Lawyer Not Criminally Liable For Improper Legal Advice: Calcutta HC Quashes Criminal Proceedings Against Lawyer

Case Title:
Bhaskar Banerjee Vs Central Bureau of Investigation & Anr.

Date:
08.04.2022

Bench:
Justice Ananda Kumar Mukherjee.

Parties:
For the Petitioners:

1. Mr. Debasish Roy, Adv.
2. Mr. AvikGhatak, Adv.
3. Mr. Amit Ranjan Pati, Adv.

For the CBI/ O.P. No.1:

1. Mr. P. Bajpayee, Adv.

For the O.P. No. 2:

1. Mr. Kausik De, Adv.
2. Ms. Mohini Majumder, Adv.

Subject

An advocate was booked under Section 420, 468, 471, 120B of IPC amounting to criminal liability for providing false legal advice for the sanction of a bank loan to a company which later turned out as Non-Performing Asset (NPA).

Important Provisions

Section 420 of IPC: Inducing delivery of property through cheating and dishonest manner.

Section 468 of IPC: Committing forgery for the purpose of cheating.

Section 471 of IPC: Use of forged documents knowingly.

Section 120B of IPC: Punishment of criminal conspiracy.

Overview

• Two directors of Emotions Info media Private Limited had applied for loan from the opposite party No.2/ IDBI bank.
• The petitioner was an advocate of the IDBI bank who was given the duty to prepare a search report on the two title deeds of immoveable property produced as collateral security.
• The bank had sanctioned a loan amount of rupees 100 lakhs against current and fixed collateral security by mortgage of immoveable property owned by Jitendra Nath Biswas.
• Title deeds bearing No. 3441 and 558 in the name of Jitendra Nath Biswas was found to be actually owned by Yar Ali Mondal. Jitendra Nath Biswas had submitted forged records of rights and rent receipts in his name.
• The Chartered Account had also prepared a fabricated balance sheet which showed ROC of Rs. 335 lakhs instead of Rs.35 lakhs for the enhancement of loan amount.
• The loan amount of the company was a total of Rs. 2.57 crores and declared to be as Non-Performing Asset (NPA).
• After investigation the opposite party No.1/ CBI submitted a charge sheet under section 420, 468, 471 and 120B against seven persons, Partha Das Chowdhury one of the Directors, Abdul Razzak Molla, Abdul Wadud Gazi who provided collateral security, Bhaskar Banerjee, the petitioner and empanelled advocate, Krishnendu chakraborty a junior advocate Saibal Sengupta, chatered Accountant who prepared false and fabricated Balance Sheets and M/s Emotions Infomedia Private Limited, the company in whose name loan was drawn.
• The petitioner was alleged to have entered into a criminal conspiracy since he was asked to conduct a search report and stated that the properties were free from any encumbrances.
• Here the petitioner had filed the application under section 40 read with Section 482 of the Civil Procedure Code for quashing the proceedings against him charged under Sections 420, 468, 471 read with section 120B.

Issues

1. Whether an advocate can be held criminally liable for improper legal advice?
2. Whether the proceeding against the petitioner was a gross abuse of the process of court and violation of the principle of natural justice.

Arguments advanced by the petitioner

• The learned counsel for the petitioner referred to the case of State of Haryana v. Ch. Bhajan Lal and others wherein it stated that when the allegations made in the FIR does not match the evidence collected and do not disclose the commission of any offence then with respect to Section 482 of Code of Civil Procedure it is fit to quash the proceeding to prevent abuse of the process of any court.
• The learned counsel for petitioner also relied upon the case of CBI, Hyderabad v. K. Narayana Rao, wherein a false legal opinion was submitted by a panel advocate and was charged under Section 420 and 109 of IPC, the Supreme court stated there should be an agreement to do an illegal act between the alleged persons in a criminal conspiracy and that can be proved either through direct or circumstantial evidence. The supreme court also stated that in the absence of tangible evidence an advocate cannot be held criminally liable, he can be held liable for gross negligence or professional misconduct and cannot be charged under the Section 420 and 109 of IPC.
• The petitioner’s role was not disclosed and neither was his name in the FIR. The petitioner had given a wrong legal opinion to the bank was the only allegation against him.
• It was put forward that no evidence was provided to establish that the petitioner committed any fraud nor any evidence to establish that the petitioner along with the other conspirators caused wrongful loss to the bank and wrongful gain to himself.
• The learned counsel for petitioner further relied upon the case of Surendra Nath Pandey & Another v. State of Bihar and another, wherein the proceedings against an advocate for similar were quashed due to the allegations being bald and omnibus in nature. It also stated that this amounts to abuse of process of court relying upon the decision made in CBI, Hyderabad v. K. Narayana Rao.
• With respect to the case of A Kumar Sharma v. CBI, it was held that mere negligence or want of greater professional care and competence on the part of an advocate would not make him criminally liable.
• The learned counsel for the plaintiff stated that the advocate would only become liable if he actively participated in the process of defrauding the bank, but in absence of any tangible evidence proceedings against the petitioner would be an abuse of the process of court.

Arguments advanced by the respondent

• The learned counsel for the respondent stated that the petitioner did not care to verify the actual ownership.
• The petitioner along with the others had the intention to defraud the bank from the very beginning, thereby approved the forged documents and siphoned the loan amount.
• Judgment Analysis
• The court after considering all relevant documents stated that the FIR lodged by the deputy Manager of the Bank does not include the name of the petitioner also does not mention that the petitioner had defrauded the bank for any wrongful gain.
• The act of petitioner for providing wrongful advice and approving the wrong report does not itself amount to the fact that the petitioner had entered into a criminal conspiracy.
• The court stated that there is no prima facie imputation in the FIR stating that the petitioner had entered into an agreement to do an illegal act. No offence was constituted against the petitioner to take a case against him.
• The report submitted by the petitioner can only hold him responsible for negligence and not possessing requisite skills.
• No manner of connection and involvement with the accused has been found against the petitioner apart from the report submitted. Also, no allegation could be found stating that the petitioner has made any wrongful gain or received any pecuniary benefit.
• The court stated that an offence of conspiracy cannot be established on mere suspicion which is not supported by acceptable evidence.
• An opining advocate can only be held liable if he was an active participant in a plan to defraud the bank and in the given scenario there is an absence of material to prove the link between the conspirators.
• The lawyer can only be charged for negligence or professional misconduct and cannot be charged under sections 420 and 109 of IPC without proper evidence.
• The court after considering all facts and referring to decisions provided in the cases State of Harayana and others Vs. Ch. Bhajan Lal and others; (1992) SCC (Cri) 426, Surindra Nath Panda and Anr. Vs. State of Bihar (2020) 18 SCC 730, CBI Vs. K. Narayana Rao (2012) 9 SCC 512, A. Kumar Sharma Vs. CBI; (2015) SCC Online Del 7206 stated that there was no tangible evidence to hold any connection or collusion between the petitioner and co accused nor there was any evidence to prove any wrongful gain or benefits received by the petitioner.
• Due to these reasons the continuation of proceedings against the petitioner would amount to abuse of the process of the court. Thereby, the section 420/468/471 read with section 120B was quashed against the petitioner only and revisional application was allowed.

Conclusion

The court concluded that a proceeding against an advocate in a scenario where there is no tangible evidence to support the wrong doing was a gross abuse of the process of court and violation of the principle of natural justice.

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