IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT SRINAGAR
Vinod Chaflerji Koul, J.
Branch Head, J&K Bank Ltd. & Anr. – Petitioners
Versus
Arjumand Shafi – Respondent
CRMC No. 56/2019
Decided On : 08-10-2021
VICARIOUS LIABILITY - CRIMINAL PROCEDURE - Section 561-A, 409, 420 RPC - The court discussed the principles of vicarious liability in criminal law, emphasizing that such liability cannot be imposed unless explicitly provided by statute. The court referenced the Supreme Court's ruling in Sunil Bharti Mittal vs. CBI, which clarified that a corporate officer can only be held liable if there is sufficient evidence of their active role and criminal intent. The court concluded that the allegations against the bank's chairman did not meet the necessary legal standards for vicarious liability, leading to the quashing of the complaint.
Fact of the Case:
The respondent filed a complaint against the petitioners, alleging breach of trust and fraud related to a loan facility that was not disbursed despite formalities being completed. The Trial Court issued summons against the petitioners based on the complaint.
Finding of the Court:
The court found that the Trial Court failed to properly assess whether the complaint met the legal requirements for establishing vicarious liability. It noted that the allegations did not demonstrate that the chairman of the bank had any direct involvement or criminal intent in the alleged offenses.
Issues: Whether the chairman of a bank can be held vicariously liable for criminal offenses committed by the bank, and whether the Trial Court had jurisdiction to issue summons based on the complaint.
Ratio Decidendi: The court reiterated that vicarious liability in criminal law requires explicit statutory provisions. It emphasized that mere position within a corporate structure does not automatically confer liability without evidence of direct involvement or intent in the alleged criminal acts.
Final Decision: The petition was allowed, the complaint was dismissed, and the order of the Trial Court issuing summons was set aside.
JUDGMENT :
Vinod Chaflerji Koul, J.
1. In this petition, preferred under Section 561-A of the Code of Criminal Procedure, quashment of complaint bearing File no. 23/A pending before the court of Forest Magistrate, Srinagar (for short "Trial Court") is sought for on the grounds made mention of therein.
2. Heard and considered. Perused the record.
3. A complaint, as is discernible from perusal of the file as also Trial Court record, has been filed by respondent before the Trial Court under Section 409, 420 RPC, alleging therein that her husband had availed CC facility of Rs. 12.00 Lakhs from J&K Bank Branch Pampore in the year 2007. Rs. 2.00 Crores are alleged to have been sanctioned in favour of husband of respondent, but, despite fulfillment of all formalities and lien-mark of land, the sanctioned amount was not granted, and even the title deeds and revenue extracts were not returned. According to respondent, petitioners committed breach of trust and committed fraud.
4. Upon presentation of complaint by respondent, the Trial Court vide order dated 19th January 2019, said that commission of offences punishable under Sections 409, 420 RPC were made out against accused no. 2 and that accused no. l was also liable to be prosecuted under vicarious liability and directed to issue summons to accused for their appearance before the Trial Court.
5. Learned senior counsel appearing for petitioner-Bank has stated that complainant/respondent has admitted that her husband has availed TOD of Rs. 7.00 Lakhs and the said amount along with interest has not been returned by husband of complainant. It is stated that husband of complainant failed to repay, so petitioner no. l, in order to secure interests of bank, asked revenue authorities to put a lien on properly of complainant. He has averred that complainant in her complaint has not named the accused at all and this fact is evident form complaint itself. It is contended that petitioner no. 2 has been sued as Chairman of the Bank. According to him Chairman of the Bank cannot be sued as he has no role and it lies within jurisdiction and powers of the Branch Managers and even in the matter of sanction of Rs. 2.00 Crores, the story is that her husband had already applied through another branch (J&K Bank Branch Office B. B. Cantt.) for providing loan of Rs. 2.00 Crores. It is stated that at no stage petitioner no. 2 had anything to do with complainant or her husband. He also contends that no criminal case is made out taking into account all the circumstances that have been set out by Trial Court in the order or in the statement of complainant inasmuch as putting lien in the revenue extract to secure interests of the bank is not an act which is prohibited by law nor does it constitute any criminal offence and that Trial Court has assumed jurisdiction, which is not vested in it.
6. On the other hand, the learned senior counsel appearing for the respondent has stated that the cognizance has been taken by the Trial Court after making a detailed order dated 19th January 2019 and after applying its mind to the whole contents of complaint and statement of respondent. It is contended that petitioners have other remedy available under Section 253(2) of Cr.P.C. by filing an application before Trial Court and putting their honest effort to satisfy the Trial Court that charge is groundless. It is stated that small liability of husband of respondent towards the bank as alleged by petitioners, cannot be a justification for a criminal wrong committed by them against complainant and that respondent and her husband are two different juristic persons, having and owning some properties individually and independently, thus, act of petitioners is unwarranted criminal act and needs proper trial to give a check to the illegal acts carried on by employers and employees of corporate sector who are equally answerable for their criminal acts against the public.
7. In the present case, when complaint was moved by respondent, the Tri
Hira Lal Hari Lal Bhagwati v. CB1 (2003) 5 SCC 257
Keki Hormusji Gharda v. Mehervan Rustom Irani (2009) 6 SCC 475
Mahendra Singh Dhoni vs. Yerraguntla Shyamsundar 2017 (7) SCC 760
Maksud Saiyed v. State of Gujarat (2008) 5 SCC 668
Pepsi Foods Ltd. v. Special Judicial Magistrate (1998) 5 SCC 749
R. Kalyani v. Janak C. Mehta (2009) 1 SCC 516
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