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India: Supreme Court Rules Repayment of Debts Does Not Wipe Out Offenses

(May 28, 2009) A. Ravishankar Prasad and A. Manohar Prasad committed the serious offenses of forgery, fabrication of documents, and declaration of such documents to be genuine in order to obtain money (about $31.4 million) from a bank in Chennai, India. When prosecuted, they settled their debts with the bank, and the Debt Recovery Tribunal in Chennai dismissed the complaint and quashed the criminal proceedings against them by declaring that a settlement had been reached and the amount had been repaid. The Madras High Court, too, on appeal, quashed the entire criminal proceedings against them, for the same reason.

In allowing the appeal against the quashing of the criminal proceedings by the Madras High Court, the Supreme Court of India considered it “extremely unfortunate” that the High Court used its inherent powers under section 482 of the Code of Criminal Procedure in quashing the proceedings, because, the Supreme Court said, the objective of that provision is to prevent abuse of the judicial process or to secure the ends of justice.

Elaborating further, the Supreme Court stated that the complaint and charge sheet prima facie may not constitute an offense, but it is not possible to conclude from the material on record that there was no offense under sections 120-B and 420 of the Indian Penal Code. The Court observed that there is adequate material available on record to proceed against the defendants. In the proceedings in four cases, the Court noted, 92 witnesses had been examined, and the trial was at an advanced stage when the High Court quashed the proceedings. Thus, the High Court judgment was set aside as being “unsustainable in law,” and the trial court was directed to continue day-to-day hearings on the four cases. (J. Venkatesan, Supreme Court Allows CBI Plea in Cheating Case, The Hindu, May 20, 2009, available at