The Supreme Court, in Criminal Appeals arising out of Special Leave Petition (Criminal) Nos. 1415 and 1416 of 2024, quashed the criminal proceedings against two women (Accused Nos. 4 and 5) in connection with a loan fraud case involving Clarion Travels and Indo Global Projects Ltd. The appellants had entered into an amicable settlement with the Bank, which led to the closure of the loan accounts. The Court held that since the core dispute had been resolved, the continuation of the criminal proceedings would serve no purpose. The decision aligns with prior rulings where commercial disputes were settled, and criminal proceedings were subsequently terminated due to the low possibility of conviction.

1. Appeal Summary and Grounds (Paras 1–2):
The appeals challenge the Orissa High Court's order permitting appellants to raise their defenses at trial instead of quashing the proceedings. The appellants sought quashing of the proceedings under Section 482 of CrPC.

2. Prosecution Case Background (Paras 3.1–3.6):
The case was initiated in 2000, alleging a criminal conspiracy between Ajay Kumar Behera (Branch Manager of Allahabad Bank), directors of Indo Global Projects Ltd. (Accused Nos. 2 and 3), and appellants (partners of Clarion Travels). Fraudulent loans were obtained by these entities for purchasing cars, with no repayments made.

3. Charges Filed (Paras 3.7–3.8):
The CBI filed a charge sheet under IPC Sections 120B (Criminal Conspiracy), 420 (Cheating), 468 (Forgery), 471 (Using Forged Documents), and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act. Cognizance was taken, and summons issued.

4. Settlement Between Parties (Paras 3.9–3.10):
Clarion Travels and IGPL settled the dues with the Bank through a One-Time-Settlement (OTS) in 2011. The Debt Recovery Tribunal disposed of the case after full payment.

5. Appellants' Submission (Paras 4–7):
Appellants (Accused Nos. 4 and 5) argued they had no active role in the fraud and were dragged into the case due to their family ties with Accused No. 2. They pointed out the full discharge of their loan liability and cited prior Supreme Court judgments to support quashing the proceedings.

6. Prosecution's Counter (Paras 8–10):
The CBI argued that settlement with the Bank does not absolve the accused from criminal liability, urging the Court to let the trial continue.

7. Court's Findings (Paras 11–14):
The Court noted that the underlying facts were undisputed and emphasized that when commercial disputes are settled, continuing criminal proceedings serves no public interest, particularly when conviction is unlikely.

8. Conclusion and Order (Paras 15–17):
The Court quashed the proceedings against Accused Nos. 4 and 5, citing prior judgments where the resolution of financial disputes justified termination of criminal cases.

Acts and Sections Discussed:

• Indian Penal Code (IPC), 1860:

  • Section 120-B (Criminal Conspiracy)
  • Section 420 (Cheating)
  • Section 468 (Forgery)
  • Section 471 (Using Forged Document)

• Prevention of Corruption Act, 1988:

  • Section 13(2) (Criminal Misconduct by Public Servant)
  • Section 13(1)(d) (Abuse of Position)

• Code of Criminal Procedure (CrPC), 1973:

  • Section 482 (Inherent Powers of the High Court)

Ratio Decidendi:

The Supreme Court ruled that in cases where financial disputes between private parties are settled, particularly in commercial matters, and there is little chance of conviction, criminal proceedings should be quashed. The Court emphasized that dragging on such proceedings would cause undue hardship to the accused and serve no meaningful purpose.

Subjects:

Criminal Law, Financial and Commercial Disputes, Quashing of Criminal Proceedings

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