The Supreme Court recently quashed an FIR filed against Standard Chartered Bank and Starship Equity Holding Ltd, which stemmed from a long-standing dispute over a share escrow agreement. The Court strongly criticized the criminal case as a “gross abuse of the process of law.”
The dispute dates back to 2007, when an Escrow and Settlement Transaction Agreement was signed between Corsair, Katra, and Standard Chartered Bank (Mauritius). As part of this agreement, Victor Program Pvt Ltd agreed to unconditionally and irrevocably sell 13,455 shares of Tamil Nadu Mercantile Bank to Corsair’s identified buyers for ₹32.5 crore.
The bank approved the transfer on May 13, 2007. That same day, the shares were deposited with Standard Chartered Bank’s Mumbai branch. Two days later, on May 15, Vector received the full payment of ₹32.5 crore, completing the transaction.
Years later, as the value of the shares soared, Vector attempted to undo the deal. In 2011, it filed a civil suit seeking to terminate the escrow agreement and reclaim the shares—but the Bombay High Court rejected the claim. After losing the appeal as well, Vector turned to criminal proceedings in 2016, filing a complaint that led to an FIR alleging serious offences like cheating, criminal breach of trust, and criminal conspiracy under Sections 406, 409, 420, 108-A, 109, and 120-B of the Indian Penal Code. The police even seized the share certificates under Section 93 of the CrPC.
When the Karnataka High Court refused to quash the FIR, Standard Chartered Bank moved the Supreme Court. A bench of Justices M.M. Sundresh and Rajesh Bindal ruled in the bank’s favour, saying the High Court should have used its powers under Section 482 CrPC to put an end to the proceedings.
The Court found no evidence to support the allegations in the FIR and noted that several key facts had been suppressed. It emphasized that Vector had willingly entered the agreement, transferred the shares, and received full payment. The attempt to reclaim the shares years later through civil and then criminal proceedings was seen as an afterthought motivated by regret over the financial outcome.
