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Synopsis

The Supreme Court on October 22, 2024, observed that a bank, as a juristic entity, cannot possess mens rea (criminal intent), as it quashed an FIR lodged against HDFC Bank officials accused of cheating, criminal breach of trust, and related offences for allegedly violating a direction by the Income Tax authorities and let a co-accused operate bank locker.

A bench of Justices B R Gavai and K V Vishwanathan allowed an appeal by the HDFC Bank Ltd against June 8, 2022 order by a single bench of the Patna High Court, declining to quash the FIR lodged with Gandhi Maidan Police Station, Patna on November 22, 2021, against certain officials of the appellant-bank working at its Exhibition Road Branch, Patna for the offences punishable under Sections 34, 37, 120B, 201, 206, 217, 406, 409, 420 and 462 of the Indian Penal Code.

The bench found none of the ingredients of the offences were made out in the case, which could squarely fall within categories of the law laid down by the top court in the case of Bhajan Lal and others.

"We are of the considered view that the continuation of the criminal proceedings against the appellant-bank would cause undue hardship to the appellant-bank," the bench said.

In his arguments, the bank's counsel contended that taking the FIR at its face value, it did not disclose any mens rea of the officials and the commission of any offence. He further submitted that the complaint also did not disclose any specific allegation with regard to collusion between the unnamed staff of the appellant bank with Ms Sunita Khemka, the main accused. 

The only allegation is that while the Prohibitory Order of October 5, 2021 was in force in relation to the bank locker, the customer was allowed to operate it, he submitted. 

It is settled law that the High Court while considering a petition under Section 482 of the CrPC for quashing the FIR must examine as to whether prima facie the ingredients of the offence have been made out in the FIR or not, he said. 

He relied upon the Supreme Court's judgments in the case of Arnab Ranjan Goswami Vs State of Maharashtra (2021) and Delhi Race Club Ltd and Others (1940) Vs State of Uttar Pradesh and another (2024).

Referring to the State of Haryana and others Vs Bhajan Lal and others (1992), he submitted that the continuation of the prosecution of the appellant-bank and/or its staff under IPC would amount to undue hardship and miscarriage of justice.

Opposing the plea, the state counsel said that the High Court while exercising powers under Section 482 CrPC cannot conduct a mini trial. This court in the case of R Venkatkrishnan Vs Central Bureau of Investigation (2009) has held that though a bank or a financial institution may not suffer ultimate loss but if the money has been allowed to be used by another person illegally for illegal purposes, the ingredients of Section 405 IPC would be attracted, he said.

He further submitted the access to the bank locker given to Ms. Khemka in violation of Section 132(2) of the IT Act would attract the offence under Section 409 read with Section 405 of the IPC.

He said that the High Court had rightly relied upon Neeharika Infrastructure Private Limited Vs State of Maharashtra and others (2021) and other judgments, to hold that the High Court cannot thwart any investigation into a cognizable offence, which is the statutory right and duty of the Police under the relevant provisions of the CrPC.

He also submitted that it is equally settled that the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint.

After hearing the counsel and scrutinizing record, the bench noted that though by order of October 5, 2021, a restraint order was imposed in respect of Bank Lockers, Bank Accounts and Fixed Deposits, the revocation order of November 1, 2021 only referred to the Bank Accounts. In the statements of the officers of the appellant-bank, it was stated that the bank locker was inadvertently permitted to be operated, by misinterpreting the revocation order of November 1, 2021.

"The appellant-bank is a juristic person and as such, a question of mens rea does not arise. However, even reading the FIR and the complaint at their face value, there is nothing to show that the appellant-bank or its staff members had dishonestly induced someone deceived to deliver any property to any person, and that the mens rea existed at the time of such inducement. As such, the ingredients to attract the offence under Section 420 IPC would not be available," the bench said.

The court further said that for bringing out a case under criminal breach of trust, it will have to be pointed out that a person, with whom entrustment of a property is made, has dishonestly misappropriated it, or converted it to his own use, or dishonestly used it, or disposed of that property.

"In the present case, there is not even an allegation of entrustment of the property which the appellant-bank has misappropriated or converted for its own use to the detriment of the respondent No.5 (IT official). As such, the provisions of Section 406 and 409 IPC would also not be applicable," the bench said.

The court further pointed out that since there was no entrustment of any property with the appellant-bank, the ingredients of Section 462 IPC were also not applicable. 

"Likewise, since the offences under Section 206, 217 and 201 of the IPC requires mens rea, the ingredients of the said Sections also would not be available against the appellant-bank," the bench said.

The FIR or the complaint also does not show that the appellant bank and its officers acted with any common intention or intentionally cooperated in the commission of any alleged offences. As such, the provisions of section 34, 37 and 120B of the IPC would also not be applicable, the court pointed out.

The court finally set aside the High Court's judgment and quashed the FIR.

Case Title: HDFC Bank Ltd Vs The State of Bihar & Ors