BHARTHI DEVI AND ANR. VERSUS STATE OF TELANGANA & ANR, 2024 (SC) 775
Facts: K. Suresh Kumar (Accused No. 1), the sole proprietor of M/s Sirish Traders, was granted credit facilities by Indian Bank, Osmanganj Branch, Hyderabad, secured by collateral from the accused, including the present appellants (Accused Nos. 3 & 4). When the borrowers (Accused Nos. 1-5) failed to repay the loan, the account was declared a Non-Performing Asset (NPA) on 31st March 2010. The bank filed a recovery suit before the Debts Recovery Tribunal (DRT), and during proceedings, discovered that some of the title documents used for the mortgage were forged. The bank filed a complaint on 3rd September 2012, leading to an FIR being registered by the CBI-EOW for offenses under Sections 120-B, 420, 409, 467, 468, 471 of the IPC, and Section 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. After investigation, the CBI filed a charge sheet in December 2013. However, the dispute had largely taken a civil nature, with the borrowers settling the matter by paying Rs. 3,80,00,000/- under an One-Time Settlement (OTS), and the bank closing the loan account.
Issue: Whether criminal cases with a predominantly civil nature should be quashed when the parties have settled the dispute.
Observation: The Supreme Court held that criminal cases arising from civil disputes, especially those with a dominant civil character, should be quashed when the parties have settled the matter. The Court noted that the dispute here had a predominantly civil nature and the parties had resolved their issues. Referring to Gian Singh v. State of Punjab & Anr. (2012), the Court concluded that when a dispute is settled, criminal proceedings should not continue. Therefore, the appeal was allowed, the High Court’s decision was set aside, and the criminal proceedings against the appellants were quashed.
