HONOURABLE JUSTICE G. SRI DEVI
CRIMINAL PETITION No. 9868 of 2016
ORDER:
1. This Criminal Petition is filed under Section 482 Cr.P.C. seeking to quash the proceedings initiated against the petitioners/A-1 and A-2 in C.C.No.107 of 2016 on the file of the I-Additional Judicial Magistrate of First Class, Nizamabad, which was taken cognizance for the offences punishable under Sections 406, 409, 420 and 506 of I.P.C.
2. The facts which led to filing of the present Criminal Petition are as under:
Originally a case in Crime No.161 of 2014 of II Town Police Station, Nizamabad, came to be registered against the petitioners herein and two others for the offence punishable under Section 420 of I.P.C., basing on the complaint lodged by the second respondent/de facto complainant herein. In the said complaint, it is stated by the second respondent that he has purchased the plot No.13 admeasuring 220 square yards in Sy.No.1630 and 1634/A situated at Nizamabad, in the auction conducted by the State Bank of India, Shivaji Nagar Branch, Nizamabad, and he has paid the entire consideration of Rs.8,00,001/- and on such payment, the bank authorities, on 20.07.2013, got registered the said plot in his name bearing document No.8949/2013 and handed over the document to 2 GSD, J Crl.P.9868_2016 him. Thereafter, he came to know that the plot which was registered in his name has no relevance to the plot which was shown to him and it belongs to others. In this regard, the 2nd respondent requested the Bank Manager to get the said plot surveyed and hand over possession to him, but the Bank Manager did not do so, due to which he sustained mental stress and financial loss and that the Bank Manager has cheated him and, therefore, requested to take legal action against the Bank Manager and his staff as per law.
3. The Police investigated into the matter and filed a final report stating that the 3rd respondent (A-3) obtained a loan of Rs.2,00,000/- on 15.12.2010 from the 2nd petitioner (A-2) for his trading business and that the 4th respondent (A-4), who is the mother of the 3rd respondent, stood as a guarantor for the loan facility and also created equitable mortgage over the subject property. Thereafter, the 3rd respondent (A-3) committed irregularities in operating the loan account and that the loan account was classified as Non Performing Asset. It is further stated that the matter is pending before the Debts Recovery Tribunal at Hyderabad vide S.A.No.485 of 2013 and a Writ Petition No.682 of 2015 is also pending before this Court. It is further stated in the final report that the Public Prosecutor, Nizamabad, has given an opinion that since the matter pertains to land/plot dispute, the same shall be settled before the concerned civil Court. Hence, the Sub-Inspector of Police, II Town 3 GSD, J Crl.P.9868_2016 Police Station, Nizamabad, filed the final report on 31.07.2015 referring the case as "Civil Nature". Thereafter, on 15.12.2015, the 2nd respondent herein, who is the de facto complainant in Crime No.161 of 2014, filed a private complaint under Section 200 of Cr.P.C. before the I-Additional Judicial Magistrate of First Class, Nizamabad. By an order dated 05.03.2016, the learned Magistrate after recording the sworn statement of the 2nd respondent herein, took the case on file against the petitioners (A-1 and A-2) and respondents (A-3 and A-4) for the offences under Sections 406, 409, 420 and 506 of I.P.C., and issued summons to them. Challenging the said order of taking cognizance of the case, the petitioners herein filed W.P.No.15320 of 2016 before this Court, which was dismissed as withdrawn vide order dated 20.06.2016, granting liberty to the petitioners to pursue an alternative remedy available under the provisions of the Criminal Procedure Code, 1973. Thereafter, the petitioners filed the present Criminal Petition, seeking to quash the proceedings in C.C.No.107 of 2016.
4. Heard Sri M.Srikanth Reddy, learned Counsel appearing for the petitioners; learned Assistant Public Prosecutor appearing for the 1st respondent; M/s.Vankina Allu and Partners, learned Counsel appearing for the 2nd respondent; Sri D.Raghavulu, learned Counsel appearing for respondent Nos.3 and 4 and perused the record. 4
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5. Learned Counsel for the petitioners would submit that respondent Nos.3 and 4 failed to repay the loan amount, in spite of issuance of demand notice by the 1st petitioner/Authorized Officer on 08.06.2012 and, therefore, the Authorized Officer issued possession notice dated 10.09.2012, which was published in the daily newspapers as required under the Rules; that the Authorized officer of the 2nd petitioner bank obtained valuation of the secured asset from the approved valuer and after getting the approval, the reserve price was fixed at Rs.7.70 lakhs; that after taking physical possession of the secured asset under the orders of the District Magistrate, Nizamabad, the 2nd petitioner Bank has conducted auction on 04.07.2013 through its Authorized Officer; that in the auction, the 2nd respondent was the successful bidder for a sum of Rs.8,00,001/- and after receiving the sale consideration from the 2nd respondent, the Authorized Officer of the 2nd petitioner Bank issued Sale Certificate dated 20.07.2013 in favour of the 2nd respondent and the same was registered with the District Registrar, Nizamabad. It is also submitted that after issuance of the sale certificate, the 2nd respondent requested the 2nd petitioner bank to identify the property once again in his presence and on verification it is noticed that respondent Nos.3 and 4 have constructed a compound wall adjoining a temple, within the secured asset and that the 2nd respondent requested the petitioners to demolish the compound 5 GSD, J Crl.P.9868_2016 wall for taking physical possession of the said plot. By that time, the 3rd respondent has filed S.A.No.485 of 2013 before the Debts Recovery Tribunal, Hyderabad and obtained status quo order on 20.08.2013 with respect to the possession of the said plot and the same is in force. It is also submitted that the 2nd respondent filed a complaint before the S.H.O., II Town Police, Nizamabad, which was registered as a case in Crime No.161 of 2014 for an offence punishable under Section 420 of I.P.C and after conducting investigation, the Police filed report dated 31.07.2015 referring the case as "Civil Nature". Thereafter, the 2nd respondent filed the private complaint dated 15.12.2015 before the learned Magistrate on the very same allegations alleging that the petitioners have committed offences punishable under Sections 406, 409, 420 and 506 read with 34 I.P.C. It is further submitted that a reading of the said complaint itself shall not disclose any of the offence against the petitioners and the learned Magistrate without examining the facts in detail took cognizance of the complaint and issued summons to the petitioners. It is also submitted that the 2nd petitioner bank and its Authorized Officer in order to recover the debt conducted the auction of the secured asset by following the Rules prescribed under the SARFAESI Act and a sale certificate was also issued in favour of the 2nd respondent. It is further submitted that Section 32 of the SARFAESI Act prohibits the prosecution of the petitioners or its 6 GSD, J Crl.P.9868_2016 Officers for the action taken in respect of recovery of the debt under the said Act; that any aggrieved person including the borrower is provided with a remedy under Section 17 of the SARFAESI Act, by filing an application before the Debts Recovery Tribunal as the jurisdiction of the Civil Courts or prosecution against the secured creditor is prohibited under the said Act. In support of his contentions, he relied upon the judgment of the Apex Court in Priyanka Srivastava and another v. State of Uttar Pradesh and others1 and also the judgment of this Court in State Bank of India v. State of Andhra Pradesh and others2.
6. Learned Assistant Public Prosecutor would submit that the learned Magistrate has got ample power under Section 190 of Cr.P.C. to take cognizance of the case and that no reasons are required to be given while taking the case on file and that there are no grounds to quash the proceedings in the said C.C.
7. Learned Counsel for the 2nd respondent would submit that the petitioners in connivance with the respondents/A-3 and A-4 sanctioned the loan without verifying the documents and without proper physical verification of the plot in question and thereby misappropriated the bank amounts and also induced the 2nd respondent and many others to participate in the auction of the plot 1 (2015) 6 SCC 287 2 (2015) 6 ALD 665 7 GSD, J Crl.P.9868_2016 in question though they are fully aware that the said plot could not be identified. He further submits that when the fraud came to light, the petitioners delayed the identification of the plot till one month after the auction with an mala fide intention to provide time to the borrowers to approach the Debts Recovery Tribunal, Hyderabad. It is further submitted that A-1, A-3 and A-4 also threatened the 2nd respondent with dire consequences stating that they will see his end if he files any case against them. Therefore, the learned Magistrate has rightly taken cognizance of the case for the aforesaid offences.
8. Learned Counsel appearing for respondent Nos.3 and 4 would submit that immediately after caming to know about the sale of the property in auction and issuance of sale certificate in favour of the 2nd respondent, respondent Nos.3 and 4 have approached the Debts Recovery Tribunal by filing S.A.No.485 of 2008 challenging the sale and also obtained status quo order with regard to the confirmation of the sale and also physical possession of the property vide docket order dated 12.09.2013 and the status quo order is still in force.
9. In view of the above rival submissions, the point that arises for consideration is "whether the above allegations constitute any offence under the provisions of I.P.C. and the petitioners can be prosecuted"?
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10. In Priyanka Srivastava v. State of U.P. (1 supra) the Apex Court in paragraph No.33 held as under:-
"33. At this juncture, we may fruitfully refer to Section 32 of the SARFAESI Act, which reads as follows :
32. Protection of action taken in good faith.- No suit, prosecution or other legal proceedings shall lie against any secured creditor or any of his officers or manager exercising any of the rights of the secured creditor or borrower for anything done or omitted to be done in good faith under this Act."
In the present case, we are obligated to say that learned Magistrate should have kept himself alive to the aforesaid provision before venturing into directing registration of the FIR under Section 156(3) Cr.P.C. It is because the Parliament in its wisdom has made such a provision to protect the secured creditors or any of its officers, and needles to emphasize, the legislative mandate, has to be kept in mind."
11. In State Bank of India v. State of Andhra Pradesh (2 supra), another coordinate bench of this Court in paragraph No.15 held as under:-
"A combined reading of the allegations in the complaint and Section 32 makes it very clear that for the acts done by the officers or manager exercising the rights of the secured creditor in good faith under the provisions of the SARFAESI Act, no suit, prosecution or other legal proceedings shall lie. In the complaint, no mala fides were 9 GSD, J Crl.P.9868_2016 alleged nor it was alleged that the acts done by the officers against the 3rd respondent were in excess of the powers conferred under the SARFAESI Act. In that view of the matter, no complaint can be made against the acts of the 1st accused. The 2nd accused is an auction purchaser and the 3rd accused is the Bank."
12. In the instant case also it is an admitted fact that the 3rd respondent had availed cash credit (Hypothecation) facility of Rs.2.00 lakhs from the 2nd petitioner bank for his trading business M/s. Mamatha Fabrics, Nizamabad and the 4th respondent, who is the mother of the 3rd respondent, stood as guarantor and she had created equitable mortgage over her residential plot No.13 admeasuring 220 square yards in Ward No.10, Block No.4, behind Radio Station, Nizamabad, as a collateral security. There is no dispute that the 3rd respondent had committed irregularities in operating the said Cash Credit facility and he was declared as Non- Performing Asset (NPA). There is also no dispute that the 2nd petitioner bank had issued a demand notice dated 08.06.2012, under Section 13 (2) of the SARFAESI Act, to respondent Nos.3 and 4, calling upon them to remit an amount of Rs.2,03,789/- due under the said loan and in the notice itself, it was mentioned that if the amount is not paid, the bank will exercise all or any of the rights detailed under Section 13 (4) of the SARFAESI Act. 10
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13. The Apex Court time and again held that Section 32 of the SARFAESI Act gives protection of action taken in good faith to the Reserve Bank or the Central Registry or any secured creditor or any of it officers. The 1st petitioner is the Retired Chief Manager of the 2nd petitioner bank and the 1st petitioner has exercised his power delegated to him as Authorized Officer under SARFAESI Act. The 2nd respondent had participated in open auction and being the highest bidder to purchase the property, deposited the bid amount and got Sale Certificate in his favour, which was also registered with the District Registrar, Nizamabad. In view of the above, this Court does not find any ingredient of cheating or inducement on the part of the petitioners as alleged by the 2nd respondent in the private complaint. The 1st petitioner had only acted in good faith as instructed by the 2nd petitioner bank as an Authorized Officer to proceed against the securities when the 3rd respondent borrower committed default in payment of the loan amount. So, it cannot be said that the petitioners have committed any offence as alleged in the private complaint and they were protected under Section 32 of the SARFAESI Act. If the learned Magistrate has committed any illegality in entertaining the private complaint, this Court has got ample power under Section 482 of Cr.P.C. to quash the said proceedings. In this case also, even if the allegations in the private complaint are true, no offence is made out against the petitioners as 11 GSD, J Crl.P.9868_2016 they acted in good faith on the basis of the documents available in the 2nd petitioner bank in respect of the transactions.
14. That apart, after conducting auction, sale certificate was also issued and the same was registered with the District Registrar, Nizamabad and the record further discloses that challenging the sale, respondent Nos.3 and 4 have filed S.A.No.485 of 2008 before the Debts Recovery Tribunal and also obtained status quo order with regard to the confirmation of the sale and also physical possession of the property vide docket order dated 12.09.2013 and the said order is still in force. Further, the earlier complaint filed by the 2nd respondent against the petitioners and the borrowers, which was registered as Crime No.161 of 2014, with the same set of allegations, has already been closed as "civil in nature". So under these circumstances, the learned Magistrate is not justified in entertaining the private complaint and no purpose will be served by allowing the proceedings to continue against the petitioners herein and as such the same are liable to be quashed.
15. Accordingly, the Criminal Petition is allowed and the proceedings initiated against the petitioners/A1 and A2 in C.C.No.107 of 2016 on the file of the I-Additional Judicial Magistrate of First Class, Nizamabad, are hereby quashed. 12
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16. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed.
_____________________ JUSTICE G. SRI DEVI 08.07.2021 Gsn/gkv 13 GSD, J Crl.P.9868_2016