Criminal proceedings for cheating against bank officials require concrete allegations of inducement and dishonest intent.

The complainant, Diganta Kakoty, alleged that his mother, Punya Prava Kakoty, owned 1 Katha 11.5 Lechas of land and had stood as personal guarantor only for a housing loan obtained by her son, Prasanta Kakoty.

According to the complaint, Prasanta Kakoty, in collusion with the then PNB Branch Manager Bipul Kumar Khataniar, procured several subsequent loans by forging Punya Prava Kakoty’s signatures and showing her property as security.

PNB thereafter initiated Debt Recovery Case/O.A. No. 179/2013, Title Suit No. 79/2014 and SARFAESI proceedings.

The present petitioners, who were bank officers posted at different times, allegedly signed affidavits, verified pleadings, sought possession, issued a sale certificate and pursued mutation of the auction purchaser’s name on the basis of the disputed documents.

A forensic examination conducted during the DRT proceedings reported that certain signatures of Punya Prava Kakoty were forged.

The complainant consequently filed Complaint Case No. 35C/2019, in which the Magistrate, after a limited investigation under Section 202 CrPC, took cognizance under Sections 417/34 IPC against the petitioners and the principal accused, Bipul Kumar Khataniar.

The petitioners approached the High Court under Section 482 CrPC seeking quashing of the complaint and the cognizance order.

Whether the allegations against the petitioners, who acted as PNB officers in recovery, SARFAESI, DRT and civil proceedings, disclosed the ingredients of cheating punishable under Section 417 read with Section 34 IPC.

Whether continuation of the complaint proceedings against the petitioners amounted to an abuse of the process of law warranting exercise of the High Court’s inherent jurisdiction under Section 482 CrPC.

Whether the petitioners were protected under Section 32 of the SARFAESI Act for acts allegedly performed in good faith in their official capacity.

The Court applied Sections 415 and 417 IPC, holding that cheating requires deception accompanied by fraudulent or dishonest inducement to deliver property, permit retention of property, or do or omit an act causing or likely to cause damage or harm.

Section 482 CrPC empowers the High Court to quash criminal proceedings where the allegations, even if taken at face value, do not disclose an offence or where continuation of the prosecution would constitute abuse of process.

Section 32 of the SARFAESI Act protects secured creditors and their officers from prosecution for acts or omissions done in good faith under the Act.

Relying on K. Virupaksha v. State of Karnataka, (2020) 4 SCC 440, and Sivakumar v. Inspector of Police, AIR 2025 SC 2148, the Court recognised that criminal proceedings should not ordinarily be used to re-litigate or intimidate officers in respect of statutory recovery proceedings where no direct criminal role is shown.

The Court also relied on M.N. Ojha v. Alok Kumar Srivastav, (2009) 9 SCC 682, which permits quashing where a complaint against bank officers contains general allegations of fraud, collusion or cheating but lacks concrete facts establishing the ingredients of a criminal offence.

The Court distinguished the alleged forgery in the creation and sanction of the loans from the later conduct of the petitioners.

The disputed loans and documents were allegedly created during the tenure of Bipul Kumar Khataniar and before the petitioners assumed their respective offices; there was no allegation that the petitioners themselves forged the documents or participated in procuring the loans.

The petitioners’ acts consisted principally of signing pleadings and affidavits, seeking possession, issuing the sale certificate and pursuing mutation in the course of official recovery proceedings.

At the relevant time, the forensic report revealing the forged signatures had not yet been received by most of the petitioners, and the Court found no material indicating their knowledge of the forgery or any dishonest intention.

Further, the complaint did not allege that the petitioners deceived or induced the complainant or his mother for their own wrongful gain.

The allegations were directed substantially against Prasanta Kakoty and Bipul Kumar Khataniar, while the petitioners were implicated merely because they acted on the bank’s records in their official capacities.

Consequently, the essential element of inducement under Section 415 IPC was absent, and the proceedings could not be sustained under Section 417/34 IPC.

Exercising jurisdiction under Section 482 CrPC, the Court set aside the order of cognizance dated 3 December 2019 and quashed Complaint Case No. 35C/2019 insofar as it concerned the five petitioners.

The complaint was permitted to proceed against the remaining accused.

The criminal petition was accordingly disposed of.