ANIL KHANDELWAL ETC. versus PHOENIX INDIA AND ANR.

Citation: [2025] 8 S.C.R. 2416 · Decided: 28-08-2025 · Supreme Court of India · Bench: SANJAY KAROL · Disposal: Appeal(s) allowed

cites 3 · see the full citation network in Lexace

Judgment (excerpt)

[2025] 8 S.C.R. 2416 : 2025 INSC 1069
Anil Khandelwal Etc. 
v. 
Phoenix India and Anr.
(Criminal Appeal No(s). 1159-1160 of 2011)
28 August 2025
[Sanjay Karol and Sandeep Mehta,* JJ.]
Issue for Consideration
Whether the High Court erred in rejecting the quashing petition 
filed by the appellants-Officers of the Bank challenging the order 
passed by the Magistrate issuing process against them for the 
offences punishable u/ss.500 and 501, Penal Code, 1860.
Headnotes†
Penal Code, 1860 – ss.500, 501 – Securitization and 
Reconstruction of Financial Assets and Enforcement of 
Security Interest Act, 2002 – s.32, 13(2), (4) – Security Interest 
(Enforcement) Rules, 2002 – r.8 – Code of Criminal Procedure, 
1973 – s.482 – Loan accounts of respondent No.1-firm were 
classified as non-performing assets and it was notified to 
repay the overdue loans with interest – Repeated intimations 
and demands raised but, the outstanding amounts were not 
cleared – Eventually, Bank issued a possession notice u/s.13(4), 
SARFAESI Act r/w 2002 Rules, for taking symbolic possession 
of the immovable properties mortgaged by respondent No. 1 
to secure the credit facilities – Inadvertently, the outstanding 
amount quoted in the possession notice was mentioned as 
Rs.56,15,9,294/- instead of Rs.5,61,59,294/- – Respondent 
No. 1 issued notice to the appellants viz., the Chairman and 
Managing Director, the Deputy General Manager, and the Chief 
Manager of the Bank, alleging defamation stating that the 
Bank had maliciously issued the possession notices reflecting 
an unrealistic and false outstanding amount of more than 
Rs.50 crores – Respondent No. 1 filed criminal Complaint u/
ss.499, 500 and 501, IPC – Magistrate issued process against 
the appellants – Quashing petition filed by the appellants, 
dismissed by High Court – Interference with:
* Author
[2025] 8 S.C.R. 
2417
Anil Khandelwal Etc. v. Phoenix India and Anr.
Held: The Bank is a body Corporate – Appellants were arraigned 
as accused on the principle of vicarious liability being the persons 
responsible for the day-to-day affairs of the Bank – However, the 
Bank itself, on whose behalf the alleged defamatory notice had 
been issued, was not arraigned as an accused in the complaint – 
Without impleading the company itself, the prosecution against 
directors or officers alone is impermissible. [Para 16]
1.2 Thus, the prosecution of the appellants, without impleading the 
Bank as an accused in the proceedings, is ex-facie impermissible 
and cannot be sustained. [Para 18]
1.3 The appellants were summoned in capacity of the officers of 
the Bank for the offences punishable under the IPC – However, 
there is no concept of vicarious liability of the officers or directors 
for the offences under the IPC as is provided under special Penal 
Statutes such as The Negotiable Instruments Act, 1881, The Food 
Safety and Standards Act, 2006, The Drugs and Cosmetics Act, 
1940, etc. which specifically creates such liability. [Para 20]
1.4 Accordingly, before any officer of a Bank or a body corporate 
can be prosecuted for an offence under the IPC on the allegation 
of having acted on behalf of the institution, it is incumbent upon 
the complainant to produce unimpeachable material indicating 
the precise role of the officer in the commission of the alleged 
offence – Mere bald assertions of vicarious liability, without 
foundational facts to show active participation, authorization, or 
deliberate omission on the part of the officer, are insufficient to 
justify issuance of process in such a situation – The law does not 
permit automatic prosecution of directors or officers merely because 
of their designation or official status. [Para 22]
1.5 Hence, in the absence of any specific statutory provision 
under the IPC creating vicarious liability, coupled with the lack of 
concrete allegations or material demonstrating the individual role 
or culpability of the appellants for the alleged defamatory notice, 
their prosecution cannot be sustained – Continuation of criminal 
proceedings merely on the basis of their official designation in 
the Bank would amount to a misuse of judicial process. [Para 24]
1.6 Furthermore, the appellants are entitled to the statutory 
protection provided u/s.32 of the SARFAESI Act, which expressly 
prohibits any suit, prosecution, or other legal proceedings against 
the Reserve Bank, the Central Registry, any secured creditor, 
or their officers for anything done in good fai

Excerpt shown. Read the full judgment & AI analysis in Lexace.