'Finance Firm Staff Not Liable For Suicide Over Loan Non-Disbursement': HC

The Aurangabad bench of the Bombay High Court has ruled that employees of a finance company cannot be prosecuted for abetment of suicide or defamation merely because a sanctioned loan was not disbursed due to procedural requirements or collection of fees.

A bench of Justices Vibha Kankanwadi and Hiten Venegavkar, on September 4, quashed the FIR filed against four employees of Nivara Housing Finances in connection with the suicide of one Krushna Mane in March 2023.

Background of the Case

According to the complaint lodged by Mane’s widow, the deceased had applied for a loan of Rs6.5 lakh to construct a house. Though the company issued a sanction letter, the loan was not released. Instead, the employees allegedly demanded Rs70,000 as processing fees and Rs1,600 as an advance instalment, which Mane paid. As the construction remained incomplete, Mane reportedly faced social humiliation and eventually hanged himself.

Rejecting the prosecution’s case, the bench said that the actions of the employees did not constitute “instigation” as required under Section 107 of the Indian Penal Code (IPC).

“The petitioners are alleged to have delayed disbursement and sought deposits by way of loan processing fee and first instalment amount. However, these acts do not constitute the important element of abetment i.e. ‘instigation’ within the meaning of Section 107 of IPC,” the court observed.

The judges noted that there were no allegations of threats, words, or acts on part of the employees that could be said to provoke or push Mane into suicide. Instead, the loan proposal had been referred for third-party verification, which returned a negative report, justifying the non-disbursement.

“The act of the deceased in committing suicide, however tragic, seems to be an independent decision of his sense of frustration. If the construction of the house remains incomplete due to non-availability of funds, then it cannot cause instigation for suicide. The deceased could have raised money from other sources,” the bench said.

Delay in FIR

The court also found significance in the two-month delay in lodging the FIR, remarking that it suggested the complaint was filed “after reflection” rather than as an immediate reaction to the incident.

The bench stressed the absence of any causal link between the employees’ conduct and the suicide.

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Final Ruling

“There is absolutely nothing available on record as the investigation is complete and the charge sheet is filed which remotely suggests that there was a mens rea or direct act of any of the petitioners of instigation. The petitioners have neither instigated nor conspired with intentionally aided the deceased in committing suicide.”

Holding that the continuation of prosecution would be an “abuse of process of law,” the bench quashed the FIR.