NDLI: Religare Finvest Limited Vs. State of Nct of Delhi & Anr.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Criminal Law
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Indian Penal Code (45 of 1860) Banking Regulation Act (10 of 1949)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	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 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.
Judge	Hon'ble Mr. Justice S. Ravindra Bhat
Neutral Citation	2023 INSC 819
Petitioner	Religare Finvest Limited
Respondent	State Of Nct Of Delhi & Anr.
SCR	[2023] 12 S.C.R. 197
Judgement Date	2023-09-11
Case Number	2242

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