In an unfortunate and disheartening event, Nitin Chandrakant Desai (Art Director and Producer) and a Director at ND’s Art World Private Limited reportedly died by suicide on 2 August.
Following this, his wife Neha Desai, lodged a First Information Report (‘FIR’) with Khalapur Police Station alleging that the reason for suicide by her husband was the mental harassment he faced due to the alleged non-payment of the loans owed by ND’s Art World Private to ECL Finance Limited (A Non-Banking Financial Company promoted by Edelweiss Group or the Creditor in this case’).
She, thus, has alleged that employees of ECL Finance and the Insolvency Resolution Professional have committed the offence of abetment of suicide.
But, strictly, legally speaking, how justified is the offence of abetment to suicide? This piece will explore exactly that.
The Loan & The Recovery Order
Based on the information available publicly, ND’s Art World Private Limited had availed loan facilities to the tune of over INR 180 Crores between 2016 to 2018. However, due to various circumstances, ND’s Art World Private Limited was unable to service the loans to the creditor.
Right after this, insolvency proceedings were set in motion at the instance of the creditor before the National Company Law Tribunal, Mumbai (‘NCLT’).
Subsequently, NCLT admitted the Insolvency Petition against the ND’s Art World Private Limited and the Insolvency Resolution Professional was handed over the reins to the management of ND’s Art World Private Limited and Nitin Desai was thus removed from the management of ND’s Art World Private Limited.
The said Insolvency Resolution Professional is also made an accused in the FIR. Nitin Desai challenged the aforesaid Order passed by the NCLT before the National Company Law Appellate Tribunal (‘NCLAT’). However, the NCLAT on 1 August dismissed the challenge and affirmed the order passed by the NCLT.
A day after the said dismissal by the NCLAT, thereby affirming the insolvency resolution process against ND’s Art World Private Limited, Desai allegedly died by suicide on 2 August. The financial distress being faced by him is said to have been the reason of his alleged suicide.
The FIR & What The Creditors Have Said
Accordingly, an FIR under Section 34 (Act done by multiple people with a common intention) read with 306 (Abetment of suicide) of the Indian Penal Code (IPC) has been lodged against the officials of ECL Finance Limited and also the Insolvency Resolution Professional appointed by the National Company Law Tribunal.
The Creditors in the statements available on various public forums have taken a stand that they did not take any steps outside the scope of guidelines by the Reserve Bank of India and the applicable law.
They have further denied any allegations of undue pressure being exerted on Nitin Desai.
Did The Creditors’ Actions Warrant the Offence of Abetment of Suicide?
The punishment for abetment of suicide (under Section 306 of the IPC), if proven, may extend to imprisonment for a period of 10 years.
In order to prove an offence under Section 306, it is imperative to show that the accused has a direct involvement in the abetment/ instigation which led to the suicide.
Though it is not necessary that actual words for instigation which specifically be suggestive of the consequence be spoken, a reasonable certainty to incite the consequence must be spelt out from the acts of the accused person. Thus, the aforesaid acts coupled with a guilty intention may result in the offence of abetment of suicide.
Based on the information available publicly, at present, the instances point out that the creditor took remedies under the law, more specifically the Insolvency and Bankruptcy Code and their actions were in fact affirmed by the Tribunals.
The remedies to recover money as undertaken by the creditor may not be considered as an instigation leading to the consequence of the alleged suicide. Recently, the Andhra Pradesh High Court, while dealing with a case of abetment of suicide due to the alleged harassment by the creditors, in the facts and circumstances of the said case, held that harassment by the creditors to recover their pending dues cannot be regarded as abetment to suicide.
The Creditors Were Functioning Within The Limits of The Law
As pointed out by famous legal scholar Jerome Hall, the mens rea or the guilty intention becomes the bedrock when it comes to criminal liability. The ‘guilty intention’ is thus, a base or foundation on which the other elements of the crime are held.
In the absence of a guilty mind, no person shall be liable for the consequences.
The primary objective of the creditor is to recover the dues from its debtors. The lending and recovery of loans is the business of such institutions and the same is imperative for a stable economy. It is only keeping in mind the aforesaid that various laws, including the Insolvency and Bankruptcy Code was based for resolution of companies in distress.
The primary objective of the officials of the Banks/officials is recovery of the money lent by them and taking remedies permissible under law for recovery of the money in case of defaults. Similarly, the objective of the Insolvency Resolution Professional is to carry of the resolution of the Company in terms of the Insolvency laws. Thus, based on the information available publicly, it may be argued for the creditor and the Interim Resolution Professional that they were acting within the contours permissible in law and did not have any guilty intention.
Thus, a perusal of the law of abetment of suicide coupled with the publicly available information, in my opinion, the aforesaid unfortunate incident may not be a case of abetment of suicide within the meaning of the applicable penal laws.
Having said that, the FIR has been registered and accordingly investigation shall have to be carried by the police to find out if the accused persons had any direct involvement as regards alleged abetment which led to the alleged unfortunate incident of suicide. Accordingly, the law shall take its own course after the conclusion of the investigation.
(The aforesaid opinion is based on the information available publicly and through the various news articles/public pieces and the same is subject to the investigation being carried out by the investigating authorities.)
(Tejasv Anand is a Senior Associate at Khaitan & Co. This is an opinion piece and the views expressed are the author's own, The Quint neither endorses them nor is responsible for them.)
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