Lawyer not liable for financial loss to client sans intent to defraud: Chhattisgarh High Court

The Chhattisgarh High Court recently held that a lawyer cannot be held criminally liable for financial loss caused to a bank due to their professional opinion, unless active participation to defraud the bank is proven. [Ramkinkar Singh v. State Of Chhattisgarh and Another]

The Court quashed criminal charges against a State Bank of India (SBI) empaneled lawyer alleged to have been involved in the fraudulent disbursal of a bank loan to a man under the Central government's Kisan Credit Card (KCC) scheme. The head note states,

"Merely because an opinion given by an Advocate has caused financial loss to person / institution, that cannot be a ground for prosecuting him. There has to be some evidence that the said act was done with sole intention to defraud the person/institution and with active participation alongwith other conspirators."

The lawyer was accused of providing a false document certifying that there was an immovable property in the name of the borrower, which led to the bank granting him the benefit of the loan.

A Bench of Chief Justice Ramesh Sinha and Justice Amitendra Kishore Prasad noted that the lawyer had merely provided a 'search report' and that there is nothing on record to prove that he actively connived with the other co-accused persons to defraud the bank.

"From perusal of the materials available on record, it transpires that the petitioner has only given a search report and there is nothing on record to hold that there was active connivance between the petitioner and other co-accused persons who have defrauded the respondent-Bank. The petitioner would be 74 years of age as on date. Even it cannot be said that the petitioner has performed his duties in a negligent manner so as to cause financial loss to the respondent Bank", the Court held.

It also found that despite having been accused of fraud, the lawyer has been retained by the bank as its panel advocate.

"Had he been negligent or untrustworthy, the respondent-Bank would certainly have removed him from their panel," it added.

The Court was dealing with a plea filed by 74-year-old lawyer Ramkinkar Singh, who sought the quashing of criminal charges filed against him, which had also been upheld by the sessions court.

It was alleged that the septuagenarian, who is an empaneled advocate of an SBI branch, had issued a 'non-encumbrance certificate' certifying that the land held by the borrower, one Hariram Chandrakar, is free of all encumbrances. This was a requirement under the KCC scheme to qualify for the grant of a loan. Chandrakar therefore obtained the loan.

As per the allegations, Chandrakar failed to repay the loan amount and upon enquiry, it was found that he had no land in his name. It was also discovered that the documents provided by Chandrakar mortgaging his land as security for the loan amount were forged.

A first information report (FIR) was lodged against Chandrakar along with the bank manager of the concerned SBI branch. Subsequently, even Advocate Singh was implicated in a supplementary charge sheet alleging his role in aiding the fraud.

After considering submissions on behalf of the parties, the Court noted that the prosecution failed to prove there was any active participation on Singh's part in causing loss to SBI.

Thus, it quashed all criminal proceedings against him.

Advocate Anshul Tiwari appeared for Singh.

Deputy Advocate General Shashank Thakur represented the State of Chhattisgarh.

Advocate PR Patankar represented the State Bank of India.

[Read Order]