Bank Dues Settled, Criminal Liability Survives: One-Time Settlement Cannot Secure Discharge in ₹348-Crore Alleged Forged Work Orders and Loan Diversion Case—Punjab and Haryana High Court
Case Name: M/s Sarvodaya Highways Ltd. and Others v. Central Bureau of Investigation
Date of Judgment: 17 September 2026
Citation: CRR-1938-2026
Bench: Hon’ble Mrs. Justice Manisha Batra
Held: The Punjab and Haryana High Court held that an accused cannot secure discharge merely by questioning the reliability, admissibility or sufficiency of the prosecution material at the stage of framing charges. Where the material collected during investigation, if accepted at face value, raises a strong suspicion that the accused may have committed the alleged offences, the matter must proceed to trial. The Court further held that a One-Time Settlement with the lending bank does not, by itself, extinguish criminal liability arising from allegations of conspiracy, cheating, forgery, use of fabricated documents, diversion of loan funds and offences under the Prevention of Corruption Act. Examining competing interpretations of documents or accepting the defence version at this stage would amount to conducting an impermissible mini-trial.
Summary: M/s Sarvodaya Highways Ltd. and its directors challenged the order of the Special Judge, CBI, Panchkula, dismissing their discharge application and framing charges under Sections 120-B, 420, 467, 468 and 471 of the Indian Penal Code and Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988.
According to the prosecution, the company and its directors obtained and subsequently enhanced credit facilities from the State Bank of Bikaner and Jaipur by submitting ten allegedly fabricated work orders valued at approximately ₹348.24 crore. The CBI also alleged that false stock and receivable statements, forged documents concerning the creation of a lien over collateral properties and other fabricated records were furnished to the bank. The prosecution further alleged that the loan proceeds were diverted contrary to the terms of sanction.
The petitioners argued that the sanction letters did not specifically refer to the work orders, some work orders were merely proposals, originals had not been recovered and photocopies could not be relied upon without proof. They also relied upon collateral securities, personal guarantees, inspection reports and the One-Time Settlement entered into with the bank. It was further contended that the individual directors could not be prosecuted merely by virtue of their designation and that the essential ingredients of the alleged offences were absent.
The High Court noted that the prosecution material included the disputed work orders, denials attributed to some of the concerned companies, alleged common directorships involving associate entities, stock and receivable statements, documents concerning the alleged lien over collateral properties, bank records, inspection material, fund-flow analysis and the CFSL report. Whether these documents were genuine, admissible or sufficient to establish guilt could be determined only upon evidence being led at trial.
The Court also observed that the earlier order quashing the prosecution on the basis of the One-Time Settlement had already been set aside by the Supreme Court. The settlement could therefore be raised as part of the defence during trial, but could not independently justify discharge where the prosecution involved allegations of forged documents, criminal conspiracy, loss to the public exchequer and offences under the Prevention of Corruption Act.
Reiterating the principles laid down in Manendra Prasad Tiwari v. Amit Kumar Tiwari, Chitresh Kumar Chopra v. State (Government of NCT of Delhi), State of Maharashtra v. Som Nath Thapa and Amit Kapoor v. Ramesh Chander, the Court held that revisional jurisdiction against an order framing charges is limited. Interference is justified only where the order suffers from patent illegality, perversity, jurisdictional error or where the allegations are inherently improbable and fail to disclose the basic ingredients of an offence.
Decision: The High Court dismissed the criminal revision petition and upheld the order passed by the Special Judge, CBI, Haryana at Panchkula, declining to discharge the petitioners and framing charges against them.