LexK. SLTARAM & ANR. versus CFL CAPITAL FINANCIAL SERVICE LTD. & ANR.
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A B [2017] 4 S.C.R. 850 K. SlTARAM & ANR. v. CFL CAPITAL FINANCIAL SERVICE LTD. & ANR. (Criminal Appeal No. 2285of2011) MARCH21,2017 . [R. K. AGRAWAL AND ADARSH KUMAR GOEL, JJ.] Penal Code, 1860 - ss. 409, 418, 423 and 425 r/w s.120-B - Complaint under - Quashing of - Complainant-respondent C Company borrowed a sum of Rs. 900 lakhs from consortium of Banks led by State Bank of Travancore (SBT) - Non-payment of loan by respondent - Recovery proceedings by SBT before DRT, partially decreed - However, SBT assigned the debt due from respondent to Kotak Mahindra Bank through an Assignment Deed - The factum of said assignment deed not intimated to the D respondent-Company either by SBT or Kotak - Unaware of such assignment deed in favour of Kotak, respondent inter alia assigned to Kotak all the dues of one of its defaulter for recovery - After nine months, respondent got to know of existence of the assignment deed between Kotak & SBT when Kotak filed an application for E substituting its name in the recovery proceedings - Common complaint by respondent against officers of Kotak & SBT alleging criminal breach of trust, suppression of facts and surreptitious execution of assignment deed - Process issued- Howeve1; complaint withdrawn by respondent against officers of Kotak - Appellants challenged issue of process before High Court, which was dismissed F - Plea of appellants that respondent withdrew complaint against the co-accused and since allegations against them are also same, thus the complaint is liable to be quashed- On appeal, held: There was suppression of facts by both the Banks as both were duty bound to inform the respondent about the Assignment Deed - However, G admittedly, respondent in its wisdom withdrew complaint against officers of the Kotak, from a common complaint made against four persons -- Thus, there is no reason as to why the remaining two persons being appellants, officers of SBT, be prosecuted - Hence, in the interest of justice complaint against appellants is liable to be quashed - Negotiable Instruments Act,1881 - s.138. H 850 K. SITARAM & ANR. v. CFL CAPITAL FINANCIAL SERVICE 851 LTD. & ANR. Criminal law: A Criminal procedure - Complaint - Issuance of process - Conditions for - Held: The only condition requisite for the issue of process is that the complainant's deposition must show some sufficient ground for proceeding. Vicarious liability of a Company - Held: If a company acting B through its officers commits an offence involving mens rea, it would normally be the intent of individual acting on behalf of the company. Allowing the appeal, the Court HELD: 1.1 The respondent-Company came to know about c the Assignment Deed dated 29.03.2006 only on 17.01.2007 i.e. after a lapse of 9 months, when the Kotak Mahindra Bank moved an application for substituting themselves in recovery proceedings in place of State Bank of Travancore on the basis of such Assignment Deed. It is pertinent to mention here that neither the State Bank of Travancore nor the Kotak Mahindra D Bank informed the respondent-Company regarding the alleged Assignment Deed either before or after the alleged assignment. [Para 17) [861-B-C] 1.2 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. More so, the fact of such assignment deed must also have been brought to the notice of the respondent-Company by the Kotak Mahindra Bank when it was responsible to provide necessary assistance to the respondent-Company. (Para 18) (861-C-D, Fl Maksud Saiyed v. State of Gujarat and Ors. (2008) 5 SCC 668 : [2007) 9 SCR 1113 - referred to. 1.3 The Assignment Deed dated 29.03.2006 specifically contained a clause which required that the clients and other related persons shall be informed about the alleged Assignment. But this fact was not brought to the notice of the respondent-Company. E F G H 852 SUPREME COURT REPORTS [2017) 4 S.C.R. A Primarily, it was the duty of the State Bank ofTravancore to inform the respondent-Company about the said assignment and secondly, Kotak Mahindra Bank was to inform the same
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