SC Reaffirms that Juristic Persons Such as Banks Do Not Have the Capacity to Possess Mens Rea

In a significant ruling, the Hon’ble Supreme Court of India in the case of HDFC Bank Ltd. v. State of Bihar & Ors., 2024 SCC OnLine SC 2995, dated October 22, 2024, underscored that corporate entities cannot inherently possess the criminal intent required for offenses under the Indian Penal Code (IPC).

The dispute arose when the Income Tax Department conducted a search and seizure operation targeting various income tax assessees, leading to an order under Section 132(3) of the Income Tax Act, 1961, which prohibited the operation of certain bank accounts, lockers, and fixed deposits associated with the assessees. Later, on November 1, 2021, the Income Tax department partially revoked the order, allowing the operation of specific bank accounts but maintaining the restraint on lockers and fixed deposits. However, one of the assessees accessed her locker at HDFC Bank Ltd., allegedly with the assistance of bank officials. This incident led to the registration of a First Information Report (FIR) against HDFC Bank Ltd. and certain officials, citing various sections of the IPC, including Sections 34, 37, 120B, 201, 206, 217, 406, 409, 420, and 462.

HDFC Bank Ltd. approached the Hon’ble High Court of Patna to quash the FIR filed against it; however, the court dismissed HDFC’s petition, citing lack of prima facie evidence of cognizable offenses and asserting that the case required further investigation. Aggrieved by the order, HDFC Bank Ltd. appealed in the Hon’ble Supreme Court of India.

The apex court examined the applicability of various IPC sections invoked in the FIR, focusing on the essential requirements of mens rea and entrustment to establish offenses under Sections 420 and 409 of IPC, among others. The court noted that these sections require either dishonest inducement or criminal breach of trust, which are not applicable in cases involving juristic entities like banks; they lack the capacity for mens rea, which is a critical element for establishing an offense under IPC. Additionally, the court stated that even taking the FIR at face value, there was no indication that the bank or its officials had dishonestly induced anyone to deliver property or engaged in any act that would meet the threshold for the offences alleged. Therefore, the apex court set aside the high court order and quashed the FIR.