Sep 18, 2023

The Supreme Court has quashed an FIR and the resultant criminal proceedings against DBS Bank India over a ₹791-crore fund diversion case filed by Religare Finvest Ltd (RFL). The authentic petition, a civil go well with on the Delhi High Court (HC) and an FIR with the Economic Offences Wing of the Delhi Police, had been filed against Lakshmi Vilas Bank (LVB), which later merged with DBS India on a course from the Reserve Bank of India ( RBI ). After the merger, RFL sought to implead DBS within the legal complaints together with former LVB officers. A Supreme Court bench of Justices S Ravindra Bhat and Arvind Kumar, whereas setting apart Delhi High Court’s order to proceed the proceedings by EOW, mentioned final week that allowing prosecution of DBS for the acts of LVB officers would end in a travesty of justice. RFL had accused LVB of misappropriation of fastened deposits furnished by it as safety for short-term loans availed of by its group firms RHC Holding and Ranchem. While the civil go well with was pending within the HC, in September 2019, it filed the FIR claiming that officers of LVB conspired with RHC Holding and Ranchem and siphoned off funds, together with the fastened deposits of RFL. After RHC Holding and Ranchem defaulted on mortgage funds, LVB appropriated the fastened deposits with none prior discover to RFL, it claimed. Based on the petition, EOW had filed a chargesheet against LVB officers. On November 25, 2020, attributable to LVB’s unstable monetary situation, the RBI directed its non-voluntary amalgamation with DBS.On February 16, 2021, summons was issued to DBS within the case.DBS challenged it by submitting a petition beneath Section 482 of the Code of Criminal Procedure earlier than the HC and likewise sought to quash a supplementary cost sheet that named DBS.However, the excessive courtroom, with out quashing the summons and the legal proceedings against DBS, directed the events to hunt a clarification on the scheme of amalgamation that whether or not legal legal responsibility was handed onto DBS beneath the phrases. The HC noticed that quashing the summoning order at that stage may hamper the aim of the investigation since there was no specific provision for abatement of legal proceedings against DBS within the merger scheme sanctioned by RBI. DBS challenged the excessive courtroom’s order within the Supreme Court. “Before the amalgamation, LVB had no ties to DBS. LVB existed as a distinct and separate entity without being part of the same group or affiliate of or in any manner associated with DBS in any capacity,” argued DBS in SC. DBS, which was represented by IndusLaw via companions Amit Jajoo and Sushmita Gandhi, argued that solely the precise wrongdoer might be punished for its wrongdoing, and no vicarious legal legal responsibility might be inherited by a transferee firm.