K. Sitaram & Anr. v. CFL Capital Financial Service Ltd. & Anr.
Background
The respondent company had defaulted on bank loans, leading the State Bank of Travancore to obtain a recovery decree from the Debts Recovery Tribunal and later assign the debt (along with securities) to Kotak Mahindra Bank without informing the respondent-company, as required by the assignment deed. Unaware of this earlier assignment, the respondent-company separately assigned to Kotak Mahindra Bank its own right to recover dues from a third party, only to later discover Kotak Mahindra Bank had already appropriated funds and withdrawn related criminal complaints without its knowledge. The respondent-company filed a criminal complaint under Sections 409, 418, 423, 425 and 120-B IPC against officers of both banks, including the two appellants (officers of the State Bank of Travancore), and the Magistrate issued process against them, which the High Court declined to quash.
Decision Breakdown
The Supreme Court agreed that both banks had suppressed material facts and that the State Bank of Travancore was duty-bound to inform the respondent-company of the assignment, creating a genuine doubt about why it was kept in the dark. However, it noted that the complainant-company had itself already withdrawn the complaint against the two Kotak Mahindra Bank officers from the same common complaint, and found no justification for continuing to prosecute only the two remaining appellants (the State Bank of Travancore officers) on the same set of facts. The Court held that the complaint against the present appellants did not survive and, in the interest of justice, quashed it. The appeal was accordingly allowed with no order as to costs.
Lesson Learnt
If a complainant voluntarily withdraws a criminal complaint against some co-accused arising from the very same set of facts, courts will scrutinize, and may quash, the continued prosecution of the remaining co-accused where there is no principled basis to treat them differently.