citation
[2024] 10 S.C.R. 650

viii) Legal Provisions Involved

Section 482, Code of Criminal Procedure, 1973
Sections 120-B, 420, 409, 467, 468, and 471, Indian Penal Code, 1860
Sections 13(1)(d) and 13(2), Prevention of Corruption Act, 1988

ix) Judgments Overruled by the Case (if any)
None.

x) Case Is Related to Which Law Subjects
Criminal Law, Procedural Law, Commercial Law

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The appellants sought quashing of criminal charges filed under Sections 120-B, 420, 409, 467, 468, and 471 of IPC, and the Prevention of Corruption Act, 1988, arising from alleged submission of forged documents to obtain loans. Despite resolving the dispute through OTS, the High Court rejected their quashing petition, reasoning that settlement could not override charges involving forgery and public fraud. The appeal presented before the Supreme Court raised critical questions about the applicability of inherent judicial powers under Section 482 CrPC in such cases.

D) FACTS OF THE CASE

Loan and Alleged Forgery:
The accused availed of credit facilities secured against allegedly forged collateral. The loan account was declared a Non-Performing Asset (NPA) in 2010, prompting the bank to initiate recovery proceedings before the Debts Recovery Tribunal (DRT).
Investigation and Chargesheet:
The Central Bureau of Investigation (CBI) registered an FIR, investigating the submission of forged documents. A chargesheet was filed, implicating the appellants under provisions of the IPC and the Prevention of Corruption Act.
Settlement Through OTS:
During the pendency of the DRT proceedings, the accused settled dues through a Rs. 3.8 crore OTS scheme. The bank issued a “No Dues Certificate,” signaling the closure of the loan.
Quashing Petition:
The appellants approached the High Court under Section 482 CrPC, citing settlement with the bank as a basis for quashing the charges. The High Court denied the petition, emphasizing that the nature of offenses alleged extended beyond private disputes.

E) LEGAL ISSUES RAISED

Whether criminal proceedings with a predominantly civil character should be quashed post-settlement between the parties.
Whether the High Court erred in dismissing the petition under Section 482 CrPC despite the remote possibility of conviction.
To what extent settlement in civil disputes influences criminal proceedings involving forgery.

F) PETITIONER/APPELLANT’S ARGUMENTS

Absence of Active Role:
The appellants, being family members of the principal borrower, argued that they played no active role in the alleged forgery.
Civil Nature of Dispute:
The case stemmed from a loan transaction, inherently a civil dispute, resolved through a mutually agreed settlement.
Precedents Supporting Quashing:
The appellants relied on judgments such as B.S. Joshi v. State of Haryana (2003) and Nikhil Merchant v. CBI (2008), which recognized the judiciary’s power to quash proceedings where criminal cases bore a predominantly civil character.
Settlement and Futility of Prosecution:
Continuation of prosecution was deemed an abuse of process, given that the bank suffered no further loss post-settlement.

G) RESPONDENT’S ARGUMENTS

Criminal Nature of Offense:
The CBI argued that forgery and criminal conspiracy, being offenses against society, warranted prosecution regardless of private settlement.
High Court’s Correct Exercise of Discretion:
The High Court’s denial of quashing under Section 482 CrPC was justified as the alleged forgery involved public interest.

H) JUDGMENT

a. Ratio Decidendi:
The Supreme Court ruled that criminal cases predominantly civil in nature, particularly those involving settled disputes, should be quashed if conviction is improbable. The bank’s acceptance of settlement and issuance of a “No Dues Certificate” rendered the continuation of proceedings oppressive and futile.

b. Obiter Dicta (if any):
The Court clarified that heinous crimes, offenses of public corruption, and serious societal wrongs cannot be quashed merely on the basis of private settlements.

c. Guidelines Issued:
The Court reinforced criteria for quashing criminal cases, emphasizing:

Predominantly civil nature of disputes.
Minimal prospects of conviction.
Settlement terms resolving grievances comprehensively.

I) CONCLUSION & COMMENTS

This judgment underscores judicial discretion under Section 482 CrPC to balance justice and procedural integrity. It reinforces the principle that civil disputes masquerading as criminal cases should not burden judicial resources, provided societal interests remain unaffected. However, it also delineates exceptions for heinous offenses, safeguarding public accountability.