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Informist, Tuesday, Oct. 28, 2025

 

NEW DELHI – The Delhi High Court has ruled that banks cannot be summoned as accused for the offence of defamation, as they lack the state of mind, or mens rea, necessary to constitute the offence. For an offence of defamation, the intention or mens rea to cause harm to reputation is an essential ingredient, the court said. A company, being an artificial or juristic person, does not possess such intention or mens rea, the court added. 

 

The high court said that the act of banks in declaring Rangoli International Pvt. Ltd.'s account as fraudulent was in the discharge of their banking activities and was conducted in good faith. There is not a whisper of any fact which can be termed to have been intended to bring disrepute to Rangoli International, the court said. Even as per the averments in the defamation complaint filed by Rangoli International, the only assertion is that the company's account was declared a fraud, resulting in major financial losses, the court noted. Therefore, even if all the averments made in the complaint are admitted to be correct and true, they do not constitute any act which can be termed as defamatory, the court added.

 

Further, the court held that the banks' officers cannot be held liable for the offence of defamation. It is well established that there is no provision in the Code of Criminal Procedure that recognises vicarious liability of a company's directors for criminal offences allegedly committed by the company, the court said. For the summoning of individual directors, there has to be personal imputations to make them liable for their individual acts and criminal liability cannot be vicariously fastened onto them merely because of their designation, in the absence of any specific allegations, the court added.

 

The petitioners, who were the senior bank officers, had not been attributed even a single act done by them with the requisite mens rea of bringing disrepute to the company, the court said. All the averments in the complaint are directed towards the banks, who had acted in discharge of their business activities, the court said. In the absence of any allegation against any of the bank officers, they cannot be held liable for any act of defamation and could not have been summoned for that offence, said the court, quashing the defamation case against bank officers.

 

In 2014, Rangoli International entered into a consortium arrangement and executed an inter-se agreement with seven banks. A credit facility was extended to the company, wherein Punjab National Bank acted as the lead bank of the consortium. The total credit facility amounted to INR 2.5 billion, of which INR 560 million was extended by the lead bank.

 

Thereafter, the banks declared the company's account fraudulent following internal audits, correspondence from the Reserve Bank of India, and directions from the Central Bureau of Investigation related to financial irregularities. The company said that Bank of Baroda, Oriental Bank of Commerce, Canara Bank, and Corporation Bank, with the intent to cause injury and harm to its reputation and to compel it to clear its outstanding dues, illegally and arbitrarily declared its account fraudulent, despite there being no fraudulent activity. Consequently, the company filed a defamation case against the officers of Bank of Baroda, Oriental Bank of Commerce, Corporation Bank, and Canara Bank. Challenging a lower court's summoning order, the officers moved the high court.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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