Hemant S. Hathi v. CBI and Chetan Jayantilal v. CBI 

WRIT PETITION (CRIMINAL) NO. 37 OF 2020

J.K. MAHESHWARI and VIJAY BISHNOI, JJ

Overview

The writ petitions concerned an extraordinary request to quash multiple criminal proceedings initiated by various central investigating agencies, including the CBI, Enforcement Directorate (ED), Serious Fraud Investigation Office (SFIO), Income Tax Department, and actions under the Fugitive Economic Offenders Act (FEOA). The petitioners asserted that the disputes underlying these criminal cases were essentially civil and financial in nature, and that they were ready to settle outstanding dues owed to a consortium of banks. The Supreme Court examined whether ongoing criminal prosecutions should be stayed or quashed in light of proposed financial settlement and repayments.

Facts of the Case

Two writ petitions under Article 32 were filed challenging a wide spectrum of criminal proceedings arising from alleged financial irregularities involving public sector banks. The reliefs sought were sweeping, quashing of two CBI FIRs for offences under the Prevention of Corruption Act and IPC provisions on cheating and forgery. Charge sheets filed in these FIRs. Two ED ECIRs and related PMLA prosecution complaints. Attachment, seizure, and freezing orders under PMLA. Proceedings under the Fugitive Economic Offenders Act, culminating in the FEOA order of 28.09.2020.
SFIO prosecution under Section 447 of Companies Act, 2013. Income Tax prosecution complaints under the Black Money Act, 2015.

When the petitions were first heard in February 2020, counsel for the petitioners informed the Court that they had negotiated One-Time Settlements (OTS) with about 15 of 20 banks and were prepared to make substantial repayments. The petitioners contended that the looming criminal prosecutions were obstructing resolution.

Recognising the possibility of settlement, the Court issued notice and granted interim protection. Over the subsequent years (2020–2024), various interim orders were passed keeping all criminal and quasi-criminal proceedings in abeyance, including proceedings before Special PMLA Courts, CBI Courts, SFIO Courts, and Income Tax Courts.

By late 2021, the petitioners indicated readiness to pay approximately ₹900+ crores, having already repaid around ₹600 crores. The Court noted that the total alleged liability was around ₹1500 crores, and sought the State’s response regarding possible concessions.

Legal Issues

1. Whether the Supreme Court can quash FIRs, charge sheets, and prosecution complaints under Article 32 when the underlying financial dispute is sought to be settled through repayment.

2. Whether pending criminal proceedings under special statutes (PMLA, FEOA, Companies Act, Black Money Act) can be stayed or kept in abeyance due to proposed settlement with banks.

3. Whether the petitioners’ offer to repay constitutes a sufficient ground to grant extraordinary interim protection.

4. Interplay between civil/financial settlements and prosecution for economic offences, which are considered offences against the financial system and not merely private disputes.

Decision 

The Court did not decide the quashing of FIRs at this stage. Instead, it continued the interim protection keeping all proceedings in abeyance.

Both the writ petitions are allowed and be treated as disposed-of in above terms.