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2021 (10) TMI 1067 - HC - Indian LawsNon-grant of sanctioned CC Facility - Breach of trust - Commitment of fraud - prosecution under vicarious liability - commission of offences punishable under Section 409, 420 RPC - whether a Chairman/Director of a company, or say a bank, can be vicariously liable for a criminal offence attributed to the company/bank? - HELD THAT - The issue whether a Chairman/Director of a company, or say a bank, can be vicariously liable for a criminal offence attributed to the company/bank, came up for consideration before the Supreme Court in Sunil Bharti Mittal vs. CBI 2015 (9) TMI 1339 - SUPREME COURT , where it was held that The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused. The Magistrate has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused. In the present case, the Trial Court has failed to pose to himself the correct question viz. as to whether the complaint, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Chairman/Managing Director and Branch Manager would arise provided any provision exists in that behalf in the statute. The Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. In the present case, the important aspects have not been followed by the Trial Court while entertaining the complaint and issuing summons to petitioners. The complaint filed by respondents does not withstand the touchstone of law laid down by the Supreme Court as discussed above and is, at the most, a civil dispute. Thus, in order to secure the ends of justice, instant petition requires to be allowed - petition allowed.
Issues Involved:
1. Quashment of complaint under Section 561-A of the Code of Criminal Procedure. 2. Allegations of breach of trust and fraud under Sections 409, 420 RPC. 3. Vicarious liability of the Chairman of the Bank. 4. Jurisdiction and application of mind by the Trial Court in issuing summons. Detailed Analysis: Quashment of Complaint under Section 561-A of Cr.P.C.: The petition was filed seeking the quashment of a complaint pending before the Forest Magistrate, Srinagar. The complaint alleged offences under Sections 409 and 420 RPC. The petitioners argued that the complaint did not make out a prima facie case against them and that the Trial Court had assumed jurisdiction improperly. Allegations of Breach of Trust and Fraud under Sections 409, 420 RPC: The complaint by the respondent alleged that her husband had availed a CC facility of ?12.00 Lakhs from J & K Bank in 2007, and despite fulfilling all formalities, the sanctioned amount of ?2.00 Crores was not granted. The respondent accused the petitioners of committing breach of trust and fraud by not returning the title deeds and revenue extracts. Vicarious Liability of the Chairman of the Bank: The petitioners contended that the Chairman of the Bank, who was sued as petitioner no. 2, had no role in the alleged offences. They argued that vicarious liability could not be imputed to the Chairman as the matter of sanctioning loans lies within the jurisdiction and powers of the Branch Managers. They cited several Supreme Court judgments, including Sunil Bharti Mittal vs. CBI, to assert that vicarious liability requires specific statutory provision and active role with criminal intent. Jurisdiction and Application of Mind by the Trial Court in Issuing Summons: The petitioners argued that the Trial Court did not apply its mind while issuing summons and assumed jurisdiction not vested in it. They emphasized that the Trial Court failed to consider whether the complaint, even if taken at face value, would lead to the conclusion that the petitioners were personally liable for any offence. They cited Supreme Court judgments, including Maksud Saiyed v. State of Gujarat, which require the Magistrate to carefully scrutinize the allegations and evidence before issuing summons. Conclusion: The High Court concluded that the Trial Court did not follow the necessary legal standards while entertaining the complaint and issuing summons. The complaint did not meet the basic ingredients of the alleged offences and was more of a civil dispute. Therefore, the High Court allowed the petition, quashing the complaint and setting aside the order dated 19th January 2019, which issued the process and summons against the petitioners.
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