Probe to continue into alleged ₹2.03-crore transfer from company account to SBI Life policy; arrest barred during investigation

Respondent No. 2 alleged that SBI officials had transferred ₹2.03 crore from its account to SBI Life Insurance Company without valid authorisation, along with other unauthorised debits.

The complaint alleged misappropriation, criminal breach of trust, cheating and falsification of accounts; the police registered Crime No. 3/2019 under Sections 403, 406, 420 and 464 read with Section 34 IPC.

The SBI petitioners sought to quash the FIR, contending that the debited amount related to an insurance policy.

The complainants disputed that a valid fresh proposal had been made after the initial proposal was returned.

The petitioners invoked the High Court’s inherent jurisdiction under Section 482 CrPC.

1. Whether the FIR should be quashed where the petitioners disputed the complainants’ allegation that the insurance transaction was unauthorised and contended that it was supported by policy documents.

2. Whether, pending investigation, the petitioners could be arrested and whether the Chairman of SBI could be summoned before the other bank officers had been interrogated.

The petitions invoked Section 482 of the Code of Criminal Procedure, 1973, which preserves the High Court’s inherent jurisdiction; the FIR alleged offences under Sections 403, 406, 420 and 464 read with Section 34 of the Indian Penal Code, 1860.

The Court applied the principle that it should not investigate disputed facts or determine the petitioners’ guilt at the quashing stage where the allegations require investigation.

Although the parties cited authorities, the Court did not identify or apply a particular precedent as the basis of its decision.

The documents showed that an initial insurance proposal had been made, but the insurer returned it because payment came from the complainant company’s account while another person was named as the life assured.

The Court held that the petitioners would need to establish whether a fresh proposal had subsequently been made at the instance of the complainant; the complainants’ annual returns referring to an insurance policy did not, by themselves, resolve that question.

Determining whether the transaction was authorised required investigation, so the Court declined to quash the FIR or give the petitioners a “clean chit.”

However, because the allegations concerned account transactions, the Court found custodial interrogation unnecessary and imposed safeguards on arrest and the Chairman’s participation in the investigation.

The challenge to the FIR was rejected, and the investigation was permitted to continue.

The police were directed not to arrest the petitioners until a thorough investigation had been conducted.

The SBI Chairman could be summoned for investigation only after the other petitioners had been interrogated and only if cognisable material or information was extracted or seized from them.

The investigation was to be completed within three months of receipt of a certified copy of the order.