# M/S Asm Traxim Pvt. Ltd. & Ors v. Union Of India. & Ors

- **Citation:** (2025) 7 ILRA 161
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-07-07
- **Case number:** Application U/S 528 BNSS No. 3242 of 2025
- **Bench:** Sanjay Kumar Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-asm-traxim-pvt-ltd-ors-v-union-of-india-ors-53611
- **Pages:** 15

## Headnote

A.S.G.I., Ashish Agrawal, G.A., Manu
Vardhana, Sanjay Kumar Yadav

Issue for Consideration
Matter pertains to the question as to whether,
upon a one-time settlement of the loan (CC
Limit) between the borrower and the bank, the
criminal proceedings instituted against accusedapplicant, who is neither a borrower nor
guarantor but had business relations with the
borrower, are liable to be quashed.

Head Notes
Penal
Code,
1860
-
ss.
420,471,468,467,120-B - Prevention of
Corruption Act, 1988 - ss. 13(1)(d),13(2) -
FIR registered by C.B.I. on complaint of
Union Bank of India alleging that M/s
Govinda International, in conspiracy with
certain
firms
including
applicant,
fraudulently obtained credit facilities and
created
fictitious
sale-purchase
transactions causing financial loss to bank
- Applicants, directors of M/s ASM Traxim
Pvt. Ltd., arrayed as accused - Appellants
sought
quashing
of
entire
criminal
proceedings - Justification:

Held: It is undisputed that applicants are
neither borrowers nor guarantors - Dispute
regarding non payment of loan (CC Limit)
between the borrower and the bank, being
predominantly civil in nature, has been settled
through One-Time Settlement - Bank now has
no subsisting grievance, and possibility of
conviction is remote an bleak - Applicants' case
stands on a better footing than that of the
borrower - Hence, continuation of criminal
proceedings would amount to undue oppression
and prejudice - Impugned charge sheet,
cognizance/summoning
order,
criminal
proceedings quashed. [Paras 11, 13] (E-13)

Case Law Cited
K.Bharthi Devi and Another v. State of
Telangana, (2024) 10 SCC 384; Tarina Sen v.
Union of India and Another, 2024 SCC OnLine
SC 2696; N.S.Gnaneshwaran Etc. v. The
Inspector of Police & Another, 2025 SCC
OnLine SC 1257; Anil Bhavarlal Jain & Another
v. The State of Maharashtra & Others, 2024
SCC OnLine SC 3823; Raman Gopi & Another
v. Kunju Raman Uthaman, 2011 SCC OnLine
Ker 4028 - referred to.

List of Acts
Penal Code, 1860, Prevention of Corruption Act,
1988

List of Keywords
Quashing
of
charge-sheet;
Cognizance
/
Summoning order; Civil dispute; One-Time
Settlement of Loan; Non-Performing Asset;
Hypothecation of goods; Entrustment; Borrower
and lender relationship; Fraudulent intention;
Forged
/
fabricated
documents;
Criminal
conspiracy; Consent terms; Public servant; Bank
officer liability; Procedural lapses; Remote
possibility of conviction.

Case Arising From
ORIGINAL JURISDICTION: Application U/s 528
BNSS No. - 3242 of 2025

From the Judgment and Order dated 31.01.2024
of the Additional Special Judge, C.B.I., Court
Ghaziabad in Misc. Criminal Case No. 5 of 2024.
162 INDIAN LAW REPORTS ALLAHABAD SERIES
Appearances for Parties
Advs. for the Applicant:
Ishan Deo Giri, Sarvesh Pandey, Shad Khan,
Shishir Prakash, Sr. Advocate

Advs. for the Opposite Party:
A.S.G.I., Ashish Agrawal, G.A., Manu Vardhana,
Sanjay Kumar Yadav

## Text

_Characters 0–39,861 of 47,878. This is a partial read: ask again with offset=39861 for what follows._

7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
161
witnesses on the date of their production
and no adjournment whatsoever shall be
granted for this purpose.
---------
(2025) 7 ILRA 161
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 07.07.2025

BEFORE

THE HON'BLE SANJAY KUMAR SINGH, J.

Application U/S 528 BNSS No. 3242 of 2025

M/S Asm Traxim Pvt. Ltd. & Ors.
 ...Applicants
Versus
Union Of India. & Ors. ...Opposite Parties

Counsel for the Applicants:
Ishan Deo Giri, Sarvesh Pandey, Shad
Khan, Shishir Prakash, Sr. Advocate

Counsel for the Opposite Parties:
A.S.G.I., Ashish Agrawal, G.A., Manu
Vardhana, Sanjay Kumar Yadav

Issue for Consideration
Matter pertains to the question as to whether,
upon a one-time settlement of the loan (CC
Limit) between the borrower and the bank, the
criminal proceedings instituted against accusedapplicant, who is neither a borrower nor
guarantor but had business relations with the
borrower, are liable to be quashed.

Head Notes
Penal
Code,
1860
-
ss.
420,471,468,467,120-B - Prevention of
Corruption Act, 1988 - ss. 13(1)(d),13(2) -
FIR registered by C.B.I. on complaint of
Union Bank of India alleging that M/s
Govinda International, in conspiracy with
certain
firms
including
applicant,
fraudulently obtained credit facilities and
created
fictitious
sale-purchase
transactions causing financial loss to bank
- Applicants, directors of M/s ASM Traxim
Pvt. Ltd., arrayed as accused - Appellants
sought
quashing
of
entire
criminal
proceedings - Justification:

Held: It is undisputed that applicants are
neither borrowers nor guarantors - Dispute
regarding non payment of loan (CC Limit)
between the borrower and the bank, being
predominantly civil in nature, has been settled
through One-Time Settlement - Bank now has
no subsisting grievance, and possibility of
conviction is remote an bleak - Applicants' case
stands on a better footing than that of the
borrower - Hence, continuation of criminal
proceedings would amount to undue oppression
and prejudice - Impugned charge sheet,
cognizance/summoning
order,
criminal
proceedings quashed. [Paras 11, 13] (E-13)

Case Law Cited
K.Bharthi Devi and Another v. State of
Telangana, (2024) 10 SCC 384; Tarina Sen v.
Union of India and Another, 2024 SCC OnLine
SC 2696; N.S.Gnaneshwaran Etc. v. The
Inspector of Police & Another, 2025 SCC
OnLine SC 1257; Anil Bhavarlal Jain & Another
v. The State of Maharashtra & Others, 2024
SCC OnLine SC 3823; Raman Gopi & Another
v. Kunju Raman Uthaman, 2011 SCC OnLine
Ker 4028 - referred to.

List of Acts
Penal Code, 1860, Prevention of Corruption Act,
1988

List of Keywords
Quashing
of
charge-sheet;
Cognizance
/
Summoning order; Civil dispute; One-Time
Settlement of Loan; Non-Performing Asset;
Hypothecation of goods; Entrustment; Borrower
and lender relationship; Fraudulent intention;
Forged
/
fabricated
documents;
Criminal
conspiracy; Consent terms; Public servant; Bank
officer liability; Procedural lapses; Remote
possibility of conviction.

Case Arising From
ORIGINAL JURISDICTION: Application U/s 528
BNSS No. - 3242 of 2025

From the Judgment and Order dated 31.01.2024
of the Additional Special Judge, C.B.I., Court
Ghaziabad in Misc. Criminal Case No. 5 of 2024.
162 INDIAN LAW REPORTS ALLAHABAD SERIES
Appearances for Parties
Advs. for the Applicant:
Ishan Deo Giri, Sarvesh Pandey, Shad Khan,
Shishir Prakash, Sr. Advocate

Advs. for the Opposite Party:
A.S.G.I., Ashish Agrawal, G.A., Manu Vardhana,
Sanjay Kumar Yadav
(Delivered by Hon'ble Sanjay Kumar
Singh, J.)

1-Heard Mr. G.S. Chaturvedi, learned
Senior Advocate assisted by Mr. Ishan Deo
Giri and Mr. Shad Khan, learned counsel
for the applicants, Mr. Rahul Srivastava,
learned counsel appearing on behalf of
opposite party nos. 1 and 3, Mr. Rabindra
Kumar
Singh,
learned
Additional
Government Advocate for the State of
U.P./opposite party no. 2 and Mr. Ashish
Agarwal, learned counsel appearing on
behalf of complainant/opposite party no. 4.

2- The instant application U/s 528 of
Bharatiya Nagarik Suraksha Sanhita, 2023
has been preferred by the applicant-M/s
ASM traxim Pvt. Ltd., Himanshu Garg and
Vipul Agarwal with a prayer to quash the
charge-sheet
no.
3
of
2024
dated
31.01.2024, cognizance / summoning order
dated 19.11.2024 under Section 120-B read
with 420 I.P.C. and consequential criminal
proceedings of Misc. Criminal Case No. 5
of 2024 arising out of F.I.R. No. RC
0072020A007 dated 18.11.2020 under
Sections 120B r/w 420, 467, 468 and 471
I.P.C. and Section 13(2) r/w 13(1)(d) of
Prevention of Corruption Act registered at
Police Station C.B.I., A.C.B., Dehradun
pending in the court of learned Additional
Special Judge, C.B.I., Court No. 1,
Ghaziabad, U.P.

Factual Matrix of the Case

3-Brief facts of the case, which are
required to be stated are that on the written
complaint dated 02.10.2020 of Mr. Saroj
Kumar Dash, Regional Head, Union Bank
of India, Regional Office, Ghaziabad, an
F.I.R.
was
registered
by
C.B.I.
on
18.11.2020
against
M/s
Govinda
International, Keshav Joshi, Pawan Kumar
Sharma, M/s Agson Global Pvt. Limited,
M/s ASM Traxim Pvt. Limited, M/s R. M.
& Associates, M/s Global Valuers &
Associates, unknown public servants and
other unknown persons U/s 120-B, 420,
467, 468 & 471 of I.P.C., 1860 and 13(2)
r/w 13(1)(d) of PC Act, 1988.

3.1-The allegations, as levelled in
the FIR, are as under:

a.
That
M/s.
Govinda
International, a proprietorship firm of
Keshav Joshi, availed CC limit of Rs. 15
crores against hypothecation of stocks and
Book debts on 31.03.2017 and further
availed ad-hoc limit of Rs. 3.75 crores on
01.11.2017 from Union Bank of India, Mid
Corporate Branch, Kaushambi, Ghaziabad,
on the basis of submission of forged
financial documents to the bank. The
borrowers closed down their business by
selling out all the hypothecated stocks
without depositing the sale proceeds in the
loan account.

b. That the Borrower firm in
collusion with the Valuers firms namely
M/s RM & Associates and M/s Global
Valuers & Associates got done inflated
valuation of the property offered as
collateral security and thereby fraudulently
induced the bank to sanction loan and thus
caused huge wrongful financial loss to the
Bank to the tune of about Rs. 19 crore 59
Lacs as on 31.10.2019.
7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
163

c.
That
sale
and
purchase
transactions were made with the same
group of companies namely M/s. Agson
Global Pvt. Ltd. and M/s, ASM Traxim
Pvt. Ltd. for creating fake/suspicious
transaction in the account to show/create
turnover through sale.

4-Filtering out unnecessary details,
relevant facts, which have come out during
investigation as per case of C.B.I. are as
under:-

4.1- M/s Govinda International is
proprietorship concern of Keshav Joshi,
which was actually being managed and
controlled indirectly by Pawan Kumar
Sharma, who is real maternal uncle of
Keshav Joshi.

4.2-
M/s
Kajuwalla
is
proprietorship concern of Jatin Sharma S/o
Pawan Kumar Sharma. M/s Jagannatlı
Traders
is
partnership
firm
under
partnership of Jatin Sharma and Pawan
Kumar Sharma. M/s Kajuwalla and M/s
Jagannath Traders have also availed CC
limits of Rs. 20 Crores each from UBI, Mid
Corporate Branch, Ghaziabad.

4.3-Keshav Joshi submitted Loan
Application Form dated 10.03.2017 to
Chief Manager, UBI, MCB, Ghaziabad, for
sanction of Cash Credit Limit of Rs. 20
Crores against hypothecation of stocks and
book debt, to meet out the working capital
requirement of M/s Govinda International.

4.4-
On
24.03.17
recommendation was made to sanction CC
Limit of Rs. 20 Crores to M/s. Govinda
International but subsequently on the basis
of their assessment, the CC limit was
reduced from Rs. 20 Crores to Rs. 15
Crores and recommendation for sanction of
Rs. 15 Crores was made to M/s Govinda
International, which was approved by
Credit Approval Committee (CAC), ZLCC,
Lucknow held on 31.03.2017.

4.5- Initially, amount of Rs. 10
Crores was released to M/s Govinda
International (borrower).

4.6- In order to achieve sales of
M/s Govinda International to the tune of
Rs. 40 Crores, Keshav Joshi and Pawan
Kumar Sharma entered into criminal
conspiracy with Sharad Gupta of M/s SAR
Enterprises
and
M/s
Vivek
Trading
Company, M/s Agson Global Pvt. Limited
and its Director Apresh Garg and M/s ASM
Traxim Pvt. Limited and its Directors Vipul
Agarwal (applicant no. 3) and Himanshu
Garg (applicant no. 2) and in furtherance of
the said criminal conspiracy, Keshav Joshi
and Pawan Kumar Sharma reflected fake
and bogus purchases in its books of
accounts to the tune of Rs. 43.22 Crores
(Approximately)
from
M/s
SAR
Enterprises, M/s Vivek Trading Company
and M/s Agson Global Pvt. Limited and
thereafter the goods so purchased from the
said three firms/companies were falsely
shown to have been sold at the cost of Rs.
43.74 Crores (Approximately). The large
part of goods was falsely shown to have
been sold to M/s ASM Traxim Pvt.
Limited. In this way, Keshav Joshi and
Pawan Kumar Sharma falsely shown to
have achieved sales of Rs. 40 Crores in
books of accounts. Sharad Gupta, Vipul
Agarwal, Himanshu Garg, Apresh Garg,
M/s Agson Global Pvt. Limited and M/s
ASM Traxim Pvt. Limited, all with the
dishonest
and
fraudulent
intention,
facilitated Keshav Joshi and Pawan Kumar
Sharma by making accommodative false
entries in their respective books of
accounts.
164 INDIAN LAW REPORTS ALLAHABAD SERIES

4.7-Ms. Shefali Sharma, Chief
Manager succeeded Anil Kumar Rawat and
joined UBI, MCB, Ghaziabad on 22.05.17
as Branch Head. Keshav Joshi again
submitted a letter dated 02.08.17 to the
UBI, MCB, Ghaziabad to release remaining
amount of CC limit of Rs. 5 Crores. Ms.
Shefali Sharma, the then Branch Head
approved the same and allowed release of
additional amount of Rs. 5 Crores M/s
Govinda International on 03.08.2017.

4.8-
Thereafter
Ms.
Shefali
Sharma, the then Branch Head, UBI, MCB,
Ghaziabad
again
recommended
for
sanction of ad-hoc limit of Rs. 3.75 Crores
to M/s. Govinda International, which was
sanctioned on 01.11.17 and the same was
released on 02.11.2017.

4.9-
There
were
only
few
transactions in the CC Account of M/s
Govinda International during 01.12.2017 to
31.03.2018. The interest amount was not
paid
during
December,
January
and
February, hence the account was declared
as Non Performing Asset (NPA) on
31.03.2018.

4.10- The funds received from
CC Limit of Rs. 15 Crores and Ad-hoc
limit of Rs. 3.75 Crores have been diverted
to different firms adopting different modus
operandi.

4.11-Pawan Kumar Sharma and
Keshav
Joshi
submitted
false
Stock
Statements with false and inflated financial
figures of Sale/Purchase/Debtors/Creditors in
order to avail and justify drawing power and
they in criminal conspiracy with M/s. Agson
Global Pvt. Ltd. and its Director Apresh
Garg, M/s ASM Traxim Pvt. Limited and its
Directors Himanshu Garg and Vipul Agarwal
and Sharad Gupta, with dishonest and
fraudulent intention, created fake and bogus
sale and purchase in books of accounts in
order to show turnover in the account and
thus to justify drawing power. Anil Kumar
Rawat did not verify or cross check the
genuineness of the stock statements and thus
dishonestly
and
fraudulently
facilitated
Keshav Joshi and Pawan Kumar Sharma in
justifying the Drawing Power and released
the limit.

4.12- Thus, in view of facts and
circumstances detailed as above paras,
Keshav Joshi and Pawan Kumar Sharma in
conspiracy with Anil Kumar Rawat, the then
Chief Manager and Branch Head and Agam
Mohan Kulshreshtha, the then Regional Head
got sanctioned credit facilities on the basis of
forged
and
fabricated
documents
and
thereafter in conspiracy with other accused
persons utilized the loan amount for purposes
other than for which the loan was sanctioned
and thus caused wrongful loss of 28.77
Crores as on 31.12.2023 (including principal
outstanding of Rs.15.72 Crores) to Union
Bank of India and corresponding wrongful
gain to themselves and other accused person
as noted above.

4.13-
After
culmination
of
investigation, C.B.I. submitted charge-sheet
no. 3 of 2024 dated 31.01.2024 against
following persons and entities:-

1. Anil Kumar Rawat u/s 120-B,
420, 468, 471 IPC and section 13(2) r/w
13(1)(d) of PC Act, 1988 and substantive
offences U/s 13(2) r/w 13(1)(d) of PC Act,
1988.

2. Agam Mohan Kulshrestha u/s
120-B r/w 420 IPC and section 13(2) r/w
13(1)(d) of PC Act, 1988 and substantive
offences U/s 13(2) r/w 13(1)(d) of PC Act,
1988.
7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
165

3. Keshav Joshi u/s 120-B r/w 420,
468 and 471 of IPC and section 13(2) r/w
13(1)(d) of PC Act, 1988 and substantive
offences u/s 420, 468 and 471 of IPC.

4. Pawan Kumar Sharma u/s 120-B
r/w 420, 468 and 471 of IPC and section 13(2)
r/w 13(1)(d) of PC Act, 1988 and substantive
offences u/s 420, 468 and 471 of IPC.

5. M/s Agson Global Pvt. Limited
u/s 120-B r/w 420 of IPC.

6. M/s ASM Traxim Private
Limited u/s 120-B r/w 420 of IPC.

7. Nanak Chand Gupta u/s 120-B
r/w 420 of IPC.

8. Apresh Garg u/s 120-B r/w 420
of IPC.

9. Himanshu Garg u/s 120-B r/w
420 of IPC.

10. Vipul Agarwal, Director u/s
120-B r/w 420 of IPC.

11. Sharad Gupta u/s 120-B r/w
420 of IPC.

12. Yogender Mohan Rustagi u/s
120-B r/w 420 of IPC.

13. M/s AKG Exim Limited u/s
120-B r/w 420 of IPC.

14. Rajeev Goel u/s 120-B r/w
420 of IPC.

15. Manav Arora u/s 120-B r/w
420 of IPC.

16. Smt. Anu Arora u/s 120-B r/w
420 of IPC.

4.14-
In
the
investigation,
procedural lapses have been found on part
of bank officers namely (1) M. N. K.
Chaitanya,
the
then
Chief
Manager
(Credit), UBI, Regional Office, Meerut. (2)
Ms. Shefali Sharma, the then Chief
Manager and Branch Head, UBI, Mid
Corporate Branch, Ghaziabad. (3) Ankit
Tomar, the then Manager, UBI, Mid
Corporate Branch, Ghaziabad and (4) Smt.
Asha Sinha, the then Manager (Credit),
UBI, Regional Office, Meerut.

4.15- On the aforesaid chargesheet dated 31.01.2024, Special Judge,
Anti-Corruption
C.B.I,
Court
No. 1,
Ghaziabad registered the case as Misc.
Case No. 05 of 2024 and took cognizance
of the offence and summoned the accused
persons vide order dated 19.11.2024, which
is the subject matter of challenge in the
present case.

5- It is argued by learned counsel for
the applicant that the applicant no. 1
namely M/s ASM Traxim Pvt. Ltd. is a
company incorporated under the provisions
of Company's Act. Applicant nos. 2 and 3
namely
Himanshu
Garg
and
Vipul
Agarwal, were erstwhile directors of M/s.
ASM Traxim Pvt. Lt. came in contact of
Keshav Joshi, who was a business man
dealing in dry fruits through his firm M/s
Govinda
International.
The
applicants
started business relationship with his firm
M/s Govinda International and over the
years, they entered into several transactions
for both sales as well as purchase. The
applicants were completely unknown that
M/s Govinda International had availed loan
credit facilities from Union Bank and on
default,
account
of
M/s
Govinda
International was declared as NPA. The
gist of the allegation against the applicants
that sale and purchase transactions made
166 INDIAN LAW REPORTS ALLAHABAD SERIES
between the firm of applicants and M/s
Govinda
International
was
bogus
transaction with a view to show / create big
turn over of M/s Govinda International.
The said allegations are completely false
and frivolous. Much emphasis has been
given by contending that all transactions
are fully genuine and on the said
transaction,
GST/VAT
amounting
Rs.
1,99,45,071/- has also been paid on all the
transactions made between M/s. ASM
Traxim Pvt. Ltd. and M/s Govinda
International. The relevant documents in
this regard are also in existence which
proves the genuineness of the said
transactions / business relationship between
them. It is also pointed out that M/s
Govinda
International,
the
original
borrower which has availed the loan
facilities has entered into one time
settlement with the bank and the liabilities
of the bank has already been paid. It is not
a case of cheating or fraud with the bank on
the part of the applicants. Maximum it
might be a case of breach of condition on
the part of borrower. The hypothecation of
goods is not entrustment but it is a charge
on the goods. The relationship between
borrower and banker is not an entrustment.
On the strength of aforesaid facts, it is also
argued that in fact, main allegation in the
present case relates to a borrower and
lender, hence, primarily it is a civil dispute
which has already been settled between the
borrower and the bank. Hence, criminal
proceeding against the applicants is liable
to be quashed in the light of law laid down
by the Apex Court in the following cases:-

(i) K.Bharthi Devi and Another
vs. State of Telangana, (2024) 10 SCC 384.

(ii) Tarina Sen vs. Union of
India and Another, 2024 SCC OnLine SC
2696.

(iii) N.S.Gnaneshwaran Etc. vs.
The Inspector of Police & Another, 2025
SCC OnLine SC 1257.

6- On the other hand, Mr. Rahul
Srivastava, learned counsel appearing on
behalf of C.B.I. reiterating the prosecution
case
and
facts
discovered
during
investigation as mentioned in charge-sheet
submitted that it is a case of triangular
transaction. In-fact fake transactions have
been shown by the applicants with a view
to enhance the turn over of M/s Govinda
International on paper, therefore, even after
one time settlement of borrower (M/s
Govinda International) with the bank and
payment of all dues to the concerned bank
by the borrower, the criminal proceeding
against the applicant is not liable to be
quashed in the light of judgment of the
Apex Court in the case of Anil Bhavarlal
Jain & Another vs. The State of
Maharashtra & Others, 2024 SCC
OnLine SC 3823. He further submits that in
the case of K.Bharthi Devi and Another vs.
State of Telangana (Supra) and in the case
of Anil Bhavarlal Jain & Another vs. The
State of Maharashtra & Others (Supra)
contrary view has been expressed by the
Apex Court, therefore, in the light of
principles laid down by the Full Bench
judgment of Kerala High Court in the case
of Raman Gopi & Another vs. Kunju
Raman Uthaman, 2011 SCC OnLine Ker
4028, this application is liable to be
dismissed considering the principles laid
down by the Apex Court in the case of Anil
Bhavarlal Jain (Supra).

7-Mr.
Ashish
Agarwal,
learned
counsel appearing on behalf of the
complainant /respondent no. 4 submits that
during
the
pendency
of
criminal
proceedings against the accused persons, a
one time settlement has been entered into
7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
167
between the bank and the borrowers
(Proprietor/partner and Guarantor of M/s
Jagannath Traders, M/s Kajuwalla and M/s
Govinda International). The settlement
amount was fixed at Rs. 43 crores as well
as legal expenses and interest, which was
additionally payable over and above OTS
amount. The said amount of Rs. 43 crores
was deposited by the borrowers in different
steps and finally, they have paid the entire
settlement amount of Rs. 43 crores, which have
been accepted by the bank. Now only legal
expenses and interest, which was additionally
payable over and above OTS scheme are to be
paid. It is also pointed out that the Chief
Manager/Branch Head, Union of India, SAM
Branch Lucknow, after depositing One Time
Settlement amount of Rs. 43 crores, by the
borrowers also wrote a letter on 29.03.2025 to
the Deputy Superintendent of Police, C.BI.,
Special Crime Branch, Hazratganj, Lucknow
mentioning therein to release of mortgaged
properties and original property papers
seized by C.B.I.

8- Now the moot question involved in
the matter for consideration before this
Court is "whether after one time settlement
of loan (CC Limit) between borrowers and
guarantors
with
bank,
the
criminal
proceeding against the accused-applicant,
who is neither borrower nor guarantor but
was having business relation with borrower
is liable to be quashed or not."

9- Here it would be apposite to discuss
the legal position that emerges from
judgments of the Hon'ble Apex Court
relied upon by the parities concerned.

9.1- Brief facts in the case of K.
Bharthi Devi (Supra) are as under :-

(i) In the above case, the Sole
Proprietor of M/s Sirish Traders was
granted various credit facilities in the group
loan account by Indian Bank, which were
secured by collateral security executed by
the
accused
persons.
Since
the
borrowers/mortgagors failed to service the
interest and re-pay the dues, the group loan
account was declared a Non-Performing
Asset. To realize the outstanding amount,
Bank approached Debts Recovery Tribunal.
During the pendency of the proceedings
before the DRT, Bank came to know that
some of the title documents executed by the
accused persons by virtue of which
equitable mortgage was created were not
original documents, rather the same were
fake, forged and fabricated. Thereafter, on
the complaint of Bank, C.B.I. registered an
FIR and after investigation prima facie it
was found that offences punishable under
Sections 120-B read with 420, 409, 467,
468 and 471 of I.P.C. and Section 13(1)(d)
and 13(2) of the Prevention of Corruption
Act have been committed. Accordingly,
CBI filed charge-sheet against the accused
persons. During the pendency of the
proceedings
before
DRT, One
Time
Settlement ("OTS" for short) has been done
between the borrower and the bank. The
OTS amount was paid, and the Bank issued
a
No
Dues
Certificate
to
the
borrowers/guarantors. Thereafter, matter
before DRT has been disposed in the light
of OTS.

(ii) The accused persons preferred
a criminal petition U/s 482 Cr.P.C. before
the High Court seeing quashing of the
charge sheet but the same was dismissed
vide order dated 01.09.2017by the High
Court holding that settlement arrived at was
only a private settlement and was not a part
of any decree given by any court. The
charges include the use of fraudulent, fake
and forged documents that were used to
embezzle public money and if these are
168 INDIAN LAW REPORTS ALLAHABAD SERIES
proved, they would be grave crimes against
the society as a whole and hence, merely
due to a private settlement between the
Bank and the accused, it cannot be said that
the prosecution of the accused persons
would amount to abuse of process of the
court.

(iii) The said judgment of the
High Court was challenged by two accused
persons before the Hon'ble Apex Court,
wherein, the Hon'ble Apex Court has
framed the issue by mentioning that "the
only question would be, as to whether the
continuation of the criminal proceedings
against the present appellants would be
justified or not".

(iv) The Hon'ble Apex Court
after wholesome treatment, discussing and
considering previous judgments, has made
following observations:

"44.The facts in the present case
are similar to the facts in the case of Sadhu
Ram Singla and Others (Supra) wherein a
dispute between the borrower and the Bank
was settled. In the present case also,
undisputedly, the FIR and the chargesheet 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.

46. ............

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.

48. We are therefore inclined to
allow the present appeal.

49. We accordingly pass the
following order:

(i) The appeal is allowed.

(ii) The impugned judgment and
order dated 1st September 2017 passed by
the High Court of Judicature at Hyderabad
for the State of Telangana and the State of
Andhra Pradesh in Criminal Petition No.
5778 of 2016 is quashed and aside.

(iii) The criminal proceedings
against the appellants in C.C. No. 16 of
2014 on the file of Principal Special Judge
for CBI Cases, Nampally, Hyderabad is
also quashed and set aside."

9.2- Brief facts in the case of
Tarina Sen vs. Union of India and
Another (Supra) are as under :-

(i) In the above case fact was that
on the basis of information received from a
reliable source, the C.B.I. has registered an
F.I.R. against the accused persons for the
offences punishable under Sections 120-B,
7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
169
420, 468 and 471 of Indian Penal Code &
Sections 13(2) read with 13(1)(d) of the
Prevention of Corruption Act. As per the
allegation, the Branch Manager of the
concerned bank entered into a criminal
conspiracy with other accused persons. At
that time, Surjit Sen and Kaushik Nath
Ojha were the Directors of M/s Indo Global
Projects
Ltd.,
Bhubaneswar
and
the
appellants who have filed SLP before the
Hon'ble Apex Court were Partners in M/s
Clarion Travels, Bhubaneswar. A loan
application was submitted on behalf of
Clarion Travels for the purpose of securing
funds to purchase new cars. Against the
said loan application, Branch Manager
Ajay Kumar Behera sanctioned a loan of
Rs. 8,40,000/- without keeping any security
or post-dated cheques. No repayment was
ever made, and Ajay Kumar Behera did not
pursue the same. A similar loan application
was submitted on behalf of IGPL for the
same purpose of securing funds to purchase
new cars at a cost of Rs. 11,84,600/-.
Against the said loan application, Ajay
Kumar Behera sanctioned the loan for the
said amount. The money was received by
the Directors of IGPL. In furtherance of the
loan application after depositing 36 postdated cheques, which when they were sent
for clearance, at a later stage, by the
successor of Ajay Kumar Behera bounced.
The office address disclosed by both IGPL
and Clarion Travels was one and the same.

(ii)
The
Central
Bureau
of
Investigation
after
culmination
of
investigation, filed the charge-sheet against
the accused persons, on which trial court
took cognizance and issued summons to the
accused persons.

(iii) Bank also filed two Original
Applications before the Debt Recovery
Tribunal for recovery of dues in respect of
the loans advanced to IGPL and Clarion
Travels. During the pendency of said
proceedings, IGPL and Clarion Travels
reached a One-Time-Settlement with the
Bank, which was accepted, and the loan
account was declared as being closed. In
view of the OTS, the recovery proceedings
pending before the DRT were disposed of.

(iv) Having settled the matter
thus, the accused persons filed separate
applications under Section 482 of Cr.P.C.
before the High Court seeking quashing of
all the proceedings pending before the trial
Court. The High Court disposed of the
applications under Section 482 of Cr.P.C.
by permitting them to urge all the pleas
raised in their application before the trial
Court at the appropriate stage.

(v) Being aggrieved thereby, the
accused
Tarina
Sen
approached
the
Hon'ble Apex Court, wherein, the Hon'ble
Apex Court has framed the issue by
mentioning that "the only question would
be, as to whether the continuation of the
criminal proceedings against the present
appellants would be justified or not".

(vi) The Hon'ble Apex Court
considering the previous judgments as well
as judgment passed in Criminal Appeal
arising out of Special Leave Petition
(Criminal) No. 4353 of 2018 has made
following observations:

"14. 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.
170 INDIAN LAW REPORTS ALLAHABAD SERIES

15.
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.

16. We find that for the aforesaid
reasons the present appeals also deserve to
be allowed.

17. In the result, we pass the
following order.

(i) Criminal Appeal arising out of
Special Leave Petition (Criminal) No.1415
of 2024 is allowed.

(ii) The impugned order dated 4th
July 2023 passed by the High Court of
Orissa at Cuttack in CRLMC No.34 of
2022 is quashed and set aside.

(iii) Criminal Appeal arising out
of Special Leave Petition (Criminal)
No.1416 of 2024 is allowed.

(iv) The impugned order dated 4
th July 2023 passed by the High Court of
Orissa at Cuttack in CRLMC No.33 of
2022 is quashed and set aside

(v) The criminal proceedings
against the appellants in T.R. No. 28 of
2002 pending in the Court of Special Judge
(CBI) Bhubaneswar is also quashed and set
aside."

9.3- Brief facts in the case of N.S.
Gnaneshwaran Etc. vs. The Inspector of
Police & Another, (Supra) are as under:

In the said case, allegations
against accused-applicant was that he was
instrumental in orchestrating the fraudulent
diversion of funds sanctioned to M/s
Vinayaka Corporation as he facilitated the
encashment of multiple cheques drawn
from fraudulent obtained credit limit using
a network of relatives, employees and
fictitious identities. Another co-accused is
alleged to have assisted in the scheme by
operating a bank account in the name of
Bharathi Traders along with his wife
through which cheques were deposited and
funds were withdrawn. Parallel to criminal
proceedings, the bank initiated recovery
proceedings before DRT. Subsequently
bank floated a one time settlement (OTS)
scheme and upon full payment of the dues,
recovery proceedings were dismissed as
settled but the High Court dismissed the
petition under Section 482 Cr.P.C. on the
ground that the stage of trial was advanced
and held that the criminal proceedings
could not be quashed merely on the basis of
OTS when a prima-facie case was made
out. But the Hon'ble Apex Court taking
note of the fact that dispute between the
parties have already been resolved through
full and final settlement, quashed the
criminal proceedings against the accused.
The operative part of the said judgment has
mentioned in paragraph nos. 9 and 10,
which are being quoted as under:-

9. In our view, allowing the
present criminal proceedings to continue
would serve no meaningful purpose,
7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
171
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.

10.
In
view
of
the
above
discussion, we find it appropriate to quash
the proceedings pending in C.C. No. 16 of
2006
against
the
appellants
herein.
Consequently, the appeals are allowed.

9.4- Brief facts in the case of Anil
Bhavarlal Jain & Another vs. The State of
Maharashtra, 2024 SCC OnLine SC 3823
are as under:

(i) In the year of 2013, appellants
who were Directors of the Company, had
obtained sanction for a building permit and
commencement certificate for plot in
question. On 15.02.2014, State Bank of
India had sanctioned a loan of Rs. 50 crores
to the Company. On 30.10.2014, the
Company opened a collateral security and
mortgaged the commercial land. The
appellant had made timely payments till
2017, while on 28/11/2017 the bank
declared the loan account of the Company
as
Non-Performing
Asset
with
an
outstanding amount of Rs. 23.86 crores.

(ii) The bank also started a
recovery process and filed an application
before the Debt Recovery Tribunal. The
Company and the Bank filed consent terms
before the DRT amounting to Rs. 15 Crore.
According to the consent terms, the
Company paid Rs. 20 lacs on 16.06.2020.
Remaining amount of Rs. 14.88 crore was
subsequently paid by the Company with
interest and the loan account was closed as
per the one-time settlement. Accordingly,
the application before the DRT came to be
disposed of.

(iii) The Bank filed a complaint
with Central Bureau of Investigation,
against the appellants for diverging the
funds from the loan account of SICOM
Ltd. from whom they had allegedly availed
a loan of Rs. 25 Crores in 2013 and against
the Company for changing the building
plans of the project which resulted in the
reduced value of the collateral security,
without the consent of the Bank. On
24.07.2022, an FIR came to be registered
against the appellants by Central Bureau of
Investigation,
Anti-Corruption
Bureau,
Mumbai. After investigation, charge sheet
dated 31.12.2021 was filed by the C.B.I.

(iv) The appellants preferred a
Writ Petition before the High Court under
Section 482 of Cr.P.C. seeking quashing of
the FIR and chargesheet.

(v) Vide order dated 26.07.2023,
High Court rejected the said Writ Petition
observing that the appellants have a
substantive alternative remedy under the
provisions of the Code of Criminal
Procedure before the High Court.

(vi) The appellants who were the
Directors of M/s Sun Infrastructure Pvt.
Ltd. filed an appeal being SLP(Crl.) No.
10078 of 2023 and appellants who were the
employees of Bank filed an appeal being
SLP (Crl.) No. 12776 of 2023.

(vii) The Hon'ble Apex Court has
framed the issue by mentioning that "the
moot question which arises for our
consideration in the present case is whether
the criminal proceedings can be quashed
based upon a settlement arrived at between
172 INDIAN LAW REPORTS ALLAHABAD SERIES
the parties as per the consent terms drawn
and submitted before the DRT."

(viii) The Hon'ble Apex Court
considering the facts of the case as well as
previous judgments Gian Singh vs. State of
Punjab, (2012) 10 SCC 303, State vs. R
Vasanthi Stanley, 2015 SCC OnLine SC
815 and Parbatbhai Aahir vs. State of
Gujrat and Another, 2017 SCC OnLine SC
1189 has made following observations:

"16. Another reference can be
made to the judgment of this Court in
Parbatbhai Aahir v. State of Gujrat
wherein it was 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.
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.

17. A profitable reference in this
regard can be made to the judgment in
State v. R Vasanthi Stanley wherein this
Court declined to quash the proceedings in
a case involving alleged abuse of the
financial system. It was observed as under:

"15. ........ A grave criminal
offence or serious economic offence or for
that matter the offence that has the
potentiality to create a dent in the financial
health of the institutions is not to be
quashed on the ground that there is delay
in trial or the principle that when the
matter has been settled it should be
quashed to avoid the head on the system.
That can never be an acceptable principle
or parameter, for that would amount to
destroying stem cells of law and order in
many a realm and further strengthen the
marrow of unscrupulous litigations. Such a
situation should never be conceived of.

18. In the instant case, it is on
record that consent terms were submitted
by the parties before the DRT. It is
admitted 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. Keeping in
view the fact that in the present case a
special statute i.e. PC Act has been
invoked, we are of the view that quashing
of offences under the said Act would have a
grave and substantial impact not just on the
parties involved, but also on the society at
large. As such the High Court committed
no error in declining to exercise its
inherent powers in the present case,
thereby refusing to quash the criminal
proceedings.

19. 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."

9.5- Here it is also relevant to
mention the Full Bench judgment of Kerala
High Court in the case of Raman Gopi
and Another vs. Kunju Raman Uthaman
7 All. M/S Asm Traxim Pvt. Ltd. & Ors. Vs. Union of India & Ors.
173
(Supra) wherein following question was
referred before the Full Bench for its
opinion.

"Where the judgments of the
Supreme Court rendered by coequal
benches express conflicting principles of
law, which cannot stand together and, thus,
present a serious problem to the High
Courts and subordinate Courts, what are the
principles to be followed in choosing one
or other of the conflicting judgments by the
High Court when in a case the applicability
of the conflicting decisions rendered by the
apex court has decisive impact in its
disposal."

The Full Bench after wholesome
treatment has held as under:

77.The legal position, which
therefore emerges on a discussion and
analysis of the principles stated in various
decisions of the Apex Court and other High
Courts including this Court, so as to act as
guidance
to
the
High
Courts
and
Subordinate Courts, when faced with a
conflicting
decisions,
are
summarised
below:-

(i) In case of conflicting views
taken in the decisions of two Benches of
equal strength of the Apex Court, the
decision later in point of time, will prevail
over the earlier one;

(ii) What is binding is the ratio
decidendi. A decision is only an authority
for what it actually decides.

(iii) A decision which is not
expressed and is not found on reasons nor
proceeds on consideration of issue cannot
be deemed to be a law declared to have a
binding effect as is contemplated by Art.
141 of the Constitution. Similarly, any
declaration made or conclusion arrived at
without application of mind or preceded
without a reason, cannot be a declaration
of law, or authority as a binding precedent;