Summary
The Supreme Court quashed proceedings against DBS for alleged offences of erstwhile Lakshmi Vilas Bank officials before its compulsory amalgamation. Corporate criminal liability can arise through attribution of responsible individuals’ acts, but it does not automatically transfer with assets and liabilities. The scheme preserved prosecution of the former bank’s responsible officers; the charge-sheet disclosed no involvement of DBS. Their individual liability remained unaffected, while the complainant’s separate civil claim was not decided.
Issues
- Whether compulsory amalgamation transferred the predecessor bank’s alleged criminal liability to DBS.
- How the scheme’s continuation clause and proviso affected proceedings against DBS and former officials.
Provisions considered
- Section 45(5)(e), Banking Regulation Act, 1949Continuation of pending proceedings depends on the statutory scheme. The Court interpreted that framework in light of the public-interest rescue and the scheme’s express preservation of liability of responsible former officials. (¶¶ 6, 18, 21, 30, 31, 32)
- Clause 3(3) and proviso, Lakshmi Vilas Bank Ltd. (Amalgamation with DBS Bank India Ltd.) Scheme, 2020The broad continuation language did not impose the former entity’s criminal liability on DBS. The proviso preserved proceedings against responsible directors, officers and employees of the transferor bank. (¶¶ 9, 21, 30, 31, 32, 33, 34, 35)
Held
- A corporation may bear criminal responsibility through attribution of acts and mental state of those controlling its affairs. That principle does not automatically transfer its criminal liability to another corporate entity upon amalgamation; the effect of the scheme and the nature of the proceedings matter. (¶¶ 23, 24, 25, 26, 27, 28, 29, 30)
- The compulsory banking rescue protected depositors, creditors and confidence in the banking system. Read in that setting, the scheme’s express proviso continued prosecution of the former bank’s responsible officials, without making DBS or its newly appointed directors criminally answerable for their acts. (¶¶ 21, 30, 31, 32)
- The charge-sheet attributed the impugned conduct to former LVB officials and disclosed no involvement by DBS. Those individuals’ criminal accountability survived, but prosecuting DBS for their conduct would be unjust and warranted quashing to that extent. (¶¶ 33, 34, 35)
- Quashing power must be exercised carefully, but refusal to use it where the record demands intervention can itself defeat justice. The Court resolved the DBS issue rather than leaving the prosecution stayed pending scheme clarification. (¶¶ 9, 10, 21, 34, 35, 36)
Result
DBS appeal allowed and complainant’s appeal dismissed without costs. High Court judgment set aside; criminal proceedings and consequential proceedings quashed only insofar as they involved DBS. Former officials’ individual criminal liability unaffected.