The main legal point established in the judgment is that the amalgamation of a banking company does not automatically abate criminal proceedings against the transferee bank, and the interpretation of the relevant provisions of the scheme of amalgamation requires clarification from the Reserve Bank.

JUDGMENT

Yogesh Khanna, J. This petition has been filed seeking quashing of the supplementary chargesheet dated 12.02.2021, summoning order dated 16.02.2021 arising out of FIR No.189/2019 registered by EOW, Mandir Marg under Section 409/120B IPC and the consequential proceedings arising therefrom.

2. The petitioner is a banking company incorporated under the Companies Act, 2013 having its registered office at Connaught Place, New Delhi, a wholly owned subsidiary of foreign entity i.e., DBS Singapore Limited. The Government of India on 25.11.2020, while exercising its powers under Section 45 of the Banking Regulations Act, 1949 directed non-voluntary amalgamation of the petitioner with erstwhile Laxmi Villas Bank (LVB) owing to the precarious financial condition of LVB, in order to safeguard the interests of the customers, depositors, creditors, employees of LVB. The respondent no.1 registered an FIR No.189/2019 on 23.09.2019 at the behest of the complainant/respondent no.2 under Section 409/120B IPC pertaining to misappropriation of certain fixed deposits, deposited with the erstwhile LVB as security against short term loans availed by the group companies of the respondent no.2, RHC Holding Pvt. Ltd. and Ranchem Private Limited. The said fixed deposits were allegedly appropriated by erstwhile LVB upon default in repayment of the outstanding loans by the group companies of respondent no.2.

3. The learned APP for the State however argued in November, 2016 RFL placed an amount of Rs.400 crores in two fixed deposits (FDs) with LVB. These FDs were created by RFL for short term tenor with intention to keep them free from all and any encumbrance. In January 2017, RFL placed an additional amount of about Rs.350 crore in another couple of FDs with LVB. Like with the first 2 FDs, these 2 FDs were also created by RFL for short term tenor with the intention to keep them free from all and any encumbrance. These were short term FDs, and were renewed by RFL from time to time till its maturity dated July, 2017. However, on 31.07.17, RFL was shocked to receive an email from LVB with a statement of accounts qua RFL's current account. RFL discovered that LVB had credited the proceeds of the FDs to RFL's current account and subsequently debited from RFL's current account a cumulative amount of Rs.7,23,71,50,920/- without prior intimation to RFL. It is alleged LVB and the other accused person came to an understanding for onward lending of RFL's funds and LVB would have made huge gains from such lending since it got the FDs/funds @4.5% interest and they had purportedly lent the money @ 10% interest.

4. During the course of investigation, the complainant company, through Manpreet Singh Suri, its authorised representative, had filed a representation citing Final Report dated 21.03.2020 filed by the EOW in FIR No.189/2019. From this final report it is understood LVB was not been made an accused by the EOW in the Final Report. It is alleged from the documents available with the Final Report, there is evidence to show that LVB has benefitted from the entire fraud and should have been made an accused along with its promoters, and accordingly, further investigation was carried out. Based on review of transactions in deposit loan account statements of RHC and Ranchem, it was noted total interest income of INR 1,15,93,63,273.07 was charged from November, 2016 till February, 2018. It was observed out of total interest of INR 1,15,93,63,273.07; INR 39,30,59,049 was paid by the borrowers to LVB and balance INR 76,63,04,227.07 was recovered from fixed deposit at the time of final set off. Thus it is seen LVB acted on the premise of three companies i.e., RFL, RHC Holding and Ranchem, the group companies under the same promoters and created security against FDs of RFL without ensuring proper authorization by RFL. As has been discussed above, the loans given by LVB to RHC Holding and Ranchem against FDs of RFL were ultimately utilized by RHC Holding and on non-r