Supreme Court quashes FIR against HDFC Bank officials for locker access despite IT Dept restraint

The Supreme Court Tuesday quashed a criminal case against certain officials of the HDFC Bank who had been booked for allowing a woman to access her bank locker despite a restraining order of the Income Tax (IT) Department [HDFC Bank Limited v. State of Bihar and Others].

A Bench of Justice BR Gavai and Justice KV Viswanathan said there was nothing to show that the officials of the bank had dishonestly induced someone to deliver any property to any person or that mens rea (criminal intent) existed at the time of such inducement.

It made the observation while examining whether Section 420 (cheating and dishonestly inducing delivery of property) of the Indian Penal Code (IPC) was made out in the case.

The Court explained that for an offence under Section 420 IPC, the case should disclose that the bank had induced anyone since inception, such inducement was fraudulent or dishonest and that mens rea (criminal intent) existed at the time of such inducement.

"The appellant-bank is a juristic person and as such, a question of mens rea does not arise," it said.

The Court also found that the allegation of criminal breach of trust was not made out in the case. It gave similar findings with regard to other offences invoked against the bank officials.

"The FIR/complaint also does not show that the appellant- bank and its officers acted with any common intention or intentionally cooperated in the commission of any alleged offences. As such, the provisions of section 34, 37 and 120B of the IPC would also not be applicable," it said.

The criminal case had originated in an order passed on October 5, 2021, by the IT Department for stopping the operation of bank lockers, bank accounts and fixed deposits of some of the HDFC Bank's customers against whom tax evasion proceedings were ongoing.

The order was complied with. However, on November 1, 2021, the IT department directed the bank to revoke the freeze on the bank accounts of those customers including one Sunita Khemka.

Accordingly, the customers were allowed them operate their bank accounts. However, the Bank later allowed Khemka to operate her bank locker as well.

On November 20, 2021, a search and seizure operation at the bank confirmed that Khemka had operated her bank locker with the assistance of bank officials. The same was found to be in breach of IT Department's restraint order of October 5, 2021.

Thereafter, the IT Department issued summons to the Branch Manager, Branch Operation Manager and Teller Authoriser.

The officials in their response said they had misinterpreted the order dated November 1, 2021 by assuming that revocation of the restraint extended to the bank lockers as well.

Dissatisfied with the explanation, the IT Department made a written complaint to the Police. The officials of HDFC bank were then booked under various provisions of the IPC.

The Patna High Court in 2022 refused to quash the case. Aggrieved, the HDFC Bank approached the apex court which proceeded to quash the case.

Senior Advocate Neeraj Kishan Kaul appeared for the HDFC Bank.

Advocates Manish Kumar and Venkataraman Chandrashekhara Bharathi, appeared for the respondents including Income Tax Department .

[Read Judgment]