Holding

It is not a legitimate exercise of judicial power to direct compounding of non‑compoundable offences, and the High Court’s quashing order was not set aside.

Summary

The Central Bureau of Investigation filed an appeal against the Punjab and Haryana High Court’s order quashing FIR No. SIA‑2001‑E‑0006, which alleged cheating, forgery and conspiracy (IPC sections 420, 471, 120B) against Sadhu Ram Singla and others. The FIR arose from alleged fraudulent stock statements that enabled a company to obtain excessive bank credit, leading to a loss of about Rs. 28.49 crore to State Bank of Patiala. While the criminal proceedings were pending, the bank and the company reached a one‑time settlement, and the company sought compounding of the offences under CrPC section 320(2), which the trial court rejected as the offences were non‑compoundable. The High Court, invoking its inherent power under CrPC section 482, quashed the FIR on the basis of the settlement. The Supreme Court, emphasizing the doctrine of judicial restraint and the constitutional principle of separation of powers, held that directing compounding of non‑compoundable offences is not a legitimate exercise of judicial power, but nonetheless dismissed the CBI’s appeal, leaving the High Court’s order undisturbed. The Court kept the legal question open for future consideration.

Issues considered

Whether a High Court can quash FIR and criminal proceedings for non‑compoundable offences on the basis of a settlement between the complainant and the accused under CrPC section 482.
Whether directing compounding of non‑compoundable offences violates the rule of law and the basic structure doctrine.

Legislation cited

Code of Criminal Procedure, 1973s. 320, s. 482
Indian Penal Code, 1860s. 120B, s. 420, s. 467, s. 468, s. 471

Subjects

non‑compoundable offenceSection 320 CrPCSection 482 CrPCjudicial restraintrule of lawbasic structure doctrinesettlementcompoundingCBI

Judgment

(2017] 1 S.C.R. 907

CENTRAL BUREAU OF INVESTIGATION A
v.
SADHU RAM SINGLA & ORS.
(Criminal Appeal No. 396of2017)
FEBRUARY 23, 2017 B

[PINAKI CHANDRA GHOSE AND AMITAVA ROY, JJ.)
Code of Criminal Procedure, 1973 - ss. 320, 482 -
Compounding of non-compou11dable offence - FIR and the
consequential proceedings alleging non-compoundable offences-
cheating and forgery - Quashing of, by the High Court in exercise
c
of its jurisdiction uls. 482 011 the basis of the settlement arrived at
between the complainant and the accused - Held: Encroaching into
the right of the other organ of the government would tantamoullf
clear violation of the rule of law which is one of the basic structure
of the Constitution - Judicial restraint to be observed while quashing D
criminal cases alleging non-compoundable offences on the basis
of the settlement arrived between the parties.
Dismissin~ the appeal, the Court

HELD: .1.1 Encroaching into the right of the other organ
of the government would tantamount clear violation of the rule of E
law which is one of the basic structure of the Constitution oflndia.
[J?ara 1:11 1913-E]
1.2 Having carefully considered the singular facts and
circumstances of the instant case, and also the law relating to the
continuance of criminal cases where the complainant and the F
accused had settled their differences and had arrived at an
amicable arrangement, there is no reason to differ with the view
taken in *Manoj S/wrm<1's case and several decisions of this Court
delivered thereafter with respect to the doctrine of judicial
restraint that it would ordinarily not be a legitimate exercise of
G
judicial power to direct compounding of a non-compoundable
offence. Depending on the attendant facts, continuance of the
criminal proceedings, after a compromise has been arrived at
between the complainant and the accused, would amount to abuse
of process of Court and an exercise in futility since the trial would
H
907
908 SUPREME COURT REPORTS [2017] I S.C.R.

A be prolonged and ultimately, it may end in a decision which may
be of no consequence to any of the parties. It would be proper to
keep the said point of law open. [Para 15, 16] (913-G-H, 914-A-
C]
*Mano} Sharma v. State & Ors. (2008) 16 SCC 1 :
B
(2008] 14 SCR 539 - relied on.
Ku/winder Singh & Ors. v. State of Punjab Anr. 2007
(4) CTC 769; Mrs. Shaku111a/a Sawhney v. Mrs.
Kaushalya Sawhney & Ors. (1980) I SCC 63; State
of Tamil Nadu v. R. Vasanthi Stanley & Anr. (2016) I
SCC 376 : [2015] 9 SCR 772; Central Bureau of
c !11vestigatio11 v. A. Ravishankar Prasad & Ors. (2009)
6 SCC 351; Central Bureau of Investigation v.
Maninder Singh (2016) 1 SCC 389 : (2015] 10 SCR
277; Gian Singh v. State of Punjab & Anr. (2012) 10
SCC 303 : (2012] 8 SCR 753 - referred to.
D Case Law Reference
2007 (4) CTC 769 referred to Para6
(1980) 1 sec 63 referred to Para8
J2015J 9 SCR 772 referred to Para 10
E r2oo~i 6 sec 351 referred to Para 11
[2015] 10 SCR 277 referred to Para 12
j2012J 8 SCR 753 referred to Para 13
[2008] 14 SCR 539 referred to Para 15
F CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 396 of2017.
From the Judgment and Order dated 02.06.2011 ofthe High Court
of Punjab and Haryana at Chandigarh in Cr!. Misc. No. M-2829 of
2011.
G
Ms. Pinky Anand, ASG., Raj iv Nanda, B. V. Balramdas, Rajesh
Ranjan, Ms. Kritika Sachdeva, M. K. Maroria, Arvind Kumar Sharma,
Advs. for the Appellant.
Bishwajit Bhattacharya, Sr. Adv., Daya Krishan Sharma, Rohit
Vats, Ms. Monika Sharma, Advs. for the Respondent.
H
CBI. v. SADHU RAM SINGLA & ORS. 909

The Judgment of the Cou1t was delivered by A
PINAKI CHANDRA GHOSE, J. I. Leave granted.
2. This appeal, by special leave, has been filed assailing the
judgment and order dated 2"' June, 2011 passed by the High Court of
Punjab and Haryana at Chandigarh in Criminal Miscellaneous No.M-
2829 of 2011, whereby the High Court while relying upon another B
judgment of the same High Cornt and on the basis of settlement of
dispute, quashed the criminal proceedings against the respondents, being
FIR No.SIA-2001-E-0006 dated 28.12.2001 under Sections 420 and 471
oflndian Penal Cpde [in short '!PC'], registered at Police Station, SIU(X)/
SPE/CBI, New Delhi and the criminal proceedings pending in the Court c
of learned Special Judicial Magistrate, CBI, Punjab, Patiala.
3. Brief facts of the case are as follows: Mis. Rom Industries
Ltd., Mansa Road, Bhatinda (Punjab), which is respondentNo.3 herein,
(hereinafter referred to as the "respondent-company") was dealing with
State Bank of Patiala, Bhatinda (City) Branch (for short "the Bank") D
since 1976 and was availing the credit limits from a consortium of banks
with the Bank as leader and enjoyed total fund based credit limits from
the banking system to an extent of Rs.31,500.00 lacs in March, 1996.
However, in the year 1996, due to destruction of stocks consisting of
Deolided Cakes lying at Bedi Port, Jamnagar in a cyclone storm that hit
Bedi Port, Jamnagar on 19/20 June, 1996, it claimed to have suffered E
heavy loss to the extent of Rs.38.08 crores. The destruction of stocks
could not be corroborated by any evidence. The respondent-company
had been granted credit facilities against hypothecation of stocks which
included stocks lying at the port. But allegedly after Bank verification of
the stocks, it was found that the respondent-company had fraudulently F
obtained higher credit limits on the basis of stock statements which
appeared forged and false. ·The respondent-company approached the
Bank for grant of adhoc export packing credit limit of Rs. I 0 crores in
February 1995, which was sanctioned on 09.03.1995.
4. Law was set into motion when FIR No.SIA-2001-E-0006 dated
G
28.12.200 I was registered at Police Station, SIU(X)/SPE/CBI, New
Delhi, by Shri K. Balachandran, Chief Vigilance Officer of the State
Bank of Patiala under Section 120-B read with Sections 420, 467, 468
and 471 of !PC, against the Board of Directors including respondent
Nos. I & 2. Charge-sheet was filed before the learned Special Judicial,
Magistrate, CBI, Patiala, Punjab, against the respondents under Section H
910 SUPREME COURT REPORTS [2017] I S.C.R.

A 420/471 read with Section 120(B) oflPC, for having entered into criminal
conspiracy between 1995 to 1996 and causing loss to State Bank of
Patiala to the extent ofRs.28.49/- crores through false stock statements,
forged bank guarantee and dishonest misuse of funds generated.
5. During the pendency of the proceedings before the Court of
B learned Special Judicial Magistrate, CBI, Patiala, Punjab, a compromise
was arrived at between the Bank and the respondent-company under a
One Time Settlement scheme of the Bank, through which sums ofRs.6
crores and Rs.1.25 crores were deposited by the respondents and
acknowledged by the Bank vide letter dated 11.11.2009. Thereafterthe
Bank released the securities and guarantees of the respondents, withdrew
c the recovery proceeding pending in the ORT and stated vide the aforesaid
letter dated 11.11.2009 that nothing was due from the respondents to the
Bank. An application filed by respondent No.1 for compounding of
offences under Section 320(2) of!PC, was dismissed by the Trial Court
on the ground that Section 471 read with 468 of !PC is a non-
D compoundable offence.
6. Thereafter, the respondents approached the High Court,
invoking its power under Section 482 of the Criminal Procedure Code,
1973 (in short 'Cr.P.C.) for quashing FIR No.SIA-2001-E-0006 dated
28. 12.200 I and also the resultant proceedings pending before the Court
of learned Special Judicial Magistrate, CBI, Patiala, Punjab, on the basis
E of aforesaid settlement. The High Com1 by its judgment dated 2"' June,
2011, relied on its Full Bench judgment in the case of Kulwintler Si11gft
& Ors. Vs. State ofP1111jabA11r., 2007 (4) CTC 769, and on the basis of
settlement of dispute, quashed the criminal proceedings against the
respondents.
F 7. The question which arises before us is no longer res integra
i.e. whether FIR and the consequential proceedings alleging non-
compoundable offences could be quashed by the High Court in exercise
of its jurisdiction under Section 482 of Cr.P.C. on the basis of the
settlement arrived at between the complainant and the respondents-
G accused. Since the question before us revolves around clause 9 of Section
320 of Cr.P.C.. the same is reproduced herein as follows:
"320. Compowu/i11~ (}{ o{fe11ces.-
(l) xn xxx xxx
(9) No offence shall be compounded except as provided by
H this section. ··
CBI. v. SADHU RAM SJNGLA & ORS. 911
[PINAKI CHANDRA GHOSE, J.)

8. We have heard learned Additional Solicitor General appearing A
for the CBI and learned senior counsel appearing for the respondents at
length and carefully examined the materials placed on record. We have
also taken notice of the fact that the counsel for the appellant in High
Court had sought time for filing the reply but no reply was filed. We
have also taken notice of the fact that the High Couti while quashing the
B
said FIR and consequential proceedings, has relied on the Full Bench
judgment of that High Court in the case of Ku/winder Sint:ft & Ors V.5.
Stale ofPunjab &Am:, 2007 (4) CTC 769, in which reliance was placed
on the judgment delivered by this Court in the case of Mrs. S/wkunlala
Sawlmey Vs. Mrs. Kauslwlya Sawlmey & Ors., (1980) I SCC 63.
9. Learned Additional Solicitor General appearing for the CBI
c
has drawn our attention to the decision of this Court in Mwwj S/wrnw
Vs. Stale & Ors., (2008) 16 SCC I, wherein it was observed by this
Court:
"22. Since Section 320 CrPC has clearly slated which
offences are compoundable and which are not, the Higft D
Court or even this Court would not ordinarily be justified in
doing something indirect(y which could not be done directly.
Even otherwise. it ordinarily would not be a legitimate
exercise of judicial power under Article 226 of the
Constitution or under Section 482 CrPC to direct doing E
something which CrPC has expressly prqhibited. Section
320(9) CrPC expressly states that no offence shall be
compounded except as provided by that Section. Hence, in
my opinion, it would ordinarily not be a legitimate exercise
of judicial power to direct compounding of a non-
compoundable offence. " F

10. We further wish to supply emphasis on the judgment delivered
by this Couti in the case of State of Tamil Nadu Vs. R. Vaswllhi Stanley
& Anr.. (2016) 1 SCC 3 76, wherein it was observed:
"15. As far as the loaC: un the criminal justice dispensation G
system is concerned it has an insegregable nexus with speedy
trial. A grave criminal offence or serious economic offence
or for that matter the offence that has the potentiality to
create a de/11 in the financial health of the institutions, is not
to be quashed on the ground that there is delay in trial or
H
912 SUPREME COURT REPORTS [201 7] 1 S.C.R.

A the principle that when the maller has been sellled it should
be quashed to avoid the load on the ~ystem. That can never
be an acc.eptable principle or para111ete1~ for that would
amount to destroying the stem cells of law and order in many
a realm and further strengthen the marrows of the
unscrupulous litigations. Such a situation should never be
B
conceived of"
11. Further reliance was placed on the decision of this Court in
the case of Central Bureau of Investi1.:atio11 Vs. A. Ravislumkar
Prasad & Ors., (2009) 6 SCC 351, wherein it was held:
c "39. Carefit! analysis of all these judgments clearly reveals
that the exercise of inherent powers would entirely depend
on the facts and circumstances of each case. The object of
incorporating inherent powers in the Code is to prevent
abuse of the process of the court or to secure ends ofjustice."

D 12. Lastly, reliance was placed upon another judgment of this
Court in Central Bureau ofJ11vestif(lltio11 Vs. Mll11i11der Si11f(h, (2016)
1 SCC 389, wherein it was held by this Court:
"19. ln this case, the High Court while exercising its inherent
power ignored all the facts viz. the impact of the offence,
E the use of the Stale machinery to keep the matter pending
for so many years coupled with the fraudulent conduct of
the respondent. Considering the facts and circumstances of
the case at hand in /he light of/he decision in Vikram Anantrai
Doshi case, (2014) 15 SCC 29, lhe order of the High Court
cannot be sustained. "
F
13. Resisting the aforesaid submissions it was canvassed by Mr.
Bishwajit Bhattacharya, learned senior counsel appearing for the
respondents that High Court has judiciously and rightly considered the
facts and circumstances of the present case. Relying upon the judgment
of this Court in Gian Singh Vs. Stllte ofPu11jllb & Anr., (2012) 10 SCC
G 303, learned senior counsel appearing for the respondents strenuously
urged that the offences in the present case are not heinous offences. He
further drew our attention towards the relevant part of Full Bench
judgment of the High Court in Ku/winder Singh & Ors. Vs. Stllte of
Punjllb &Anr. (supra), which was reproduced in the impugned judgment
and the same is reproduced hereunder:
H
CBI. v. SADHU RAM SINGLA & ORS. 913
[PINAKI CHANDRA GHOSE, J.]

"26. In Airs. Shakuntala Sawhney v. Mrs. Kaushalya A
Sawhney & Ors.,(1980) 1 SCC 63, Hon 'ble Krishna Iyer. J.
aptly summed up the essence of compromise in the following
words:-
The finest hour ofjustice arrives propitiously when parties,
despite falling apart, bury the hatchet and weave a sense of B
fellowship or reunion.
27. The power to do complete justice is the very essence of
every judicial justice dispensation system. it cannot be diluted
by distorted perceptions and is not a slave to anything; except
to the caution and circumspection, the standards of which c
·the Court sets before it, in exercise of such plenary and
unfettered power inherently vested in it while donning the
cloak of compassion to achieve the ends of justice. No
embargo, be in the shape of Section 320(9) of the Cr.P.C. or
any other such curtailme/I/, can whit/le down the power under
Section 482 of the Cr.P.C." D

14. Since the present case pertains to the crucial doctrine of
judicial restraint, we are of th~ considered opinion that encroaching into
the right of the other organ of the government would tantamount clear
violation of the rule of law which is one of the basic structure of the
Constitution of India. We wish to supply emphasis on para 21 of the E
Manoj Slwrma's case (supra) which is as follows: I
,, would have agreed with Mr. B.B. Singh.
"21. Ordinarily, we
The doctrine ofjudicial restraint which has been emphasised I
repeatedly by this Court e.g. in Aravali Golf Club v. Chander
Hass (2008) 1 SCC 683 and Govt. of A.P. v. P. Laxmi Devi F
(2008) 4 SCC 720, restricts the power of the Court and does
not permit the Court to ordinarily encroach illlo the legislative I
or executive domain. As observed by this Court in the above I'I
decisions, there is a broad separation of powers in the
Constitution and it wo;;IC: not be proper for one organ of the G
I
I
State to encroach illlo the domain of another organ. " ,i
i
.I
15. Having carefully considered the singular facts and ·I
circumstances of the present case, and also the law relating to the !, '
continuance of criminal cases where the complainant and the accused :·'l'
had settled their differences and had arrived at an amicable arrangement,
H l"
',ii
I'

I
I
;I: r
914 SUPREME COURT REPORTS [2017] I S.C.R.

A we see no reason to differ with the view taken in Ma110} Sfmrma's
case (supra) and several decisions of this Court delivered thereafter
with respect to the doctrine ofjudicial restraint. In concluding hereinabove,
we are not unmindful of the view recorded in the decisions cited at the
Bar that depending on the attendant facts, continuance of the criminal
proceedings, after a compromise has been arrived at between the
B
complainant and the accused, would amount to abuse of process of Court
and an exercise in futility since the trial would be prolonged and ultimately,
it may end in a decision which may be of no consequence to any of the
parties.
16. In view of the discussion we made in the preceding
c paragraphs, in our opinion, it would be proper to keep the said point of
law open. However, in the given facts, we dismiss this appeal.

Nidhi Jain Appea1 dismissed.

.•