'Bank Juristic Person, No Mens Rea' : Supreme Court Quashes FIR Against HDFC Bank & Officials For Violating Income Tax Dept Order

The Supreme Court today quashed a criminal case registered against HDFC Bank Ltd. for violating the notice issued by the Income Tax Department to stop the operation of bank accounts, fixed deposits, and lockers of an income tax assessee.

The bench comprising Justices BR Gavai and KV Viswanathan set aside the High Court's decision which refused to quash the case registered against officials of the HDFC Bank Ltd. for violating the IT Department order and allowing the assessee to operate the bank locker when the prohibitory order regarding operation of the bank locker was in operation.

In this case, the IT Department issued notice to the Appellant/Bank under Section 132 (3) of the Income Tax Act, 1961 to stop the operation of the assesses bank account, fixed deposits, and locker. Later on, the department allowed the assesses to operate the bank account but maintained the status quo on the operation of fixed deposit and bank locker.

The allegations against the appellant/bank officials were that they had violated the notice issued by the department by allowing the assessee to operate the bank locker. Resultantly, the FIR was registered against them under Sections 34, 37, 120B, 201, 206, 217, 406, 409, 420 and 462 of the Indian Penal Code, 1860.

Senior Advocate Neeraj Kishan Kaul appearing for the appellant/bank contended that the FIR should be quashed because if the FIR was taken at face value it doesn't disclose the commission of a cognizable offence. Moreover, the FIR failed to show any mens rea of the officials of the appellant-bank for committing aforesaid offences.

Per contra, Advocate Manish Kumar appearing for the respondents justified the High Court's decision to not quash the FIR. He argued that the High Court while exercising powers under Section 482 Cr.P.C. cannot conduct a mini-trial to ascertain the allegations labeled against the Appellant-Bank, which can be better decided in the full-fledged trial before the trial court.

Finding force in the Appellant's contention, the judgment authored by Justice Gavai pointed out that the essential ingredients of the provisions of aforesaid offences were not met out to book the appellant/bank for the said offences.

“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.”

“For bringing out the case under criminal breach of trust (S. 409 IPC), 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.”

The Court added that since there was no entrustment of any property with the appellant bank, the ingredients of Section 462 IPC are 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 FIR/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 said.

Applying the ratio of Bhajan Lal v. State Of Haryana, the Court found it the fit case to quash the FIR because the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

“The First Information Report being Case No. 549 of 2021 registered at Gandhi Maidan Police Station, Patna on 22nd November, 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, 1860 is also quashed and set aside qua the appellant-bank.”, the court held.

Accordingly, the appeal was allowed.

Case Title: HDFC BANK LTD. VERSUS THE STATE OF BIHAR & ORS.

Citation : 2024 LiveLaw (SC) 823

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