Case Details

  • Case Name: Vijay Kumar Kela & Anr. vs. Central Bureau of Investigation & Anr.
  • Court/Authority: Supreme Court of India, Criminal Appellate Jurisdiction
  • Case No.: Criminal Appeal No. OF 2026 (arising out of SLP (Criminal) No. 18035 of 2024)
  • Date of Judgment: 29 May 2026
  • Period of Dispute: Loan facilities sanctioned 02‑09‑2006 to 30‑01‑2009; compromise settlement dated 30‑03‑2015; CBI FIR registered 08‑03‑2018; chargesheet filed 27‑11‑2018; charge‑framing order 20‑02‑2023; High Court order dismissed quash petition on 05‑07‑2024.

Parties Involved

  • Appellants: Vijay Kumar Kela (appellant No. 1) and Mohan Traders (appellant No. 2, a proprietary trading concern established 30‑09‑1998).
  • Respondents: Central Bureau of Investigation (CBI) and an unnamed respondent.
  • Other Relevant Entities: UCO Bank Ltd (complainant bank), Debts Recovery Tribunal (DRT) Jabalpur, Special Judicial Magistrate (CBI Cases) Raipur.

Issues / Allegations / Violations

  • Whether a criminal prosecution under IPC Sections 420 (cheating) and 471 (use of forged document) can continue after the loan account was settled by an approved compromise having the imprimatur of the DRT.
  • Whether the CBI had jurisdiction to investigate and prosecute without the consent of the State of Chhattisgarh under Section 6 of the Delhi Special Police Establishment Act, 1946.
  • Allegations by UCO Bank that the appellants:
  • Diverted bank funds to the personal account of appellant No. 1.
  • Substituted two valuable mortgaged properties with an encroached property.
  • Obtained enhancement of cash‑credit limits by submitting forged audit reports.
  • Caused wrongful loss to the bank of Rs 223.7 lakhs and notional interest of Rs 308.8 lakhs (total alleged loss Rs 532.54 lakhs).
  • The CBI FIR (RC 2202018E0002) was filed on 08‑03‑2018 under Section 120B read with Section 420 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act.
  • The High Court dismissed the appellants’ petition under Section 482 CrPC, holding prima facie that the appellants had fraudulent intent.

Findings & Observations

  • The Supreme Court noted that the compromise proposal dated 30‑03‑2015 was approved by the competent authority of UCO Bank, resulting in a settlement amount of Rs 4.25 crores against outstanding dues of Rs 6.49 crores (including notional interest of Rs 3.09 crores).
  • The DRT recorded the compromise on 10‑07‑2015, and the appellants paid the full amount, after which the bank issued a no‑dues certificate on 30‑09‑2015.
  • The DRT subsequently dismissed the original recovery application on 27‑10‑2015, acknowledging that the compromise amount had been deposited.
  • The Court observed that the bank’s complaint to the CBI was lodged on 27‑02‑2018, more than two and a half years after the DRT‑approved settlement, indicating a lack of good faith.
  • The compromise settlement itself contained a clause (9.1.9) stating no lapses in documentation or irregularities were observed, and clause 25 certified that the settlement complied with RBI policy guidelines.
  • The Court held that the CBI lacked statutory jurisdiction because the State of Chhattisgarh had not given case‑specific consent for a CBI investigation.
  • The Court emphasized that the dispute was predominantly civil/commercial in nature, having been fully resolved through a judicially‑sanctioned compromise, and that continuing criminal prosecution would be oppressive, prejudicial, and an abuse of process.
  • The Court referenced precedents (e.g., Nikhil Merchant, Gian Singh, K. Bharthi Devi) to support the view that criminal cases arising from commercial transactions may be quashed when the parties have settled the dispute and the possibility of conviction is remote.

Penalties / Settlements / Directions

  • The Supreme Court set aside the High Court order dated 05‑07‑2024.
  • The Court quashed the chargesheet dated 27‑11‑2018 and the charge‑framing order dated 20‑02‑2023 issued by the Special Judicial Magistrate.
  • No monetary penalty or further criminal liability was imposed on the appellants.
  • The Court ordered no costs to be awarded.

Corrective Actions & Future Obligations

  • With the quashing of the criminal proceedings, the appellants are relieved of any further criminal liability arising from the CBI case.
  • The judgment underscores the need for banks to initiate criminal action promptly if fraud is suspected, rather than after a civil settlement, to avoid abuse of process.
  • The decision serves as a precedent that settlements approved by competent authorities and recorded by the DRT should be respected, discouraging retrospective criminal prosecutions.

Final Ruling & Enforcement

  • Appeal Allowed: The Supreme Court allowed the appeal filed by Vijay Kumar Kela & Anr.
  • Impugned Orders Quashed: The High Court order (05‑07‑2024) and the CBI chargesheet (27‑11‑2018) along with the charge‑framing order (20‑02‑2023) were set aside.
  • No Cost: The parties were not ordered to bear any costs.
  • Effect: The criminal proceedings against appellant No. 1 are terminated, reinforcing the principle that commercial banking disputes settled through compromise should not be pursued criminally.

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Judgment delivered by Justices B.V. Nagarathna and Ujjal Bhuyan, New Delhi, 29 May 2026.