The Chhattisgarh High Court ruled that a lawyer cannot be held liable for financial loss to a client if there is no intent to defraud. The court quashed the criminal charges against an SBI empaneled lawyer who was accused of being involved in the fraudulent disbursement of a bank loan. The ruling emphasized that without clear fraudulent intent, criminal liability cannot be established. This decision highlights the importance of proving malicious intent in fraud-related cases.
The Chhattisgarh High Court ruled that a lawyer cannot be criminally liable for financial losses incurred by a bank due to their professional opinion unless there is proof of active participation in defrauding the bank.
The court dismissed criminal charges against a lawyer associated with the State Bank of India (SBI) who was accused of being involved in the fraudulent disbursal of a loan under the Central government’s Kisan Credit Card (KCC) scheme.
The court stated,
“Merely because an opinion given by an Advocate has caused financial loss to a person/institution, that cannot be a ground for prosecuting him. There has to be some evidence that the said act was done with the sole intention to defraud the person/institution and with active participation along with other conspirators.”
The lawyer was alleged to have provided a false document certifying that the borrower owned immovable property, which led to the loan being granted. However, the bench, consisting of Chief Justice Ramesh Sinha and Justice Amitendra Kishore Prasad, observed that the lawyer had only issued a ‘search report’ and there was no evidence of collusion with other accused parties to defraud the bank.
The court noted,
“From perusal of the materials available on record, it transpires that the petitioner has only given a search report and there is nothing on record to hold that there was active connivance between the petitioner and other co-accused persons who have defrauded the respondent-Bank.”
The court also highlighted that despite the fraud allegations, the lawyer remained on the bank’s panel, suggesting he had not been negligent or untrustworthy.
The case involved 74-year-old Ramkinkar Singh, who sought to quash the criminal charges upheld by the sessions court. It was alleged that Singh issued a ‘non-encumbrance certificate’ for a piece of land owned by the borrower, Hariram Chandrakar, which was necessary to qualify for the loan.
Read Also: ‘Lawyers Strikes Unacceptable’: Supreme Court Enforces ‘zero tolerance’ Policy
When Chandrakar defaulted on the loan, it was discovered that he did not own any land, and the documents he provided were forged.
Following the investigation, an FIR filed against Chandrakar and the bank manager, with Singh later implicated in a supplementary charge sheet. Ultimately, the court found that the prosecution did not demonstrate any active role of Singh in the alleged fraud and quashed all proceedings against him.
Advocate Anshul Tiwari represented Singh, while Deputy Advocate General Shashank Thakur represented the State of Chhattisgarh, and Advocate PR Patankar represented SBI.