Calcutta High Court Quashes Criminal Case Against Bajaj Finserv MD, Holds Loan Dispute Civil in Nature

The Calcutta High Court has recently quashed criminal proceedings against the Managing Director of Bajaj Finserv and another company official.

It held that allegations arising from the restructuring of a personal loan and the recovery of loan dues disclosed a civil dispute rather than criminal offences such as cheating, criminal breach of trust or forgery.

Justice Ajoy Kumar Mukherjee held that the complaint did not contain the particulars necessary to sustain the allegation of forgery. The court further held that the dispute arose from a disagreement over the adjustment of loan dues and was civil in nature.

Justice Mukherjee observed, "On perusal of the complaint and the averments made therein, I do not find any ingredient to substantiate the offence of forgery. The complaint is conspicuously silent with regard to the nature of the documents allegedly forged by the petitioners and /or their specific role in manufacturing or forging any such document. The essence of common intention to do an illegal act before or after commission of offence has not been stated by the OP no.2. Therefore, the dispute between the parties is purely civil in nature."

The borrower had purchased mobile phones on equated monthly instalments from Bajaj Finance in 2017 and 2018. She later availed a personal loan of ₹69,000.

According to the complaint, she defaulted on repayments during the COVID-19 lockdown and sought additional time to pay the instalments. She alleged that instead of extending the repayment schedule, the finance company converted her existing loan into another loan account without obtaining her consent.

She further alleged that the company failed to account for amounts already repaid and raised an excess demand, amounting to cheating, criminal breach of trust, and forgery.

The company officials disputed those allegations. They contended that the borrower had accepted the loan conversion after understanding its terms and conditions. They also argued that the dispute arose from a continuing commercial relationship concerning adjustment of loan dues and did not disclose any criminal offence.

Rejecting the allegation of forgery, the court noted that the borrower herself admitted signing the subsequent loan agreement. It held that no false document was alleged to have been made and, therefore, the essential ingredients of forgery were not satisfied.

Justice Mukherjee held, "Although from the facts and circumstances of the case and the arguments placed before the Court, it can be said that regarding adjustment of loan amount there might be a conflict between the parties but I am unable to appreciate the petitioners contention that it attracts any criminality, as a penal statute cannot be expanded by using implications. Section 464 IPC makes it clear that only one who makes a false document can be held liable under the aforesaid provision."

The court further held that if the borrower believed the finance company had demanded excess money, she had a common law remedy to challenge the legality of that demand. It observed that the allegations on record could not, by any stretch, attract the criminal offences alleged in the complaint.

The court also examined the order issuing summons. It reiterated that a magistrate must independently scrutinise the allegations and supporting material before directing an accused to face criminal proceedings. It found that allegations relating to recovery of excess money arising from business transactions spanning more than three years did not disclose the ingredients of the offences invoked.

Referring to the Supreme Court's decision in Pepsi Foods Ltd. v. Special Judicial Magistrate, Justice Mukherjee observed:

"The order of a magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He must examine the nature of allegations made in the complaint and the initial deposition along with documents supplied in support thereof and he cannot act as silent spectators at the crucial stage."

The court also relied on Indian Oil Corporation v. NEPC India Ltd., in which the Supreme Court cautioned against converting disputes that are essentially civil in nature into criminal prosecutions.

Holding that the complaint failed to disclose the ingredients of the offences alleged, the court quashed the criminal proceedings pending before the Additional Chief Judicial Magistrate, Berhampore.

For Petitioners: Advocates Pratim Priya Dasgupta, Om Srivastava, Amit Dey, Swastik Polley

For Opposite Party: Advocates Partha Sarathi Bhattacharyya, Swarnali Saha,