Fraudsters cannot be let off by returning money: SC

'Such offences create hazards in financial interest of society'

A person charged with financial fraud cannot be let off just by returning the money, as such an offence does not only involve individual wrongs, but also has immense social impact, the Supreme Court has held.

A bench of Justices Dipak Misra and Vikramjit Sen said it was not legally permissable to dismiss cases of financial fraud before trial. It also set aside a 2010 Bombay High Court order that quashed such a charge sheet filed against a group of businessmen, after they submitted that they had returned the money they cheated the Bank of Baroda and other public sector banks out of.

“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. It has the potential 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,” the bench said.

The court asserted that financial offences are not merely civil in nature. “It is an accepted principle that whenever there is manipulation and cleverly conceived contrivance to avail financial benefits, it cannot be regarded as a case having overwhelming and predominant civil character,” the bench said.

Allowing the appeal filed by the Central Bureau of Investigation, the bench said that courts should be on their guard against accused obtaining no due certificates from banks to get criminal cases quashed.

“The collective interest of which the court is the guardian cannot be a silent or mute spectator and allow proceedings to be withdrawn.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 Criminal Procedure Code and quash proceedings,” the bench said.