Case Note & Summary
The Supreme Court allowed the appeal filed by HDFC Bank Ltd. against the judgment of the Patna High Court which had dismissed the bank's petition under Section 482 CrPC seeking quashing of FIR No. 549 of 2021. The FIR was registered on a complaint by the Deputy Director of Income Tax (Investigation) alleging that officials of the bank's Exhibition Road Branch, Patna, had allowed Smt. Sunita Khemka to operate her bank locker bearing No. 462 in violation of a prohibitory order dated 5th October 2021 passed under Section 132(3) of the Income Tax Act, 1961. The background facts reveal that during a search and seizure operation, the Income Tax Department had issued an order restraining the bank from allowing operation of lockers and accounts of certain persons including Smt. Sunita Khemka. Subsequently, on 1st November 2021, the Department issued an order revoking the restraint only in respect of bank accounts of Smt. Sunita Khemka and three others. The bank officials, misunderstanding the order to apply to lockers as well, allowed Smt. Khemka to operate the locker on 9th November 2021. When the Department later conducted a search of the locker, it found that the locker had been operated and filed a complaint leading to the FIR. The bank officials in their statements explained that it was an inadvertent error and misinterpretation of the order. The High Court dismissed the quashing petition holding that the FIR disclosed cognizable offences and investigation could not be thwarted. The Supreme Court examined the allegations and found that the FIR did not disclose any mens rea or criminal intent on the part of the bank officials. The Court noted that the bank had complied with the prohibitory order initially and only allowed operation after receiving the revocation order, albeit mistakenly applying it to the locker. There was no allegation of dishonest intention, misappropriation, or deception. The Court held that the ingredients of offences under Sections 406, 409, 420, 120B, 201, 206, 217, 462, 34, and 37 IPC were not made out. Relying on the principles laid down in State of Haryana v. Bhajan Lal, the Court held that continuation of prosecution would be an abuse of process of law. Accordingly, the Supreme Court set aside the High Court's order and quashed the FIR and all proceedings arising therefrom.
Headnote
A) Criminal Procedure Code - Quashing of FIR - Section 482 CrPC - Lack of Mens Rea - FIR against bank officials for allowing operation of locker despite prohibitory order under Section 132(3) IT Act - Held that where allegations do not disclose any criminal intent or mens rea, continuation of prosecution would be an abuse of process - Court quashed FIR as ingredients of offences under IPC not made out (Paras 12-18). B) Indian Penal Code - Criminal Breach of Trust - Sections 405, 406, 409 - Entrustment and Dishonest Misappropriation - Bank locker operation after revocation of restraint order - Held that no dishonest intention or misappropriation as bank officials acted under bona fide mistake interpreting order - Ingredients of criminal breach of trust not satisfied (Paras 14-16). C) Indian Penal Code - Cheating - Section 420 - Deception and Fraudulent Inducement - No allegation of deception or inducement by bank officials - Held that mere violation of prohibitory order without fraudulent intent does not constitute cheating (Para 17). D) Indian Penal Code - Criminal Conspiracy - Section 120B - Agreement to Commit Offence - No evidence of meeting of minds or agreement between bank officials and account holder - Held that conspiracy requires intentional participation, not mere negligence or mistake (Para 18).
Issue of Consideration
Whether the FIR against the appellant-bank officials for alleged violation of a prohibitory order under Section 132(3) of the Income Tax Act, 1961, discloses the commission of any offence under the Indian Penal Code, 1860, and whether the High Court erred in dismissing the petition under Section 482 CrPC for quashing the FIR.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment of the Patna High Court, and quashed FIR No. 549 of 2021 and all proceedings arising therefrom.
Law Points
- Quashing of FIR
- Section 482 CrPC
- Mens rea essential for criminal liability
- Ingredients of criminal breach of trust
- Criminal conspiracy
- Cheating
- Income Tax Act Section 132(3) restraint order
- Bona fide mistake
- No criminal intent
