Banking Law - The Legal Chamber

Fraud Case Closed: Supreme Court Rules in Favor of Accused After Bank Settlement

13Jun

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Supreme Court

Fraud Case Closed: Supreme Court Rules in Favor of Accused After Bank Settlement

The Supreme Court quashed criminal proceedings under Sections 120B, 420, 468, and 471 IPC, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, against the appellants. This decision was based on a comprehensive One Time Settlement with the Bank, full repayment of dues, and dismissal of recovery proceedings. The Court noted that continuing the proceedings would serve no purpose, especially given similar cases against co-accused were also quashed on grounds of settlement Facts Of The Case: N.S. Gnaneshwaran and N.S. Madanlal, accused nos. 3 and 6 respectively, are the appellants in this case. They were facing criminal proceedings in C.C. No. 16 of 2006, arising from FIR No. RC MA1 2005 0020, based on a complaint lodged by respondent no.2 - Bank on April 27, 2...

SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions

The Supreme Court, in Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd., ruled that Section 11 of the SARFAESI Act is mandatory, requiring inter-se disputes between banks and financial institutions concerning secured assets to be resolved through arbitration. No explicit arbitration agreement is needed; the provision legally mandates it, thereby divesting DRT of jurisdiction in such matters. Facts Of The Case: In the case of Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd. & Ors., the core dispute involved the priority of charge over secured assets (stocks of paddy and rice) belonging to a common borrower, M/s Sri Nangli Rice Mills Pvt. Ltd., between two public sector banks: Bank of India (appellant) and Punjab National Bank (respondent). Both banks had extended credit facil...

Cheque Bounce Case: Supreme Court Reinstates Case Against Director in ₹6 Crore Cheque Dishonour Case

The Supreme Court clarified that for vicarious liability under Section 141 of the Negotiable Instruments Act, complaints need not reproduce statutory language verbatim. Substantive allegations demonstrating a director's responsibility for company affairs suffice. The Court emphasized substance over form, ruling that technical pleading deficiencies don't invalidate proceedings if the complaint, read holistically, establishes the director's operational role. The judgment reinstated criminal proceedings against the director, overturning the High Court's quashing order. Facts Of The Case: The case involved a complaint filed by HDFC Bank against M/s R Square Shri Sai Baba Abhikaran Pvt. Ltd. and its directors, including Mrs. Ranjana Sharma (Respondent No. 2), for dishonor of a cheque worth ₹6...