Supreme Court quashes criminal case against Appellants after complaint withdrawal. Insufficient grounds cited.

The Supreme Court quashed the criminal case against the Appellants due to the withdrawal of the complaint against the Kotak Mahindra Bank officers. The court found insufficient grounds to proceed against the Appellants, emphasizing the inconsistency in prosecuting only the State Bank of Travancore officers.

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Issues Involved:
1. Validity of the Assignment Deed dated 29.03.2006.
2. Allegations of criminal breach of trust, cheating, and fraudulent execution of deeds.
3. Vicarious liability of the officers of the State Bank of Travancore.
4. Whether the criminal case is liable to be quashed.

Issue-wise Detailed Analysis:

1. Validity of the Assignment Deed dated 29.03.2006:
The complainant-Respondent Company borrowed Rs. 900 lakhs from a consortium of banks, leading to a Non-Performing Asset status due to non-payment. The State Bank of Travancore assigned the debts to Kotak Mahindra Bank through an Assignment Deed dated 29.03.2006. The Respondent-Company was unaware of this assignment until 17.01.2007. The Kotak Mahindra Bank then initiated the process to substitute its name in place of the State Bank of Travancore and withdrew two criminal complaints without informing the Respondent-Company. The Respondent-Company filed complaints alleging criminal breach of trust and cheating.

2. Allegations of Criminal Breach of Trust, Cheating, and Fraudulent Execution of Deeds:
The Respondent-Company alleged that the State Bank of Travancore and Kotak Mahindra Bank acted in collusion to defraud it. The Appellants contended that the assignment was valid and equitable, executed by the Executive Committee of the State Bank of Travancore. They argued there was no wrongful gain or intention to defraud. However, the Respondent-Company claimed that the assignment was done with dishonest intention, and the suppression of facts led to wrongful losses.

3. Vicarious Liability of the Officers of the State Bank of Travancore:
The Appellants argued that they were not personally liable as the Indian Penal Code does not attach vicarious liability to the directors of a company unless explicitly stated by statute. They cited precedents, including Maksud Saiyed v. State of Gujarat, which emphasized the need for specific statutory provisions to impose vicarious liability. The court noted that a corporate entity acts through its officers, and vicarious liability arises only if the statute provides so.

4. Whether the Criminal Case is Liable to be Quashed:
The court examined whether there was sufficient ground to proceed with the complaint. It was noted that the Respondent-Company was not informed about the Assignment Deed, which was required under Clause 2.3 of the deed. The court found that both banks failed to inform the Respondent-Company, indicating suppression of facts. However, the court also noted that the Respondent-Company had withdrawn the complaint against the officers of Kotak Mahindra Bank but continued to prosecute the officers of the State Bank of Travancore, which was inconsistent.

Conclusion:
The Supreme Court concluded that the complaint against the Appellants did not survive due to the withdrawal of the complaint against the Kotak Mahindra Bank officers. The appeal was allowed, and the criminal case against the Appellants was quashed. The court emphasized that there was no sufficient ground to proceed against the Appellants, highlighting the inconsistency in prosecuting only the officers of the State Bank of Travancore while exonerating the Kotak Mahindra Bank officers.

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