New Delhi, June 4: In a significant ruling, the Supreme Court of India has held that criminal proceedings against a loan defaulter cannot continue once the outstanding loan dues have been settled through a compromise approved by the Debt Recovery Tribunal (DRT).
A Bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan quashed criminal proceedings initiated by the Central Bureau of Investigation on the complaint of UCO Bank against businessman Vijay Kumar Kela.
The case involved allegations under Sections 420 (cheating) and 471 (using forged documents as genuine) of the Indian Penal Code (IPC). However, the apex court observed that since the loan dispute had already been resolved through a settlement sanctioned by the DRT, continuing the criminal prosecution would serve no meaningful purpose.
The Court stated that allowing such proceedings to continue would be “oppressive” to the accused and would amount to an abuse of the judicial process.
The judgment is being viewed as an important precedent in cases where financial disputes between banks and borrowers are amicably resolved through legally approved settlements, reinforcing the principle that criminal proceedings should not be used to prolong settled commercial disputes.(KNC)
