In a decisive ruling, the Supreme Court has quashed a criminal case against HDFC Bank and its officials, which had accused them of violating an Income Tax Department directive. The case revolved around the alleged unauthorized operation of a bank locker belonging to an income tax assessee, despite an official order restricting access.
The bench, consisting of Justices BR Gavai and KV Viswanathan, overturned a High Court decision that had refused to nullify the FIR filed against the bank. The court found that the core accusations lacked key legal elements necessary to establish the offenses under the Indian Penal Code, particularly criminal intent, or “mens rea.”
The case originated when the Income Tax Department issued a notice under Section 132(3) of the Income Tax Act, 1961, to freeze the operation of the assessee’s accounts, fixed deposits, and lockers. Although access to the bank account was later restored, restrictions on the locker remained. Allegedly, HDFC Bank violated this order by allowing the locker to be accessed, prompting the filing of an FIR under various sections of the IPC, including charges like conspiracy and criminal breach of trust.
However, the Supreme Court sided with HDFC Bank’s argument that the FIR did not demonstrate the requisite mens rea for the alleged offenses. It emphasized that as a juristic entity, the bank itself cannot possess criminal intent. Additionally, there was no indication of dishonest inducement or misappropriation, undermining the charges of breach of trust and fraud.
In light of this, the Court ruled that none of the sections invoked under the FIR could be sustained. Applying principles from a previous case, Bhajan Lal v. State of Haryana, the Court concluded that the allegations, even if taken at face value, did not amount to a criminal offense.
The FIR, filed at Gandhi Maidan Police Station in Patna, has now been officially quashed, clearing HDFC Bank and its officials of all charges. The appeal was consequently upheld by the Supreme Court.
