# M/s Puja Quench Distributors Pvt. Ltd. & Ors v. State of U.P. & Ors

- **Citation:** (2020) 2 ILRA 908
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-05-01
- **Case number:** Crl. Misc. Writ Petition No. 9628 of 2019
- **Bench:** Manoj Misra, Suresh Kumar Gupta
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-puja-quench-distributors-pvt-ltd-ors-v-state-of-u-p-ors-45324
- **Pages:** 9

## Headnote

A. Criminal Law-Indian Penal Code,1860Sections
420,
407,468,471,406,120-BQuashing of FIR-settlement/compromise
of non-compoundable offence-Petitioner
Company obtained loan facility by setting
up an impostor with fabricated papers to
show execution of sale-deed with an
intent to defraud the finance companymagistrate
ordered
for
further
investigation-petitioners
as
borrowers
entered into settlement-defrauding a
public limited finance company by setting
up forged papers, is an act which has
potential to affect the society at largecriminal cases cannot be quashed on the
basis
of
settlement-Hence,
dismissed.(Para 1 to 26)

The quashment neither helps to secure the
ends of justice nor does it prevent the abuse of
the process of law. These offences are serious
and not private in nature.if the finance
company is defrauded, it may shake the
confidence of the shareholders, creditors and
public at large.(Para 24)

Crl. Misc. writ petition dismissed. (E-6)

List of Cases Cited:-

## Text

908 INDIAN LAW REPORTS ALLAHABAD SERIES
and is of no benefit to the revisionist
herein.

64.

No
illegality
much
less
procedural irregularity can be found in the
order passed by the Additional Sessions
Judge, Court No.1, Kushinagar, which
would warrant interference by this Court
in exercise of its revisional jurisdiction.

65. The revision is, thus, found
devoid of merits and hence dismissed.
----------
(2020)02ILR A908

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.05.2019

BEFORE
THE HON'BLE MANOJ MISRA, J.
THE HON'BLE SURESH KUMAR GUPTA, J.

Crl. Misc. Writ Petition No. 9628 of 2019

M/s Puja Quench Distributors Pvt. Ltd. &
Ors. ...Petitioners
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
Sri Bharat Kishore Srivastava, Sri Vimal
Dharm Yadav

Counsel for the Respondents:
A.G.A., Sri Abhishek Srivastava

A. Criminal Law-Indian Penal Code,1860Sections
420,
407,468,471,406,120-BQuashing of FIR-settlement/compromise
of non-compoundable offence-Petitioner
Company obtained loan facility by setting
up an impostor with fabricated papers to
show execution of sale-deed with an
intent to defraud the finance companymagistrate
ordered
for
further
investigation-petitioners
as
borrowers
entered into settlement-defrauding a
public limited finance company by setting
up forged papers, is an act which has
potential to affect the society at largecriminal cases cannot be quashed on the
basis
of
settlement-Hence,
dismissed.(Para 1 to 26)

The quashment neither helps to secure the
ends of justice nor does it prevent the abuse of
the process of law. These offences are serious
and not private in nature.if the finance
company is defrauded, it may shake the
confidence of the shareholders, creditors and
public at large.(Para 24)

Crl. Misc. writ petition dismissed. (E-6)

List of Cases Cited:-

1. Manoj Sharma Vs. State, (2008 )16 SCC 1

2. CBI,ACB,Mumbai Vs. Narendra Lal Jain &
Ors.,(2014) 5 SCC 364

3. Gian Singh Vs. St. Of Punjab & Anr, (2012)
10 SCC 303

4. St. Of Mah. Thru CBI Vs. Vikram Anantrai
Doshi & Ors,(2014)15 SCC 29

5. Gopakumar B. Nair Vs. CBI & Anr. ,(2014) 5
SCC 800

6. CBI Vs. Jagjit Singh ,(2013 )10 SCC 686

7. CBI Vs. Maninder Singh,(2016 )1 SCC 389

(Delivered by Hon'ble Manoj Misra, J. &
Hon'ble Suresh Kumar Gupta, J).)

1. We have heard the learned counsel
for the petitioners; Sri Deepak Mishra, the
learned A.G.A., for the respondents 1, 2
and 3; Sri Abhishek Srivastava for the
respondent no.4; and have perused the
record.

2. The instant petition seeks quashing
of the first information report (in short
FIR) dated 20.10.2015 which has been
lodged at P.S. Kavi Nagar, District-
2 All. M/s Puja Quench Distributors Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
909
Ghaziabad as Case Crime No. 1343 of
2015, under Sections 420, 407, 468, 471,
406 and 120-B I.P.C.

3. The impugned first information
report has been lodged by an authorized
representative
of
Edelweiss
Housing
Finance Ltd. (respondent no.4) against the
petitioners and one Smt. Geeta Devi (nonpetitioner).

4. The allegations in the first
information report are: that Edelweiss
Housing Finance Ltd. (for short informant
company) is a registered company doing
business in financing, housing loans, etc.;
that
in
the
month
of
December
2012/January
2013,
the
accused-
petitioners, some of whom are directors in
M/s Pooja Quench Distributors India Pvt.
Ltd (petitioner no.1), applied to the
informant company for a housing loan to
purchase a property i.e. House No. KF 41,
Kavi Nagar, Ghaziabad by creation of
mortgage thereon; that in connection
therewith,
property
papers
of
the
aforementioned property, which was stated
to be owned by Geeta Devi (co-accused -
non-petitioner),
were
shown
to
the
informant company to indicate that the
said property was allotted and leased to
Devendra
Kumar
Jain
(allottee)
by
Improvement Trust (currently Ghaziabad
Development Authority), vide lease deed
dated 02.02.1977, which was assigned to
Smt. Geeta Devi, vide instrument dated
19.07.1978, following which, Geeta Devi
obtained freehold rights from Ghaziabad
Development Authority vide instrument
dated 22.03.2005; that by disclosing that
the said property has been purchased by
the petitioners from Geeta Devi, vide saledeed dated 08.03.2013, and by depositing
papers thereof, loan of Rs. 3 crores, to
finance the purchase, was obtained from
the
informant
company, which was
disbursed by the informant company by
issuing bank draft of Rs. 3 crores in favour
of Geeta Devi; that after paying few
installments, in between April 2013 and
October 2013, the accused-petitioners
defaulted in payment of the installments;
that, consequently, the informant company
tried to contact the borrowers and when it
failed in its efforts, an officer of the
informant company was deputed for
enquiry / inspection, whereupon, it was
found that the property wore locks of IDBI
Bank; that, when a detailed enquiry was
made, it was found that the said property
had been purchased by a person named
Rajesh Singh, who had borrowed loan
from IDBI Bank against mortgage of the
property and, as he had defaulted in
repayment of the loan, the IDBI Bank had
taken possession thereof; that upon further
enquiry, it was found that the purchaser
company (M/s. Puja Quench Distributors
Pvt. Ltd - petitioner no.1) through its
Director (Sunder Singh-petitioner no.2)
and other co-purchasers, namely, Smt.
Kamlesh Singh (petitioner no.3) and
Rajendra Kumar (petitioner no.4) for the
purpose of obtaining loan facility had set
up an impostor of Geeta Devi as also
fabricated papers to show execution of
sale-deed in their favour. Thus, in pith and
substance, the allegations in the impugned
first information report are that by setting
up forged and fabricated documents, loan
was obtained from a finance company with
an intent to defraud the finance company.

5. The petitioners have not disputed
that the sale-deed, which was deposited
with the informant, was a forged and
fabricated document and that it was
executed by an impostor of Geeta Devi.
Rather, the case of the petitioners is that
they are innocent and they had no reason
910 INDIAN LAW REPORTS ALLAHABAD SERIES
to suspect that their vendor is an impostor
of Geeta Devi. In that regard, it would be
apposite to reproduce paragraphs 13, 14
and 15 of the writ petition, which are
extracted below:-

"13.
That
petitioner
was
accosted by the accused, father-in-law
Bhan Singh Nagar, brother-in-law Ved
Prakash Nagar and Manoj Nagar all
residents
of
KI
140
Kavi
Nagar,
Ghaziabad, who are all related as in-laws
to his younger brother Rajkumar with the
proposal for the sale of house and
property located at KF 41 Kavi Nagar,
Ghaziabad.

14. That the aforementioned
accused presented one imposter a lady
Smt. Geeta Devi as the owner of the
property at KF 41 Kavi Nagar, Ghaziabad
which she wanted to sell and further
claimed that they had advanced some
amount to this lady aforementioned.

15. That the petitioners had no
reason to suspect all that was falsely
projected before him as the accused were
closely related to his younger brother."

6. However, the petition has not been
pressed on that ground. This petition has
been pressed by claiming that the police
after registration of the first information
report had investigated the matter and had
submitted a final report on 09.11.2015;
that to the final report, a protest petition
was filed by the informant, upon which a
direction was issued by the concerned
Magistrate for further investigation; that
pursuant
to
the
order
for
further
investigation, the matter was investigated
and the police, yet again, submitted a final
report on 30.11.2017; that on the said final
report, again, by order dated 18.09.2018,
the Court of A.C.J.M.-VIth, Ghaziabad,
upon protest by the informant, rejected the
final report and remanded the matter for
further investigation; that, in between, on
16.11.2018, the petitioners, as borrowers,
have entered into a settlement/compromise
with the informant (creditor) and, by now,
abiding the terms of the settlement,
borrowers have paid off the dues therefore,
as the informant company is not interested
in
pursuing
the
matter,
the
first
information report should be quashed.

7. From the averments made in
paragraph 9 of the petition, it appears that
pursuant to the order of the concerned
Magistrate, dated 18.09.2018, directing
further investigation, the investigation is in
progress. Interestingly, neither the order
directing further investigation has been
brought on record nor it has been
challenged in this petition. It has also not
been urged before us that the said order
has been challenged in any proceeding and
that it has been stayed or set aside.

8. On 18.04.2019, Sri Abhishek
Srivastava, who had appeared for the
respondent no.4, had stated before the
Court that he would have no objection if
the impugned first information report is
quashed. But he, however, sought time to
file an affidavit.

9. Pursuant to the order dated
18.04.2019, Sri Abhishek Srivastava,
Advocate, has filed an affidavit of Sri
Ragvendra
Singh,
Law
Officer
/
Authorised representative of the informant
company, stating that, as per the terms and
conditions of settlement entered by the
parties, Rs. 1.5 crores has been received,
as per schedule, towards full satisfaction
of the informant company. In paragraph 7
of that affidavit, it is stated that since the
parties have not only arrived at a
settlement but also complied with the
2 All. M/s Puja Quench Distributors Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
911
terms and conditions of the settlement
dated 16.11.2018, the informant company
does not want to prosecute the petitioners
any further.

10. The learned counsel for the
petitioners,
by
placing
reliance
on
decisions of the Apex Court in Manoj
Sharma v. State : 2008 (16) SCC 1;
Central Bureau of Investigation, ACB,
Mumbai v. Narendra Lal Jain and others
: (2014) 5 SCC 364; and Gian Singh v.
State of Punjab and another : (2012) 10
SCC 303, has submitted that in view of
compromise between the parties, the first
information report for offences punishable
under Sections 420, 468, 471, 34 and 120B I.P.C. can and ought to be quashed even
though the offences might be noncompoundable.

11. Learned A.G.A. has submitted
that cases of economic offences or bank
fraud or fraud relating to financial
institutions stand on a different footing as
they have an impact on the society at large
and therefore neither the FIR nor the
proceedings in pursuance thereof can be
quashed on the basis of compromise
between immediately affected parties. In
such matters the proceeding would have to
be brought to its logical conclusion as per
law. He has further submitted that, in the
instant case, the petitioners have not
disputed the position that the sale-deed
was obtained from an impostor of the
owner and the same was used for creating
a mortgage to obtain loan from a public
limited company. It was urged that though
it may be true that the informant company
might have entered into a settlement with
the borrower but who set up the impostor;
who was behind the fraud; as to why funds
were released without proper verification
of
the
documents;
whether
original
documents were at all there, if so, whether
they were checked, are all issues which
concern the society at large, inasmuch as
the informant is a public limited company,
where members of public must have
subscribed to its capital, and there may be
lenders lending there money to it. He
submitted that such financial frauds have a
cascading effect on the economy of the
nation and destroys faith in the financial
system. He has thus submitted that this is
not a case where the first information
report or the consequential investigation
should be quashed on the basis of
compromise between immediately affected
parties. In support of his submission, the
learned A.G.A. has placed reliance on
decisions of the Apex Court in State of
Maharastra through CBI v. Vikram
Anantrai Doshi and others : (2014) 15
SCC 29; and in Gopakumar B. Nair v.
Central Bureau of Investigation and
another : (2014) 5 SCC 800. He has thus
prayed that the petition be dismissed and
the investigation be allowed to come to its
logical conclusion.

12. We have considered the rival
submissions and have perused the record
carefully.

13. A perusal of the record including
the pleading of the writ petitioners would
reflect that even the petitioners do not
dispute that the sale-deed which was
submitted for obtaining loan was a false
document and was executed by an
impostor. Though it has not been brought
to our notice as to why, earlier, final report
was submitted as also why further
investigation
was
directed
by
the
concerned Magistrate but, what is clear is
that, the order of further investigation is
operating. The only question therefore that
remains for us to examine, is whether on
912 INDIAN LAW REPORTS ALLAHABAD SERIES
the basis of a private settlement between
borrower
and
the
creditor,
the
investigation on the first information
report, which discloses commission of
non-compoundable offences, relating to
forgery
and
setting
up
of
forged
documents to obtain loan from a public
limited finance company, can be quashed.

14. The issue as to when a noncompoundable offence can be quashed on
the basis of a compromise had been an
issue engaging attention of the courts time
and again. A three Judge Bench of the
Apex Court in Gian Singh's case (supra)
had laid down law in that regard, as found
in paragraph 61 of the report, which is
extracted below:-

"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 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 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 the ends
of justice, it is appropriate that criminal
case is put to an end and if the answer to
2 All. M/s Puja Quench Distributors Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
913
the above question(s) is in affirmative, the
High Court shall be well within its
jurisdiction
to
quash
the
criminal
proceeding."

15. From above extract, it is clear
that before exercising extraordinary power
to quash the FIR or the proceeding,
relating to a non-compoundable offence,
on the basis of a compromise, the High
Court must have due regard to the nature
and gravity of the crime so as to ascertain
whether it has serious impact on society.

16. In cases relating to financial
fraud, particularly, where forged papers
are set up for obtaining loan facility; and
those relating to prevention of corruption
matters, the apex court had been consistent
in its view that such matters affect the
society at large. In this regard, it would be
worthwhile to notice the decision of the
apex court in State of Maharastra
through CBI v. Vikram Anantrai Doshi
and others (supra) where it has been
observed as follows:-

"26.
We
are
in
respectful
agreement with the aforesaid view. Be it
stated, that availing of money from a
nationalized bank in the manner, as
alleged by the investigating agency, vividly
exposits fiscal impurity and, in a way,
financial fraud. The modus operandi as
narrated in the chargesheet cannot be put
in the compartment of an individual or
personal wrong. It is a social wrong and it
has immense societal impact. It is an
accepted principle of handling of finance
that whenever there is manipulation and
cleverly conceived contrivance to avail of
these kind of benefits it cannot be
regarded as a case having overwhelmingly
and predominantingly of civil character.
The ultimate victim is the collective. It
creates a hazard in the financial interest of
the society. The gravity of the offence
creates a dent in the economic spine of the
nation. The cleverness which has been
skillfully contrived, if the allegations are
true, has a serious consequence. A crime
of this nature, in our view, would definitely
fall in the category of offences which
travel far ahead of personal or private
wrong. It has the potentiality to usher in
economic crisis. Its implications have its
own seriousness, for it creates a concavity
in the solemnity that is expected in
financial transactions. It is not such a case
where one can pay the amount and obtain
a "no due certificate" and enjoy the benefit
of quashing of the criminal proceeding on
the hypostasis that nothing more remains
to be done. The collective interest of which
the Court is the guardian cannot be a
silent or a mute spectator to allow the
proceedings to be withdrawn, or for that
matter yield to the ingenuous dexterity of
the accused persons to invoke the
jurisdiction under Article 226 of the
Constitution or under Section 482 of the
Code and quash the proceeding. It is not
legally permissible. The Court is expected
to be on guard to these kinds of adroit
moves. The High Court, we humbly
remind, should have dealt with the matter
keeping in mind that in these kind of
litigations the accused when perceives a
tiny gleam of success, readily invokes the
inherent jurisdiction for quashing of the
criminal proceeding. The court's principal
duty, at that juncture, should be to scan
the entire facts to find out the thrust of
allegations and the crux of the settlement.
It is the experience of the Judge comes to
his aid and the said experience should be
used with care, caution, circumspection
and courageous prudence. As we find in
the case at hand the learned Single Judge
has not taken pains to scrutinize the entire
914 INDIAN LAW REPORTS ALLAHABAD SERIES
conspectus of facts in proper perspective
and quashed the criminal proceeding. The
said quashment neither helps to secure the
ends of justice nor does it prevent the
abuse of the process of the Court nor can
it be also said that as there is a settlement
no evidence will come on record and there
will be remote chance of conviction. Such
a finding in our view would be difficult to
record. Be that as it may, the fact remains
that the social interest would be on peril
and the prosecuting agency, in these
circumstances, cannot be treated as an
alien to the whole case. Ergo, we have no
other option but to hold that the order of
the High Court is wholly indefensible."

17. Likewise, in Gopakumar B.
Nair's case (supra), by taking a similar
view, a three Judges Bench of the Apex
Court
had
refused
to
quash
the
proceedings against a borrower on account
of alleged settlement with the Bank upon
finding that the accused had also been
charged for commission of substantive
offence under Section 471 IPC. In that
regard, it would be useful to reproduce
paragraph 14 of the judgment, as reported,
which is extracted below:-

"The aforesaid principle of law
may now be applied to the facts of the
present case. At the very outset a detailed
narration of the charges against the
accused-appellant has been made. The
appellant has been charged with the
offence of criminal conspiracy to commit
the offence under Section 13(1)(d). He is
also substantively charged under Section
420 (compoundable with the leave of the
Court)
and
Section
471
(non-
compoundable). A careful consideration of
the facts of the case would indicate that
unlike in Nikhil Merchant (supra) no
conclusion can be reached that the
substratum of the charges against the
accused-appellant in the present case is
one of cheating nor are the facts similar to
those in Narendra Lal Jain (supra) where
the accused was charged under Section
120-B read with Section 420 IPC only. The
offences are certainly more serious; they
are not private in nature. The charge of
conspiracy is to commit offences under the
Prevention of Corruption Act. The accused
has also been charged for commission of
the substantive offence under Section 471
IPC. Though the amounts due have been
paid the same is under a private settlement
between the parties unlike in Nikhil
Merchant (supra) and Narendra Lal Jain
(supra) where the compromise was a part
of the decree of the Court. There is no
acknowledgement on the part of the bank
of the exoneration of the criminal liability
of the accused-appellant unlike the terms
of compromise decree in the aforesaid two
cases. In the totality of the facts stated
above, if the High Court has taken the
view that the exclusion spelt out in Gian
Singh (supra) (para 61) applies to the
present case and on that basis had come to
the conclusion that the power under
Section 482 CrPC should not be exercised
to quash the criminal case against the
accused, we cannot find any justification
to interfere with the said decision."

18.

In
Central
Bureau
of
Investigation v. Jagjit Singh : (2013) 10
SCC 686, a first information report was
registered against Director of Company
and Officers of Indian Overseas Bank on
allegations that the accused obtained loan
for his company against security on
forged/ fabricated documents and Indian
Overseas Bank including its officers and
managers helped him in obtaining such
loan. Later, the borrower settled the
dispute with Indian Overseas Bank and
2 All. M/s Puja Quench Distributors Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
915
paid the amount, pursuant to the order
passed by Debt Recovery Tribunal,
Calcutta. By giving reference of the order
of the Debt Recovery Tribunal, the
accused moved an application under
Section 482 Cr.P.C. before the High Court
for quashing the criminal proceedings on
the ground that in view of the alleged
amicable settlement between the parties,
the proceedings were liable to be quashed.
The High Court quashed the proceedings
against which the Central Bureau of
Investigation filed an appeal before the
Apex Court. Allowing the appeal and
setting aside the order passed by the High
Court, the Apex Court observed that the
offences when committed in relation with
Banking activities, including offences
under Section 420/471 IPC, have harmful
effect on the public and threaten the well
being of the society. It was observed that
one may say that the bank is the victim in
such cases but, in fact, the society in
general, including customers of the Bank
is the sufferer.

19. Similarly, in Central Bureau of
Investigation v. Maninder Singh : (2016)
1 SCC 389, the Apex Court, in paragraph
16, had observed as follows:-

"16. The allegation against the
respondent is ''forgery' for the purpose of
cheating and use of forged documents as
genuine in order to embezzle the public
money. After facing such serious charges
of forgery, the respondent wants the
proceedings to be quashed on account of
settlement with the bank. The development
in means of communication, science &
technology etc. have led to an enormous
increase in economic crimes viz. phishing,
ATM
frauds
etc.
which
are
being
committed by intelligent but devious
individuals involving huge sums of public
or government money. These are actually
public wrongs or crimes committed
against society and the gravity and
magnitude attached to these offences is
concentrated at public at large."

20. At this stage, it may be noticed
that in the decision of Central Bureau of
Investigation, ACB, Mumbai v. Narendra
Lal Jain (supra), on which reliance has
been placed by the petitioner, the Apex
Court had approved quashing of the
proceeding by the High Court on the basis
of settlement as there was no allegation of
using a forged document for the purpose
of obtaining loan. The decision in
Narendra Lal Jain's case (supra) was
considered
and
distinguished
in
Gopakumar B. Nair's case (supra) by
observing that in Narendra Lal Jain's
case (supra), the accused was charged for
offences punishable under Section 120-B
read with Section 420 I.P.C. only and there
was no charge of an offence punishable
under Section 471 I.P.C.

21. The question therefore that now
arises for our consideration is whether the
facts giving rise to the impugned FIR
reflects
a
private
dispute
between
borrower and the creditor or it has larger
ramification that affects the society at
large. If we hold that such transaction
would have affect on the society then, on
the basis of private settlement between
borrower and creditor, the first information
report can not be quashed.

22. To answer the above question,
we would have to analyze the thrust of the
allegations made in the impugned first
information report. The thrust of the
allegations is that the borrowers had set up
a false document for the purpose of taking
loan from a public limited housing finance
916 INDIAN LAW REPORTS ALLAHABAD SERIES
company and, after payment of few
installments, they committed default and,
when it was inquired, it was found that the
property belonging to someone else was
mortgaged by setting up a false document. The
first information report was lodged in the year
2015 whereas the settlement between the
parties came in the year 2018 much after the
order of the Magistrate directing further
investigation in the matter.

23. Whether the aforesaid transaction has
potential to have an impact on the society at
large would have to be examined with
reference to the manner in which a finance
company functions.

24. The business of a public limited
finance company, as is the case here, is
ordinarily run by borrowing funds from open
market and by subscription of its shares by
members of the public. In a public limited
company, the shareholders and the creditors
put their money to run its business. Finance
companies may also generate finances by
taking deposits from members of public.
Therefore if a finance company is defrauded,
the impact of its financial morass would be on
the public at large and such impact may shake
the confidence of the public in the financial
system.

25. In view of the above, keeping in
mind the law laid down by the Apex Court
noticed above, we are of the considered view
that an act of defrauding a public limited
finance company by setting up forged papers,
is an act which has potential to affect the
society at large and, therefore, a criminal case
based on such a transaction cannot be quashed
on the basis of settlement or compromise.

26. A fortiorari, the prayer of the
petitioners to quash the first information report
and the consequential investigation, cannot be
accepted. The petition is dismissed. It is made
clear that we have not expressed any opinion
on the merits of the allegations made in the
impugned FIR.
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(2020)02ILR A916

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.01.2020

BEFORE
THE HON'BLE ANIL KUMAR-IX, J.

Crl. Misc. Writ Petition No. 25689 of 2019

Parvindra ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Vinai Shanker Singh

Counsel for the Respondents:
A.G.A.

A. Criminal Law-Uttar Pradesh Control of
Goondas Act, 1970-Section 3-challenge
to-externment of the petitioner for a
period of six months passed by ADM and
Commissioner-for declaring a person as
"Goonda" as defined u/s 2(b) of the Act,
there must be repeated/ persistent overt
acts not isolated and individual act-a
single or two acts of accused will not be
sufficient to hold that he is habitually
involved
in
the
commission
of
the
offences referred in the Act-In the
present case, show cause notice was
issued on the basis of his involvement in
only one case-thus, petitioner does not
fall within the ambit of 'Goonda' as
defined u/s 2(b) of the Act-Hence,
allowed.(Para 7 to 20)

Crl. Misc. writ petition allowed. (E-6)

List of Cases Cited:-

1. Shankar Ji Shukla Vs. Ayukt Allahabad
Mandal, Allahabad