Economic Offences Involving Financial Well-Being Of States Have Implications Beyond Mere Dispute Between Private Disputants: SC Dismisses Plea To Quash Corruption Case
The Supreme Court has refused to quash a corruption case while reiterating that economic offences involving the financial and economic well-being of the State have implications which lie beyond the domain of a mere dispute between the private disputants.
The Court dismissed an Appeal filed by the Appellants challenging the Bombay High Court's refusal to quash the FIR and the consequent charge sheet filed under Sections 409, 420, and 120B of the IPC and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act (PC Act), 1988.
The Bench of Justice Vikram Nath and Justice Prasanna B. Varale observed that “economic offenses involving financial and economic well-being of the state have implications which lie beyond the domain of a mere dispute between the private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance. Thus, it can be concluded that economic offences by their very nature stand on a different footing than other offences and have wider ramifications.”
Senior Advocates Malvika Trivedi and Siddharth Bhatnagar represented the Appellants, while Advocate Samrat Krishnarao Shinde appeared for the Respondents.
The Appellants' company had obtained a loan from the State Bank of India (Bank) mortgaging commercial land as collateral. Their account was declared a Non-Performing Asset (NPA) with an outstanding amount of Rs. 23.86 crore. Consent terms filed before the Debt Recovery Tribunal (DRT) led to the settlement of dues, with Rs. 15 crore agreed as the settlement amount.
However, the bank lodged a complaint alleging fund diversion and fraudulent property valuation, resulting in the FIR and subsequent charge sheet. The Appellants argued that the settlement absolved them of liability and that delays in lodging the FIR weakened the case.
The Supreme Court had to determine whether the criminal proceedings could be quashed based upon a settlement arrived at between the parties as per the consent terms drawn and submitted before the DRT.
The Bench noted that the consent terms were submitted by the parties before the DRT. It was noted that the bank had suffered losses to the tune of Rs. 6.13 Crores approximately. “Hence, a substantial injury was caused to the public exchequer and consequently it can be said that public interest has been hampered,” it noted.
The Court referred to the decision in Parbatbhai Aahir vs State of Gujrat (2017) wherein it was observed that, “economic offences by their very nature stand on a different footing than other offences and have wider ramifications. They constitute a class apart. Economic offences affect the economy of the country as a whole and pose a serious threat to the financial health of the country. If such offences are viewed lightly, the confidence and trust of the public will be shaken.”
Consequently, the Court held, “For the reasons stated above, we are of the view that the High Court was justified in not exercising its jurisdiction under Section 482 of CrPC. The appeals are accordingly dismissed..”
Accordingly, the Supreme Court dismissed the Appeal.
Cause Title: Anil Bhavarlal Jain & Anr. v. The State Of Maharashtra & Ors. (Neutral Citation: 2024 INSC 1039)
Appearance:
Appellants: Senior Advocates Malvika Trivedi and Siddharth Bhatnagar; Advocates Mahinder Singh Hura, Saif Ali, Pushpendra Singh Bhadoriya, Vijay Sharma, Pranav Menon, Saurav, Vivek Punjabi and Shrika Gautam; AOR Jasmeet Singh and Ranjeeta Rohatgi
Respondents: Advocates Samrat Krishnarao Shinde, Siddharth Dharmadhikari, Arjun Bhatia, Divya Singh Pundir, Devesh Dubey, Mahima Kapur, Shubhra Kapur and Surya Prakash AOR Aaditya Aniruddha Pande, Mukesh Kumar Maroria and Sanjay Kapur