The landmark judgment of the Tamil Nadu adjuidcator Sri P W C Davidar in the Umashankar Vs ICICI Bank adjudication is now part of the history.

It is now also known that just before the judgement was released on 12th April 2010, Chennai Police also had filed  a chargesheet on 5th April 2010 in the case under Section 66 of ITA 2000. Chargesheet includes Sections 419,420,465,468 and 471 of IPC also.

The chargesheet however has been filed against the account holder in Mumbai Fort branch of the Bank to which the phished amount was transferred and later withdrawn in cash across the counter.

The criminal proceedings recognize the offence under Sec 66 as was done by the adjudicator while exercising his jurisdiction. The adjudicator had consequently also examined the operation of Section 85 and held that ICICI Bank was liable under Section 85 due to a failure in fulfilling the “Due Diligence” obligations. This automatically means that ICICI bank officials in charge of the business as well as the Directors of the Bank are also liable for the offence and such offence may extend to criminal obligations. The precedence of in the ITA 2000 scenario as well as several other IPC instances would be sufficient to make ICICI Bank liable on criminal grounds.

In the instant case, the Mumbai branch was accused of opening the account of the fraudster without following KYC norms, granting him “Overdraft” facilities, allowing him to withdraw Rs 4 lakhs in cash across the counter immediately after the disproportionate amount was credited to the account, destroying the CCTV evidence available to identify the fraudster, failing to lodge a police complaint when the fraud was brought to their notice, claiming that they were entitled to retain part of the fraud proceeds to recover the overdraft amount (as co-beneficiaries of the fraud) etc., This makes ICICI Bank officials in Mumbai susceptible to be charged for criminal negligence.

ICICI Bank should be relieved that the Police have spared them from being charged either under Section 66 or under Sec 420 of IPC though there were perhaps enough grounds for the same hopefully, an occassion will not arise for the Police to be forced to rethink and file charge sheet on some of the bank officials.

It may be recalled that recently Chennai Police chargesheeted some officials of UTI Bank in a Nigerian fraud case. Bank managements need to be alive to such possibilities and undertake appropriate employee training besides instituting better security measures to protect themselves from the operation of vicarious liablities in an incresingly fraud prone industry.

Naavi of


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