ORDER
A.C. Kabbin, J.
1. In September 2001, a complaint was lodged by the Chief Vigilance Officer of the second respondent-State Bank of Mysore, Head Office, K.G. Road, Bangalore, alleging fraud and siphoning of the amounts advanced on LC facility by the Bank to the present petitioners 1, 2 and 9. It was also alleged that, that fraud was committed in connivance with certain officers of the State Bank of Mysore. On the basis of the said complaint, on preliminary verification, FIR was lodged by the C.B.I., in RC No. 2(E)/2001 -BSFC/BLR, dated 6-9-2001. It is alleged that during investigation, complicity of the present petitioners 3 to 8 in the crime was disclosed. Their names were added as accused and after further investigation, a charge-sheet was placed by the C.B.I. against the present petitioners 1 to 9. However as regards the Bank Officers, no charge-sheet was placed on the ground that no mens rea for the offences was present with regard to those persons. As regards recovery of amounts taken by the present petitioners 1, 2 and 9, there were recovery proceedings. The matter had been referred to Debt Recovery Tribunal, Bangalore, and there, on 13-2-2003 a compromise petition was filed by the present petitioners 1, 2 and 9 and the present respondent 2, agreeing therein that the amount due which was more than Rs. 9,00,000/- should be paid in instalments commencing from 1-1-2003 stretching upto 1-1-2007. That petition was allowed and a decree was passed by the Debt Recovery Tribunal in terms of compromise petition. Contending that in view of that compromise decree passed by the Debt Recovery Tribunal, Bangalore, the offences, if any alleged in the charge-sheet stood compounded, the present petition has been filed under Section 482 of the Code of Criminal Procedure on behalf of the accused in C.C. No. 15139 of 2003 praying that the proceedings therein should be quashed.
2. A perusal of the complaint shows that the petitioner 9 had sought for LC facility from the respondent 2, which was granted. Later that was extended from time to time, the limit of facility extending upto 9.00 crores. It is alleged that under the guise of LC facility, the petitioners siphoned off the amounts to different Companies and thereby cheated the respondent 2.
3. It is stated that the present first petitioner is the Chairman, the second petitioner, the Managing Director, the third, fourth, seventh and eighth petitioners, the authorised signatories of the ninth petitioner, M/s. STI International Limited in favour of which the LC facilities had been sanctioned. It is alleged that the fifth and sixth petitioners, who are the Director and authorised signatories of M/s. Loiwal Steels Private Limited and M/s. G.B. Steels Private Limited, respectively and other petitioners have siphoned off money through different Companies leading to M/s. Steel Tubes of India Limited. The charge-sheet shows that in furtherance of the criminal conspiracy and in the course of transaction wrongful gain was made by the petitioners through accounts of different companies and thereby they cheated the Industrial Finance Branch of State Bank of Mysore (respondent 2) as on 31-12-2002 to the extent of 9.02 crores and that thereby accused 1 to 9 (petitioners 1 to 9) committed the offence punishable under Section 120-B of the IPC and substantive offence of Section 420 of the IPC.
4. It is argued by Sri B.R. Nanjundaiah, the learned Counsel representing the petitioners that the matter is essentially civil in nature and that the compromise arrived at by the petitioners and the respondent 2 before the Debt Recovery Tribunal in O.A. No. 467 of 2000 puts an end to the controversy and that therefore the prosecution of the petitioners would be an abuse of the process of the Court. In this regard, he relies on the observations of the Supreme Court in Central Bureau of Investigation, SPE, SIU(X), New Delhi v. Duncans Agro Industries Limited, Calcutta, wherein civil suits filed by the Banks against debtor-Company for recovery of dues had been compromised on payments by debtor-Company, investigation had not been completed for a long-time in that case and taking into consideration the facts and circumstances of the case, the Supreme Court held that it amounted to compounding of offence of cheating.
5. Sri Ashok Harnahalli, the learned Counsel representing the first respondent argues that any compromise between the petitioners and the second respondent may not put an end to a criminal liability and if ever the parties would like to compound offence, they are at liberty to do so in the Trial Court and that under the pretext of compromising the dispute, the petitioners cannot seek under Section 482 of the Cr.P.C., for quashing of the proceedings. In this regard, he refers to the observation of the Supreme Court in Vishwa Nath v. State ofJammu and Kashmir, wherein under the facts and circumstances of that case, it was observed that where the accused had put to personal use the Government money entrusted to him, instead of depositing the same in the proper place, the fact that he refunded the amount when the act of his defalcation came to be discovered, does not absolve him of the liability under the offence committed by him. It is also submitted by the learned Counsel for respondent 1 that the fact that there is a civil liability is not itself sufficient to quash a criminal proceedings. In this regard he cites the decision of the Supreme Court in Medchl Chemicals and Pharma Private Limited v. Biological E. Limited and Ors., wherein the principle laid down is that where the allegations levelled in the complaint on the face of it disclosed offence alleged – complaint cannot be quashed merely on the ground that civil remedy is available.
6. The charge-sheet and connected papers disclose that the accused fraudulently and dishonestly hatched a conspiracy between 1997 and 2001 to cheat the respondent 2-Bank, i.e., State Bank of Mysore in the matter of availing huge credit facilities and induced the respondent 2 to part with huge funds on the pretext of purchase of steel and other materials. After investigation, the C.B.I. has concluded that by fraudulently discounting bills and producing false acknowledgments of receipt of goods, though no transactions had taken place, the petitioners 5 to 8 induced the respondent 2 to part with huge sums of money. In other words, the Bank was induced to part with the money as per LC facility for the transactions mentioned, which money was required to be repaid as per the agreement and by receiving that money on the basis of discounted bills accompanied by false delivery receipted challans and by diverting the proceeds to the petitioner 9 through different accounts, but not meeting the requirement of repayment on due dates, the petitioners committed substantive offence of cheating. The mode of receiving the proceeds on the basis of discounted bills and false acknowledgments, though no transactions had taken place, and not meeting the requirement of payments on due dates as per agreement, but diverting the amount to the respondent 2 through different accounts, if true, indicates the ingredients of an offence of cheating and does not remain only as a civil dispute.
7. The next question that arises is as to whether in view of the compromise entered into between the petitioners 1, 2 and 9 on the one part and respondent 2 on the other part, before the Debt Recovery Tribunal, the matter stood compounded. In this regard, it is pertinent to note that the facts and circumstances which were taken into consideration by the Hon’ble Supreme Court in Duncans Agro Industries Limited’s, case, supra, were quite different from the one in the present case. In that case, after discussing the matter the Supreme Court had come to the conclusion about lack of ingredients of the offence of criminal breach of trust. The following observations, which are very much material to decide the present matter, were made in that case:
“29. In the facts of the case, it appears to us that there is enough justification for the High Court to hold that the case was basically a matter of civil dispute. The Banks had already filed suits for recovery of the dues of the Banks on account of credit facility and the said suits have been compromised on receiving the payments from the concerned Companies. Even if an offence of cheating is prima facie constituted, such offence is a compoundable offence and compromise decrees passed in the suits instituted by the Banks, for all intents and purposes, amount to compounding of the offence of cheating. It is also to be noted that long-time has elapsed since the complaint was filed in 1987. It may also be indicated that although such FIRs were filed in 1987 and 1989, the Banks have not chosen to institute any case against the alleged erring officials despite allegations made against them in the FIRs. Considering that the investigations had not been completed till 1991 even though there was no impediment to complete the investigations and further investigations are still pending and also considering the fact that the claims of the Banks have been satisfied and the suits instituted by the Banks have been compromised on receiving payments, we do not think that the said complaints should be pursued any further. In our view, proceeding further with the complaints will not be expedient. In the special facts of the case, it appears to us that the decision of the High Court in quashing the complaints does not warrant any interference under Article 136 of the Constitution. We, therefore, dismiss these appeals”.
8. In that case, there was long delay in investigation and it had not been completed, when the matter was considered. In the present case the investigation has been completed and charge-sheet has been placed. As observed earlier, materials disclose the offences alleged. As regards the compromise entered into before the Debt Recovery Tribunal it can only be found as an arrangement arrived at between the respondent 2 and the debtor regarding the mode of payment which were required to be made by the petitioner 9. Under these circumstances, it cannot be said that the present case falls within the ambit of the observations made by the Supreme Court. Of course, it may be said that if respondent 2 so agrees and the petitioners are moving for compounding the offence, they may do so in accordance with law. It is stated by the learned Counsel for the respondent 2 that even with regard to the payments that were required to be made as per the compromise arrived at between the parties, the payments have not been made; and out of ten instalments, only six have been paid. The learned Senior Counsel for the petitioners submitted that an undertaking would be given by the petitioners 1 to 9 regarding the prompt payment of the remaining amount, but that itself is not sufficient to quash the proceedings since as observed by me above, the compromise arrived at is only regarding the mode of payment. In fact, the Counsel for the second respondent has opposed the prayer of the petitioners and has submitted that once this petition is disposed of, there may be once again default by the petitioners in paying the amount.
9. A creditor, who files a complaint alleging cheating by the accused, is not precluded from seeking civil remedy for recovery of the amount advanced. In fact, he will be more interested in recovering his dues rather than in pursuing punitive action. In his endeavour to recover the money, he may enter into a compromise or arrangement for payment by the debtor in instalments. That automatically does not result in compounding of the offence. If a prayer is made for permission to compound the offence the payment made in furtherance of such arrangement may be taken into consideration, while considering such prayer. The conduct of the debtor in meeting his obligation as per compromise before Civil Court is very much material. An offer of the debtor to repay the amount, when cornered is not sufficient to allow an offence to be compounded. The facts and circumstances under which the Hon’ble Supreme Court in Duncans Agro Industries Limited’s case, supra, held that the offence of cheating was compounded, are different from the facts and circumstances of this case and the present proceeding does not come within the ambit of the principle laid down in that decision.
10. Seeing the matter from any angle, I am of the view that it cannot be said that allowing the proceedings to continue would be an abuse of the process of Court. This is not a fit case wherein the inherent powers of the High Court can be exercised. The petition is therefore dismissed.