RELIGARE FINVEST LIMITED versus STATE OF NCT OF DELHI & ANR.

Citation: [2023] 12 S.C.R. 197 · Decided: 11-09-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Disposed off

Cited by 2 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

CASE DETAILS
RELIGARE FINVEST LIMITED
v.
STATE OF NCT OF DELHI & ANR.
(Criminal Appeal No(s). 2242 of 2023)
SEPTEMBER 11, 2023
[S. RAVINDRA BHAT AND ARAVIND KUMAR, JJ.]
HEADNOTES
Issue for consideration: Whether a transferee entity-a successor 
bank (DBS Bank) can be fastened with corporate criminal liability for 
the off ences which the amalgamating entity-the erstwhile Laxmi Vilas 
Bank (LVB) is accused of.
Criminal Law – Corporate criminal liability – When cannot be 
fastened on a transferee entity:
Held: Criminal liability of a company cannot be transferred ipso 
facto, except when it is in the nature of penalty proceeding – Only 
defi ned legal proceedings are succeeded to by the transferee company, 
which is the DBS Bank in the instant case – Further, every scheme of 
amalgamation is statutory and sanctioned under the Banking Act – Such 
amalgamation aims at securing larger public interest and health of the 
banking industry – Overall objective of the scheme is to ensure recovery 
of what are the bank’s dues and ensuring protection of the creditors – In 
the present case, Clause 3 (3) of the amalgamation scheme no doubt, 
mentions that legal proceedings would be continued by or against the 
transferee bank-DBS Bank however, when viewed in the backdrop as 
aforesaid, the express mention of directors and such other individuals 
in the proviso to Clause 3 (3) means that it is to that extent only that 
prosecutions or other criminal proceedings can continue; in the ordinary 
sense, criminal liability can neither be attributed to DBS nor its directors, 
brought in after the amalgamation, whose appointments were approved 
by the RBI– Criminal liability of the individuals now attributed to 
DBS are actions of those who were offi  cials of LVB – Their individual 
[2023] 12 S.C.R. 197 : 2023 INSC 819
197
SUPREME COURT REPORTS 
[2023] 12 S.C.R.
198
responsibility and accountability in criminal law remains unaff ected 
by the amalgamation – No involvement of DBS Bank revealed in the 
charge sheet – Pending criminal proceedings to the extent it involved 
DBS, which was the subject mat-ter of the impugned judgment and all 
consequent proceedings arising therefrom (to the extent involving DBS), 
quashed – Impugned judgment set aside – Banking Regulation Act, 1949 
– s.45(2) – Penal Code, 1860 – ss.409, 120B. [Paras 30-32, 34 and 35]
Criminal Law – Criminal liability of a company:
Held: Criminal liability of a company is recognized where it can 
be attributable to individual acts of employees, directors or offi  cials of a 
company or juristic persons – It is recognized even if its conviction results 
in a term of imprisonment – Further, the legal eff ect of amalgamation 
of two companies is the destruction of the corporate existence of the 
transferor company (LVB, in the present case); it ceases to exist. [Para 30]
Criminal Law – Quashing – Exercise of power:
Held: Power to quash a criminal investigation or proceedings 
should not be lightly exercised – Yet, to refuse recourse to that power, 
in cases that require or may demand it, is being blind to justice – In 
the present case, the public’s confi dence in the banking industry was at 
stake, when RBI stepped in, imposed the moratorium and asked DBS 
to take over the entire functioning, management assets and liabilities of 
the erstwhile LVB – To permit prosecution of DBS for the acts of LVB 
offi  cials (facing criminal charges) would result in travesty of justice. 
[Para 35]
Criminal Law – Liability of corporate entities – Divergence of 
opinion amongst certain High Courts – Discussed.
LIST OF CITATIONS AND OTHER REFERENCES
McLeod Russel India Limited v. Regional Provident Fund Commissioner, 
Jalpaiguri & Ors., [2014] 9 SCR 162; Iridium India Telecom v. Motorola Inc.,
(2010) 14 (Addl.) SCR 591; M/s. General Radio & Appliances Co. Ltd. v. M.A. 
199
Khader (dead) by LR’s, [1986] 2 SCR 607; Saraswati Industrial Syndicate 
Ltd. v. CIT, Haryana, H.P. & Delhi, [1990] 1 Supp SCR 332 – relied on.
Sham Sunder & Others v. State of Haryana, (1984) 4 SCC 630 
: [1989] 3 SCR 886; M. Abbas Haji v. T.N. Channakeshava, (2019) 
9 SCC 606; Standard Chartered Bank v. Directorate of Enforcement,
[2005] 1 Suppl. ) SCR 49 – referred to.
Champa Agency v. R. Chowdhury, 1974 CHN 400; Sunil Banerjee 
v. Krishna Nath, AIR 1949 Cal 689; AK Khosla v. Venkatesan, (1992) 
98 CrLJ 1448 (Cal); Esso Standard Inc. v. Udharam Bhagwandas 
Japanwalla, [1975] 45 Comp Cas 16 (Bom); Tesco Supermarkets Ltd. 
v. Nattrass, 1

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