Facts
Magma Fincorp Ltd. (Opposite Party No. 2) filed a complaint alleging that Accused No. 1 (Avinash Kumar) and his wife (Accused No. 2) obtained a loan of ₹19,75,000/- by mortgaging property through forged claims of ownership
Source reference: p. 2-3The petitioner, a lawyer, was engaged by the company to verify the title documents and submit a legal opinion
Source reference: p. 3-4Based on the petitioner’s report—which stated the property was unencumbered and the borrower was the absolute owner—the loan was sanctioned
Source reference: p. 4When the borrower defaulted after nine installments, the company discovered the borrower's father was actually alive and the absolute owner of the property
Source reference: p. 3On 20.02.2018, the Judicial Magistrate, 1st Class, Patna, took cognizance under Section 406 IPC
Source reference: p. 1-2The petitioner moved the High Court seeking to quash the cognizance order
Source reference: p. 1Issues
1. Whether the professional legal opinion provided by a lawyer regarding the validity of title documents, which later turned out to be based on the client's misrepresentation, can attract criminal liability under Section 406 IPC.
Source reference: p. 5-62. Whether the ingredients of criminal breach of trust are present against the petitioner in what appears to be a civil loan default dispute.
Source reference: p. 5Law Applied
Section 406 of the Indian Penal Code (IPC) relating to punishment for criminal breach of trust, which requires the "entrustment" of property and subsequent dishonest misappropriation
Source reference: p. 1, 5The principle that professional negligence or an error in legal opinion does not automatically equate to criminal intent or conspiracy, especially when material facts were suppressed by the borrower from the legal professional
Source reference: p. 5-6Reasoning
The court observed that the petitioner’s role was strictly limited to verifying the authenticity of documents produced before him and reconciling them with the ground reality
Source reference: p. 6The court noted that there was no evidence of "entrustment" of property to the petitioner, nor did he create any forged documents himself; he merely acted on the documents and information (such as the death of the father) provided by the loanee
Source reference: p. 5The court reasoned that the failure of the loan was a civil dispute arising from the borrower’s dishonest suppression of material facts—specifically that his father was alive—rather than a criminal act by the lawyer
Source reference: p. 5Since the petitioner's opinion was based on the "memorandum of family partition" and government mutation records provided to him, no criminal intent could be attributed to him for the loanee's subsequent default
Source reference: p. 4, 6Holding
The court answered in the negative, holding that no offence under Section 406 IPC was made out against the petitioner. The court found that the petitioner was only liable for verifying documents and that the loanee had provided false information regarding his status
The High Court allowed the petition and quashed the order of cognizance dated 20.02.2018 passed in Complaint Case No. 1299C of 2016 specifically as it pertained to the petitioner
Source reference: p. 6Original Court PDF
NARENDRA KUMAR TIWARIvsTHE STATE OF BIHAR
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