Supreme Court quashes Religare Finvest’s plea against DBS Bank India

The Supreme Court docket has quashed an FIR and the ensuing prison proceedings towards DBS Financial institution India over a Rs 791 crore fund-diversion case filed by Religare Finvest Ltd (RFL).

The unique petitions, a civil go well with on the Delhi Excessive Court docket adopted by an FIR with the Financial Offences Wing of the Delhi Police, have been filed towards Lakshmi Vilas Financial institution (LVB), which later merged with DBS India on a path from the Reserve Financial institution of India. After the merger, RFL sought to implead DBS within the prison complaints together with former LVB officers.

A Supreme Court docket bench of Justices S Ravindra Bhat and Arvind Kumar, whereas setting apart Delhi Excessive Court docket’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 mounted deposits furnished by it as safety for short-term loans availed of by its group corporations RHC Holding Pvt Ltd and Ranchem Pvt Ltd.
Whereas 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 mounted deposits of RFL. After RHC Holding and Ranchem defaulted on mortgage funds, LVB appropriated the mounted deposits with none prior discover to RFL, it claimed.Based mostly on the petition, the EOW had filed a cost sheet towards LVB officers. On November 25, 2020, because of 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 underneath Part 482 of the Code of Felony Process earlier than the HC and in addition sought to quash a supplementary cost sheet that named DBS.

Nevertheless, the excessive court docket, with out quashing the summons and the prison proceedings towards DBS, directed the events to hunt a clarification on the scheme of amalgamation that whether or not prison legal responsibility was handed onto DBS underneath the phrases. The HC noticed that quashing the summoning order at that stage would possibly hamper the aim of the investigation since there was no express provision for abatement of prison proceedings towards DBS within the merger scheme sanctioned by the RBI.

DBS challenged the excessive court docket’s order within the Supreme Court docket.

“Earlier than the amalgamation, LVB had no ties to DBS. LVB existed as a definite and separate entity with out being a part of the identical group or affiliate of or in any method related to DBS in any capability,” argued DBS within the Supreme Court docket.

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 prison legal responsibility might be inherited by a transferee firm.