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TMI Blog2017 (3) TMI 1926X X X X Extracts X X X X X X X X Extracts X X X X ..... 96 of 2003 before the Debts Recovery Tribunal (DRT), Mumbai. On 22.07.2005, the DRT passed a partial decree awarding a sum of Rs. 812.26 lakhs with 12 per cent interest. (b) On 29.03.2006, the State Bank of Travancore assigned the debts due from the complainant-Company to the Kotak Mahindra Bank together with all the securities through an Assignment Deed. On 11.01.2007, the borrower-the Respondent Company assigned to Kotak Mahindra Bank the debt due towards it from one Ravishankar Industries Pvt. Ltd. of more than Rs. 32 crores with an agreement that any excess recovery over and above Rs. 90 lakhs from Ravishankar Industries Pvt. Ltd. would be shared equally between the Kotak Mahindra Bank and the complainant-Company. It is pertinent to mention here that the fact of the alleged Assignment Deed came to the notice of the complainant-Company only on 17.01.2007 when the Kotak Mahindra Bank handed over a copy of the application for substituting themselves in place of State Bank of Travancore to the Respondent-Company. (c) The Kotak Mahindra Bank initiated process for substituting its name in place of the assignor-State Bank of Travancore in the recovery application and also withdraws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants have preferred this appeal by way of special leave. 3. Heard the arguments advanced by Mr. T.R. Andhyarujina, learned senior Counsel for the Appellants and Mr. Aniruddha P. Mayee, learned Counsel for the State and perused the records. Point for consideration: 4. The only point for consideration before this Court is whether Criminal Case No. 0800009/SW/08, pending in the Court of Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai, is liable to be quashed or not? Rival contentions: 5. Learned senior Counsel for the Appellants vehemently contended that the Appellants were not the employees of the State Bank of Travancore when the alleged Deed of Assignment was entered into between the State Bank of Travancore and the Kotak Mahindra Bank. He further contended that the Deed of Assignment dated 29.03.2006 is a valid and equitable assignment. The decision in respect of execution of the assignment is taken by the Executive Committee of the State Bank of Travancore and the same is not the individual decision of the Appellants herein. Learned senior Counsel further contended that since the State Bank of Travancore had no knowledge about the transactions betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore was duty bound to protect the interest of the Respondent-Company as the Bank was entrusted with certain properties of the Respondent-Company. By entering into such alleged assignment with deliberate suppression and concealment of material facts with dishonest intention, the Appellants herein, who were responsible for the day to day affairs of the Bank, have committed the offence of criminal breach of trust and cheating. Learned Counsel for the State finally submitted that the order dated 25.01.2008 passed by the Metropolitan Magistrate for issue of process as well as the order dated 07.01.2011, passed by the learned single Judge of the High Court, dismissing the writ petition filed by the Appellants herein for setting aside the order of issue of process dated 25.01.2008 against the Appellants are justified and do not call for any interference. Discussion: 8. The present appeal has been filed for quashing of Criminal Case No. 0800009/SW/08 pending in the Court of Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai and for setting aside the order dated 25th January 2008, by which process was issued against all the persons Accused in the complaint. Appellant N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely done with a dishonest intention to induce the complainant-Company and to make wrongful losses and to deceive it. 11. Learned senior Counsel for the Appellants contended that the allegations against the Appellants in their personal capacity are vague. He further contended that Appellant No. 1 herein joined the State Bank of Travancore on 11.05.2006 i.e. subsequent to the Assignment Deed dated 29.03.2006. He was, however, admittedly working with the Bank on 11.01.2007, when the complainant Company entered into the Deed of Assignment with the Kotak Mahindra Bank. As regards Appellant No. 2 herein, though he was signatory to the Deed of Assignment dated 29.03.2006, he submitted that he was not in service of State Bank of Travancore on the date on which Deed of Assignment dated 11.01.2007, was executed between the complainant-Company and the Kotak Mahindra Bank and hence he claims to have no connection whatsoever with the offence alleged. He further contended that the Indian Penal Code does not contain any provision for attaching vicarious liability on the part of the Chairman and General Managers of the Company when the Accused is the Company. When the Company is the offender, vic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized the truck on July 30, 1973 from the house of the Respondent they could and did claim to have done so in exercise of their bona fide right of seizing the truck on the Respondent's failure to pay the third monthly installment in time. It was, therefore, a bona fide civil dispute which led to the seizure of the truck. On the face of the complaint petition itself the highly exaggerated version given by the Respondent, the Appellants went to his house with a mob armed with deadly weapons and committed the offence of dacoity in taking away the truck was so very unnatural and untrustworthy that it could take the matter out of the realm of civil dispute. Nobody on the side of the Respondent was hurt. Even a scratch was not given to anybody. 6. In our opinion on the facts and in the circumstances of this case criminal prosecution deserves to be quashed. On behalf of the Respondent it was argued that the Appellants' filing a petition in the High Court for quashing the proceeding before issuance of the summons was premature and the High Court could not have quashed it. In our opinion the point is so wholly without substance that it has been stated merely to be rejected. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, this discretion should be exercised with proper care and caution. 17. The Respondent-Company came to know about the Assignment Deed dated 29.03.2006 only on 17.01.2007 when the Kotak Mahindra Bank moved an application for substituting themselves in place of State Bank of Travancore on the basis of that alleged document i.e. Assignment Deed dated 29.03.2006. It is also pertinent to mention here that neither the State Bank of Travancore nor the Kotak Mahindra Bank informed the Respondent-Company regarding the alleged Assignment Deed either before or after the alleged assignment. It is also on record that vide agreement dated 01.10.1999, the Kotak Mahindra Bank, which was earlier a financial services Company, entered into an agreement with the Respondent-Company to act as an advisor and to provide necessary assistance for the successful restructuring of the Respondent-Company and to provide follow up and support services to the complainant-Company in recovery from its various defaulters. 18. Under the above terms and conditions, when the Kotak Mahindra Bank was already in an agreement with the Respondent-Company in order to safeguard its interest, the fact of the Assignment Dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank wherein all the dues of a defaulter, viz., Ravishankar Industries Pvt. Ltd., of more than Rs. 32 crores were assigned to the Kotak Mahindra Bank. The Kotak Mahindra Bank was under an obligation to inform the Respondent-Company about the earlier Assignment Deed which was not done. More so, the Kotak Mahindra Bank received a sum of Rs. 225 lakhs in March 2007 from Ravishankar Industries Pvt. Ltd. but without giving any information as to the terms of settlement and the mode of payment to the complainant-Company, approached the Recovery Officer-I for appropriating the same. 21. With regard to the contention of learned senior Counsel for the Appellants herein that there can be no vicarious liability attributed to the Director, Deputy Director of a Company unless the Statute specifically creates so, no doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company that too when the criminal act is that of conspiracy. Thus, an individual who has perpetrated the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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