In a significant ruling, the Supreme Court of India quashed criminal proceedings against two women accused in a long-pending bank loan fraud case, emphasizing that the continuation of such proceedings after a settlement between the bank and the borrowers would lead to “great oppression and prejudice” against the accused. The bench, comprising Justice B.R. Gavai and Justice K.V. Viswanathan, delivered this verdict on October 3, 2024, in Criminal Appeals Nos. 1415 and 1416 of 2024.
Background of the Case
The case stems from a criminal conspiracy in 1998 involving a fraudulent loan transaction with Allahabad Bank’s Temple Marg Branch in Bhubaneswar. The Central Bureau of Investigation (CBI) had lodged an FIR against five individuals, including Tarina Sen and Shaileshree Sen, partners of Clarion Travels, Bhubaneswar. The FIR accused them of securing loans without providing proper security and failing to repay the amount. The total loan amounts involved were Rs. 8,40,000 and Rs. 11,84,600.
The prosecution alleged that Tarina Sen (Accused No. 4) and Shaileshree Sen (Accused No. 5) conspired with the bank’s branch manager, Ajay Kumar Behera, and directors of Indo Global Projects Ltd., Bhubaneswar (IGPL), to defraud the bank. No repayment was made on the loans, and subsequent post-dated cheques issued by IGPL bounced. The case was registered under Sections 120-B, 420, 468, and 471 of the Indian Penal Code (IPC) and under Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988.
Despite the serious allegations, in 2011, Clarion Travels and IGPL reached a One-Time Settlement (OTS) with the bank, paying off their dues. As a result, the bank declared the loan accounts closed. Following this, the appellants filed applications before the High Court of Orissa to quash the criminal proceedings, but the High Court allowed them only to raise their pleas during the trial, leading to the present appeals before the Supreme Court.
Legal Issues Involved
The key issue before the Supreme Court was whether the criminal proceedings should continue after the financial dispute had been settled between the borrowers and the bank. Senior counsel Shri Dama Seshadri Naidu, representing the appellants, argued that since the matter had been resolved through the OTS and the bank had accepted full payment, the continuation of criminal proceedings was unnecessary and unjust. He further emphasized that the appellants, being women related to the other accused, had no active role in the alleged conspiracy.
On the other hand, Additional Solicitor General (ASG) Shri Vikramjeet Banerjee, representing the CBI, contended that the settlement of the loan dispute did not absolve the accused of their criminal liability. He argued that the criminal charges should not be dismissed merely because the financial dispute had been settled.
Court’s Observations and Decision
In its judgment, the Supreme Court observed that the facts of the case were undisputed, particularly that the bank had settled its claims with the borrowers, and the loan accounts were closed. The bench referred to earlier rulings, noting that in cases involving financial or commercial transactions, or where the dispute is private in nature, the continuation of criminal proceedings could be avoided if the matter has been amicably settled.
The court stated:
“The possibility of conviction in such cases is remote and bleak, and as such, the continuation of the criminal proceedings would put the accused to great oppression and prejudice.”
The court also emphasized that the appellants, being women and relatives of the other accused, had limited involvement in the case. The fact that the primary accused had since passed away further weakened the case against the appellants.
In light of these observations, the court ruled that the continuation of criminal proceedings would serve no purpose and quashed the pending trial against the appellants. The judgment highlighted the importance of bringing an end to criminal trials when the chances of conviction are minimal, and the underlying dispute has already been resolved.
Case Details:
– Case Number: Criminal Appeal Nos. 1415 and 1416 of 2024
– Appellants: Tarina Sen & Shaileshree Sen
– Respondents: Union of India & Anr.
– Bench: Justice B.R. Gavai and Justice K.V. Viswanathan
– Lawyers: Shri Dama Seshadri Naidu for appellants, Shri Vikramjeet Banerjee (ASG) for respondents, Mr. Brijesh Kumar Tamber for respondent No. 2 (Bank).
