Delhi High Court Quashes Cheating Case Against Central Bank Of India's Officials, Says Dispute Over ₹58 Lakh Settlement Adjustment Is Purely Civil
The Court ruled that the matter was a contractual dispute and a business venture rather than a criminal offence, directing the parties to pursue existing civil remedies.
Justice Neena Bansal Krishna, Delhi High Court
The Delhi High Court has quashed criminal proceedings against officials of the Central Bank of India in a case involving an alleged misappropriation of ₹58 lakhs during a failed One-Time Settlement (OTS).
The Court observed that since the settlement failed due to the complainant’s own default, the Bank was within its rights to adjust the deposited amount against the outstanding debt.
The Bench of Justice Neena Bansal Krishna observed, “Even if the account got assigned along with other NPA Accounts, it is merely a business venture in which no element of cheating can even prima facie presumed. The Bank and Petitioner have stated that this amount has been given due adjustment in the Assessment Deed…In any case, if there is any challenge of the Complainant to his entitlement to Rs.58 lakhs, he has his own civil remedy. No offence of cheating or criminal breach of trust has made out, merely because the Petitioners and Central Bank of India entered into Assessment Agreement with UVARCL, which was formalised on 20.04.2013.”
Senior Advocate Rakesh Tiku appeared for the Petitioner, while APP Utkarsh appeared for the Respondents.
Factual Background
The Complainant’s two companies defaulted on loans from the Central Bank of India, leading the Bank to declare them NPAs in 1999–2000. By March 2013, the Debt Recovery Tribunal (DRT) had issued recovery certificates against the Complainant for approximately ₹13 crores. In early 2013, Bank officials proposed a One-Time Settlement (OTS). The Complainant deposited a total of ₹58 lakhs into a "No-Lien" account as a show of good faith.
The Bank then sanctioned a settlement of ₹6 crores, requiring the balance of ₹5.42 crores to be paid by March 31, 2013. When the Complainant failed to pay the balance by the deadline, the OTS was automatically cancelled, and all concessions were withdrawn. On April 26, 2013, the Complainant demanded the return of his ₹58 lakhs. Instead, the Bank informed him that it had assigned (sold) the debt to a private company, UVARCL, on April 20, 2013. The Complainant alleged that the Bank and UVARCL conspired to cheat him
After the police declined to take action, the Complainant filed a criminal complaint. On June 28, 2017, the Magistrate summoned the Bank and its officials to stand trial for cheating (Section 420 IPC) and criminal breach of trust (Section 409 IPC). The Petitioners then moved the High Court to quash these proceedings.
Observations of the Court
The Court said, “First and foremost, admittedly, OTS failed on account of non-adherence of the terms by the Complainant. Secondly, though this amount of Rs.58 lakhs was lying in ‘No lien’ account, the Bank, in case of default, was well within its right to adjust the said amount towards outstanding amount. It cannot be held to be a case of criminal breach of trust or of cheating.”
It was contended on behalf of the Bank that a due adjustment of this amount has been made in the loan account of the Complainant. The Court said that even if it is not correct, it is merely a case of recovery of Rs. 58 lakhs, to which the Complainant is making a claim, which is purely a civil dispute, for which he has already invoked civil remedy by filing a Civil Suit, which is pending trial.
“At best, the dispute relates to adjustment or refund of money arising out of contractual terms. There is no material to indicate any fraudulent or dishonest intention at the inception of the transaction, a sine qua non for constituting the offence of cheating under Section 420 IPC. Thus, it does not disclose any criminal offence, as is sought to be made out by the Complainant”, the Court said.
Accordingly, the Court said that the contents of the Complaint do not disclose any criminal offence of cheating or of criminal breach of trust. Hence, the criminal proceedings were quashed.
Cause Title: Mahender Singh v. State (Govt. of NCT of Delhi) & Anr. [Neutral Citation: 2026:DHC:1584]
Appearances:
Petitioner: Senior Advocate Rakesh Tiku with Advocates Jaswainder Singh and Monu Kumar
Respondents: APP Utkarsh, APP with Advocates Sima Gulati with Diksha Narula