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Criminal LawSupreme Court of India

Dr. Anil Khandelwal v. Phoenix India

Criminal Appeal · 2025 INSC 1069Decided 28 Aug 2025
Crl.A. No.-001159-001160-2011 (with connected Crl.A. No. 1166 of 2011)
Justice Sanjay Karol · Justice Sandeep Mehta

Background

Dr. Anil Khandelwal (then Chairman and Managing Director of Bank of Baroda, earlier Vijaya Bank) and two bank officers were prosecuted for defamation after a SARFAESI possession notice against a defaulting firm, Phoenix India, mistakenly stated the outstanding dues as about Rs. 56 crore instead of the correct roughly Rs. 5.6 crore due to a clerical error. The Bank promptly issued a clarification and apology, but Phoenix India filed a criminal complaint under IPC Sections 499-501, and a magistrate issued process against the bank officers. The Bombay High Court declined to quash the proceedings.

Decision Breakdown

The Supreme Court held that the Bank itself, on whose behalf the notice was issued, had never been made an accused, and settled law (Aneeta Hada v. Godfather Travels) holds that officers cannot be prosecuted on a theory of vicarious liability unless the company/bank is also arraigned and a specific statute creates such liability. The IPC, unlike special statutes such as the Negotiable Instruments Act, has no vicarious liability provision. The Court also found the possession notice was issued bona fide under SARFAESI in the discharge of statutory duty, with the error genuinely clerical and swiftly corrected, attracting the good-faith immunity under Section 32 of the SARFAESI Act. It quashed the complaint and, on identical facts, quashed the connected proceedings against the third officer as well.

Lesson Learnt

Bank or company officers cannot be criminally prosecuted merely because of their designation, without the company itself being made an accused and a specific statutory provision fixing personal liability, and genuine clerical errors made in good faith while discharging statutory duties do not amount to defamation.

Dr. Anil Khandelwal v. Phoenix India – Legal Case Shots | LegalAware