The Madhya Pradesh High Court has refused to quash a lower court order that required registering a FIR against several top office bearers of the Kotak Mahindra bank.
The Kotak Mahindra bank had filed a petition in the High Court requesting the quashing of the order of the Chief Judicial Magistrate, Raisen district, Madhya Pradesh.
The order in the case, “Kotak Mahindra Bank Ltd and nine others versus state of Madhya Pradesh and others”, was passed 24 January this year by Justice N.K.Gupta.
Last year, the CJM court had ordered the registration of a FIR against Directors of Kotak Mahindra Bank—Anand Mahindra, Uday Kotak, Pradeep Kotak, C. Jayaram, Cyril Shroff, Shivaji Dam, Shankar Nath, Dipak Gupta and Asim Ghosh—under sections 406, 420 read with sections 120 B and 156(3) of the Cr.P.C. on a complaint by Madhya Pradesh based Som Group of Companies.
According to the HC order, Kotak Mahindra bank had entered into an agreement with the Som group for a one-time settlement of the latter's outstanding loans (non-performing assets) with the Bank of Baroda, Bank of India and other banks.
However, alleging that the Kotak Mahindra bank had violated the agreement and cheated, the Som group complained to the Police and later approached the CJM court, Raisen requesting the court to take cognizance of offences committed by the Kotak Mahindra bank office bearers.
After the police informed the CJM court that Kotak mahindra bank was not cooperating in the investigation, the court directed the police station to register a FIR last year.
The Som group also pointed out to the HC that during investigation, the Raisen police had found that the Kotak Mahindra bank had also committed an offence under the Securitization And Reconstruction of Financial Assets and Enforcement of Security Interest, 2002 (SARFAESI Act).
The police allegedly found that while the Kotak Mahindra bank worked as a securitization company, it didnt register itself under section 3 of the SARFAESI Act.
The bank had therefore committed an offence under section 29 of the SARFAESI Act, 2002 which was liable to be taken cognizance as an offence under section 30 of the act by any Judicial Magistrate First Class.
A petition has also been filed by the Som group under this matter with the Reserve Bank of India.
The HC order concluded that the Kotak Mahindra bank could not prove that the FIR registered against it was without basis and therefore dismissed its petition asking for the FIR to be quashed.
In its defence, the Kotak Mahindra bank counsel told the court that the matter in question was a civil matter and therefore a criminal case was not made out against the bank and its directors.
The counsel also said that the bank had fulfilled its commitment to the Som group as per their agreement.