- 1 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 IN THE HIGH COURT OF KARNATAKA,AT DHARWAD DATED THIS THE 21ST DAY OF JANUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE V.SRISHANANDA CRIMINAL PETITION NO. 103432 OF 2024 (482(CR.PC)/528(BNSS)) BETWEEN: 1. LAKSHMANAN GANESHAN S/O. LATE M.R. LAKSHMANAN AGE. MAJOR, OCC. ASST. MANAGER, R/O. NO.368-A, RUKMINI SADANA, 2ND CROSS, (RIGHT) M.V. NAGAR, KOPPAL ROAD, BALLARI-583101. 2. T. BHEEMANNA S/O. LATE THIMMAPPA AGE. 54 YEARS, OCC. ASST. MANAGER, SHANKARGOUDA POLICE HOUSE, 3RD CROSS LEFT, KALIDAS NAGAR, KOPPAL, KARNATAKA-583231. 3. G.R. LAWHALE S/O. R.P. LAWHALE AGE. MAJOR, OCC. THE THEN DY. GENERAL MANAGER, NO.4, SOGONENT, RAMAKRISHANAPPA ROAD, NEAR DODEGUNTHA CIRCLE, COX TOWN, BENGALURU-560008. …PETITIONERS (BY SRI. S.V. YAJI, ADVOCATE) AND: CENTRAL BUREAU OF INVESTIGATION, BANK SECURITIES AND FRAUDS CELL, NO.36, CBI COMPLES, 2ND FLOOR, BALLARI ROAD, GANGANAGAR, BENGALURU-560032. R/BY CENTRAL GOVERNMENT, STANDING COUNCIL, GROUND FLOOR, HIGH COURT BUILDING, DHARWAD. …RESPONDENT (BY SRI. NEELENDRA D. GUNDE, ADVOCATE) Digitally signed by CHANDRASHEKAR LAXMAN KATTIMANI Location: High Court of Karnataka, Dharwad Bench. - 2 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO CALL FOR THE RECORDS AND ALLOW THIS PETITION AND QUASH THE CHARGE SHEET FILED AGAINST THE PETITIONERS AS ACCUSED NO.5, 6 AND 7 DATED 26.08.2011 WHICH IS REGISTERED AT SPL.C.B.I. CC NO.24/2013 BEFORE THE III RD ADDL. DISTRICT AND SESSIONS SPECIAL JUDGE DHARWAD, FOR THE OFFENCE PUNISHABLE U/S 120B R/W 420, 467, 468, 471 AND 511 OF IPC AND SECTION 7, 13(2), R/W 13(1) (D) OF PC ACT, IN THE INTEREST OF JUSTICE AND EQUITY. THIS CRIMINAL PETITION COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: ORAL ORDER (PER: THE HON'BLE MR. JUSTICE V.SRISHANANDA) Heard Sri.S.V.Yaji, learned counsel for the petitioners and Sri.Neelendra D. Gunde, learned counsel for the respondent/Central Bureau of Investigation (hereinafter ‘CBI’ for short). 2. Present petitioners are accused Nos.5 to 7 who are Deputy General Manager, Cashier and Assistant Manager of Union Bank of India who have been charge sheeted for the offences punishable under Section 120B read with Section 420, 467, 468 and 471 of Indian Penal Code. - 3 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 3. They have approached this Court with the following prayer by filing a petition under Section 482 of Cr.P.C.: “Wherefore, it is humbly prayed that this Hon’ble Court may kindly be pleased to call for the records and be pleased to allow this petition and quash the charge sheet filed against the petitioners as accused No.5, 6, and 7 dated 26.08.2011 which is registered at Spl. CBI CC No.24/2013 before the IIIrd Addl. District and Sessions Special Judge Dharwad for the offence punishable under Section 120B read with 420, 467, 468, 471 and 511 of IPC and Section 7, 13(2) R/w 13(1)(D) of PC Act in the interest of justice and equity.” 4. Facts in the nutshell which are utmost necessary for disposal of the present petition are as under: 4.1. Accused No.8 filed an application for sanction of loan with the Union Bank of India, Ballary Branch. - 4 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 4.2. Loan application was serviced and as against the security of the immovable property, loans were being sanctioned at different interval of time. 4.3. Loan account was serviced without proper sanction from the Board, as the branch did not have the power to sanction the loan amount beyond the branch limit. Therefore, the loan request was recommended by the branch to the higher authorities. 4.4. It is alleged that the loan became irregular and at that juncture, an internal enquiry was held in the bank by the Vigilance Department of the Union Bank of India and they found lot of irregularities in servicing the loan request of accused No.8 and filed a report. 4.5. Based on the report, the Board of Union Bank of India decided to initiate criminal action against accused No.8 and other employees of the Union Bank of India who have all recommended the loan and present petitioners who are not named as accused in the FIR were arraigned as - 5 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 accused Nos.5 to 7 in the charge sheet after collecting necessary materials that they are also responsible for the illegal servicing of the loan request of accused No.8. 4.6. In the meantime, the recovery proceedings were also initiated for the amounts that were due to the Union Bank of India and accused No.8 opted for the one time settlement scheme and it is submitted that entire loan amount is now settled and as such, there is no civil liability. 4.7. After the charge sheet came to be filed, learned Special Judge took cognizance of the offences alleged against the accused persons and registered a criminal case and proceeded with the same. 5. An Application seeking discharge of the present petitioners came to be filed under Section 239 of Cr.P.C. Same was opposed by the CBI by filing written objections. 6. Learned Trial Judge after considering the objections, filed by the CBI, dismissed the application filed - 6 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 by the present petitioners by order dated 08.08.2024 inter alia holding in paragraph Nos.29 to 34 as under: “29. It is allegation against the accused No.7 that, he was working as Deputy General Manager, Union Bank of India, Regional Office, Bangalore, but he did not ensure Technical inspection of Unit to ascertain the technical feasibility and economic viability, at the time of sanctioning the term loan. Further he has not ensured to obtain the cash budget at the time of sanction, as applicable to seasonal industry. He has sanctioned short term loan of Rs.225 lakh without ensuring technical inspection of the unit, in order to ascertain its commissioning as the unit was not started its commercial activity at the time of his sanction leading to diversion of funds. It is further alleged that, the accused no.7 had knowledge that, the plant was not in operational by way of his personal visit, to the plant and yet he sanctioned subsequent loan i.e., SOD of Rs.75 lakhs, short term loan of Rs.225 lakhs and direct loan of Rs.400 lakhs. 30. By considering the rival contention of accused No.1, 5 to 7 and the prosecution side, this Court has gone through statements of the - 7 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 witnesses, documents submitted along with charge sheet. 31. On perusal of the statement of witness No.1 who has stated that, he has conducted investigation on the various Irregularity in the account of M/s. Rytu Depot Cold Storage Pvt. Ltd., during the year 2009. Further stated that, he has verified relevant original vouchers, registers and other related documents and prepared detailed investigation report, showing irregularities made in the account of M/s. Rytu Depot Cold Storage Pvt. Ltd. He has clearly stated regarding the Irregularities committed by the accused No.1 while submitting proposal and did not ensure the technical feasibility and economic viability. Further witness No.2 who is Assistant General Manager, Vigilance Department, Central Office, Mumbai, has stated regarding the processing of agricultural loan of Rs.265 lakhs without carrying out detail verification regarding technical feasibility and economic viability of M/s. Rytu Depot Cold Storage pvt. Ltd. 32. Further the witness No.11 has stated that, lapses and Irregularities observed by him in the credit facilities l.e., term loan of Rs. 261.60 - 8 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 lakhs SOD(TD) of Rs. 75 lakhs, SIT loan of Rs.225 lakhs and direct loan of Rs.400 lakhs disbursed to M/s. Rytu Depot Cold Storage Pvt. Ltd, Bellary. Further clearly stated that, loan was not disbursed as per progress work. Limits were disbursed without conducting proper inspection and use was never verified by the branch. 33. C.W-14 who is Sr. Branch Manager Union Bank of India, Bagalkot Branch, who has conducted internal audit of Bellary branch, he has submitted in the report that he has observed regarding the deviations in the advances amounts of M/s. Rytu Depot Cold Storage private Pvt. Ltd., which were serious issues. Further stated that, the total work done was Rs.80 lakhs. Whereas, branch had released Rs.108.70 lakhs already inclusive of margin. 34. Cw-20 has stated regarding accounts were not properly monitored, all the three limits were not disbursed without conducting proper inspection even while releasing big amount disbursement were not properly monitored. End use was never verified by the branch.” - 9 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 7. Being aggrieved by the same, accused Nos.5 to 7 have filed the present petition on following grounds:  “The Trial court has failed to consider the facts that the complaint and FIR is not filed nor registered against the petitioner. The complaint is not filed against the petitioner by the Bank as there is no evidence in their inspection and enquiry before lodging the complaint. However, the charge sheet was filed without any records and contradictory statement of the witness.  The learned Sessions Judge has failed and consider the fact that the prosecution has failed to produce any oral and documentary evidence to prove the ingredients of the commission of offence U/S 7 of the P.C. Act.  It is submitted that the prosecution has nowhere alleged or produced any document or statement regarding the illegal gratification what so ever in cash or kind. Further it is not alleged or stated before the lower court by the prosecution that the person who has given the illegal gratification or received the same. Absolutely there is no statement or document to prove or connect the illegal gratification - 10 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 received by the petitioner/Accused in cash or kind. Therefore, the provisions of P.C. Act is not attracted.  It is submitted that filing of charge sheet without any materials for the commission of offence under P.C. Act is arbitrary and erroneous. On this count alone the charge sheet against the petitioners alleging the commission offence under P.C Act is not sustainable.  The Prosecution has failed to consider the fact that the loan pertains to the customer is a NABARD Sponsored scheme and the unit is monitored and supervised by NABARD. Further the NABARD has release the subsidy on 20-07-2009. Thus it is evident that the customer of the Bank has implemented the project. Therefore, the statement of the witnesses is not sustainable.  That there are no reasonable grounds to believe that the petitioners have committed an offence punishable under sections 120B R/W 420, 467, 468, 471 and 511 of IPC and Section 7, 13(2), R/W13(1) (D) of PC Act. - 11 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024  That the petitioners are falsely implicated by the investigation officer without knowing any law of investigation on the available documents on record just to harass the petitioners for the reasons best known to them. Hence the entire criminal proceedings are liable to be quashed.  That there was no motive or intention on the part of the petitioners to commit the alleged offence punishable under section 120B R/W 420, 467, 468, 471 and 511 of IPC and Section 7, 13 (2), R/W 13 (1) (D) of PC Act.  That this Hon'ble High Court be please to permit the petitioners to raise any new grounds for arguments at the time of hearing.  The Investigation Authority and the Court below has failed to consider the fact that the prosecution/C.B.I. has not stated about the forgery of the document and the manner in which the documents are forged that of the original document. It is submitted that whatever the documents submitted by the customer of the Bank was sent to the Regional Office for sanction of the loan. The Regional Office has considered the proposal of the loan and sanctioned the same without any - 12 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 alteration of the documents in the file. Therefore, the charge leveled against the petitioner for commission of the offence under sanction 467 of IPC is not attracted.  Even the Investigation Officer has not considered the fact that the officials of the Bank have not changed or altered any of the documents pertains to the loan file and thereby there is no forgery of the documents for cheating. Hence the charge sheet U/S 468 of IPC is worthless. The lower court has erred in considering the same.  The Investigation Officer has not considered the records pertains to the charge U/S 471 of IPC pertains to the using a forged document as Genuine document. The Prosecution/CBI has not stated in the charge sheet and also documents being produced to prove the forging of the document which was the real or original document or Genuine Document and with that of the forged documents. The Genuine document or forged documents are not before the court. The documents which are produced by the investigation agency is pertains to loan documents. Hence the charge U/S 471 of IPC is not applicable. - 13 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024  The Investigation Agency has filed the charge sheet based on the statement made by the officers of other bank and further without appreciating the fact that the bank or management has not doubted or suspected the petitioners in commission of any offence. Therefore, the charge sheet is deserves to be quash.  The CBI has not collected the document nor produced before the Trial Court as to the function and duties to entrusted to the petitioners in the bank and there is no document as to the entrustment to the work.  The Prosecution has not appreciated and considered the fact that the processing of the loan application, recommendation, disbursement of the Joan is at the branch end. The Manager is the Head of the Branch and he has to take the decision. Each and every witness have stated about the duties and function of the Manager who is the head of the Branch and these petitioners are no-way concerned about the same. Consequently, the charge sheet against the petitioners is not sustainable. - 14 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024  The document produced by the Prosecution is evident that whatever the objection raised by the audit unit was rectified and the earlier report was recalled as it is based on the false information or report without any basis.  The Trial Court ought to have discharge the petitioners considering the development during the pendency of the proceedings such as settlement of account, closer of the loan account and issue of no dues certificate. Thus, it is evident that the matter was not consider seriously by the management.  The Prosecution has not appreciated or considered the fact that the market value of the properties assessed by the PWD Engineer worth Rs.8.27 Lacks as against the liability of Rs. 5.29 Lacks as on 14.06.2010. Therefore, there is no diversion of funds and under valuation of the property.  The CBI has not considered the fact that the sanction of the loan by the accused no. 7 is not unilateral and it is a decision by the committee consisting of 3-4 officers of different departments and sanctioning of the loan is by a common decision based on the - 15 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 records. Therefore, the charges against these petitioners is without any evidence.  The Prosecution has not considered and appreciated the fair care taken by the petitioners while sanctioning the loan by imposing additional conditions which are in his hand writing dated 30.04.2009.  The petitioners have acted in good faith without any lapse and taken the decision diligently to approve the loan based on the recommendation by the branch head, duly vetted credit department and recommendation of the credit grid. Hence, the decision of the petitioners is beyond suspicion.  The charge sheet filed by CBI against the petitioners is contrary to the decision, guidelines and directions of the Apex Court and this Hon'ble Court.  The Lower Court has failed to consider the fact that the charge sheet filed later against this petitioner alleging the commission of the offence. A. As he did not ensure technical inspection of the unit to ascertain the - 16 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 technical feasibility and economic viability at the time of sanction of the loan. B. He has sanctioned the loan when the company has not started its commercial operation. C. He has not ensured to obtain the cash budget at the time of sanction of the loan applicable to seasonal industry. D. Granting of additional loan when the earlier account operation was not satisfactory. E. The loan was sanctioned without ensuring the technical inspection and diversion of funds. He has sanctioned the loan when the plant was not in operation.  The Lower Court has erred in considering the fact that the subordinate officials of the Bank have processed the file and technical inspection report was made and the petitioners have approved the same on the bases of the note and report made by the subordinate. It is very clearly from the records - 17 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 that the commercial operation of the unit was commenced and additional loan was made on secured asset. The budget including the balance sheet was made available in the file. It is further evident in the records that the special report was later which drawn as in correct. The industrial unit has commenced the activities in the presence of the public. The Lower Court has failed to consider the fact that the NABARD has released the subsidy to the industrial unit only it has commenced the operation. Hence the Lower Court without considering the documents and appreciating the materials placed has wrongly rejected the application instead of discharging the petitioners which has resulted in miscarriage of justice.  The Lower Court has not considered the fact that in the enquiry made by the Bank the petitioners were discharged.  The decisions of the Apex Court sighted during the course of the arguments is not considered and appreciated in proper perspective.  In alternative the petitioners prays that the order of the learned Sessions Judge in rejecting the application for discharge U/S 227 - 18 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 of Cr.P.C may kindly be set a- side and they may be discharged by exercising the inherent jurisdiction as the order is contrary to law and true facts of the case.” 8. Learned counsel for the petitioners reiterating the grounds urged in the petition vehemently contended that the present petitioners were not shown as accused persons in the FIR and without there being any material evidence placed on record, they have been falsely implicated in the charge sheet as accused Nos.5 to 7 resulting in not only abuse of process of law but also miscarriage of justice. 9. He would also contend that the role assigned to the present petitioners is not specific and charge sheet materials are highly insufficient to establish prima facie nexus between the petitioner and the alleged crime. 10. He would further contend that accused No.5 being the Deputy General Manager of Union Bank of India - 19 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 was only a recommendatory authority and he has no role whatsoever in the alleged fraud. 11. Insofar as petitioner No.2 is concerned, he is only a cashier and therefore, no overt act would be attributed per se in the alleged fraud as he had no role to play in sanctioning of loan or disbursement thereof. 12. Insofar as petitioner No.3 is concerned, learned counsel for the petitioner would submit that he is only Assistant Manager of Union Bank of India and he had no independent power either to recommend the loan or disburse the loan and he was acting under the directions of the official superiors. Therefore, per se he cannot be held liable for any of the charges as is found in the charge sheet and thus, sought for allowing the petition. 13. He would also contend that the limit was sanctioned by the Board and thereafter, servicing of the loan as and when accused No.8 made a request to the branch was serviced by following the requisite established - 20 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 procedure and therefore, no criminality could be attributed to the present petitioners. 14. He would also contend that since accused No.8 has now repaid the entire outstanding amount by availing one time settlement scheme, civil liability is totally cleared and under such circumstances, continuation of the criminal case is nothing but futile exercise as is held by the Hon’ble Apex Court in the case of N.S.Gnaneshwaran Etc. v. Inspector of Police and Another reported in 2025 SCC OnLine SC 1257. 15. He would invite the attention of this Court to paragraph Nos.6 to 10 of the said judgment which is culled out hereunder for ready reference: “6. On the other hand, learned counsel for the respondents contends that the settlement of dues or compromise between the parties does not automatically warrant quashing of criminal proceedings when serious allegations involving fraud and criminal conspiracy are made out. It is submitted that the existence of a prima facie - 21 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 case is sufficient to warrant trial and that private settlements should not interfere with criminal prosecution, especially at an advanced stage. 7. 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. 8. Further, in identical proceedings filed by the CBI against the appellants in C.C. Nos. 13 of 2006 and 151 of 2010, the charge sheets were quashed by the High Court after taking note of the settlement reached in the recovery proceedings. The special leave petitions preferred by the State being SLP (Crl) No. 711 of 2021 and SLP (Crl) No. 825 of 2021 challenging the said quashing were dismissed by this Court, rendering the orders final. Since the - 22 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 facts and legal position are the same in the present matter, we see no reason why the appellants should not be given the same relief. 9. In our view, allowing the present criminal proceedings to continue would serve no meaningful purpose, 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.” 16. Per contra, learned counsel for respondent/CBI would support the impugned order of rejection of discharge application by contending that the investigation agency has collected all necessary materials to arraign the present petitioners as accused Nos.5 to 7. - 23 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 17. He would further contend that it is the Assistant Manager of the Branch who has to process the application and petitioner No.2 being the cashier who claims that he had no role in the application, has counter signed the application and petitioner No.1 being the Deputy General Manager without even considering the flaw in the application, recommended to the higher authorities whereby prima facie all of them are responsible for the alleged fraud and therefore, sought for rejection of the petition. 18. He would further contend that at the time of considering the discharge application, material collected by the prosecution alone to be considered as is held in the case of State of Orissa v. Debendra Nath Padhi reported in 2005 (1) SCC 568. Therefore, any other documents cannot be considered by the Court and therefore, no additional documents can be considered by the Trial Court or by this Court while considering the request of the petitioner and sought for dismissal of the petition. - 24 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 19. Having heard the arguments of both the sides, this Court perused the material on record meticulously. 20. On such perusal of the material on record, prima facie materials collected in the form of charge sheet by the investigation agency based on the internal enquiry report of the very same officials of the Union Bank of India, it is found that the loan request made by accused No.8, is serviced by the bank without following the requisite procedure and the guidelines issued by the Reserve Bank of India which would govern the day to day activities especially in the matter of sanctioning of loan. 21. Further, there is no rule that the additional accused persons cannot be arraigned while filing the charge sheet whose names have not found in the FIR. 22. If additional accused persons are involved in the crime, it is always open for the Investigation Officer to arraign them as additional accused persons. Therefore, the contentions urged on behalf of the petitioners that the - 25 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 present petitioners are not named in the FIR and therefore, filing of the charge sheet against them is per se incorrect cannot be countenanced in law. 23. Further, this Court is not required to hold a mini trial to find out respective individual overt acts committed by the petitioners in the alleged crime. 24. It is always open for the petitioners herein to place such necessary material before the Trial Court in accordance with law to prove their innocence. 25. Prima facie materials collected by the investigation agency especially the loan application and related papers wherein the signatures of the present petitioners are found, would be sufficient enough to frame the charge against the present petitioners. 26. Now, adverting to the decision relied on by the learned counsel for the petitioners is concerned, no doubt, in a case where the civil liability is settled between the - 26 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 parties and prima facie there is no criminality involved in a given case and it is only a irregularity in sanctioning the loan, the criminal matters can be put to end as continuation of the same would only result in futile exercise. 27. There is a clear and subtle difference between irregularity and illegality though it is separated by a very thin line. An irregularity can be condoned but an illegality cannot be condoned. 28. View of this Court, in this regard is supported by the judgment of the Hon’ble Apex Court in the case of Gian Singh v. State of Punjab reported in (2012) 10 SCC 303. 29. Further, the principles of law enunciated in the case of Gian Singh supra is reiterated by the Hon’ble Apex Court in the case of Anil Bhavarlal Jain and Another v. State of Maharastra and Others reported in 2024 SCC OnLine SC 3823. - 27 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 30. Relevant paragraph in this regard is culled out hereunder: “14. This Court in Gian Singh (supra) has dealt with the powers of the High Court under Section 482 r/w Section 320 of the CrPC and the consequent authority of the High Court to quash criminal proceedings, FIRs or complaints under its inherent jurisdiction as in contradistinction to the power with criminal courts for compounding offenses under Section 320 of the CrPC. The High Court observed that quashing was dependent on the unique circumstances of each case and though no fixed category can be established, heinous and severe offences should not be quashed even if the parties have settled. However, this Court in Gian Singh (supra) categorically made an observation that: “61. …….. The offences of mental depravity under the Penal Code, 1860 or offences of moral turpitude under special statutes like Prevention of Corruption Act or the offences committed by the public servants while working in that capacity, the settlement between offender and victim can have no legal sanction at all.” 16. Another reference can be made to the judgment of this Court in Parbatbhai Aahir v. State - 28 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 of Gujrat8 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. 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 - 29 - HC-KAR NC: 2026:KHC-D:668 CRL.P No. 103432 of 2024 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.” 31. Thus, the decision relied on by the learned counsel for the petitioner would not advance the case of the petitioners in setting aside the order of rejection of the discharge application. 32. Hence, following: ORDER i. Petition is meritless and hereby dismissed. ii. However, all the defences available to the petitioners are kept open to be canvassed before the Trial Court in accordance with law. Sd/- (V.SRISHANANDA) JUDGE KAV, CT:CMU LIST NO.: 1 SL NO.: 0