Returning fraud funds won't save you from criminal action

A person who has secured a bank loan by fraud is liable to face criminal prosecution even if he has repaid the debt, the Supreme Court said today.

In a major ruling, which also hinges on the interpretation of 'corruption' in the Prevention of Corruption Act (PCA), a bench comprising justice SB Sinha and justice Mukundakam Sharma said, "A civil proceeding and a criminal proceeding can proceed simultaneously. The bank is entitled to recover the amount of loan given to the debtor.

"If in connection with obtaining the said loan, criminal offences have been committed by the accused persons, including officers of the bank, criminal proceedings would also indisputably be maintainable."

The court dismissed an appeal filed by Kolkata businesswoman Rumi Dhar. Dhar's husband is the key accused in the case. She is also facing charges of fraud and cheating along with some officials of the Oriental Bank of Commerce.

Dhar had sought quashing of the charge-sheet filed against her by the Central Bureau of Investigation in 1993. She said that since she had returned the loan amount to the bank, she could not be prosecuted under criminal law in a case relating to the transaction.

Earlier, the CBI special judge and the Calcutta High Court had rejected her plea. The special judge had observed: "If I allow this (plea for quashing the charge-sheet), then I may have to swallow in a case of bribery that the accused has paid back the amount to the sufferer the amount received as bribe" and hence he cannot be punished.

The Supreme Court termed the offence that the woman is accused of as "an offence against society". "The offence alleged against the accused being an offence against society and the allegations contained in the FIR having been investigated by the CBI, the bank could not have entered into any settlement at all," the court said.

The court said it was for the trial court to determine whether the couple had conspired to cheat the bank and intended to defraud it in connivance with the bank's officials.