ORDER : A. BADHARUDEEN, J. Accused No.2 in Crime No. RC0332024A0005/2024, registered by the ACB, Cochin, has filed this Criminal Miscellaneous Case seeking to quash all proceedings in the said crime. 2. Heard the learned counsel for the petitioner as well as the learned Special Public Prosecutor appearing for the CBI. Perused the relevant decisions placed by the learned counsel for the petitioner. Also gone through the statement filed by the investigating officer, along with the statements submitted by the Central Bank of India, Palakkad branch, dated 23.12.2024. 3. In this matter, crime was registered alleging commission of offences punishable under Sections 406 and 420 r/w Section 120B of the Indian Penal Code (hereinafter referred to as ‘IPC’ for short) as well as under Section 13 (2) r/w Section 13 (1)(d) of the Prevention of Corruption Act, 1988 , (hereinafter referred to as ‘PC Act,1988’ for short) by the accused, acting on a complaint filed by Sri. Ujjwal Kumar Chandra, Regional Head, Central Bank of India, Regional Office, Cochin. The allegation in the FIR is that the unknown Public servants of Central Bank of India, along with Directors of M/s.Shalom Micro Finance Ltd, namely, Shri Jaison Joy M.J. (Managing Director), Shri.Job Manthottathil Joy (Addl. Director), Shri.Sivadas Chettoor (Addl.Director), Smt.Velandy Saraswathi (Addl.Director), Shri.Emmanuel Vijayanand Muray (Nominee Director), Shri.Sivasankaran Kannan (Addl. Director), Shri.Janardhanan V.K. (Director) and Shri.Raju Aruvummackal Cherian (Addl. Director) and unknown others were involved in this case. The prosecution case is that the Directors of M/s.Shalom Finance Ltd. availed 4 term loans for the period from January 2010 to March 2013 to the tune of Rs.1132 lakh. The borrowers mortgaged 3 acres of land and School building of the Guarantor as security towards the loan. The company represented by its Directors and its guarantors committed default in repayment of the loan as agreed by them and the account had been classified as NPA on 31.12.2013 by the Bank. The total loss sustained to the Central Bank of India is Rs.7,25,94,608/-. As per the complaint, Central Bank of India assigned Forensic Audit to M/s.Grandmark & Associates, Chartered Accountant, Kochi and the finding disclosed that this is a clear case of embezzlement of funds, fraud, breach of trust, misappropriation and cheating by the company and its borrowers to amass illegal wealth. These findings were accepted by the bank. 4. As per the complaint, Central Bank of India assigned Forensic Audit to M/s.Grandmark & Associates, Chartered Accountant, Kochi and the finding disclosed that this is a clear case of embezzlement of funds, fraud, breach of trust, misappropriation and cheating by the company and its borrowers to amass illegal wealth. These findings were accepted by the bank. 4. The learned counsel for the petitioner argued that, as per the complaint produced as Annexure I, in paragraph No.6, the loan availed by the petitioner and his company is stated as Rs.1132 lakh (Rupees Eleven Crore and thirty two lakh only). The total outstanding amount with accrued interest as on 31.07.2017 was Rs.89,17,2,829/. After granting decree by the Debts Recovery Tribunal for the said amount with future interest, the petitioner availed One Time Settlement (OTS) provided by the Bank for the closure of the loan. Ultimately, altogether 3.40 Crore was repaid apart from the earlier repayments made, under the OTS and no liability to the bank is subsisting as above. It is also pointed out that, at the time of filing OA No.216/2015 before the Debt Recovery Tribunal-I, Ernakulam, no allegation regarding commission of any criminal offences alleged. 5. The learned counsel for the petitioner placed decision of the Apex Court in N.S. Gnaneshwaran Etc V. Inspector of Police and Another , reported in 2025 SCC OnLine SC 1257, to point out that in a similar case, the Apex Court quashed the proceedings. He also referred another decision of the Apex Court in K.Bharthi Devi and Ors . Vs. State of Telangana and Ors, reported in (2024) 10 SCC 384, with reference to paragraph Nos.16, 24 to 29 and 31 to 35, wherein also, the Apex Court quashed the proceedings in a case involving same set of facts. In paragraph Nos.34 and 35 of the above judgment, the Apex Court held as under: “34. The facts in the present case are similar to the facts in the case of Sadhu Ram Singla and Ors. (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. (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. 35. 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.” 6. Whereas, it is submitted by the learned Special Public Prosecutor appearing for the CBI that, as per letter dated 23.12.2024, the bank sent a letter through its Chief Manager, Sri.Mihira Kanta Tripathy, contending that OTS was considered by the bank as a commercial decision and the same should have no bearing whatsoever on the criminal case/investigation, if any, carried out by the CBI/police, and the same should proceed as per law. Apart from placing reliance on the letter, the learned Special Public Prosecutor also filed a detailed objection narrating the way in which the loan was availed and diverted. According to the learned Special Public Prosecutor, in this matter, even though the loan availed was for Rs.1132 lakh, as per the letter given by the bank, the One Time Settlement facility by way of compromise was reached for Rs.3.40 Crore against the outstanding ledger balance of Rs.6.69 Crore under NPV approach, along with sacrifice of Rs.30.11 Crore, comprising write off of the ledger balance of Rs.3.29 Crore and waiver of uncharged interest of Rs.26.82 Crore. According to the learned special Public Prosecutor, in cases involving bank fraud, merely for the reason of settlement, that too for a lesser amount than the actual amount entitled, criminal culpability of the accused persons could not be effaced so as to quash the proceedings, on the basis of settlement. According to the learned special Public Prosecutor, in cases involving bank fraud, merely for the reason of settlement, that too for a lesser amount than the actual amount entitled, criminal culpability of the accused persons could not be effaced so as to quash the proceedings, on the basis of settlement. According to the learned Special Public Prosecutor, after availing the loan under the guise of running a microfinance business, the funds were misused and diverted for the personal needs and to discharge the other liabilities of the 2 nd accused, which were unconnected with the purpose of the said loan. It is further submitted that the bank officials were also involved in the scam, and therefore, the investigation must go on and consequently, the prayer to quash the FIR would necessarily fail. 7. In the objection, the learned Special Public Prosecutor highlighted various decisions of the Apex Court, while addressing financial fraud, in paragraph Nos.7,8,9, which read as under: “7. The Hon’ble Supreme Court vide its Judgment dated 19.09.2014 in State of Maharashtra Through CBI Vs. Vikram Anantrai Doshi & others has observed that “…….that availing of money from a nationalised 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 skilfully 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. 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 proceedings 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 Court and quash the proceeding. It is not legally permissible. The Court is expected to be on guard to these kinds of adroit moves………….” 8. It was held by the Hon'ble Supreme Court in Parbatbhai Aahir vs State of Gujrat and Anr. (2017) SCC Online SC 1189 that, economic offences 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. 9. 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. 9. In State vs. R Vasanthi Stanley (2015 SSC Online SC 815) the Hon'ble Apex Court observed "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.” 8. The learned Special Public Prosecutor specifically pointed out in paragraph 4.(xii) of the counter which would deal with forensic orders and the same reads as under: “(xii) This is a clear case of embezzlement of funds, fraud, breach of trust, misappropriated and cheating by the Company and its borrowers to amass illegal wealth, and are disclosed during a Forensic Audit conducted in the account and assigned M/s. Grandmark & Associates, Chartered Accounts, Kochi. The findings of the Forensic Audit Report are accepted by the complainant and it reveals the bogus/sham transactions carried by the company to divert and misappropriate the borrowed fund thereby defrauding the bank and the public money.” 9. Coming back, looking into the verdict of N.S.Gnaneshwaran’s case (Supra), where the allegation of the prosecution is that the accused committed offences punishable under Sections 120B r/w 420, 468 and 471 of IPC as well as under Section 13 (2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 , where, the appellants got arrayed as accused Nos.3 and 6 in the crime based on a complaint lodged by the respondent No.2 bank on 27.04.2005 alleging that the 1 st appellant therein orchestrated the fraudulent diversion of funds sanctioned to M/s.Vinayaka Corporation and also he alleged to have facilitated engagement of multiple cheques drawn from the fraudulently obtained credit limit using a network of relatives, employees and fictitious identities. There was allegation further that the 1 st accused therein forged signatures and diverted the funds to various accounts linked to his family members associates. While considering a case of the said nature, in paragraph No.5, the Apex court considered the submission made by the learned counsel for the appellants that, the dispute in question arose out of a commercial transaction which had since been amicably resolved through a OTS scheme extended by the bank and the learned counsel for the respondents contended that the settlement of dues or compromise between the parties did not automatically warrant quashment of criminal proceedings when serious allegations involving fraud and criminal conspiracy were made out, pointing out the necessity of trial. 10. In paragraph No.7, the Apex Court held that having considered the submissions of both sides and examined the record, we are of the view that no useful purpose would be served by continuing the criminal proceedings in the present matter. The dispute has, admittedly, culminated in a comprehensive One Time Settlement under which the Bank has received the entire outstanding amount. The recovery proceedings before the tribunal have been dismissed as settled, and no residual claim survives. The Bank has not raised any objection to the closure of the matter and has issued formal acknowledgments of satisfaction. 11. Thereafter, in paragraph No.8, of the judgment, a similar case was referred, wherein the Apex court found in paragraph No.9, as under while quashing the proceedings. “8. In our view, allowing the present criminal proceedings to continue would serve no meaningful purpose, particularly when the dispute between the parties has been 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.” 12. 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.” 12. On reading the decision in Vikram Anantrai’s case (supra), the facts in the said case was that, the accused persons when made applications to the Bank of Baroda for sanction of various credit facilities, in relation to their business operations, by stating that they wanted to induct the said bank as a new consortium member to replace the existing members, namely, the UTI Bank and the Federal Bank, and requested to sanction 15% of the total Working Capital facility sanctioned by the consortium of Banks, so that much amount could be transferred to the UTI bank and Federal Bank to take over the existing liabilities with those banks. The accused persons, wilfully and with criminal intent to mislead the Bank of Baroda, furnished wrong statements about the outstanding position with the existing consortium members and accordingly, acting on the letter of creidts issued from SBI, and the Dena Bank in favour of fictitious companies, propped up by the accused persons and using the said letters of credits to siphon the funds from those Banks, the Apex Court held that the alleged act of the accused persons was a financial fraud, falling within the ambit of social wrong having immence social impact and it was not a case which had overwhelmingly and predominantly of a civil flavour. Applying the guidlines laid down in Gian Singh v. State of Punjab and Another reported in (2012) 10 SCC 303, the Apex Court held that criminal proceedings in the said case could not be quashed merely because the accused persons repaid the amount to the Bank and the Bank issued 'no due certificate' to them. 13. In R Vasanthi Stanley’ s case (supra), the case considered by the Apex Court was that loans were availed on the basis of mortgages by the use of forged documents where the loan was closed and the Bank issued ‘no due certificate’ where the High Court allowed quashment of the case under Section 482 of Cr.P.C. While setting aside the quashment ordered by the High Court, the Apex Court held that the gravity of offence creates a dent in the economic spine of the nation. Whenever there is manipulation and cleverly conceived contrivance to avail benefits in handling of finance and grant of loans, the same could not be regarded as a case having overwhelmingly and predominantly of civil character. 14. In Parbatbhai Aahir’ s case (supra), the Apex Court laid down the guiding principles by which the High Court should consider quashment. In the said case, the High Court was not inclined to quash the criminal proceedings against the accused on the ground of settlement, as there was allegation of creation of a forged power of attorney in the name of the complainant as well as his siblings to sell the ancestral agricultural land. Thus, it could be gathered that, in the three decisions, relied on by the learned Special Public Prosecutor for the CBI, the allegations involved are as discussed herein above, mainly centered on forgery of records, manipulation and cleverly conceived contrivance to avail for the purpose of committing financial fraud. 15. In the instant case, the prosecution has no case that there was grant of loan based on any forged documents and the loan was granted to a fictitious company involved in manipulation and a cleverly conceived contrivance to avail financial benefits. In the instant case, the prosecution has no case that loans were availed by manipulating or forging records of any manner, and at the time of filing OA before the DRT also, no such allegations were raised. Subsequently, the borrowers availed OTS facility and closed the loan, as agreed by the Bank. Once OTS facility is availed by the Bank, where there is no allegation of manipulation, forgery or cleverly conceived contrivance to avail financial benefits otherwise, on closure of the loan transaction, its diversion for certain other purposes in negation to the purpose for which the loan was sanctioned alone would not be a ground to hold that the nature of the case to be regarded as overwhelmingly and predominantly out of civil character, as held by the Apex Court in N.S.Gnaneshwaran’s case (supra), to disallow the plea of quashment. Thus, in the facts of the case, the ratio laid down in K.Bharthi Devi and Ors's case (supra) and N.S.Gnaneshwaran's case (supra) would apply. 16. Thus, in the facts of the case, the ratio laid down in K.Bharthi Devi and Ors's case (supra) and N.S.Gnaneshwaran's case (supra) would apply. 16. Having appraised the legal position in tune with the facts involved, the prosecution against the petitioner herein in the context of facts discussed is found to be unnecessary and the quashment is liable to succeed. 17. In the result, this Criminal Miscellaneous Case stands allowed. All further proceedings in Crime No. RC0332024A0005/2024, registered by the ACB, Cochin, against the 2nd accused stand quashed. Registry is directed to forward a copy of this order to the Special Court, forthwith.