Corporate Criminal liability of erstwhile Bank on successor Bank after amalgamation under the Banking Regulations Act.
Corporate Criminal Liability of successor Bank after non-voluntary amalgamation as per directions of RBI under the Banking Act.
The appellant Religare Finvest Limited had placed four FDs of Rs.750 crores as security for short term loan with Laxmi Vikas Bank. LVB had given loans to RHC Holding and Ranchem utilizing these FDs as security.
However, on default of RHC, LVB debited the amount of Rs.723.71 crores from RFL’s current account without obtaining prior authorisation or prior notice.
In the meanwhile, the RBI had placed LVB under prompt corrective action in view of inadequate capital, etc.
On 23.9.2019, the appellant – Religare Finvest Limited filed criminal complaint against the officials of LVB that they had conspired with RHC Holding and Ranchem.
On 17.9.2020 the cognizance of the offences was taken after filing charge-sheet against ten officials of LVB. However, LVB was not an accused in the said case.
On 17.11.2020, RBI imposed moratorium on LVB under Section 45(2) of the Banking Regulation Act, 1949 and directed non-voluntary amalgamation to DBS Bank.
On 12.2.2021, supplementary charge-sheet or final report was filed to implead LVB through its Director (now DBS Bank) as accused along with bank officials and companies RHC Holding and Ranchem.
HELD that in the present context, on the directions of RBI asked DBS Bank to take over entire functioning, management, assets and liabilities of LVB. To permit prosecution of DBS for the acts of LVB officials (who are in fact facing criminal charges) would result in travesty of justice. Criminal proceedings to the extent of DBS are quashed.
Religare Finvest Limited Vs. State of NCT of Delhi and another (Criminal Appeal No.2242 of 2023) Judgment dated 11.9.2023 of the Supreme Court of India
