Madras High Court
S.Samraj vs The Inspector Of Police, on 8 July, 2026
Author: G.K. Ilanthiraiyan
Bench: G.K. Ilanthiraiyan
Crl.O.P.No.20604 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.20604 of 2025
and Crl.M.P.No.14238 of 2025
S.Samraj
Prop M/s.Swastik Enterprises … Petitioner/Accused No.2
vs.
1.The Inspector of Police,
CBI, ACB, Shastri Bhavan,
Nungambakkam, Chennai.
2.The Chief Manager,
Asset Recovery Management Branch,
Canara Bank,
770A, Anna Salai, Chennai – 600 002. … Respondents
PRAYER: Criminal Original Petition is filed under Section 528 of the
Bharathiya Nagarik Suraksha Sanhita, 2023, to call for the records of
C.C.No.17 of 2014 on the file of the XI Additional City Civil and Sessions
Court for CBI Cases, Chennai and quash the same in respect of the above
petitioner.
For Petitioner : Mr.B.Natarajan
For R1 : Mr.K.Srinivasan
Special Public Prosecutor (CBI)
For R2 : Mr.P.Raghunathan
for M/s.T.S.Gopalan and Co
1/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
ORDER
This Criminal Original Petition has been filed to quash the
proceedings in C.C.No.17 of 2014 on the file of the XI Additional City Civil
and Sessions Court for CBI Cases, Chennai.
2. The petitioner is arrayed as 2nd accused. The case of the
prosecution is that the petitioner was the proprietor of M/s. Swastick
Enterprises and he was in the business of manufacturing and domestic and
international of granites. On 04.03.2010, the 2nd respondent/bank sanctioned
to the petitioner, OCC / PC limit of Rs.800 lakhs, FDB / FDE limit of
Rs.300 lakhs and a term loan of Rs.35 lakhs. The said loan amount was
obtained from Punjab National Bank. The petitioner secured the credit
facilities granted by the bank by mortgaging various asstes owned by him.
2. (i) Further, the account of the petitioner had became non-
performing. Therefore, a legal notice was issued on 03.06.2011 and
subsequently, the 2nd respondent/bank initiated action under the SARFAESI
Act against the secured assets mortgaged to the bank and a demand notice
was issued to the petitioner on 03.06.2011 and a symbolic possession of the
2/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
properties was taken on 16.08.2011. Thereafter, on 27.11.2012 an original
application in O.A.No.186 of 2012 was filed before the Debts Recovery
Tribunal, Chennai by the 2nd respondent/bank for recovery of a sum of
Rs.1591.44 lakhs together with interest and for the sale of the mortgaged
property. The 2nd respondent/bank filed a criminal complaint against the
petitioner/2nd accused on 13.08.2013 alleging fraudulent availment of credit
limits and diversion of funds. Thereafter, a police report was filed by the
Central Bureau of Investigation and the said criminal case is pending. On
16.10.2017, the said original application was allowed and recovery
certificate bearing No.DRC 4 of 2018 was issued.
2. (ii) It is further stated that on 29.09.2018, one of the properties of
the petitioner was sold under SARFAESI Act for Rs.551.00 lakhs and
another property was sold on 13.12.2021 for Rs.43.41 lakhs and the said
amounts were credited to the loan account. Thereafter, another property was
sold on 10.11.2022 and a sum of Rs.25.85 lakhs was realised and credited to
the loan account. The remaining properties were valued only at Rs.24.25
lakhs which were difficult to sell and realize as there were no interested
buyers to purchase the quarry land.
3/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
2. (iii) It is the further case of the prosecution that the petitioner had
offered Rs.75 lakhs by way of One-Time Settlement, improved his offer to
Rs.100 lakhs and paid an amount of Rs.10 lakhs to show his bonafides.
Thereafter, there were negotiations between the petitioner and the bank
based on which a One-Time Settlement for Rs.1.20 crores was reached
between the bank and the said buyer. Thereafter, on 26.12.2023, the
borrower paid a sum of Rs.120 lakhs and a No Due Certificate was issued on
12.02.2024 to the petitioner. A memo was filed before the Debts Recovery
Tribunal II, Chennai in DRC No.4 of 2018 and O.A.No.186 of 2012
requesting for recording the said compromise and seeking return of
documents and the said documents have been returned by the Debts
Recovery Tribunal. However, there was a loss to the tune of Rs.725.55 lakhs
to the 2nd respondent/bank. Therefore, all the accused are charged for the
offences under Section 120-B read with 420, 467, 468, read with 471 of IPC
and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988.
After completion of investigation, the 1st respondent filed final report and
the same has been taken cognizance by the Trial Court.
4/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
3. Mr.B.Natarajan, learned counsel appearing for the petitioner
submits that the petitioner is arrayed as 2 nd accused. The case of the
prosecution as against the petitioner is that the petitioner,in collusion with
the other accused persons, diverted the funds from the cash credit limit of
Canara Bank, Guindy Branch to his individual account maintained with
State Bank of Hyderabad to the tune of Rs.45 lakhs. He further submits that
the entire loan of the petitioner was fully secured and he had mortgaged
several valuable properties. After committing default, the Banker initiated
proceedings under the SARFAESI Act as against the petitioner. Thereafter,
the petitioner offered One-Time Settlement and the same was duly approved
by the Banker. Accordingly, the petitioner had settled the loan amount as full
and final settlement and the banker also issued No Due Certificate dated
12.02.2024. He further submits that the Bank did not suffer any loss and as
such, the petitioner was issued with No Due Certificate. Therefore, the
criminal proceedings pending against the petitioner would not serve any
purpose. In view of the settlement made by the petitioner, the entire
proceedings against the petitioner cannot be sustained and is liable to be
quashed.
5/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
4. In support of his contention, he relied upon the 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
from 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.
6/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
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.
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.
7/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
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
their 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.”
8/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
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 been
dismissed 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
9/24https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025said 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
alleged 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
10/24https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025are 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 disputes
arising 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
11/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025in 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.
5. Mr.P.Raghunathan, learned counsel appearing for the
2nd respondent/bank submits that in fact One-Time Settlement was accepted
only for the reason that the granite quarry was closed and the petitioner
could not carry on business due to ban on quarry and the quarry had been
exploited to the maximum limit and the quarry land could not be put to any
alternative use. Further, the claim made by the bank to the Export Credit
Guarantee Corporation (ECGC), was also rejected because there was no
actual export/import business. The petitioner was not having any business
12/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
activity. Hence, the Bank sanctioned a One-Time Settlement to receive the
dues and the One-Time Settlement will not have any bearing whatsoever on
criminal cases and proceedings.
6. Heard the learned counsel appearing on either side and perused the
materials available on record.
7. 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
13/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
non-compoundable offences including the offence under the Prevention of
Corruption Act, 1988.
8. The learned Special Public Prosecutor for CBI appearing for the
1st respondent relied upon the following judgment:-
8. (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
14/24https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025depravity 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
private 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 or15/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025continuation 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 the
ends 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.
16/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
9. The learned counsel appearing for the 2nd respondent/bank relied
upon the following judgment:-
9. (i) 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.
17/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 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 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
18/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
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), 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
19/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
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.”
10. 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.
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.
20/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
11. The judgments relied upon by the petitioner 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.
12. 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.
13. On perusal of the records, it was further revealed that the Banker
also approved the One-Time Settlement Scheme on condition that the
21/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
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.
14. 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
accused had committed offence against the Society and had caused wilful
loss to the complainant banks.
22/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
15. Accordingly, the Criminal Original Petition is dismissed.
Consequently, the connected criminal miscellaneous petition is closed.
08.07.2026
Index :Yes / No
Speaking order :Yes / No
Neutral Citation :Yes / No
dm
To
1. The XI Additional City Civil and Sessions Court for CBI Cases,
Chennai.
2.The Inspector of Police,
CBI, ACB, Shastri Bhavan,
Nungambakkam, Chennai.
3.The Chief Manager,
Asset Recovery Management Branch,
Canara Bank,
770A, Anna Salai, Chennai – 600 002.
4.The Public Prosecutor,
High Court of Madras,
Chennai.
23/24
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.20604 of 2025
G.K. ILANTHIRAIYAN, J.
dm
Pre-delivery order made in
Crl.O.P.No.20604 of 2025
08.07.2026
24/24
https://www.mhc.tn.gov.in/judis
