Madras High Court
N.Vijayaraghavalu vs State Rep By, The Superintendent Of … on 8 July, 2026
Author: G.K. Ilanthiraiyan
Bench: G.K. Ilanthiraiyan
Crl.O.P.No.25447 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 30.06.2026
PRONOUNCED ON : 08.07.2026
CORAM
THE HON'BLE MR JUSTICE G.K. ILANTHIRAIYAN
Crl.O.P.No.25447 of 2025
and
Crl.M.P.No.17213 of 2025
1.N.Vijayaraghavalu
2.M/s. New Version India (P). Ltd.,
Rep. by its Managing Director
N.Vijayaraghavalu, (M/57)
s/o. M.Narayanasamy,
11A, Jubilee Road,
West Mambalam, Chennai-33. ...Petitioners/Accused Nos.2 and 3
vs.
State: Rep. by
The Superintendent of Police,
SPE/CBI/ACB,
Chennai. R.C.No.MA1 2015 A 0044 ... Respondents
PRAYER: Criminal Original Petition is filed under Section 528 of the
Bharathiya Nagarik Suraksha Sanhita, 2023, to quash the entire proceedings
against the Petitioner in C.C.No.24019 of 2017 pending on the file of the
learned XXIV Additional Special Judge for CBI cases relating to Banks and
Financial Institutions Scams, at Allikulam, Chennai.
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Crl.O.P.No.25447 of 2025
For Petitioners : Mrs.G.Ramadhevi
for M/s.S.Uma Nachiar
For Respondent : Mr.K.Srinivasan
Special Public Prosecutor (CBI)
ORDER
This Criminal Original Petition has been filed to quash the
proceedings in C.C.No.24019 of 2017 on the file of the XXIV Additional
Special Judge for CBI cases relating to Banks and Financial Institutions
Scams, at Allikulam, Chennai.
2. Both the petitioners are arrayed as Accused Nos.2 and 3. The case
of the prosecution is that the 1st accused conspired with other accused
persons and sanctioned various credit facilities with the discretionary powers
of the 1st accused and the same were not utilised by the 2 nd accused to 8th
accused for the purpose for which it was sanctioned and were diverted to the
other accounts thereby misappropriating the funds and cheating the Bank to
the tune of Rs.480.77 lakhs during the period from February-2012 to
July-2012. Therefore, they are charged for the offences under Section 120-B
read with Sections 409 and 420 of IPC and Section 13(2) read with 13(1)(d)
of the Prevention of Corruption Act, 1988 on the file of the Superintendent
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Crl.O.P.No.25447 of 2025
of Police, Central Bureau of Investigation, Anti Corruption Branch, Shastri
Bhawan, Nungambakkam, Chennai. After completion of investigation, the
1st respondent filed final report and the same has been taken cognizance by
the Trial Court.
3. Mrs.G. Ramadhevi, learned counsel appearing for the petitioners
submits that the petitioners are arrayed as A2 and A3. The 3 rd accused is the
Managing Director of M/s New Version India P Ltd., and availed cash credit
to the tune of Rs.40,00,000/- and term loan to the tune of Rs.35,00,000/-
from the defacto complainant for purchase of computer peripherals in the
name of M/s. Ultimate E Solutions during the month of March-2012. It was
sanctioned and disbursed in favour of M/s. Ultimate E Solutions. But
however, thereafter, due to financial crises, the borrower was not able to
repay the said loan amount and as such, the loan amount was classified as
‘Non-Performing Asset (NPA)’. After filing the charge sheet, the
complainant/bank had formulated special One-Time Settlement Scheme to
settle the dues. Accordingly, a sum of Rs.31,00,000/- was approved as full
and final settlement on 21.12.2018. Accordingly, the said amount was settled
and the petitioners were issued ‘No Dues Certificate’ on 14.02.2019. In view
of the ‘No Dues Certificate’ issued by the defacto complainant, the
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Crl.O.P.No.25447 of 2025
petitioners filed petition under Section 320 of Criminal Procedure Code to
compound the offence before the Trial Court. It was rejected for the reason
that it was not the appropriate stage for taking up that petition since the
charges were yet to be framed and the discharge petitions filed by the
Accused Nos.1 and 4 were pending. In view of the settlement made by the
petitioners, the entire proceedings against the petitioners cannot be sustained
and is liable to be quashed.
4. In support of her contention, she relied upon several judgments of
the Hon’ble Supreme Court of India:-
4. (i) In K. Bharthi Devi and another vs. State of Telangana and
another reported in (2024) 10 SCC 384, the Hon’ble Supreme Court of India
held as follows:-
“44. The facts in the present case are similar to the facts
in Sadhu Ram Singla wherein a dispute between the borrower
and the Bank was settled. In the present case also, undisputedly,
the FIR and the charge-sheet are pertaining to the dispute
concerning the loan transaction availed by the accused persons
on one hand and the Bank on the other hand. Admittedly, the
Bank and the accused persons have settled the matter. Apart
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Crl.O.P.No.25447 of 2025from the earlier payment received by the Bank either through
equated monthly instalments (EMIs) or sale of the mortgaged
properties, the borrowers have paid an amount of
Rs.3,80,00,000/- under OTS. After receipt of the amount under
OTS, the Bank had also decided to close the loan account. The
dispute involved predominantly had overtures of a civil dispute.
45. Apart from that, it is further to be noted that in view
of the settlement between the parties in the proceedings before
the DRT, the possibility of conviction is remote and bleak. In our
view, continuation of the criminal proceedings would put the
accused to great oppression and prejudice.
46. In any case, as discussed hereinabove, both the
appellants have been arraigned as wives of the Accused 1 and 2.
The specific role that was attributed in the charge-sheet was
pertaining to Accused 1.
47. In the result, we find that this was a fit case wherein
the High Court ought to have exercised its jurisdiction under
Section 482 CrPC and quash the criminal proceedings.”
In the above cited judgment, since the dispute concerning the loan
transaction availed by the accused from the defacto complainant was settled,
the defecto complainant/bank also decided to close the loan account. Hence,
the dispute in the present case is predominantly civil in nature.
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4. (ii) In Tarina Sen vs. Union of India and another reported in
(2024) 20 SCC 97, the Hon’ble Supreme Court of India held as follows:-
“20. The facts in the present case are not in dispute. It is
not disputed that the matter has been compromised between the
borrowers and the Bank. It has also not been in dispute that,
upon payment of the amount under the OTS, the loan account
of the borrower has been closed.
21. Therefore, the only question would be, as to whether
the continuation of the criminal proceedings against the present
appellants would be justified or not.
22. At the outset, we may state that we are only
considering the cases of two women i.e. Accused 4 and 5,
wherein Accused 4 is the wife of Accused 2. It is also not in
dispute that the original Accused 2 and 3 have since died.
23. By a separate judgment of the even date in criminal
appeal arising out of Special Leave Petition (Criminal)
No.4353 of 2018 wherein similar facts arose for consideration,
we have held that when the matter has been compromised
between the borrower and Bank, the continuation of the
criminal proceedings would not be justifiable.
24. Relying on the earlier judgments of this Court, we
have held that in the matters arising out of commercial,
financial, mercantile, civil, partnership or such like
transactions or the offences arising out of matrimony relating
to dowry, etc. or family disputes where the wrong is basically
private or personal in nature and the parties have resolved
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Crl.O.P.No.25447 of 2025their entire dispute, the High Court should exercise its powers
under Section 482 CrPC for giving an end to the criminal
proceedings. We have held that 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.”In the above judgment, since the matter was compromised between the
borrower and bank, it as found that the continuation of the criminal
proceedings would not be justifiable, hence, the Hon’ble Supreme Court of
India had quashed the proceedings on the ground of compromise.
4. (iii) In N.S.Gnaneshwaran Etc. vs. Inspector of Police and
another reported in 2025 SCC OnLine SC 1257, the Hon’ble Supreme
Court of India held as follows:-
“7. Having considered the submissions of both sides
and examined the record, we are of the view that no useful
purpose would be served by continuing the criminal
proceedings in the present matter. The dispute has, admittedly,
culminated in a comprehensive One Time Settlement under
which the Bank has received the entire outstanding amount.
The recovery proceedings before the tribunal have been7/22
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Crl.O.P.No.25447 of 2025dismissed as settled, and no residual claim survives. The Bank
has not raised any objection to the closure of the matter and
has issued formal acknowledgments of satisfaction.
8. Further, in identical proceedings filed by the CBI
against the appellants in C.C. Nos. 13 of 2006 and 151 of 2010,
the charge sheets were quashed by the High Court after taking
note of the settlement reached in the recovery proceedings. The
special leave petitions preferred by the State being SLP (Crl)
No. 711 of 2021 and SLP (Crl) No. 825 of 2021 challenging the
said quashing were dismissed by this Court, rendering the
orders final. Since the facts and legal position are the same in
the present matter, we see no reason why the appellants should
not be given the same relief.
9. In our view, allowing the present criminal
proceedings to continue would serve no meaningful purpose,
particularly when the dispute between the parties has already
been resolved through a full and final settlement. The
settlement between the parties having taken place after the
alleged commission of the offence, and there being no
continuing public interest we see no justification for allowing
the matter to proceed further.”In the said decision, the Hon’ble Supreme Court of India held that the
dispute between the parties had already been resolved through a full and
final settlement. The settlement between the parties had taken place after the
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Crl.O.P.No.25447 of 2025alleged commission of offence and there is no continuing public interest and
thereby quashed the proceedings.
4. (iv) In Vijay Kumar Kela and another vs. Central Bureau of
Investigation and another reported in 2026 INSC 588, the Hon’ble
Supreme Court of India held as follows:-
“27. Further, having regard to the fact that the dispute
between the parties arising out of banking transactions which
are commercial transactions having overwhelmingly or
predominantly civil flavour had ended in a compromise
settlement, that too, in the manner which we have delineated
above, in our view, the possibility of conviction of appellant No.
1 is remote and bleak. Therefore, continuation of the criminal
case would cause grave prejudice and injustice to the
appellants.
28. There is one more reason why we say so. If the
respondent-Bank is permitted to go ahead with the criminal
prosecution initiated after settlement of the loan account before
the DRT, it would adversely impact the sanctity of such
settlement which has become part of the judicial proceeding
and which had the approval of a judicial forum like the DRT. If
such a conduct is overlooked and prosecution is allowed to
continue, many persons including commercial entities would be
hesitant to come forward and seek resolution of their disputes9/22
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Crl.O.P.No.25447 of 2025arising out of banking transactions which are after all
commercial transactions, having predominantly elements of
civil dispute(s). This in turn would have a debilitating effect on
the overall economy, more so, when the focus is on settlement
of commercial disputes. This is the larger picture we need to
keep in mind.”In the above case, the dispute between the parties arose out of banking
transactions which are commercial transactions and are predominantly civil
in nature and it ended in a compromise settlement. It was held that the
possibility of conviction of the accused is remote and bleak and that the
complainant/bank on one hand issued No Objection Certificate after settling
the dues and on the other hand permitted to go ahead with the criminal
prosecution. Therefore, the Hon’ble Supreme Court of India held that it
would adversely impact the sanctity of such settlement which has become
part of the judicial proceeding and which had the approval of a Judicial
Forum like the Debt Recovery Tribunal (DRT). If such a conduct is
overlooked and prosecution is allowed to continue, many persons including
commercial entities would be hesitant to come forward and seek resolution
for the disputes that are arising out of banking transactions.
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5. Heard the learned counsel appearing on either side and perused the
materials available on record.
6. On perusal of the counter affidavit filed by the respondent, it is
revealed that though the petitioners were issued ‘No Dues Certificate’, the
terms and conditions therein includes that the criminal case shall be
continued. Therefore, the compromise is being considered by the Bank as a
commercial decision and shall have no bearing what so ever on the ongoing
criminal case being carried out by the respondent and the same shall proceed
as per law. Further, the One-Time Settlement will have no binding on the
criminality or forgery and submission of fabricated and forged documents to
avail loan from the Bank. The accused had created documents only for the
purpose of availing loan and with the fraudulent intention had conspired
together and prepared forged and fabricated invoices and submitted to the
Bank. Therefore, the One-Time Settlement will have no implication on the
offences committed by the accused. Further, the accused have committed
non-compoundable offences including the offence under the Prevention of
Corruption Act, 1988.
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7. The learned Special Public Prosecutor for CBI appearing for the
respondent relied upon the following judgments:-
7. (i) In Gian Singh vs. State of Punjab and another reported in
(2012) 10 SCC 303, the Hon’ble Supreme Court of India held as follows:-
“61. The position that emerges from the above
discussion can be summarised thus: the power of the High
Court in quashing a criminal proceeding or FIR or complaint
in exercise of its inherent jurisdiction is distinct and different
from the power given to a criminal court for compounding the
offences under Section 320 of the Code. Inherent power is of
wide plenitude with no statutory limitation but it has to be
exercised in accord with the guideline engrafted in such power
viz; (i) to secure the ends of justice or (ii) to prevent abuse of
the process of any Court. In what cases power to quash the
criminal proceeding or complaint or F.I.R may be exercised
where the offender and victim have settled their dispute would
depend on the facts and circumstances of each case and no
category can be prescribed. However, before exercise of such
power, the High Court must have due regard to the nature and
gravity of the crime. Heinous and serious offences of mental
depravity or offences like murder, rape, dacoity, etc. cannot be
fittingly quashed even though the victim or victim’s family and
the offender have settled the dispute. Such offences are not
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Crl.O.P.No.25447 of 2025private in nature and have serious impact on society. Similarly,
any compromise between the victim and offender in relation to
the offences under special statutes like Prevention of
Corruption Act or the offences committed by public servants
while working in that capacity etc; cannot provide for any basis
for quashing criminal proceedings involving such offences. But
the criminal cases having overwhelmingly and predominatingly
civil flavour stand on different footing for the purposes of
quashing, particularly the offences arising from commercial,
financial, mercantile, civil, partnership or such like
transactions or the offences arising out of matrimony relating
to dowry, etc. or the family disputes where the wrong is
basically private or personal in nature and the parties have
resolved their entire dispute. In this category of cases, High
Court may quash criminal proceedings if in its view, because of
the compromise between the offender and victim, the possibility
of conviction is remote and bleak and continuation of criminal
case would put accused to great oppression and prejudice and
extreme injustice would be caused to him by not quashing the
criminal case despite full and complete settlement and
compromise with the victim. In other words, the High Court
must consider whether it would be unfair or contrary to the
interest of justice to continue with the criminal proceeding or
continuation of the criminal proceeding would tantamount to
abuse of process of law despite settlement and compromise
between the victim and wrongdoer and whether to secure the13/22
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Crl.O.P.No.25447 of 2025ends of justice, it is appropriate that criminal case is put to an
end and if the answer to the above question(s) is in affirmative,
the High Court shall be well within its jurisdiction to quash the
criminal proceeding.”Thus, it is clear that any compromise between the victim and the offender in
relation to the offences under special statutes like the Prevention of
Corruption Act, 1988 or the offences committed by Public Servants while
working in that capacity etc., shall not be a basis for quashing the criminal
proceedings. Further, heinous and serious offences of mental depravity such
as murder, rape and dacoity etc., cannot appropriately be quashed though the
victim or victim families have settled the same with the accused. Therefore,
the inherent power as contemplated under Section 482 of the Criminal
Procedure Code has to be exercised in accordance with guideline i.e., to
secure ends of justice or to prevent abuse of process of any Court. At the
same time, the offence committed as against the Society at large cannot be
considered even if the parties entered into compromise since such offences
have a serious impact on society. It was held by the Hon’ble Three Judges
Bench of the Supreme Court of India.
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7. (ii) Further, the Hon’ble Supreme Court of India in S.L.P.
(Crl.).No.11108 of 2022, dated 11.11.2025 in the case of Central Bureau of
Investigation vs. M/s. Sarvodaya Highways Ltd and others held as
follows:-
“23. Having gone through the reasons assigned by the
High Court, it is apparent that while quashing the proceedings
on the basis of one-time settlement, the High Court failed to
advert to the following vital facts of the case which were duly
established during investigation.
(i) That there was a specific finding in the chargesheet that
the defaulter company through its directors had
submitted fabricated documents and misrepresented to
the Bank for the purpose of procuring the cash credit
facility.
(ii) That the appellant-CBI, on the basis of evidence
collected during investigation, found that the offences
of criminal conspiracy, fabrication of documents, and
offences under the PC Act, were clearly made out.
(iii) That sanction for prosecution had been duly issued
against the then Bank Manager, Mr. Nishan Lal.
(iv) That the amount of settlement under the one-time
settlement did not cover the actual amount due to the
Bank and that there was a deficit of more than 5 crores
plus interest which was a direct loss to the public
exchequer.
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Crl.O.P.No.25447 of 2025
24. The High Court, while exercising jurisdiction under
Section 482 CrPC, did not consider these vital facts and
quashed the proceedings merely on the basis of the alleged one-
time settlement. The blanket order quashing the chargesheet in
its entirety would have the effect of terminating the prosecution
against the Bank Manager as well, against whom prosecution
sanction has been granted.
25. There are plethora of judgments of this Court, some
of which we have referred to above, which categorically hold
that in cases involving economic offences, it is not merely the
Bank that stands defrauded, but the society at large is also
impacted.
26. It can be said without a shadow of doubt that the
one-time settlement would not fetch the entire amount to which
the Bank was otherwise entitled, had the cash credit account
been maintained regularly. The settlement was made at around
Rs.41 crores whereas, admittedly, the liability was of Rs. 52
crores approximately. One-time settlements are, as a rule,
effected under circumstances where the Bank under duress is
compelled to accept lesser amount in order to secure the
maximum possible recovery against the defaulting account.
27. In this background, we feel that the High Court
committed error apparent in the eyes of law by quashing the
proceedings.
28. In the case of Jaswant Singh (supra), the dispute
involved was inter se between private parties and the
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Crl.O.P.No.25447 of 2025
prosecution had been initiated only for the offences punishable
under Sections 406 and 420 of the IPC. This Court thought it fit
to quash the proceedings considering the fact that the accused
and the complainant had settled all their disputes amicably and
no useful purpose would be served by allowing the prosecution
to continue.
29. In the case of B.B. Aggarwal (supra), this Court
upheld the order of the High Court quashing the proceedings
against the accused on the ground that the civil suits filed by
the Bank against the defaulter companies and their directors
for recoveries of the outstanding dues, which were subsequently
transferred to Debt Recovery Tribunal stood settled by entering
into a one-time settlement.
30. On going through the aforesaid judgments, we find
that this Court did not consider the judgment in the case of
Gian Singh (supra) which expressly prohibits quashing of
proceedings of a criminal case on strength of a compromise
where loss to public exchequer is evident and the offences
under the PC Act, 1988 are applied.
31. In the Case of Narendra Lal Jain (supra), the
offences were under Sections 420 and 120B of the IPC. This
Court held that Section 420 IPC was compoundable whereas
Section 120B IPC was not. In this background, the Court was
persuaded to quash the proceedings holding that allowing the
criminal prosecution to continue would be nothing short of an
exercise in futility. Additionally, in Narendra Lal Jain (supra),
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there was no indication about use of forged documents to
procure the loan/advance facilities from the Bank.
32. Furthermore, in none of these three cases did the
Court observe that the amount of the one-time settlement did
not cover the actual outstanding dues of the Bank.
33. In this background, we are of the clear opinion that
the facts involved in the three precedents relied upon by learned
counsel for the respondents are clearly distinguishable and the
same have no application to the case at hand.
34. Thus, we are of the opinion that the impugned
judgment and order do not stand to scrutiny and deserves to be
set aside. We, therefore, allow the appeal, set aside the
impugned judgment and order and restore the proceedings
arising out of the chargesheet dated 30th November, 2016
before the trial Court.”
8. Therefore, in cases involving economic offences, it is not merely
the Bank that stands defrauded, but the society at large is also impacted.
Further, the One-Time Settlement would not fetch the entire amount to
which the Bank was otherwise entitled, had the cash credit account being
maintained regularly. The One-Time Settlement was effected under the
circumstances where the Bank under duress is compelled to accept the lesser
amount in order to secure the minimum possible recovery against the
defaulting account. Therefore, there was a loss to the public exchequer.
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Hence, the Hon’ble Supreme Court of India declined to quash the entire
proceedings on settlement of the loan amount under the One-Time
Settlement Scheme.
9. The judgments relied upon by the petitioners were held by the
Hon’ble Two Judges Bench of the Supreme Court of India. The case of Gian
Singh vs. State of Punjab and another was held by the Hon’ble Three
Judges Bench of the Supreme Court of India. Therefore, this Court is
inclined to respectfully follow the Gian Singh case held by the Hon’ble
Three Judges Bench of the Apex Court. Further, the judgments relied upon
by the learned counsel for the petitioners are not applicable to the present
case on hand.
10. In the case of Gian Singh vs. State of Punjab and another, the
Hon’ble Supreme Court of India held that the cases cited by the petitioner
therein were quashed against the women, who were none other than the
wives of the respective public servants, who were facing charges under the
Prevention of Corruption Act, 1988. Further, it was held that the settlement
of dues between the parties does not automatically warrant quashing of
criminal proceedings and serious allegation involving fraud and criminal
conspiracy are made out.
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11. On perusal of the records, it was further revealed that the Banker
also approved the One-Time Settlement Scheme on condition that the
settlement proposal given by the party relates only to the recovery
proceedings of the Bank and shall not in any way affect the criminal action
taken by the Bank which shall continue till its logical end. Further, the
Reserve Bank of India also issued guideline with regard to compromise
settlement entered in bank fraud cases, wherein it is provided that the Banks
may enter into compromise settlement with wilful defaulters and fraudulent
borrowers without prejudice to the criminal cases against the borrowers.
12. Further, the Reserve Bank of India Master Directions on Frauds,
dated 01.07.2016 revealed that no compromise settlement involving a
fraudulent borrower is allowed unless the conditions stipulate that the
criminal complaint will be continued. As per the Circular issued by the
Reserve Bank of India, dated 08.06.2023 regulated Entities, may undertake
compromise settlements or technical write-offs in respect of accounts
categorised as wilful defaulters or fraudulent debtor without prejudice to the
criminal proceeding underway against such debtors. That apart, already the
trial had commenced and the prosecution had examined the witnesses.
Therefore, this Court is not inclined to quash the entire proceedings since the
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accused had committed offence against the Society and had caused wilful
loss to the complainant banks.
13. Accordingly, the Criminal Original Petition is dismissed.
Consequently, the connected criminal miscellaneous petition is closed.
08.07.2026
(1/2)
Index :Yes / No
Speaking order :Yes / No
Neutral Citation :Yes / No
dm
To
1. The XXIV Additional Special Judge for CBI cases
relating to Banks and Financial Institutions Scams,
at Allikulam, Chennai.
2.The Superintendent of Police,
SPE/CBI/ACB,
Chennai.
3.The Public Prosecutor,
High Court of Madras,
Chennai.
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Crl.O.P.No.25447 of 2025
G.K. ILANTHIRAIYAN, J.
dm
Pre-delivery order made in
Crl.O.P.No.25447 of 2025
08.07.2026
(1/2)
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