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 officials of LVB – Their individual responsibility and accountability in criminal law remains unaffected 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 officials of a company or juristic persons – It is recognized even if its conviction results in a term of imprisonment – Further, the legal effect 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 confidence 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 officials (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. 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, 1971 (2) All ER 127; Meridian Global Funds Management Asia Ltd v. Securities Commission, [1995] 3 All ER 918; Walker’s Settlement 1935 (1) Ch. D. 567; In Re: Skinner 1958 (3) All E.R 273 – referred to.
Stroud’s Judicial Dictionary of Words and Phrases (9th edition). 25 Black’s Law Dictionary, Eleventh Edition – referred to. OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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