PNB Scam: Supreme Court refuses to interfere with case against bank officials on RBI's criminal complaint

The Supreme Court earlier this month refused to interfere with a Delhi High Court order that called for issuance of process against the Punjab National Bank in connection with a criminal complaint filed by the Reserve Bank of India (RBI) complaint against the bank in 2018 [Punjab National Bank v. NCT of Delhi & Anr]..A bench of Justices KM Joseph and BV Nagarathna dismissed the appeal moved by the Punjab National Bank (PNB), but kept all its contentions open so that it may pursue other remedies available as per law. .The RBI had, on November 25, 2016, issued a confidential circular to banks on 'Cyber Security Controls Frauds'. The circular advised banks to explore STP (Straight Through Processing) between CBS (Core Banking System) and SWIFT (Society for Worldwide Interbank Financial Telecommunication) messaging systems.It also spoke on trade finance transactions and the misuse of SWIFT, a fund transferring interface and sent this information in a password protected form to PNB.In January 2018, RBI allegedly received multiple Fraud Monitoring Reports (FMR) and discovered that PNB had falsely stated to the RBI that it had integrated all applications around CBS with Straight Through Processing. The FMRs purportedly revealed that the modus operandi of this ₹13,000 crores scam was that CBS was not integrated with SWIFT through STP.Following this, a show cause notice was sent by the RBI to PNB on August 23, 2018 asking them to show cause in writing as to why penalty under Section 47 A(1) (C) read with Section 46(4) of the Banking Regulation Act 1949 should not be imposed on PNB.The RBI then filed a criminal complaint before the Patiala House Metro Magistrate seeking prosecution of PNB and its officials for commission of offences under Section 46 of Banking Regulation Act read with Section 120B of Indian Penal Code.After a hearing took place in relation to the show cause notice, in December 2018 the Committee of Executive Directors of RBI passed an order under Section 47A of Banking Regulation Act, imposing a penalty of ₹2 crore on PNB.On March 11, 2019, the Court of Metropolitan Magistrate of Patiala House Court, New the Delhi, passed an order by which PNB officials and others named in the criminal complaint filed by RBI were summoned to appear before the Court.In June last year, the Delhi High Court dismissed a petition moved by PNB seeking to quash the Magistrate's order on the ground that prima facie a case for offences alleged was made out..The bank then approached the Supreme Court with the present Special Leave Petition (SLP) challenging the Delhi High Court's order.Before the top court, Senior Advocate Mukul Rohatgi appearing for PNB, contended that SWIFT and Treasury are one and the same thing, the bank's statement to the RBI about integrating its systems with the two could not be considered false.However, Senior Advocate Mahesh Jethmalani, appearing for the RBI, contended that there were around 80 applications around CBS, and that SWIFT and Treasury were two of them.The top court after hearing the parties rejected the appeal."The special leave petition is dismissed. This will be without prejudice to all the remedies and contentions open to the petitioner in law," the Court ordered.Senior Advocate Mahesh Jethmalani and advocates Mugdha Pande, Ramesh Babu, Ajay Awasthi and Wedo Khalo appeared for RBI..[Read order]