Whether the retired physical instructors of the Government College are entitled to the benefit of revised pay scale when the same benefit was granted to the similarly placed employees.

[2023] 12 S.C.R. 235 : 2023 INSC 828

B.C. NAGARAJ & ANR.

v.

THE STATE OF KARNATAKA & ORS.

(Civil Appeal Nos.5529¬5530 of 2023)

SEPTEMBER 13, 2023.

[ABHAY S. OKA AND PANKAJ MITHAL, JJ.]

Issue for consideration: Whether the retired physical instructors

of the Government College are entitled to the benefit of revised

pay scale when the same benefit was granted to the similarly

placed employees.

Service law – Revised pay scale – Benefit of – Entitlement, to

retired physical instructors of the Government College – When

the same benefit of University Grant Commission pay scale

under the Government order dated 15.11.1999 was granted to

the similarly placed employees:

Held: Retired physical instructors should not be denied the

same relief, when the same benefit was granted to the similarly

placed employees – Case of similarly placed retiree, decided by

the Single Judge of the High Court was similar to the present

appellants wherein the Single Judge held that he was entitled to

the benefit of the revised UGC pay scale from 1.01.1996 based

on the order dated 15.11.1999 – Said order attained finality upto

this Court – It appears that the Order dated 19.10.2006 issued

by UGC and the Order dated 4.07.2008 issued by the State

Government that the Government employees were not entitled

to a revised pay scale with retrospective effect were not pointed

out to the courts below as also this Court who decided the case

of the similarly placed retiree – State Government never applied

for the review and allowed the said order to become final – In the

subsequent decision, the Division Bench of the same High Court

noted the directions issued by the UGC on 19.10.2006 and the

Order dated 4.07.2008 – However, even thereafter, despite the

Government Order dated 4.07.2008, in 2014, to the employees

who were similarly placed as the appellants, the benefits of the

revised UGC pay scale in terms of the Government order dated

15.11.1999 were granted – Now, the State Government cannot rely

upon the Government Order dated 4.07.2008 – Thus, issuance

* Author

236 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

of direction to the State Government to extend the benefits under

the Government Order dated 15.11.1999 to the retired physical

instructors within the stipulated period. [Paras 6-12]

State of Karnataka & Anr. v. Puttaswamy and Ors. Writ

Appeal no.234 of 2007 dated 29th April 2011; Irayya

& Ors. v. The Secretary & Ors. Writ Petition no. 62679

of 2012 30th July 2012 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5529-5530 of

2023.

From the Judgment and Order dated 09.10.2017 of the High Court of

Karnataka at Bengaluru in WP Nos.1895 and 1896 of 2014.

Charudatta Vijayrao Mahindrakar, Mrs. Darshan Mahindrakar, Advs.

for the Appellants.

Prateek K. Chadha, AAG, V. N. Raghupathy, Manendra Pal Gupta,

Md. Apzal Ansari, Sreekar Aechuri, Ms. Muskan Singla, Ms. Pragya

Ganjoo, Advs. for the Respondents.

The Judgment of the Court was delivered by

ABHAY S. OKA, J.

FACTUAL ASPECTS

1. The appellants were employed initially as Physical Instructors in

Government Grade Colleges in Karnataka. The first appellant reached

the selection grade pay scale of the University Grants Commission

(UGC) on 1st January 1986. The second appellant was granted

senior scale of pay on 1st January 1986 and selection grade of

pay from 13th July 1990. The first appellant was superannuated on

31st January 1998, and the second appellant was superannuated

on 31st May 2004. Both, at the time of retirement, were selection

grade Physical Education Directors in the State Government colleges.

2. On 15th November 1999, the State Government issued an order

revising the pay scale of Teachers, Librarians and Physical Education

Directors in the Government colleges. Under the said Government

order, the benefit of the University Grants Commission (UGC) pay

scales as revised from 1st January 1996 was granted to these three

categories of employees with retrospective effect from 1st January

1996. On the same day, by a separate order, the benefit of the

revised pay scale was granted to Teachers, Librarians and Directors 

[2023] 12 S.C.R. 237

B.C. NAGARAJ & ANR. v. THE STATE OF KARNATAKA & ORS.

of Education in the Government-aided colleges. The order dated 15th

November 1999 was partially modified on 29th July 2000. A circular

was issued by the Government of Karnataka on 23rd October 2001

stating that physical education and library personnel drawing UGC

pay scales of 1996 shall not be granted other government benefits

under the Government Order dated 15th November 1999.

3. The appellants were denied the benefit of the Government Order dated

15th November 1999. Therefore, the appellants filed an application

before the Karnataka Administrative Tribunal, which was rejected.

They filed a Writ Petition before the High Court to challenge the

order of the Tribunal. Writ Petition was dismissed by the impugned

judgment. The impugned judgment relies upon a Government Order

dated 4th July 2008, which records that the revised UGC pay scale

shall be extended from 27th July 1998 notionally and all financial

benefits shall be extended prospectively from 4th July 2008, and no

arrears shall be paid.

SUBMISSIONS

4. The learned counsel appearing for the appellants pointed out that

one Shri N. Ramesh, who retired as a Director of Physical Education

(selection grade), was granted the benefit of the Government Order

dated 15th November 1999. He superannuated on 28th February

2006. Later on, the benefits granted to the said employee were sought

to be recovered from him, and therefore, he filed a Writ Petition before

the High Court. The High Court held that the benefit of the revised

UGC pay scale was rightly extended earlier to the said employee,

and therefore, the High Court, by judgment and order dated 13th

February 2009, directed that all benefits be extended to him. He

pointed out that the Division Bench confirmed the said order in a

Writ Appeal filed by the respondents, and a Special Leave Petition

filed against the orders has been dismissed. Placing reliance on the

documents annexed to the application for permission to file additional

documents (IA No.61474 of 2022), he submitted that even in 2014,

full benefits under the Government Order dated 15th November 1999

were extended to similarly placed employees.

5. Learned Additional Advocate General appearing for the State of

Karnataka submitted that the orders passed in the Writ Petition filed

by Shri N. Ramesh are per incuriam since the Government Order

dated 4th July 2008 which incorporated the clarification issued on 

238 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

19th October 2006 by UGC was not brought to the notice of the

Courts. He pointed out that by a judgment and order dated 29th April

2011 passed by the Division Bench of Karnataka High Court in Writ

Appeal no.234 of 2007 (State of Karnataka & Anr. v. Puttaswamy and

Ors.), the benefit of the Government Order dated 15th November

1999 was denied to the similarly placed employee on the basis of the

order dated 19th October 2006 of UGC. He submitted that the order

dated 4th July 2008 issued by the State Government is in terms of

the order of UGC dated 19th October 2006, which lays down that

the benefit of revised pay scales with effect from 1st January 1996

shall be extended from 27th July 1998 notionally and all financial

benefits shall be extended prospectively from 4th July 2008 and that

the employees will not be entitled to arrears. The learned Additional

Advocate General, therefore, submitted that the view taken by the

High Court is fully justified.

FINDINGS AND CONCLUSIONS

6. It is not in dispute that the case of Shri N. Ramesh in Writ Petition

No. 5855 of 2008, decided by the learned Single Judge of Karnataka

High Court on 13th February 2009, was similar to the present

appellants. The learned Single Judge held that the said Shri N.

Ramesh was entitled to the benefit of the revised UGC pay scale

from 1st January 1996 based on the order dated 15th November

1999. Shri N. Ramesh had superannuated on 28th February 2006

as Physical Education Director from a Government aided college.

The judgment of the Karnataka High Court attained finality as a

Writ Appeal preferred against the judgment and the Special Leave

Petition have been dismissed.

7. It appears that the Order dated 19th October 2006 issued by UGC

and the Order dated 4th July 2008 issued by the State Government

were not pointed out to the learned Single Judge who decided Writ

Petition of Shri N. Ramesh on 13th February 2009. Even in the

appeal before the Division Bench and in the Special Leave Petition

before this Court, both the orders were not brought to the notice of

the Court. The State Government never applied for the review. It

is true that in the subsequent decision of the Division Bench of the

same High Court dated 29th April 2011 in Writ Appeal no. 234 of

2007, the High Court noted the directions issued by the UGC on 19th

October 2006 and the Government Order dated 4th July 2008 based 

[2023] 12 S.C.R. 239

B.C. NAGARAJ & ANR. v. THE STATE OF KARNATAKA & ORS.

on the directions of UGC and held that the Government employees

were not entitled to a revised pay scale with retrospective effect.

8. It must be noted here that the State Government implemented the

order in the case of Shri N. Ramesh. In another order passed by a

learned Single Judge of Karnataka High Court on 30th July 2012, in

Writ Petition no. 62679 of 2012 and other connected matters (Irayya

& Ors. v. The Secretary & Ors.), a direction was issued in favour of

the similarly placed employees who were entitled to revised UGC pay

scales with effect from 1st January 1996 along with all consequential

benefits. The order was confirmed by a Division Bench by an order

dated 27th August 2013.

9. Along with the same application, the appellants have produced a

copy of the order dated 7th January 2014 in the case of one Shri K.C.

Patil and Shri S.H. Hallur, who were retired librarians. By the said

order, the two librarians, who were similarly placed as the appellants,

were granted the benefit of the revised pay scale from 1st January

1996 along with consequential benefits in terms of the order dated

15th November 1999. Therefore, not only in the case of Shri N.

Ramesh but even thereafter in 2014, to the employees who were

similarly placed as the appellants, the benefits of the revised UGC

pay scale in terms of the Government order dated 15th November

1999 were granted.

10. The State Government ought to have applied for review of the order of

this Court in the case of Shri N. Ramesh. However, the Government

had allowed the said order to become final. Notwithstanding the

Government Order of 4th July 2008, as can be seen from the

additional documents, the benefit was granted to the employees who

were similarly placed with the appellants even on 7th January 2014.

It was a conscious decision of the State Government to accept the

decision of the High Court in the case of Shri N. Ramesh. Now, the

State Government cannot rely upon the Government Order dated

4th July 2008, which was not pointed out to the Courts which dealt

with the case of Shri N. Ramesh as the State Government accepted

the judgment in the case of Shri N. Ramesh and granted benefits

to him of the Government Order dated 15th November 1999. There

is no reason why the appellants should be denied the same relief,

especially when even as of 7th January 2014, the same benefit was

granted to the similarly placed employees. 

240 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

11. Accordingly, the impugned judgment dated 9th October 2017 is hereby

quashed and set aside. We direct the State Government to extend

the benefits under the Government Order dated 15th November

1999 to the appellants within a period of three months from today.

The appeals are, accordingly, allowed on the above terms with no

order as to costs.

12. We make it clear that this judgment will apply to all cases, pending

before either the Administrative Tribunal or High Court, of similarly

situated employees in which a similar relief is claimed. However, this

judgment shall not be used to file new cases by retired employees

who have been denied the benefit and who have not challenged

the action till date. No case, which has been concluded, shall be

reopened on the basis of this judgment.

Headnotes prepared by: Nidhi Jain Result of the case : Appeals allowed.

Assault by mob, Seven accused were convicted, including the present appellant-accused no.6, for the offences punishable u/s. 396 r/w. s.149, s.395 r/w. s.149, s.307 r/w. s.149, s.435 r/w. s.149 and s.201 r/w. s.149 of the IPC. Accused nos. 1, 5 and 13 were acquitted in appeal by the Supreme Court. (a) Whether conviction of appellant-accused no.6 justified; (b) Whether conviction of accused no. 2, 3, 4 was justified, when role ascribed to them was that they were part of mob.

[2023] 12 S.C.R. 220 : 2023 INSC 829

JAVED SHAUKAT ALI QURESHI

v.

STATE OF GUJARAT

(Criminal Appeal No. 1012 of 2022)

SEPTEMBER 13, 2023

[ABHAY S. OKA* AND SANJAY KAROL, JJ.]

Issue for consideration: Assault by mob, Seven accused were

convicted, including the present appellant-accused no.6, for the

offences punishable u/s. 396 r/w. s.149, s.395 r/w. s.149, s.307 r/w.

s.149, s.435 r/w. s.149 and s.201 r/w. s.149 of the IPC. Accused

nos. 1, 5 and 13 were acquitted in appeal by the Supreme Court.

(a) Whether conviction of appellant-accused no.6 justified; (b)

Whether conviction of accused no. 2, 3, 4 was justified, when role

ascribed to them was that they were part of mob.

Evidence – Conviction of appellant-accused no.6 based on

sole testimony of PW-2 – Propriety:

Held: Considering the nature of the testimony of PW-2, it cannot be

said that the evidence of PW-2 is wholly reliable – The identification

of the appellant for the first time in the Court after a lapse of about

two years becomes doubtful for more than one reason – Firstly,

the appellant was not known to PW-2 – Secondly, the appellant

was part of a large aggressive mob of 50 to 100 people which

surrounded the auto-rickshaw – Thirdly, there was no identification

parade held – Fourthly, there was no time available to PW-2 to

note the distinctive features of the appellant – Hence, it is very

unsafe to record a conclusion based only on the testimony of the

solitary witness that the guilt of the appellant was proved beyond a

reasonable doubt – Even if the evidence of PW-2 is categorized as

“neither wholly reliable nor wholly unreliable,” the appellant cannot

be convicted only based on the sole testimony of PW-2 unless

there is a corroboration to the version of PW-2 either by direct

or circumstantial evidence – Such a corroboration is completely

absent in this case – Therefore, the conviction of the appellant

cannot be sustained. [Para 8]

* Author

[2023] 12 S.C.R. 221

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

Penal Code, 1860 – Conviction of accused nos. 2, 3, 4 –

Propriety:

Held: The conviction of accused nos. 1, 5 and 13 was based only

on the testimony of PW-25 and PW-26 – The Supreme Court had

in its earlier decision rejected the testimony of PW-25 and PW26 in its entirety – Assuming that PW-25 and PW-26 identified

accused nos.2, 3 and 4 by stating that they were members of the

mob; once a Coordinate Bench of the Supreme Court discards

their testimony in its entirety being unreliable, the benefit of the

said finding will have to be extended to the accused nos.2, 3,

and 4 as they are similarly placed with accused nos.1,5 and 13

– Therefore, the conviction of accused nos.2, 3 and 4 set aside.

[Paras 11, 12 and 14]

Evidence – Similar or identical evidence of eyewitnesses

against accused persons – Principle of parity:

Held: When there is similar or identical evidence of eyewitnesses

against two accused by ascribing them the same or similar role,

the Court cannot convict one accused and acquit the other – In

such a case, the cases of both the accused will be governed by

the principle of parity – This principle means that the Criminal

Court should decide like cases alike, and in such cases, the Court

cannot make a distinction between the two accused, which will

amount to discrimination. [Para 15]

Constitution of India – Suo moto exercise of jurisdiction

u/Art.136:

Held: The testimony of PW-25 and PW-26 was rejected –

Consequent to which, accused nos.1, 5 and 13 were acquitted

– The case of accused nos. 3 and 4 stands on the same footing

as accused nos. 1,5 and 13 – They must get the benefit of parity

– Accused nos.3 and 4 did not prefer any appeal – In the case of

Pawan Kumar v. State of Haryana, Supreme Court dealt with similar

contingency in some detail – The Court held that the jurisdiction

under Article 136 of the Constitution of India can be invoked in

favour of the party even suo moto when the Court is satisfied

that compelling ground for its exercise exists – However, such

suo moto power should be used very sparingly with caution and 

222 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

circumspection – The Court held that the power must be exercised

in the rarest of the rare cases. [Para 16]

Practice and Procedure:

Held: Earlier special leave petition filed by accused no.2 was

summarily dismissed without recording any reasons – The law

is well-settled that an order refusing special leave to appeal by a

non-speaking order does not attract the doctrine of merger – The

case of accused no 2 stands on the same footing as accused nos.

1,5 and 13 acquitted by this Court – The accused no.2 must get

the benefit of parity – Therefore, the order passed in the earlier

special leave petition filed by accused no.2 is recalled. [Para 18]

Vadivelu Thevar & Anr. v. State of Madras AIR 1957

SC 614 : [1957] SCR 981; Musa Khan & Ors. v. State

of Maharashtra AIR 1976 SC 2566; Pawan Kumar v.

State of Haryana (2003) 11 SCC 241 : [2003] 1 Suppl.

SCR 710; Harbans Singh v. State of U.P. & Ors. (1982)

2 SCC 101 : [1982] 3 SCR 235 – relied on.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.1012

of 2022.

From the Judgment and Order dated 11.02.2016 of the High Court of

Gujarat at Ahmedabad in CRLA No.736 of 2006.

M. Shoeb Alam (Amicus Curiae), Ms. Fauzia Shakil, Ujjwal Singh,

Agastya Sen, Ms. Garima Chaudhry, Advs. for the Appellant.

Ms. Ruchi Kohli, Ms. Swati Ghildiyal, Ms. Devyani Bhatt, Ms. Srishti

Mishra, Advs. for the Respondents.

The Judgment of the Court was delivered by

ABHAY S. OKA, J.

FACTUAL ASPECTS

1. The occurrence based on which the appellant was convicted was of

7th November 2003. According to the prosecution case, around 10

a.m. on that day, about 1,000 to 1,500 people had gathered in the

Shah Alam area of the city of Ahmedabad. When PW-1 Baldev was

passing through that area by his two-wheeler, the crowd stopped him.

He was forced to disclose his identity. After he disclosed his identity, 

[2023] 12 S.C.R. 223

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

the crowd started assaulting him and his two-wheeler was burnt.

Thereafter, the crowd stopped an auto-rickshaw, and the passengers

in the auto-rickshaw were forced to alight. The necklace of PW-2

Gitaben Bhailal, who was a passenger in the auto rickshaw, was

snatched. The mob assaulted PW-3 Hemubhai, who was carrying

LPG cylinders on a bicycle. PW-13 Ajay was passing through that

area on his two-wheeler with Mukesh as a pillion rider. PW-13 Ajay

managed to run away. However, Mukesh was assaulted by the mob.

Afterwards, the dead body of Mukesh was found in a nearby lake.

A total of 13 accused were prosecuted. Accused nos. 1 to 6 and 13

were convicted and Trial Court acquitted the rest of the accused.

Seven accused were convicted, including the present appellantaccused no.6, for the offences punishable under Section 396 read

with Section 149, Section 395 read with Section 149, Section 307

read with Section 149, Section 435 read with Section 149 and Section

201 read with Section 149 of the Indian Penal Code, 1860 (for short

‘IPC’). The maximum sentence imposed was life imprisonment for

the offence punishable under Section 396 read with 149 of IPC.

By the impugned judgment, while confirming the conviction of the

accused, the High Court brought down the sentence to 10 years.

The appeals preferred by the convicted accused were decided by a

Division Bench of the High Court by the impugned judgment.

2. The appellant is accused no.6. Accused nos.1, 5 and 13 preferred

Criminal Appeal no.1041 of 2016 to this Court. By the judgment dated

9th August 2018, this Court acquitted the said three accused. SLP

(Crl.) Dy. No.13063 of 2018 filed by the accused no.2 was summarily

dismissed vide order dated 11th May 2018. Accused nos.3 and 4 did

not prefer any appeal for challenging the judgment of the High Court.

SUBMISSIONS

3. Learned counsel appointed as Amicus Curiae to espouse the cause

of the appellant pointed out that only one witness, namely, PW-2

Gitaben identified the appellant and ascribed him a role of pulling

her gold chain. He submitted that PW-2 did not know the appellant.

Therefore, her identification of the appellant in the Court becomes

doubtful as even according to her version; there were 50-100

persons in the mob which surrounded the auto-rickshaw by which 

224 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

the witness was travelling. Moreover, the witness deposed before

the Court approximately two years after the occurrence of the crime.

He pointed out that the test identification parade was not held.

4. He submitted that as an officer of the Court, it is his duty to point out

that accused nos.3 and 4 were convicted only on the basis of the

testimony of PW-25 and PW-26. He submitted that the same is the

case with accused no 2. He submitted that while deciding Criminal

Appeal no. 1041 of 2016 preferred by the accused nos.1, 5 and 13,

this Court has completely discarded the testimony of both PW-25 and

PW-26. He would, therefore, submit that not only that the appellant

deserves to be acquitted, but the benefit of the judgment may be

extended to accused nos. 2, 3 and 4 as well.

5. The learned counsel appearing for the respondent urged that PW-2

has clearly identified the appellant and has ascribed the role of

snatching her gold chain to him. She submitted that time of only two

years had elapsed between the date of occurrence and the date of

deposition of PW-2, and therefore, it was easily possible for PW-2

to identify the appellant. She submitted that PW-2, being a woman,

would never forget the face of the accused who had snatched the

gold chain from her neck. She submitted that as far as accused

nos.2,3 and 4 are concerned, their conviction has become final and

cannot be interfered with.

OUR VIEW

6. Firstly, we deal with the case of the appellant. PW-25 (Arif Khan) and

PW-26 (Sachinbhai Patel), who are alleged to be the eyewitnesses,

are the police constables. Both of them claimed that at the time

of the incident, a mob of about 1000-1,500 people had gathered

at the spot where the incident took place. Going by the impugned

judgments, only PW-2 Gitaben has identified the appellant and

has ascribed a specific role of chain snatching to him. Thus, as far

as the appellant is concerned, PW-2 is the solitary witness. PW-2

stated in the examination-in-chief that there were six passengers in

the auto-rickshaw by which she was travelling. After seeing the mob

near Shah Alam Gate, the driver stopped the auto-rickshaw and fled

away. She stated that a mob surrounded the auto-rickshaw. She

also stated that the members of the mob belonged to the Muslim 

[2023] 12 S.C.R. 225

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

community. She stated that two people sitting in the front seat of

the auto-rickshaw were pulled out. She could not get out of the

auto-rickshaw. She stated that someone pulled her gold chain from

her neck, which was nearly weighing 10 grams. She stated that she

was slapped and that she received injuries caused by a nail. She

specifically stated that there were 50-100 people in the mob present

around the auto-rickshaw, and she did not identify anyone from the

mob. When her attention was invited to the accused present in the

Court, she stated that one of them was present in the mob. The

witness signalled toward one accused. The Trial Court has noted

that the said accused was told to stand up who disclosed his name

as Javed. Thereafter, the witness stated that the said accused pulled

the chain from her neck. In the cross-examination, she accepted

that no test identification parade was held. It must be noted here

that no other prosecution witness has identified the appellant. The

witness stated that a mob of around 50-100 people had gathered

around the auto-rickshaw. It is not the case of the prosecution that

she knew the appellant beforehand. Going by her version of the

incident, there was no time available to her to observe the distinctive

features of the appellant. The incident of snatching must have been

over in seconds. Therefore, it is very difficult to accept that in such

a large mob gathered around the auto-rickshaw, the witness could

remember the face of only one accused and recognise him after a

lapse of about two years from the date of the incident.

7. In a given case, the conviction can be based on the testimony of

only one eyewitness. The law has been laid down on this behalf by a

Bench of three Hon’ble Judges of this Court in the case of Vadivelu

Thevar & Anr. v. State of Madras1

. In paragraphs 10,11 and 12 of

the said decision, this Court held thus:

“10. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

On a consideration of the relevant authorities and the provisions of

the Evidence Act, the following propositions may be safely stated

as firmly established:

1 AIR 1957 SC 614

226 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

(1) As a general rule, a court can and may act on the testimony

of a single witness though uncorroborated. One credible

witness outweighs the testimony of a number of other

witnesses of indifferent character.

(2) Unless corroboration is insisted upon by statute, courts

should not insist on corroboration except in cases where

the nature of the testimony of the single witness itself

requires as a rule of prudence, that corroboration should

be insisted upon, for example in the case of a child witness,

or of a witness whose evidence is that of an accomplice

or of an analogous character.

(3) Whether corroboration of the testimony of a single witness is or

is not necessary, must depend upon facts and circumstances

of each case and no general rule can be laid down in a matter

like this and much depends upon the judicial discretion of the

Judge before whom the case comes.

11. In view of these considerations, we have no hesitation in holding

that the contention that in a murder case, the court should insist

upon plurality of witnesses, is much too broadly stated. Section 134

of the Indian Evidence Act, has categorically laid it down that “no

particular number of witnesses shall, in any case, be required for

the proof of any fact”. The legislature determined, as long ago as

1872, presumably after due consideration of the pros and cons, that

it shall not be necessary for proof or disproof of a fact, to call any

particular number of witnesses. In England, both before and after

the passing of the Indian Evidence Act, 1872, there have been a

number of statutes as set out in Sarkar’s Law of Evidence — 9th

Edn., at pp. 1100 and 1101, forbidding convictions on the testimony

of a single witness. The Indian Legislature has not insisted on laying

down any such exceptions to the general rule recognized in Section

134 quoted above. The section enshrines the well recognized maxim

that “Evidence has to be weighed and not counted”. Our Legislature

has given statutory recognition to the fact that administration of

justice may be hampered if a particular number of witnesses were to

be insisted upon. It is not seldom that a crime has been committed

in the presence of only one witness, leaving aside those cases 

[2023] 12 S.C.R. 227

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

which are not of uncommon occurrence, where determination of

guilt depends entirely on circumstantial evidence. If the legislature

were to insist upon plurality of witnesses, cases where the

testimony of a single witness only could be available in proof

of the crime, would go unpunished. It is here that the discretion

of the presiding judge comes into play. The matter thus must

depend upon the circumstances of each case and the quality

of the evidence of the single witness whose testimony has to

be either accepted or rejected. If such a testimony is found by

the court to be entirely reliable, there is no legal impediment

to the conviction of the accused person on such proof. Even

as the guilt of an accused person may be proved by the testimony

of a single witness, the innocence of an accused person may be

established on the testimony of a single witness, even though a

considerable number of witnesses may be forthcoming to testify to

the truth of the case for the prosecution. Hence, in our opinion, it is

a sound and well-established rule of law that the court is concerned

with the quality and not with the quantity of the evidence necessary

for proving or disproving a fact. Generally speaking, oral testimony

in this context may be classified into three categories, namely:

(1) Wholly reliable.

(2) Wholly unreliable.

(3) Neither wholly reliable nor wholly unreliable.

12. In the first category of proof, the court should have no difficulty in

coming to its conclusion either way — it may convict or may acquit on

the testimony of a single witness, if it is found to be above reproach

or suspicion of interestedness, incompetence or subornation. In the

second category, the court equally has no difficulty in coming to its

conclusion. It is in the third category of cases, that the court has

to be circumspect and has to look for corroboration in material

particulars by reliable testimony, direct or circumstantial. There

is another danger in insisting on plurality of witnesses. Irrespective

of the quality of the oral evidence of a single witness, if courts were

to insist on plurality of witnesses in proof of any fact, they will be

indirectly encouraging subornation of witnesses. Situations may

arise and do arise where only a single person is available to give 

228 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

evidence in support of a disputed fact. The court naturally has to

weigh carefully such a testimony and if it is satisfied that the evidence

is reliable and free from all taints which tend to render oral testimony

open to suspicion, it becomes its duty to act upon such testimony.

The law reports contain many precedents where the court had to

depend and act upon the testimony of a single witness in support

of the prosecution. There are exceptions to this rule, for example,

in cases of sexual offences or of the testimony of an approver; both

these are cases in which the oral testimony is, by its very nature,

suspect, being that of a participator in crime. But, where there are

no such exceptional reasons operating, it becomes the duty of the

court to convict, if it is satisfied that the testimony of a single witness

is entirely reliable. We have therefore, no reasons to refuse to act

upon the testimony of the first witness, which is the only reliable

evidence in support of the prosecution.”

(emphasis added)

8. Considering the nature of the testimony of PW-2, it cannot be said

that the evidence of PW-2 is wholly reliable. The identification of the

appellant for the first time in the Court after a lapse of about two years

becomes doubtful for more than one reason. Firstly, the appellant

was not known to PW-2. Secondly, the appellant was part of a large

aggressive mob of 50 to 100 people which surrounded the autorickshaw. Thirdly, there was no identification parade held. Fourthly,

there was no time available to PW-2 to note the distinctive features

of the appellant. Hence, it is very unsafe to record a conclusion

based only on the testimony of the solitary witness that the guilt

of the appellant was proved beyond a reasonable doubt. Even if

we categorise the evidence of PW-2 as “neither wholly reliable nor

wholly unreliable,” the appellant cannot be convicted only based on

the sole testimony of PW-2 unless there is a corroboration to the

version of PW-2 either by direct or circumstantial evidence. Such

a corroboration is completely absent in this case. Therefore, the

conviction of the appellant cannot be sustained.

9. Now, coming to the role of accused nos.2,3 and 4, we must note here

that the only role ascribed to them was that they were a part of the

mob. No overt act was ascribed to them. The Trial Court believed 

[2023] 12 S.C.R. 229

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

the testimony of PW-25 (Arifkhan) and PW-26 (Sachinbhai Patel).

Both PW-25 and PW-26 identified accused no.2. However, a test

identification parade was not conducted.

10. As far as accused no.3 is concerned, he was identified by PW-26 as

a member of the mob. After having perused the testimony of PW-25,

we find that he has not specifically named accused no.3. Accused

no.4 was not identified by PW-26, but the finding of the Trial Court

is that he was identified by PW-25.

11. The conviction of accused nos. 1, 5 and 13 was based only on the

testimony of PW-25 and PW-26. The test identification parade as

regards accused nos.1 and 5 was not held, but as regards accused

no.13, the test identification parade was conducted. While dealing

with appeals preferred by accused nos.1,5 and 13, in paragraph 5,

this Court held thus:

“On a careful consideration of the evidence adduced by PWs-25

and 26, we are left with serious doubt as to whether the evidence

of the said two witnesses should inspire the confidence of the

Court. Identification of a total of 13 accused, who were sent out

for trial including present accused-appellants, in a mob of 1000-

1500 people is by no means an easy task. Over and above that no

Test Identification Parade was held so far as accused Nos.1 and 5

are concerned. The prosecution has not offered any explanation as

to why no Test Identification Parade was held in respect of A-1 and

A-5 whereas a Test Identification Parade was held in respect of A-13.”

(emphasis added)

12. This Court was of the view that evidence of PW-25 and PW-26 does

not inspire confidence. This Court did not partially reject the testimony

of PW-25 and PW-26 but rejected their testimony in its entirety.

13. As Section 149 of IPC was applied, this Court dealt with the theory

of the prosecution based on the fact that accused nos.1,5 and 13

were present in the mob. This Court relied upon what is held in

paragraph 5 of its decision in the case of Musa Khan & Ors. v.

State of Maharashtra2

. Paragraph 5 of the said decision reads thus:

2 AIR 1976 SC 2566

230 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

“5.  The appellants pleaded innocence and averred that they had

been falsely implicated due to enmity and had not participated in the

riot. Both the courts below have accepted the main facts leading to

the occurrence as also participation of the appellants in the rioting.

The Additional Sessions Judge as also the High Court, however,

do not appear to have made a correct approach in examining the

individual cases of the accused, particularly with reference to their

actual presence or participation in the incident in question. It is true

that having regard to the background against which the events took

place all the incidents starting from the National Hotel and ending

with the chawl of Jogendra Singh were parts of the same transaction,

nevertheless they were separate incidents in which different members

of the mob had participated. In these circumstances, therefore, without

there being any direct evidence about the actual participation of the

appellants in all the incidents it could not be inferred as a matter

of law that once the appellants were members of the mob at the

National Hotel, they must be deemed to have participated in all the

other incidents at the Engineering College Hostel, Bharat Lodge and

the chawl of Jogendra Singh. It is well settled that a mere innocent

presence in an assembly of persons, as for example a bystander,

does not make the accused a member of an unlawful assembly,

unless it is shown by direct or circumstantial evidence that the

accused shared the common object of the assembly. Thus, a court

is not entitled to presume that any and every person who is

proved to have been present near a riotous mob at any time

or to have joined or left it at any stage during its activities is

in law guilty of every act committed by it from the beginning

to the end, or that each member of such a crowd must from

the beginning have anticipated and contemplated the nature of

the illegal activities in which the assembly would subsequently

indulge. In other words, it must be proved in each case that

the person concerned was not only a member of the unlawful

assembly at some stage, but at all the crucial stages and shared

the common object of the assembly at all these stages. Such

an evidence is wholly lacking in this case where the evidence

merely shows that some of the accused were members of the

unlawful assembly at one particular stage but not at another. In 

[2023] 12 S.C.R. 231

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

these circumstances, therefore, the accused who were not present

or who did not share the common object of the unlawful assembly at

other stages cannot be convicted for the activities of the assembly

at those stages. In view of this error committed by the High Court it

has become necessary for us to examine the evidence on the limited

question as to which of the accused had actually participated in the

incidents at the Engineering College, Bharat Lodge and the chawl

of Jogendra Singh where acts of incendiarism had taken place. It is

also common ground that the occurrence had taken place at night

and the evidence of the witnesses identifying the accused had to

be examined with great caution.”

(emphasis added)

14. Assuming that PW-25 and PW-26 identified accused nos.2, 3 and 4

by stating that they were members of the mob; once a Coordinate

Bench of this Court discards their testimony in its entirety being

unreliable, the benefit of the said finding will have to be extended to

the accused nos.2,3 and 4 as they are similarly placed with accused

nos.1,5 and 13. Moreover, except for PW-25 and PW-26, no other

witnesses have ascribed any role to the accused nos.2, 3 and 4.

15. When there is similar or identical evidence of eyewitnesses against

two accused by ascribing them the same or similar role, the Court

cannot convict one accused and acquit the other. In such a case,

the cases of both the accused will be governed by the principle of

parity. This principle means that the Criminal Court should decide like

cases alike, and in such cases, the Court cannot make a distinction

between the two accused, which will amount to discrimination.

16. As far as accused nos.3 and 4 are concerned, they did not prefer

any appeal. In the case of Pawan Kumar vs. State of Haryana3

,

this Court dealt with similar contingency in some detail. This Court

held that the jurisdiction under Article 136 of the Constitution of India

can be invoked in favour of the party even suo moto when the Court

is satisfied that compelling ground for its exercise exists. However,

such suo moto power should be used very sparingly with caution and

3 (2003) 11 SCC 241

232 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

circumspection. The Court held that the power must be exercised in

the rarest of the rare cases.

17. Accused nos. 1,5 and 13 were convicted only on the basis of the

testimony of PW-25 and PW-26. They were acquitted by holding that

the testimony of both witnesses was unreliable and deserved to be

discarded. If the same relief is not extended to accused nos. 3 and

4 by reason of parity, it will amount to violation of fundamental rights

guaranteed to accused nos. 3 and 4 by Article 21 of the Constitution

of India. Therefore, we have no manner of doubt that the benefit

which is granted to accused nos. 1,5 and 13 deserves to be extended

to accused nos.3 and 4, who did not challenge the judgment of the

High Court. In this case, the suo motu exercise of powers under

Article 136 is warranted as it is a question of the liberty of the said

two accused guaranteed by Article 21 of the Constitution.

18. Now, we come to the case of accused no.2. By the order dated

11th May 2018, a special leave petition filed by accused no.2 was

summarily dismissed without recording any reasons. The law is

well-settled. An order refusing special leave to appeal by a nonspeaking order does not attract the doctrine of merger. At this stage,

we may refer to a three-judge Bench decision of this Court in the

case of Harbans Singh v. State of U.P. & Ors.4

. In paragraph 18,

this Court held thus:

“18.To my mind, it will be a sheer travesty of justice and the

course of justice will be perverted, if for the very same offence,

the petitioner has to swing and pay the extreme penalty of death

whereas the death sentence imposed on his co-accused for the

very same offence is commuted to one of life imprisonment and

the life of the co-accused is shared (sic spared). The case of the

petitioner Harbans Singh appears, indeed, to be unfortunate, as

neither in his special leave petition and the review petition in

this Court nor in his mercy petition to the President of India, this

all important and significant fact that the life sentence imposed

on his co-accused in respect of the very same offence has been

commuted to one of life imprisonment has been mentioned.

4 (1982) 2 SCC 101

[2023] 12 S.C.R. 233

JAVED SHAUKAT ALI QURESHI v. STATE OF GUJARAT

Had this fact been brought to the notice of this Court at the

time when the Court dealt with the special leave petition of the

petitioner or even his review petition, I have no doubt in my

mind that this Court would have commuted his death sentence

to one of life imprisonment. For the same offence and for the same

kind of involvement, responsibility and complicity, capital punishment

on one and life imprisonment on the other would never have been

just. I also feel that had the petitioner in his mercy petition to the

President of India made any mention of this fact of commutation of

death sentence to one of life imprisonment on his co-accused in

respect of the very same offence, the President might have been

inclined to take a different view on his petition.”

(emphasis added)

19. We have found that the case of accused no 2 stands on the same

footing as accused nos. 1,5 and 13 acquitted by this Court. The

accused no.2 must get the benefit of parity. The principles laid down

in the case of Harbans Singh4 will apply. If we fail to grant relief to

accused no 2, the rights guaranteed to accused no. 2 under Article

21 of the Constitution of India will be violated. It will amount to

doing manifest injustice. In fact, as a Constitutional Court entrusted

with the duty of upholding fundamental rights guaranteed under the

Constitution, it is our duty and obligation to extend the same relief

to accused no.2. Therefore, we will have to recall the order passed

in the special leave petition filed by accused no.2.

20. Before we part with the judgment, we must record our appreciation

of the service rendered by Mr. M. Shoeb Alam, Advocate as Amicus

Curiae.

21. Accordingly, the appeal succeeds and we pass the following order:

a. The appellant, accused no.6–Javed Shaukat Ali Qureshi, is

acquitted of the offences alleged against him by setting aside

the judgment of the Trial Court dated 17th March 2006 and

judgment of the High Court dated 11th February 2016 to the

extent. He is on bail. His bail bonds stand cancelled;

b. We set aside the order of conviction of accused no.3

Mehboobkhan Allarakha and accused no.4 Saidkhan @ Anna 

234 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

Ikbalhusain by setting aside the same judgments to that extent

and acquit them of the offences alleged against them. They

shall be forthwith set at liberty if they are not required to be

detained in connection with any other case;

c. We recall the order dated 11th May 2018 in SLP (Crl.) Diary

No.13063 of 2018 and grant leave. For the reasons set out

above, accused no. 2 Amjadkhan Nasirkhan Pathan stands

acquitted by setting aside the impugned judgment of the Trial

Court and the High Court to that extent. He shall be forthwith

set at liberty unless he is required to be detained in connection

with any other offence; and

d. The appeal is allowed on the above terms.

Headnote prepared by: Ankit Gyan Result of the case : Appeal allowed.

Whether a transferee entity-a successor bank (DBS Bank) can be fastened with corporate criminal liability for the offences which the amalgamating entity-the erstwhile Laxmi Vilas Bank (LVB) is accused of.

[2023] 12 S.C.R. 197 : 2023 INSC 819

RELIGARE FINVEST LIMITED

v.

STATE OF NCT OF DELHI & ANR.

(Criminal Appeal No(s). 2242 of 2023)

SEPTEMBER 11, 2023

[S. RAVINDRA BHAT* AND ARAVIND KUMAR, JJ.]

Issue for consideration: Whether a transferee entity-a successor

bank (DBS Bank) can be fastened with corporate criminal liability

for the offences which the amalgamating entity-the erstwhile Laxmi

Vilas Bank (LVB) is accused of.

Criminal Law – Corporate criminal liability – When cannot be

fastened on a transferee entity:

Held: Criminal liability of a company cannot be transferred ipso

facto, except when it is in the nature of penalty proceeding – Only

defined legal proceedings are succeeded to by the transferee

company, which is the DBS Bank in the instant case – Further,

every scheme of amalgamation is statutory and sanctioned under

the Banking Act – Such amalgamation aims at securing larger public

interest and health of the banking industry – Overall objective of

the scheme is to ensure recovery of what are the bank’s dues and

ensuring protection of the creditors – In the present case, Clause

3 (3) of the amalgamation scheme no doubt, mentions that legal

proceedings would be continued by or against the transferee bankDBS Bank however, when viewed in the backdrop as aforesaid,

the express mention of directors and such other individuals in

the proviso to Clause 3 (3) means that it is to that extent only

that prosecutions or other criminal proceedings can continue; in

the ordinary sense, criminal liability can neither be attributed to

DBS nor its directors, brought in after the amalgamation, whose

appointments were approved by the RBI– Criminal liability of the

individuals now attributed to DBS are actions of those who were

officials of LVB – Their individual responsibility and accountability

in criminal law remains unaffected by the amalgamation – No

involvement of DBS Bank revealed in the charge sheet – Pending

criminal proceedings to the extent it involved DBS, which was

the subject mat-ter of the impugned judgment and all consequent

* Author

198 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

proceedings arising therefrom (to the extent involving DBS),

quashed – Impugned judgment set aside – Banking Regulation

Act, 1949 – s.45(2) – Penal Code, 1860 – ss.409, 120B. [Paras

30-32, 34 and 35]

Criminal Law – Criminal liability of a company:

Held: Criminal liability of a company is recognized where it can be

attributable to individual acts of employees, directors or officials

of a company or juristic persons – It is recognized even if its

conviction results in a term of imprisonment – Further, the legal

effect of amalgamation of two companies is the destruction of the

corporate existence of the transferor company (LVB, in the present

case); it ceases to exist. [Para 30]

Criminal Law – Quashing – Exercise of power:

Held: Power to quash a criminal investigation or proceedings should

not be lightly exercised – Yet, to refuse recourse to that power, in

cases that require or may demand it, is being blind to justice – In

the present case, the public’s confidence in the banking industry

was at stake, when RBI stepped in, imposed the moratorium and

asked DBS to take over the entire functioning, management assets

and liabilities of the erstwhile LVB – To permit prosecution of DBS

for the acts of LVB officials (facing criminal charges) would result

in travesty of justice. [Para 35]

Criminal Law – Liability of corporate entities – Divergence of

opinion amongst certain High Courts – Discussed.

McLeod Russel India Limited v. Regional Provident

Fund Commissioner, Jalpaiguri & Ors., [2014] 9 SCR

162; Iridium India Telecom v. Motorola Inc., (2010) 14

(Addl.) SCR 591; M/s. General Radio & Appliances Co.

Ltd. v. M.A. Khader (dead) by LR’s, [1986] 2 SCR 607;

Saraswati Industrial Syndicate Ltd. v. CIT, Haryana, H.P.

& Delhi, [1990] 1 Supp SCR 332 – relied on.

Sham Sunder & Others v. State of Haryana, (1984) 4

SCC 630 : [1989] 3 SCR 886; M. Abbas Haji v. T.N.

Channakeshava, (2019) 9 SCC 606; Standard Chartered

Bank v. Directorate of Enforcement, [2005] 1 Suppl. )

SCR 49 – referred to.

[2023] 12 S.C.R. 199

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

Champa Agency v. R. Chowdhury, 1974 CHN 400;

Sunil Banerjee v. Krishna Nath, AIR 1949 Cal 689; AK

Khosla v. Venkatesan, (1992) 98 CrLJ 1448 (Cal); Esso

Standard Inc. v. Udharam Bhagwandas Japanwalla,

[1975] 45 Comp Cas 16 (Bom); Tesco Supermarkets

Ltd. v. Nattrass, 1971 (2) All ER 127; Meridian Global

Funds Management Asia Ltd v. Securities Commission,

[1995] 3 All ER 918; Walker’s Settlement 1935 (1)

Ch. D. 567; In Re: Skinner 1958 (3) All E.R 273 –

referred to.

Stroud’s Judicial Dictionary of Words and Phrases

(9th edition). 25 Black’s Law Dictionary, Eleventh

Edition – referred to.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 2242

of 2023.

From the Judgment and Order dated 24.03.2023 of the High Court

of Delhi at New Delhi in CRLMC No. 3173 of 2021.

With

Criminal Appeal No. 2243 of 2023

Mukul Rohatgi, Jayant Bhushan, Jana Kalyan Das, Rana Mukherjee,

Sr. Advs., Amit Jajoo, Ms. Sushmita Gandhi, Malak Manish Bhatt,

Ms. Neeha Nagpal, Ms. Vatsala Pant, Ms. Samridhi, Sandeep

Devashish Das, Shreekant Neelappa Terdal, Ms. R. Bala, Sachin

Sharma, Bhawarpal Singh Jadon, Dr. N. Visakamurthy, Advs. for

the appearing parties.

The Judgment of the Court was delivered by

S. RAVINDRA BHAT, J.

1. These appeals1

 arise from a final order2

 of the Delhi High Court

rejecting a petition for quashing criminal proceedings, filed by the DBS

Bank India Limited (second respondent in the first appeal /appellant

in second the appeal) (hereafter “DBS”). In the two appeals, Religare

Finvest Limited (hereafter “complainant” or “RFL”) and DBS have

1 Crl. A. No. 2242 / 2023 & Crl.A. No. 2243 / 2023.

2 Dated 24.3.2023 in Crl. M. C. No. 3173 of 2021.

200 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

challenged the impugned order. To be more specific, they are also

impleaded as second respondents in each other’s appeal.

2. RFL filed a commercial suit3

 seeking to recover ₹791 Crores from (the

erstwhile) Laxmi Vilas Bank (hereafter “LVB”). The claim was based

on the allegations that LVB misappropriated Fixed Deposits (“FDs”)

furnished as security by RFL and its group companies, namely RHC

Holding Pvt. Ltd. (hereafter “RHC Holding”) and Ranchem Pvt. Ltd.

(hereafter “Ranchem”), to secure short-term loans.

3. Subsequently, on 23.9.2019, RFL lodged a criminal complaint

asserting that officials of LVB had conspired with RHC Holding

and Ranchem. This led to the registration of FIR4

 by the Economic

Offences Wing under Sections 409 and 120B of the Indian Penal

Code, 1860 (IPC) (registered as Crime No. 1534/2020). The contents

of the FIR alleged that RFL had placed four FDs with a combined

value of ₹750 Crores as security for short-term loans. LVB extended

loans to RHC Holding and Ranchem, utilizing these FDs as security.

When RHC Holding and Ranchem defaulted on their loan payments,

LVB debited an amount of ₹723.71 crores from RFL’s current account

without obtaining proper authorization or prior notice.

4. Meanwhile, due to high net levels of Non-Performing Assets,

inadequate Capital to Risk (Weighted) Average Ratio and Common

Equity Tier-I Capital, two years of negative Return on Assets, and

high leverage, the Reserve Bank of India (hereafter “RBI”) placed

LVB under “Prompt Corrective Action”5

.

5. A chargesheet was filed against ten bank officials of LVB; however,

LVB itself was not implicated as an accused. The Chief Metropolitan

Magistrate took cognizance of these offenses on September 17, 2020.6

3 (Comm.) No. 940/2018.

4 FIR No. 189/2019.

5 Prompt Corrective Action (PCA) Framework is to enable Supervisory intervention at appropriate time

and require the Supervised Entity to initiate and implement remedial measures in a timely manner, so as to

restore its financial health. The PCA Framework is also intended to act as a tool for effective market discipline. The PCA Framework does not preclude the Reserve Bank of India from taking any other action as it

deems fit at any time in addition to the corrective actions prescribed in the Framework.

6 Crime Case No. 1534/2020, titled State vs. Malvinder Mohan Singh.

[2023] 12 S.C.R. 201

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

6. On November 17, 2020, RBI imposed a moratorium7

 on LVB in terms

of Section 45(2) of the Banking Regulation Act, 1949 [hereafter

“the Banking Act”]. On November 25, 2020, due to LVB’s unstable

financial condition, the Central Government directed its non-voluntary

amalgamation to DBS8

.

7. On February 12, 2021, a supplementary chargesheet or final report

was filed, to implead LVB, represented through its director, (now

DBS Bank India Limited after amalgamation), as an accused9

 along

with bank officials and the companies RHC Holding and Ranchem.

It was alleged that LVB and other accused parties conspired to

siphon off funds that were lent, and belonged to RFL. LVB stood

to make substantial profits from this lending, as it obtained the

FDs at a 4.5% interest rate and then ostensibly lent the money at

a rate of 10% p.a. Investigation revealed that LVB’s actions were

based on the premise that RFL, RHC Holding, and Ranchem were

group companies under the same promoters. LVB created security

against FDs of RFL. However, proper authorization from RFL was

not secured for this arrangement. The loans advanced by LVB to

RHC Holding and Ranchem against FDs of RFL were ultimately

utilized by RHC Holding. Consequently, when RHC Holding failed

to repay the loans to LVB, the FDs of RFL were adjusted by LVB

against the outstanding loan amounts. As a result, it was observed

that the actual beneficiaries of RFL’s funds, amounting to ₹729.13

Crores, was the RHC Holding. In absence of sufficient documentation

supporting explicit authorization from RFL led to the allegation that

LVB facilitated the diversion of funds for the promoter’s personal gain.

8. In this way, LVB revoked the FDs worth ₹729 Crores and also

benefited by earning ₹115 crores, in interest. It was alleged that the

parties involved acted in connivance with each other and committed

acts of commission and omission in furtherance of the conspiracy

to cheat the complainant company.

7 Moratorium order dated 17.11.2020.

8 under section 45(7) of the Banking Regulation Act, 1949.

9 in Crime No. 1534/2020.

202 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

9. Summons were issued to DBS (identified as accused No. 12) on

16.2.2021. Aggrieved, DBS filed a Criminal Miscellaneous Case10

before the Delhi High Court, seeking to quash the supplementary

chargesheet dated 12.2.2021 and summoning order dated

16.2.202111, contending inter alia that LVB had ceased to exist due

to the non-voluntary amalgamation scheme and that DBS should

not face prosecution for the acts and omissions of the entity which

it merged with, as directed by the Government of India and the RBI.

Additionally, Clause 3(3) of the Amalgamation scheme provides for

the institution of criminal proceedings against officials of LVB and

therefore, liability should not be attributed to the rescuer bank.

10. The High Court, by its impugned order, observed that quashing the

summoning order against the DBS at this stage may hamper the

purpose of the scheme since there was no explicit provision for

abatement of criminal proceedings against the DBS bank in the

scheme sanctioned by the RBI. The court directed the involved

parties to seek clarification regarding the interpretation of Clause

3(3) of the scheme in respect of criminal proceedings constituted

against transferor bank if be carried forward to transferee bank or

not after the amalgamation from RBI. Additionally, the court stayed

the summoning order issued on February 16, 2021, against DBS

Bank till clarification was issued by RBI. DBS appeals to this court,

aggrieved by the refusal to quash criminal proceedings by the

impugned order; RFL’s appeal is limited to the point that the court

ought not to have deferred the issue, for consideration by RBI and

should have dismissed the request for quashing, simpliciter and

ought not to have indefinitely stayed the summoning order.

Contentions of RFL

11. Mr. Rana Mukherjee, learned senior counsel for RFL, contends that

the High Court ought not to have indefinitely stayed the summoning

order, especially when it observed that quashing the summoning order

against DBS would not be in public interest. This is more significant

10 Crl. M. C. No. 3173/2021.

11 Arising out FIR No. 189/2019.

[2023] 12 S.C.R. 203

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

because the High Court denied such interim measure in its previous

order dated 17.12.2021.

12. It was argued that the direction to approach RBI for clarification is

beyond the scope of the original petition as DBS did not assert or

seek relief in its quashing petition for the parties to approach the RBI

for clarification. This direction essentially imposes a new obligation

on the parties involved. If the High Court deemed it necessary to

seek RBI’s view, it should have ideally impleaded RBI as a necessary

party. Nevertheless, the RBI cannot sit in appeal over the findings

of the High Court. Additionally, the High Court failed to take into

account its own findings regarding interpretation of Clause 3(3) of

the amalgamation scheme, that is –

“15. Now, if one peruse sub clause 3 of Clause 3 of Scheme of

Merger, it may appear there is no impediment to prosecute the

petitioner company as the proviso of the said Scheme specifically

says any cause of action or any other proceedings of whatsoever

nature, against the transferee bank, the same shall not abate but

shall be prosecuted by or against the transferee bank. The proviso

to sub clause 3 appears to be only qua Director, Secretary, Manager,

officer or other employee of the transferee bank who has actually

committed criminal offence.”

13. RFL argued that criminal proceedings do not automatically abate

upon the amalgamation of a company. LVB gained from the illegal

transaction, and DBS is benefited from the assets of LVB, which

included misappropriated funds obtained from RFL’s fixed deposits.

Moreover, Clause 3(3) of the scheme incorporates the notion of

criminal accountability, and there is no such bar on transferring

criminal liability onto the transferee bank. The High Court’s decision

essentially denies the petitioner the chance to pursue the case on

merits, and instead, it necessitates involving an external body to

interpret the amalgamation scheme. Lastly, as the trial is in its early

stages, an indefinite stay will further delay the trial process.

Contentions of DBS

14. Mr. Mukul Rohatgi and Mr. Jayant Bhushan, learned senior counsel,

argued that the acts outlined in the chargesheet occurred well 

204 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

before the appointed date of the amalgamation, i.e., 27.11.2020.

LVB was not implicated as an accused prior to the appointed date

and was only added in the supplementary chargesheet. Before the

amalgamation, LVB had no ties to DBS. LVB existed as a distinct

and separate entity without being part of the same group or affiliate

of or in any manner associated with DBS in any capacity. It ceased

to exist in terms of Clause 7(2) of the scheme of amalgamation.

15. It was submitted that it is well settled principle that only the actual

wrongdoer can only be punished for its wrongdoing, and no vicarious

criminal liability can be inherited by a transferee company. Reliance was

placed on Sham Sunder & Others v. State of Haryana12 and McLeod

Russel India Limited v. Regional Provident Fund Commissioner,

Jalpaiguri & Ors.13 It was further submitted that the High Court has

wrongly ignored/rejected a binding judgment passed by a coordinate

bench of the same High Court in Nicholas Piramal India Limited v. S.

Sundaranayagam14 passed in similar circumstances, wherein it was

held that no vicarious criminal liability was being passed on to the

transferee company in an amalgamation where the relevant Clause

of the scheme was more or less identical by observing:

“The legal position which emerges from afore-noted judicial decisions

is that upon an amalgamation between two companies, the transferor

company dies a civil death and the entity which has evolved upon

amalgamation cannot be prosecuted for an offence committed by

the transferor company. […] So far as clause 8 relied upon by the

counsel for the State is concerned, same relates to transfer of legal

proceedings. The clause does not contemplate that criminal liability

for offence committed by the earlier company would be transferable

to the petitioner company.”

16. It was submitted that after the amalgamation, particularly, a nonvoluntary scheme of amalgamation necessitated to safeguard the

public interests, LVB ceased to exist and criminal proceedings

12 (1989) 4 SCC 630.

13 2014 (9) SCR 162.

14 Rendered on August 23, 2007, in Cri. M.C. No. 5392 of 2005.

[2023] 12 S.C.R. 205

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

against LVB shall abate. The transfer pertained to civil liability, with

no provision concerning the continuation of criminal proceedings for

the transferee company. Moreover, it was submitted that criminal

proceedings cannot be transferred through a contract or statute, let

alone by a scheme. Similarly, it placed reliance on M. Abbas Haji v.

T. N. Channakeshava15 to submit that even in the case of a natural

person where upon the demise of an accused person, criminal

proceedings do not pass on to legal heirs or successors.

17. It was further submitted that the High Court was wrong to rely on

foreign cases to observe that a transferee company can entail

criminal liability as those judgments were rendered by considering

legal interpretations distinct from those in India.

18. It was submitted that while one arm of the Government, namely

the RBI and the Central Government, took proactive measures by

formulating the Scheme under Section 45(7) of the Banking Act to

safeguard the interests of LVB’s depositors, employees, and others,

another arm of the Government, represented by Respondent No. 1,

cannot vitiate the process by imposing criminal liability against DBS

for the past actions of LVB.

19. Furthermore, DBS highlighted that RFL itself argued before the High

Court that an interpretation from the RBI was necessary and that the

Court should not make a determination on this matter. RFL presented

in its Reply dated 09.01.2022 before the High Court, the following:

“21. Without prejudice to the submissions made herein, as per the

Clause 13 of the Scheme of amalgamation, if any doubt arises in

the interpretation of the provisions of the scheme, in that case the

matter is to be raised and referred to the RBI.”

Therefore, through the current appeal, RFL is blowing hot and cold by

contesting the impugned order, asserting that such clarification wasn’t

needed and the stay of the summoning order is wrong.

20. Lastly, it was submitted that subsequent to the Impugned Order,

RBI through its letter dated 14.06.2023, provided clarification that

15 (2019) 9 SCC 606.

206 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

criminal proceedings against the officials of the transferor bank do

not get carried forward to the transferee.

Analysis

21. Before discussing and dealing with the rival submissions, it would

be useful to extract provisions of the scheme of amalgamation

published by the RBI. Clause 3(3) of the amalgamation notification

reads as follows:

“3. Transfer of assets and liabilities and general effect thereof. -

(1)-(2) xxxxxxx

(3) If on the appointed date, any cause of action, suit, decrees,

recovery certificates, appeals or other proceedings of whatever nature

is pending by or against the transferor bank before any court or

tribunal or any other authority (including for the avoidance of doubt,

an arbitral tribunal), the same shall not abate, be discontinued or

be ill any way prejudicially affected, but shall, subject to the other

provisions of this Scheme, be prosecuted and enforced by or against

the transferee bank:

Provided that where a contravention of any of the provision of any

statute or of any rule, regulation, direction or order made thereunder

has been committed by or any proceeding for a criminal offence has

been instituted against, a director or secretary, manager, officer or

other employee of the transferor bank before the appointed date,

such director, secretary, manager, officer or other employee shall,

without prejudice to the application of section 6 of the General

Clauses Act, 1897 (10 of 1897), be liable to be proceeded against

under such law and punished accordingly, as if the transferor bank,

being a banking company had not been dissolved.”

Section 45(5)(e) of the Banking Act reads as follows:

“45. Power of Reserve Bank to apply to Central Government for

suspension of business by a banking company and to prepare

scheme of reconstruction or amalgamation. —

(1) Notwithstanding anything contained in the foregoing provisions of

this Part or in any other law or [any agreement or other instrument], 

[2023] 12 S.C.R. 207

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

for the time being in force, where it appears to the Reserve Bank

that there is good reason so to do, the Reserve Bank may apply to

the Central Government for an order of moratorium in respect of [a

banking company].

(2) to (4) xxx

(5) The scheme aforesaid may contain provisions for all or any of

the following matters, namely:—

(e) subject to the provisions of the scheme, the continuation by or

against the banking company on its reconstruction or, as the case

may be, the transferee bank, of any actions or proceedings pending

against the banking company immediately before the [reconstruction

or amalgamation]”

Clause 13 of the Amalgamation scheme in the present case, i.e.,

relating to interpretation by RBI in the case of disputes, is as follows:

“13. Interpretation of provisions of this Scheme. – If any doubt

arises in the interpretation of the provisions of this Scheme, the

matter shall be referred to the Reserve Bank and its views on the

issue shall be final and binding on all concerned.”

22. As is apparent from the factual narrative and the above discussion,

the issue which this court is concerned with, is whether a transferee

entity (here, a successor bank) can be fastened with corporate

criminal liability for the offences which the amalgamating entity- the

erstwhile LVB is accused of.

23. There was some divergence of opinion amongst certain High Court

about the liability of corporate entities. The Calcutta High Court’s view

was that that only natural persons, could be ascribed with intention

or “mens rea”. Resultantly, a juristic person such as a company

could not be ascribed with criminal intent [Ref Champa Agency v.

R. Chowdhury16, Sunil Banerjee v. Krishna Nath17, and AK Khosla

v. Venkatesan18 ]. The Bombay High Court, differed, and had taken

16 1974 CHN 400.

17 AIR 1949 Cal 689.

18 1992 (98) CrLJ 1448 (Cal).

208 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

note of developments in the United Kingdom. In Esso Standard Inc.

v. Udharam Bhagwandas Japanwalla19 arguments were advanced

before the court on whether a company can have mens rea, and

on how the process of attribution would, in fact, operate, with the

precise question being whose mens rea would be attributed to the

company. The High Court accepted that a strict test of mens rea was

required to locate or ascribe criminal responsibility of a company,

on the concerned decision maker. The Court adopted this line of

reasoning, approving Lord Diplock’s opinion in Tesco Supermarkets

Ltd. v. Nattrass20, including the following relevant observations:

“In my view, therefore, the question: what natural persons are to be

treated in law as being the company for the purpose of acts done

in the course of its business, including the taking of precautions and

the exercise of due diligence to avoid the commission of a criminal

offence, is to be found by identifying those natural persons who by

the memorandum and articles of association or as a result of action

taken by the directors, or by the company in general meeting pursuant

to the articles, are entrusted with the exercise of the powers of the

company.”

In Meridian Global Funds Management Asia Ltd v Securities Commission21,

a more nuanced approach was adopted:

“These primary rules of attribution are obviously not enough to enable

a company to go out into the world and do business. Not every act

on behalf of the company could be expected to be the subject of a

resolution of the board or a unanimous decision of the shareholders.

The company therefore builds upon the primary rules of attribution

by using general rules of attribution which are equally available to

natural persons, namely, the principles of agency. It will appoint

servants and agents whose acts, by a combination of the general

principles of agency and the company’s primary rules of attribution,

count as the acts of the company. And having done so, it will also

19 [1975] 45 Comp Cas 16 (Bom).

20 1971 (2) All ER 127.

21 [1995] 3 All ER 918.

[2023] 12 S.C.R. 209

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

make itself subject to the general rules by which liability for the acts

of others can be attributed to natural persons, such as estoppel or

ostensible authority in contract and vicarious liability or tort.

It is worth pausing at this stage to make what may seem an obvious

point. Any statement about what a company has or has not done,

or can or cannot do, is necessarily a reference to the rules of

attribution (primary and general) as they apply to that company.

Judges sometimes say that a company ‘as such’ cannot do anything;

it must act by servants or agents. This may seem an unexceptionable,

even banal remark. And of course the meaning is usually perfectly

clear. But a reference to a company ‘as such’ might suggest that

there is something out there called the company of which one can

meaningfully say that it can or cannot do something. There is in fact

no such thing as the company as such, no ding an such, only the

applicable rules. To say that a company cannot do something means

only that there is no one whose doing of that act would, under the

applicable rules of attribution, count as an act of the company.

The company’s primary rules of attribution together with the general

principles of agency, vicarious liability and so forth are usually

sufficient to enable one to determine its rights and obligations. In

exceptional cases, however, they will not provide an answer. This will

be the case when a rule of law, either expressly or by implication,

excludes attribution on the basis of the general principles of agency

or vicarious liability. For example, a rule may be stated in language

primarily applicable to a natural person and require some act or state

of mind on the part of that person ‘himself’ as opposed to his servants

or agents. This is generally true of rules of the criminal law, which

ordinarily impose liability only for the actus reus and mens rea of the

defendant himself. How is such a rule to be applied to a company?

One possibility is that the court may come to the conclusion that the

rule was not intended to apply to companies at all; for example, a law

which created an offence for which the only penalty was community

service. Another possibility is that the court might interpret the law

as meaning that it could apply to a company only on the basis of its

primary rules of attribution, i.e. if the act giving rise to liability was 

210 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

specifically authorised by a resolution of the board or an unanimous

agreement of the shareholders. But there will be many cases in which

neither of these solutions is satisfactory; in which the court considers

that the law was intended to apply to companies and that, although

it excludes ordinary vicarious liability, insistence on the primary rules

of attribution would in practice defeat that intention. In such a case,

the court must fashion a special rule of attribution for the particular

substantive rule. This is always a matter of interpretation: given

that it was intended to apply to a company, how was it intended

to apply? Whose act (or knowledge, or state of mind) was for this

purpose intended to count as the act etc. of the company? One

finds the answer to this question by applying the usual canons of

interpretation, taking into account the language of the rule (if it is a

statute) and its content and policy.’

Lord Hoffmann, in his opinion stated that:

“. . their Lordships would wish to guard themselves against being

understood to mean that whenever a servant of a company has

authority to do an act on its behalf, knowledge of that act will for all

purposes be attributed to the company. It is a question of construction

in each case as to whether the particular rule requires that the

knowledge that an act has been done, or the state of mind with

which it was done, should be attributed to the company. Sometimes,

as in In re Supply of Ready Mixed Concrete (No. 2) [1995] 1 A.C.

456 and this case, it will be appropriate . . .. On the other hand,

the fact that a company’s employee is authorised to drive a lorry

does not in itself lead to the conclusion that if he kills someone by

reckless driving, the company will be guilty of manslaughter. There

is no inconsistency. Each is an example of an attribution rule for a

particular purpose, tailored as it always must be to the terms and

policies of the substantive rule.”

24. This court, considered the issue in Iridium India Telecom v Motorola

Inc22 and held, inter alia, that:

22 [2010) 14 (ADDL.) SCR 591. 

[2023] 12 S.C.R. 211

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

“38. From the above it becomes evident that a corporation is virtually in

the same position as any individual and may be convicted of common

law as well as statutory offences including those requiring mens rea.

The criminal liability of a corporation would arise when an offence is

committed in relation to the business of the corporation by a person

or body of persons in control of its affairs. In such circumstances, it

would be necessary to ascertain that the degree and control of the

person or body of persons is so intense that a corporation may be

said to think and act through the person or the body of persons.”

Earlier, in the Constitution Bench ruling in Standard Chartered Bank v

Directorate of Enforcement23, the court referred to Section 11 of the IPC,

which defined “person”. “The word “person” includes any Company or

Association or body of persons, whether incorporated or not”; the court

also referred to the 41st and 47th Law Commission reports. The Law

Commission had stated that

“In every case in which the offence is only punishable with

imprisonment or with imprisonment and fine and the offender is a

company or other body corporate or an association of individuals, it

shall be competent to the court to sentence such offender to fine only.”

The judges- in the majority held that all penal statutes are to be strictly

construed, in the sense that the court must see that the thing charged

as an offence is within the plain meaning of the words used and must

not strain the words. Any act falling within the mischief that is addressed

should be intended to be included and has to included if thought of. Further,

all penal provisions, like all other statutes, need to be fairly construed in

terms of expressed legislative intent. The intent to prosecute corporate

bodies for the offences committed by them was clear and explicit, and

the statute did not intend to exonerate them from prosecution. The court,

therefore, held that it would be violence to commonsense that the legislature

intended to punish the corporate bodies for minor and silly offences while

at the same time, extended immunity of prosecution to major and grave

economic crimes.

23 2005 [Supp] (1) SCR 49.

212 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

25. According to Stroud24, “amalgamation” is “welding or blending of

two or more concerns into one.” It also states that “where there

the companies concerned retain separate entities, [] there is no

amalgamation”. Black25 defines amalgamation as the “act of combining

or uniting; consolidation < amalgamation of two small companies

to form a new corporation >…” The Companies Act, 2013 does not

contain any express definition of amalgamation; it rather outlines

and regulates the procedure for amalgamation and spells out its

legal effect, which results in extinguishment of the corporate identity

of the transferor company26 [read, in this case, LVB]. In Walker’s

Settlement27, the term ‘amalgamation’ is defined as:

“The word ‘amalgamation’ has no definite legal meaning. It

contemplates a state of things under which 2 companies are so

joined as to form a third entity or one company is absorbed into and

blended with another company.”

In Re: Skinner28 too referred to amalgamation schemes and their effect

as follows:

“…schemes and orders made by virtue of Section 206 and Section

208 of the Companies Act 1948 can only transfer such rights, powers,

duties and property as are capable of being lawfully transferred by

a party to the scheme if no such sections of the Companies Act

existed. It is not necessary in a scheme to exclude specifically from

its operation things incapable of such transfer as general words in

the scheme and any order in furtherance must be taken to operate

in a manner not to repugnant to the general law of England.”

26. In M/s. General Radio & Appliances Co. Ltd. vs. M.A. Khader (dead) by

LR’s29, the effect of amalgamation of two companies was considered

24 Stroud’s Judicial Dictionary of Words and Phrases (9thedition).

25 Black’s Law Dictionary, Eleventh Edition.

26 Section 233 of the Companies Act, 2013 outlines the result of acceptance of a scheme of amalgamation:

“(8) The registration of the scheme under sub-section (3) or sub-section (7) shall be deemed to have the effect of

dissolution of the transferor company without process of winding-up.”

27 1935 (1) Ch. D. 567.

28 1958 (3) All E.R 273.

29 1986 (2) SCR 607.

[2023] 12 S.C.R. 213

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

by the Supreme Court. It was held that after the amalgamation of

two companies, the transferor company ceases to have any entity,

and the amalgamated company acquires a new status, and it is not

possible to treat the two companies as partners or jointly liable in

respect of their liabilities and assets.

27. In the context of income tax liability, this court, in Saraswati Industrial

Syndicate Ltd. vs. CIT, Haryana, H.P. & Delhi30, observed that:

“The true effect and character of the amalgamation largely depends

on the terms and scheme of merger but there cannot be any doubt

that when two companies amalgamate and merge into one the

transferor company loses its entity as it ceases to have its business.

However, their respective rights or liabilities are determined under the

scheme of amalgamation but the corporate entity of the transferor

company ceases to exist with effect from the date the amalgamation

is made effective.”

28. McLeod Russel India Limited v. Regional Provident Fund

Commissioner, Jalpaiguri & Ors31. was a case involving default in

paying provident fund dues under the Employees Provident Fund

Act, 1952 (“the EPF Act”). In this case, one Mathura Tea Estate

owned Saroda Tea Company Ltd., which was covered by the EPF

Act. During the pendency of recovery and penalty proceedings, the

entire management of Mathura Tea Estate (including ownership of

Saroda Tea Co. Ltd and the estate) was taken over by Eveready

Industries (India) Ltd., which discharged the principal EPF liability but

sought to disclaim penalty (for non-compliance in the requirement to

remit or deposit EPF contributions). This court negatived its position

by noticing that the takeover document clearly noted the liability and

how it was to be treated as McLeod Russel’s liability:

“13. There is no gainsaying that criminal liability remains steadfastly

fastened to the actual perpetrator and cannot be transferred by any

compact between persons or even by statute. But this incontrovertible

legal principle does not support or validate the contention of Mr. Jayant

30 1990 Supp (1) SCR 332.

31 2014 (9) SCR 162.

214 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

Bhushan, Learned Senior Advocate for the Appellants, that damages

levied in terms of Section 14B of the EPF Act cannot be foisted onto

his clients. Sections 14, 14A, 14AA, 14AB and 14AC of the EPF Act

are the provisions postulating prosecution; in contradistinction Section

14B contemplates the power to “recover from the employer by way

of penalty such damages, not exceeding the amount of arrears, as

may be specified in the Scheme”. It is true that it is not a river but

a mere rivulet that segregates and distinguishes the legal concepts

of damages or compensatory damages or exemplary damages or

deterrent damages or punitive damages or retributory damages.

We shall abjure from writing a dissertation on this compelling legal

nodus; save to clarify that modern jurisprudence recognizes that the

imposition of punitive damages, quintessentially quasi-criminal in

character, can be resorted to even in civil proceedings to deter wilful

wrongdoing by making an admonished example of the wrongdoer.

This is the essential purpose, it seems to us, of Section 14B of the

EPF Act, and an imposition within its confines does not assume

criminal prosecution so as to stand proscribed insofar as transfer

of establishment from one management/employer to its successor

is concerned.”

29. In Shyam Sundar v State of Haryana (supra), the liability of a

partnership firm, based on the agency of every partner for the

individual criminal acts of its partners, was negatived:

“9. But we are concerned with a criminal liability under penal provision

and not a civil liability. The penal provision must be strictly construed

in the first place. Secondly, there is no vicarious liability in criminal

law unless the statute takes that also within its fold. Section 10 does

not provide for such liability. It does not make all the partners liable

for the offence whether they do business or not.”

30. It is, therefore, noticeable that the criminal liability of a company

(a) is recognized where it can be attributable to individual acts

of employees, directors or officials of a company or juristic

persons (Tesco, Meridian Global Funds, Standard Chartered

Bank, and Iridium)

[2023] 12 S.C.R. 215

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

(b) recognized even if its conviction results in a term of imprisonment

(Meridian, Iridium);

(c) cannot be transferred ipso facto, except when it is in the nature

of penalty proceeding (McLeod Russel)

(d) the legal effect of amalgamation of two companies is the

destruction of the corporate existence of the transferor company

(in this case, LVB); it ceases to exist.

(e) that apart, only defined legal proceedings, are succeeded to by

the transferee company, which, in this case, is the DBS Bank32 .

31. As noted earlier, Clause 3 (3) of the scheme in this case, no doubt

mentions that legal proceedings would be continued by or against

the transferee bank (read DBS Bank). However, it is also important

to notice the proviso:

“3. Transfer of assets and liabilities and general effect thereof. -

(1)-(2) xxxxxxx

(3) If on the appointed date, any cause of action, suit, decrees,

recovery certificates, appeals or other proceedings of whatever nature

is pending by or against the transferor bank before any court or

tribunal or any other authority (including for the avoidance of doubt,

an arbitral tribunal), the same shall not abate, be discontinued or

be ill any way prejudicially affected, but shall, subject to the other

provisions of this Scheme, be prosecuted and enforced by or against

the transferee bank:

Provided that where a contravention of any of the provision of any

statute or of any rule, regulation, direction or order made thereunder

has been committed by or any proceeding for a criminal offence has

been instituted against, a director or secretary, manager, officer or

other employee of the transferor bank before the appointed date,

such director, secretary, manager, officer or other employee shall,

without prejudice to the application of section 6 of the General

Clauses Act, 1897 (10 of 1897), be liable to be proceeded against

32 Section 233 (9) of the Companies Act, 2013.

216 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

under such law and punished accordingly, as if the transferor bank,

being a banking company had not been dissolved.”

32. Every scheme of amalgamation is statutory and sanctioned under the

Banking Act. Such amalgamation is to ensure that the interests of the

depositors, the creditors and others who had invested, or given credit

to in the erstwhile bank, before its sickness, and that the general

public are protected. It aims at securing larger public interest and

health of the banking industry. Late intervention into the affairs of a

bank can result in a “run” on it, resulting in serious loss of confidence

in the intricately woven banking and financial system. If one sees

this and the overall objective of the scheme, it is to ensure recovery

of what are the bank’s dues and ensuring protection of the creditors.

Clause 3 (3) of the scheme, therefore, has to be considered from

this backdrop. In this context, the express mention of directors and

such other individuals in the proviso means that it is to that extent

only that prosecutions or other criminal proceedings can continue;

in the ordinary sense, criminal liability can neither be attributed to

DBS nor its directors, brought in after the amalgamation, whose

appointments were approved by the RBI.

33. The charge sheet, to the extent it is relevant in the present case,

reads as follows:

“PS – EOW, FIR – 189/2019

**********************

Further, during the course of investigation, the certified copy of the

emails were obtained from the bank along with certificate U/s 65-B

Evidence Act which are as under: -

1. Certified copy of email dated 10.11.16.

2. Certified copy of email dated 07.01.17.

3. Certified copy of email dated 09.01.17.

4. Certified copy of email dated 13.07.17.

Further, the complainant informed that “we draw you kind attention to

the recent amalgamation of LVB With DBS by the Reserve Bank of 

[2023] 12 S.C.R. 217

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

India. Pursuant to the Press Release bearing No. 2020- 2021/647, the

RBI announced a scheme of amalgamation of LVB with DBS Which

came into force on 27.11.2020, post which LVB has amalgamated

with DBS.”

From the investigation conducted, it was emerged that the bank

officials in collusion with promoters of the REL deliberately/knowingly

did not complete the formalities which are mandatory for the loan

transaction to benefit the promoters/accused of RHC Holding Limited

and Ranchem Pvt. Limited by extending loan to the entities which

the promoters/accused persons used to square of their liabilities.

The deposit loan was extended from time to time and the mandatory

requirements were not completed and there is no satisfactory

response of not following the manual in respect of deposit loan of

their own bank and later on, when invoke the deposit they tried

to shift the responsibility to each other. There is no document as

per requirement of the bank itself is on record which established

that these are the loans against the security/FDRS of RFL. It has

emerged that the loan was required by the promoters of REL as well

as RHC Holding Pvt. Limited to square off the liabilities/borrowing of

RHC Holdings Limited and Ranchem Private Limited. The accused

Malvinder Mohan Singh and Shivinder Mohan Singh cannot avail

the loan in their 100% holding company against the FDs of REL

as it requires approval of related party transaction committee from

the board of REL. Therefore, this arrangement was done with the

connivance of the bank officials who facilitated this transaction by

passing the SOP of their own. Moreover, loans were extended from

time to time and eventually the security has been invoked by the

Lakshmi Vilas Bank thus causing wrongful loss to the complainant

Company to the tune of Rs. 791 crores approximately.

From the investigation conducted so far, the supplementary charge

sheet has been prepared against LVB Bank (Now DBS Bank India

Limited) and bank officials namely (1) Anjani Kumar Vermam, (2)

S. Venkatesh, (3) Pradeep Kumar and (4) Parthsarathi Mukherjee

(without arrest) and accused persons Malvinder Mohan Singh,

Shivinder Mohan Singh, Sunil Godhwani, Hemant Dhingra, Kavi

Arora and company RHC Holding Pvt. Limited, M/s Ranchem Pvt. 

218 [2023] 12 S.C.R.

SUPREME COURT REPORT: DIGITAL

Limited as they acted in connivance with each other being members

of a well-planned conspiracy and interacted with each other and

committed acts of commission and of omission in furtherance of the

conspiracy to cheat the complainant company. Hence, this charge

sheet against the accused persons, company and Bank u/s 409/120B

IPC has been prepared by putting their names in column no. 11.

It is therefore, respectfully prayed that this supplementary charge

sheet may kindly be treated as part of main chargesheet against

the said accused and the entire oral and documentary evidence as

reflected in the lists of PWs, and documents enclosed herewith may

also be treated as supplement to the main chargesheet.

17. Refer Notice Served Yes No: Date

Acknowledgement to be placed

18. Dispatched on:

-sd-”

34. It is, therefore, clear that the criminal liability of the individuals now

attributed to DBS are actions of (1) Anjani Kumar Verma, (2) S.

Venkatesh, (3) Pradeep Kumar and (4) Parthsarathi Mukherjee.

They were all officials of LVB. Their individual responsibility and

accountability in criminal law, is and remains unaffected by the

amalgamation. Therefore, there is in fact, no involvement of DBS

Bank, revealed in the charge sheet filed by the Delhi Police. In

completely ignoring these aspects and proceeding on a rather

superficial basis, the High Court, in our considered opinion fell into

error.

35. There is no gainsaying that the power to quash a criminal investigation

or proceedings should not be lightly exercised. Yet, to refuse recourse

to that power, in cases that require or may demand it, is being blind

to justice, which the courts can scant afford to be. In the present

context, the public’s confidence in the banking industry was at stake,

when RBI stepped in, imposed the moratorium and asked DBS to

take over the entire functioning, management assets and liabilities

of the erstwhile LVB. To permit prosecution of DBS for the acts of

LVB officials (who are in fact, facing criminal charges) would result 

[2023] 12 S.C.R. 219

RELIGARE FINVEST LIMITED v. STATE OF NCT OF DELHI & ANR.

in travesty of justice. Therefore, the pending criminal proceedings

(arising out of FIR – 189/2019 registered at P.S. Economic Affairs

Wing, New Delhi), to the extent it involves DBS, which was the subject

matter of the impugned judgment and all consequent proceedings

arising therefrom (to the extent of involvement of DBS), are hereby

quashed.

36. The impugned judgment is accordingly set aside; the appeal by DBS

is allowed; the appeal by RFL/complainant is, for the same reasons,

dismissed. No costs.

Headnotes prepared by: Divya Pandey Result of the case : Appeals disposed of.