Karnataka HC Quashes SBI Criminal Case Over Financial Dues

The Karnataka High Court in Bengaluru has ruled that criminal prosecution cannot be employed as a mechanism for the recovery of financial liability unless the foundational ingredients of a criminal offence are established prima facie.

Justice Suraj Govindaraj issued the ruling while quashing criminal proceedings initiated by the State Bank of India against a petitioner.

The case against the petitioner stemmed from a dispute involving a tripartite agreement with a builder, in which the petitioner was a signatory. Following issues over financial dues, SBI had launched criminal proceedings in connection with the matter.

While setting aside the proceedings, the court clarified that financial recovery actions cannot be pursued through the criminal justice process in the absence of primary evidence demonstrating a criminal offence.