Criminal FIR Against SBI Officials Over Banker’s Lien Quashed: Delhi High Court

Sudhir Kumar & Others Vs State of NCT of Delhi & Others (Delhi High Court)

Case Summary: The Delhi High Court, in Sudhir Kumar & Others Vs State of NCT of Delhi & Others, W.P.(CRL) 2152/2022, decided on 30 August 2024, quashed FIR No. 106/2022 registered against three officials of the State Bank of India under Sections 409 and 120B of the Indian Penal Code, 1860, holding that the dispute principally concerned the Bank’s entitlement to retain original title deeds of mortgaged property under its general lien under Section 171 of the Indian Contract Act, 1872. The petitioners, comprising two Assistant General Managers and a Chief Manager of SBI, approached the High Court under Article 226 of the Constitution read with Section 482 of the Code of Criminal Procedure, 1973, challenging criminal proceedings initiated after a corporate guarantor demanded the return of property documents. The Court examined whether continued retention of title deeds by a bank, purportedly to secure outstanding liabilities arising from other loan facilities, could constitute criminal breach of trust or criminal conspiracy. It held that the Bank was entitled to assert its lien in the circumstances established by the loan and guarantee documents and that the complaint did not disclose dishonest misappropriation or conversion of entrusted property. The Court further observed that the parties were already litigating their competing rights before the Debts Recovery Tribunals and that criminal proceedings could not be used to secure collateral relief in what was substantially a civil and commercial dispute. Applying the principles governing quashing of criminal proceedings, the High Court allowed the petition and quashed the FIR and all consequential proceedings against the petitioners.