Bombay High Court
M/S. Gic Housing Finance Ltd. And ... vs The State Of Maharashtra And Anr on 12 August, 2015
Bench: S.C. Dharmadhikari
WP.475.2006.901.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 475 OF 2006
1. M/s. GIC Housing Finance Ltd. }
a Public Limited Company }
incorporated under the Provisions }
of Companies Act, 1956 having its }
corporate office at Universal }
Building, 3rd floor, Sir P. M. Road,}
Fort, Mumbai 400 001 }
}
2. Mr. Ashim K. Guha }
Managing Director and Chief }
Executive of M/s. GICHF Ltd. }
ig }
3. Mr. Srinivas Mahishi }
Asstt. Vice President of }
M/s. GICHF Ltd. }
}
4. Mr. V. R. Joshi }
Area Incharge - Bombay of }
M/s. GICHF Ltd. }
}
5. Mr. Hasmukh Thakkar }
Group Head of M/s. GICHF Ltd. }
}
6. Mr. M. N. Basutkar }
Executive of M/s. GICHF Ltd. }
}
7. Mr. Chandra M. Veera }
Executive of M/s. GICHF Ltd. }
2 to 7 are the Executives of }
M/s. GICHF Ltd. having their office }
at Universal Building, 3rd floor, }
Sir. P. M. Road, Fort, }
Mumbai 400 001 }
}
8. Mr. Krishnakumar }
Armadas Consultants, }
Navsari Chambers of D. N. Road, }
Mumbai - 400 001 }
}
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9. Mr. R. K. Joshi }
Chairman-cum-Managing Director }
of M/s. General Insurance }
Corporation of India having its }
office at Suraksha }
Opp. Mantralaya, Mumbai 400 032 }
}
10. Mr. B. Chakrabarty }
Chairman-cum-Managing }
Director of M/s. New India }
Assurance Co. Ltd. having its }
office at 87, M. G. Road, }
Mumbai - 400 001 }
}
11. Mr. M. Ramdoss }
Chairman-cum-Managing Director }
of M/s. Oriental Insurance Co. Ltd. }
having its office at Oriental House, }
A-25/27, Asaf Ali Road }
New Delhi - 110 002 }
}
12. Mr. M. K. Garg }
Chairman-cum-Managing Director }
of M/s. United India Insurance }
Co. Ltd. having its office at }
H. O. - 24, Whites Road, }
Chennai - 600 014 } Petitioners
versus
1. The State of Maharashtra }
through Azad Maidan Police }
Station and M. R. A. Police Station, }
Mumbai }
}
2. Mr. C. Anthony Louis }
residing at 2/A/203, Hema Park }
Bhandup (East), Mumbai 400 042 } Respondents
Mr. B. K. Barve with Mr. Sandeep Barve and
Mr. Ajit Salunke i/b. M/s. B. K. Barve and Co.
for the Petitioners.
Mr. C. Anthony Louis-Respondent No. 2 in
person.
Page 2 of 24
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WP.475.2006.901.doc
CORAM :- S. C. DHARMADHIKARI &
G. S. KULKARNI, JJ.
DATED :- AUGUST 12, 2015
ORAL JUDGMENT :- (Per S. C. Dharmadhikari, J.)
By this Petition under Articles 226 and 227 of the
Constitution of India and invoking section 482 of the Criminal
Procedure Code, 1973 as well, the Petitioners are seeking to quash a
criminal complaint being M. E. R. C. No. 7 of 2006 and an order passed
therein, under section 156(3) of the Criminal Procedure Code, pursuant
to which, a FIR has been registered at Azad Maidan Police Station,
Mumbai.
2) The Petitioners are inter alia M/s. General Insurance
Corporation Finance Limited (M/s. GIC Finance Limited). It is a public
limited company incorporated under the provisions of the Indian
Companies Act, 1956 and having its corporate office at the address
mentioned in the cause title. Petitioner No. 1 is promoted by General
Insurance Corporation of India and other insurance companies being
M/s. United India Company Limited, M/s. Oriental Insurance Company
Limited, M/s. New India Assurance Company Limited etc. Petitioner
No. 2 is the managing director and Petitioner No. 3 is the Assistant Vice
President. The other Petitioners are the executives and high level
officers including Chairman and Managing Directors of the aforenoted
insurance companies.
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3) The first Respondent is the State and the second
Respondent is the original complainant.
4) At the outset, it must be stated that this Petition was not
assigned to us and as per our current Roster. It was assigned to a
Division Bench presided over by Her Ladyship Hon'ble Mrs. Justice V. K.
Tahilramani. However, the record indicates that this Petition could not
be taken up by the Bench presided over by Her Ladyship and equally by
the other Bench which is presided over by Hon'ble Mr. Justice Ranjit
More.
5) On a request and submission in writing of the Registrar
(Judicial - I) dated 15th July, 2015, this Writ Petition was assigned to
our Bench by the Hon'ble the Chief Justice.
6) Pursuant to such a direction, Respondent No. 2 - party-in-
person made repeated requests that this Writ Petition which was placed
for hearing and final disposal on our Weekly Board, is not being taken
up. He being a party-in-person and aged about 70 years, he finds it
inconvenient to attend the Court frequently. Therefore, we accepted
and granted his request and that is how the Writ Petition was placed
before us for hearing and final disposal out of turn. Accordingly, it was
heard extensively by us on 11th August, 2015 and today we placed it for
Judgment.
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7) The facts and briefly stated in the memo of the Writ
Petition are that the second Respondent, along with his wife Norma
Louis approached Petitioner No. 1 and requested to advance a housing
loan of Rs.4 lacs. That is stated to be for purchasing of a flat/residential
property at Mumbai. The application in writing is dated 20 th November,
1995. The second Respondent to this Writ Petition being co-applicant
executed all the documents and furnished a guarantee as well.
Accordingly, Petitioner No. 1 agreed and sanctioned the loan and issued
a letter of offer dated 22nd March, 1996 to that effect. That incorporates
several terms and conditions. They were accepted by Respondent No. 2
and his wife and that is how their signatures were subscribed thereto.
Thereafter, the second Respondent and his wife issued a letter dated 3 rd
April, 1996 to the Sub-Registrar of Assurances, Mumbai with a request
to handover the original agreement for sale dated 15 th November, 1995
executed with M/s. Laxmi Corporation for purchase of the flat in order
to create a equitable mortgage of the flat. That is how the security
interest was created and the asset is termed as a "secured asset" by the
Petitioners. The further documents and receipts acknowledge the
receipt of the housing loan.
8) According to the Petitioners, there was a default committed
in the payment of the housing loan. Therefore, demand was raised and
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in writing. There was an offer, which was made on 27 th September,
2005 by Respondents to pay a sum of Rs.1,32,962/- in full and final
settlement of the loan liability. The request was made to accept this
proposal, but there is a correspondence, namely, reply by Petitioner No.
1 dated 27th October, 2005 and thereafter, there are further letters.
9) The Petitioners have pointed out that there was no
settlement and as the second Respondent and his wife failed to make
the payment, a notice under section 13(2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (for short the "SARFAESI Act") came to be issued and that
was duly served. Thereafter, there was a demand notice by the
Petitioners, through their Advocates. The second Respondent replied to
this letter on 22nd November, 2005, whereafter also there was a further
letter on 4th January, 2006. This correspondence continued, but in the
meanwhile, the Petitioners stated that Respondent No. 2 approached
the Court of Metropolitan Magistrate, namely, Additional Chief
Metropolitan Magistrate, 37th Court, Esplanade, Mumbai and filed a
private complaint alleging offences punishable under sections 409, 418,
420 read with section 34 of the Indian Penal Code. A copy of this
complaint is at Annexure 'Q' to this Writ Petition from pages 85 to 97 of
the paper book. The Petitioners also state that initially this complaint
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was not entertained and an order was passed thereon on 13 th December,
2005, copy of which is at page 98 of the paper book. Thereafter
Respondent No. 2 preferred Criminal Revision Application No. 1723 of
2005 in the Sessions Court.
10) However, the Second Respondent also filed a criminal
complaint on 5th January, 2006 being C. C. No. 2/M/2006 before the
learned Additional Chief Metropolitan Magistrate, Esplanade Mumbai
alleging offence punishable under section 500 read with section 34 of
the Indian Penal Code.
11) Even on this complaint, there is an order passed on 21 st
February, 2006, copy of which is at Annexure 'S' to the Writ Petition.
12) The second Respondent then filed the subject complaint
and alleging offences punishable under section 383, 384 and 385 of the
Indian Penal Code. The Metropolitan Magistrate, by an order dated 3 rd
February, 2006, directed the Azad Maidan Police Station to investigate
the complaint, by exercising its powers under section 156(3) of the
Criminal Procedure Code. The Metropolitan Magistrate therefore and
in pursuance of his earlier orders, directed the Azad Maidan Police
Station to register a FIR. The order to that effect was passed on 21 st
February, 2006 and the FIR has been registered on 22 nd February, 2006.
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The order dated 21st February, 2006 and the FIR which has been
registered pursuant thereto are sought to be quashed in the present
Petition.
13) Mr. Barve appearing for the Petitioners submits that the
complaint as a whole does not disclose commission of any offence. All
the materials that are referred in the complaint taken as a whole at their
face value do not disclose commission of a cognizable offence. The
argument of Mr. Barve is that the Petitioners being public financial
institutions were performing their statutory duties and, under the
statute, issued the notice at page 53 of the paper book. If the notice
and its contents are perused, it does not indicate that offence
punishable under section 383 of the Indian Penal Code has been
committed. The notice has been issued under the powers conferred on
the Petitioners by the SARFAESI Act. That there was a "security
interest" and that a "secured asset" both within the meaning of the
SARFAESI Act would empower the Petitioners to issue the subject
notice. The notice therefore called upon the Petitioner to pay the sum.
It is in these circumstances it is submitted that there is no offence
committed much less punishable under section 383 of the Indian Penal
Code. There is no dishonest inducement for delivery of property and
therefore none of the ingredients of section 383 of the Indian Penal
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Code are satisfied. The complaint is thus a gross abuse of the process of
the Court. The Petitioner No. 1 and all the senior officials of the
Petitioner No. 1 have been arrayed as accused. The Chairman and
Managing Directors of the insurance companies and in public sector
have also been arrayed as accused. There is absolutely no role
attributed to them. In the circumstances, this is nothing but an attempt
to pressurise these Petitioners not to perform their statutory functions
and duties or to exercise their statutory powers. In such circumstances,
this Court should exercise its inherent power and equally powers under
Articles 226 and 227 of the Constitution of India to quash this
complaint and the FIR. Heavy reliance is placed on a recent Judgment
of the Hon'ble Supreme Court of India in the case of Mrs. Priyanka
Srivastava and Anr. vs. State of U. P. and Ors. in Criminal Appeal No.
781 of 2012 dated 19th March, 2015. Reliance is also placed on a
Judgment of the Division Bench of this Court, which held that so long as
there is no actual delivery of valuable security or property, no offence
can be said to have been committed under section 383 of the Indian
Penal Code, which is punishable under section 384 thereof.
14) On the other hand, Respondent No. 2 appearing in-person
has submitted that there is no merit in the Writ Petition and it must be
dismissed. He submits that this Court cannot proceed to quash the
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criminal complaint or the FIR on a possible and probable defence of the
accused. The powers conferred in this Court are of extraordinary
nature and ought to be sparingly exercised. They cannot be exercised
as a matter of course. Once there is no coercive action on the part of
the second Respondent and his wife and all that they have done is to
take recourse to law, then, the FIR cannot be quashed. More so, there is
nothing extraordinarily absurd about the FIR. Equally, the learned
Metropolitan Magistrate has applied his mind and passed the order
directing police to carry out further investigation, pursuant to which the
FIR has been registered. In these circumstances, this Writ Petition
deserves to be dismissed. Respondent No. 2 has read out sections
383 to 385 of the Indian Penal Code and relied upon section 511. He
would submit that the crucial word in section 383 of the Indian Penal
Code is 'injury'. In the present circumstances and when the complaint
discloses commission of offence and the first Petitioner which is seeking
to recover an amount much more than what was advanced or
sanctioned and in any event what has been settled and agreed upon,
then, all the more this Court should not interfere in its Writ Jurisdiction.
The second Respondent has handed over cheques to the Petitioner in
repayment of the loan but on the specific understanding that they
would not be deposited. Therefore, such an agreement and
understanding having been confirmed by the officers of the Petitioner
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No. 1, all the more the ingredients of section 383 of the Indian Penal
Code are attracted. They are satisfied prima facie. This Court is only
concerned with a prima facie case and if the cheques handed over
constitute a valuable security, then, the complainant must be given an
opportunity to prove the allegations made in the complaint and the FIR.
The Petitioners will have all opportunities to defend the charge at the
trial. Hence, at this stage, this Court should not interfere in its Writ
Jurisdiction and the petition be dismissed.
15)
With the assistance of the both, the learned Counsel
appearing for the Petitioners and the party-in-person, we have perused
the complaint and the subject FIR. The Petitioner No. 1 is a public
financial Corporation and covered by the SARFAESI Act. By a notice
issued on 15th December, 2005, copy of which is at page 53 of the paper
book, the Petitioners accorded sanction to the housing loan on the
condition of creation of an equitable mortgage in its favour and on
other terms and conditions incorporated in the loan agreement. Then,
the notice refers to the account details and states that the account of
Respondent No. 2 has been classified as a non performing asset. That is
in accordance with the directions/guidelines relating to assets
classification issued by the National Housing Bank. In the light of the
default committed in repayment of the principal debt and interest, the
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notice calls upon the second Respondent and the guarantors to pay to
the Petitioner No. 1 the amount stated to be the outstanding dues of
Rs.3,61,030/- as on 31st December, 2005 within a period of 60 days
from the date of service of the notice, failing which, the Petitioner No. 1
stated that it is free to invoke sub-section (4) of section 13 of the
SARFAESI Act.
16) What has transpired is that this notice was duly served.
Thereafter, the second Respondent addressed a letter and this was
replied but thereafter on 3rd February, 2006, the second Respondent's
Advocate's letter was addressed to the Petitioners. The same refers to
some offers and proposals.
17) We are clarifying that we are not concerned in this Petition
with what is outstanding and payable and whether any offer or proposal
for settlement was made, accepted and agreed and subsequently
whether there are any steps taken in furtherance thereof. We are here
only concerned with the allegations in the complaint. The allegations in
the complaint would have to be assumed to be true and correct. The
complaint, copy of which is at page 116 of the paper book proceeds to
allege that the housing loan was taken by Norma Louis and the
Respondent No. 2 jointly. In para 1, it has been stated that the loan was
obtained from accused No. 1/Petitioner No. 1 and accused Nos. 2 to 12
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are functionaries of the accused company. It is alleged that they are
responsible for the day to day functioning and accused Nos. 6 to 11 are
directly participating events leading to the cause of action in the
complaint. Then, role of accused No. 11 is referred to in signing and
sending notice dated 15th December, 2005 under the SARFAESI Act and
making the extortionary demands forming subject matter of the
complaint. After making reference to the other accused, it is averred in
para 2 that monthly installments were paid by way of a total 9 post
dated cheques which were handed over to the then Manager at Bombay
of the Petitioner No. 1, Mr. Makrand Paranjpe. That is under cover of
letter and Mr. Paranjpe while acknowledging the carbon copy had
admitted the receipt of the said letter. That letter records that the
cheques should not be deposited prior to a confirmation from the
second Respondent. Each of these cheques and up to cheque No. 7
dated 30th October, 2002 came to be deposited after checking with the
second Respondents and they were duly encashed by the accused
company. The deposit of cheque No. 8 dated 30 th November, 2002,
however, was without informing the second Respondent and behind his
back. Since there was a temporary shortage of funds, the cheque was
dishonoured. Then, initiation of legal proceedings and invoking section
138 of the Negotiable Instruments Act is referred and such averments
continue in paras 5 and 6 of the complaint. Then, the second
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Respondent in para 7 alleges that adding injury to insult, Petitioner
No.1 demanded overdue interest and arising out of the cheque not
having been realised. In para8 once again there is a reference to how
the second Respondent did not issue a fresh cheque unless the first
Petitioner accused was ready and willing to give assurance in writing
that they will not charge any overdue interest on the dishonoured
cheques. Para 9 of the complaint expresses disappointment of the
second Respondent in the Petitioner No. 1 taking allegedly unfair, unjust
and unreasonable stand by insisting upon overdue interest on the said
cheque amount. It insisted on the overdue interest. Thereafter, in para
10, the complainant alleges that the cheques were issued and signed by
Second Respondent and they were drawn on the account with Canara
Bank. This means that threat to seize his flat over which his wife has no
title is an unlawful threat. Thereafter, in para 11, there is a reference to
a dispute and with regard to non payment of Equal Monthly
Installments (EMIs) unless Petitioner No. 1 giving up its demand for
overdue interest. In para 12, there is reference to several meetings on
different occasions at the residence of the complainant and the attempts
made to settle the claim of the Bank/Petitioner No. 1. Then, in paras 13
and 14, there is a reference to the same letter and issued in May, 2005.
From para 15 onwards, it is alleged that the company has not clarified a
discrepancy in the records and accounts. Such allegations continue up
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to para 19 and then reference is made to further correspondence and in
which, specifically a letter dated 27 th September, 2007 is referred at
para 21 of the complaint. Para 22 contains the allegations and
pertaining to the issuance of notice and the two paragraphs 22 and 23
reads as under:-
"22. I say that it was in the face of the said facts that, suddenly
and without disputing or denying what is stated in Exh. 'L' below
- I received a notice dated 15.12.2005 from the accused
company, signed by accused No. 11 above, claiming this fantastic
and frightening amount of Rs.3,61,030/- as outstanding and
payable, failing which I was threatened that u/s 13(4) of the
Securitisation Act, my said flat will be seized, taken over and
auctioned by the accused company. A true copy of this notice is
placed below, marked Exh. 'M'. I say that my wife (or I) owe no
such amount to the accused company.
23. I say that whereas the said notice gave us 60 days to pay
the said amount as prescribed by the Securitisation Act also it
was followed by another notice dated 21.12.2005, this time from
M/s. B. K. Barve and Co. advocates on behalf of the accused
company, this time calling upon us to pay the said amount with
18% interest, which was not demanded in the earlier notice
within 7 days. This notice, however, did not specify under which
law or laws the demand was being made or the threat of public
auction sale of my flat was extended. A true copy of this notice
is placed below, marked Exh. 'N'."
18) Para 24 refers to the offer made and the alleged correct
outstanding amount and it is stated that what is demanded by Petitioner
No. 1 is extortionary. That is how in para 26, the allegations are
summed up and it is specifically alleged that the offence of extortion
has been committed in the manner set out in the complaint. Para 27
also refers to the notice. It is on such a complaint that the Metropolitan
Magistrate, namely the Additional Chief Metropolitan Magistrate, 8 th
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Court, Esplanade Mumbai passed an order on 3 rd February, 2006 under
section 156(3) of the Criminal Procedure Code, directing the Senior
Police Inspector of Azad Maidan Police Station to investigate and submit
a report. Thereafter, the detailed order on 21 st February, 2006 has been
passed holding that the police have failed to take necessary steps and
therefore they must record and register the FIR. The FIR, copy of which
is at page 134A of the paper book reiterates these allegations and at
page 134D, the same allegations about the loan availed of, the handing
over of the cheques and some of the cheques being deposited and
behind the back of the complainant are set out. Thereafter, the notice
under section 13(2) of the SARFAESI Act is referred to.
19) Section 383 of the Indian Penal Code defines extortion.
The same is reproduced hereinbelow:-
"S.383. Extortion. - Whoever intentionally puts any person in
fear of any injury to that person, or to any other, and thereby
dishonestly induces the person so put in fear to deliver to any
person any property or valuable security, or anything signed
or sealed which may be converted into a valuable security,
commits "extortion"
20) A bear reading of this section would indicate that the
offence is committed when somebody intentionally puts any person
under fear of any injury to that person or to any other and thereby
dishonestly induces the person so put in fear to deliver to any person
any property or valuable security, or anything signed or sealed which
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may be converted into a valuable security. Such an act is stated to be
extortion. Therefore, the essential ingredients are intentionally putting
any person in fear of any injury to that person or to any other and
thereby dishonestly inducing the person so put in fear to deliver to any
person any property or any valuable security.
21) From a reading of the allegations in the complaint and as a
whole, we do not find any offence under section 383 being even prima
facie made out. The reliance placed by Mr. Barve on the Judgment of
the Hon'ble Supreme Court and on a Judgment of a Division Bench of
this Court is therefore accurate. None of the allegations, and which we
have referred extensively in order not to leave any room for doubt or a
complaint for injustice, would make out the offence of extortion. The
first Petitioner was acting in furtherance of a contractual stipulation,
whereunder it sanctioned the loan. It is a public sector corporation and
rather a public financial institution. It is in the business of advancing
and lending moneys. In terms of the contract, it was entitled to call
upon the second Respondent and his wife to make payment of the loan
amount sanctioned and disbursed. That the liability in that behalf is not
disputed is clear from the complainant's version. That there were
cheques handed over and towards repayment of the loan is further
undisputed. That there may have been an understanding or otherwise
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with regard to the deposit of these cheques and that intimation to the
second Respondent/complainant but it is the complainant's version that
only some of the cheques were deposited without intimation, whereas,
at least 7 cheques were deposited with intimation to the complainant.
We do not see how by such an act and which is alleged to have been
committed, namely of deposit of cheques behind the back of the
complainant in order to prosecute the complainant lawfully and for
offence punishable under section 138 of the Negotiable Instruments Act
can be said to be an act within the meaning of section 383 of the Indian
Penal Code. A completely voluntary act of handing over the cheques
and in due discharge of a admitted liability of the complainant and his
wife is not out of any fear of injury to either. Nor this act of handing
over post dated cheques for being deposited in Petitioner No. 1's
account is because of dishonest inducement to deliver a valuable
security. Similarly, the creation of a equitable mortgage in favour of the
Petitioner No. 1 is also in return of a loan facility, duly sanctioned and
the amount thereunder disbursed and received by the Respondent No. 2
and his wife. This is also a voluntary and contractual act, prima facie.
That the cheques on due presentation were not honoured is apparent
from the allegations in the complaint itself. Therefore, there is no
question of intentionally putting the complainant or the second
Respondent in any fear of any injury. Secondly, by issuance of notice
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under section 13(2) of the SARFAESI Act, we do not see how the
offence of extortion is committed. The legal rights and vesting in the
Petitioner No. 1 under the parliamentary statute having been exercised,
the offence of extortion is not committed prima facie. Precisely, this was
the issue before the Hon'ble Supreme Court and in the case of Mrs.
Priyanka Srivastava (supra). One Prakash Kumar Bajaj son of Pradeep
Kumar Bajaj had availed housing loan from Punjab National Bank
Housing Finance Limited. The loan was taken in the name of
Respondent No. 3 and his wife, namely Jyotsna Bajaj. As there was
default in payment of the installments, the loan account was treated
non performing asset in accordance with the guidelines framed by the
competent authorities. Thereafter, the financial institution issued notice
to the borrower under section 13(2) of the SARFAESI Act and in
pursuance thereof, submitted an application on 5 th June, 2007 before
the District Magistrate, Varanasi for taking appropriate action under
section 13(4) of the SARFAESI Act. Thereafter, the Writ Petition of
Respondent No. 3 before the High Court was dismissed with liberty to
him to approach the Tribunal under section 17 of the SARFAESI. That is
how the complaint came to be filed and against all the officers and
managers of the financial institution and the allegation was that the
offences punishable under section 163, 193 and 506 of the Indian Penal
Code are committed. The criminal complaint was dismissed and a
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Criminal Revision Application was preferred and the Additional Sessions
Judge, Varanasi set aside the order passed and remanded the case to the
Trial Court. Then, what is transpired is that the Hon'ble Supreme Court
referred to the manner in which the Magistrate proceeded to take
cognizance. Once the Hon'ble Supreme Court discussed that part of the
controversy, what it has referred to are the proceedings before the
Tribunal under the SARFAESI Act. Thereafter, a criminal case was filed
and series of them and which are referred to in para 7 of the Judgment
of the Hon'ble Supreme Court, pursuant to which FIR No. 298 of 2011
was registered. The FIR and then the allegations therein, the offer of
one time settlement are all referred in the Hon'ble Supreme Court
Judgment and subsequently what the Hon'ble Supreme Court cautioned
is that the powers conferred vide section 156(3) of the Criminal
Procedure Code cannot be exercised as a matter of course and
mechanically by the Magistrates. They are expected to apply their mind
and consider as to whether any offence under the penal Act has been
committed for the Court to take note of the same. It is in these
circumstances that the reliance that has been placed on paras 24 and 25
of this judgment is appropriate. These paras read as under:-
"24. Regard being had to the aforesaid enunciation of law,
it needs to be reiterated that the learned Magistrate has to
remain vigilant with regard to the allegations made and the
nature of allegations and not to issue directions without
proper application of mind. He has also to bear in mind that
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sending the matter would be conducive to justice and then he
may pass the requisite order. The present is a case where the
accused persons are serving in high positions in the bank. We
are absolutely conscious that the position does not matter, for
nobody is above law. But, the learned Magistrate should take
note of the allegations in entirety, the date of incident and
whether any cognizable case is remotely made out. It is also
to be noted that when a borrower of the financial institution
covered under the SARFAESI Act, invokes the jurisdiction
under Section 156(3) Cr. P. C. and also there is a separate
procedure under the Recovery of Debts due to Banks and
Financial Institutions Act, 1993, an attitude of more care,
caution and circumspection has to be adhered to.
25. Issuing a direction stating "as per the application" to
lodge an FIR creates a very unhealthy situation in the society
and also reflects the erroneous approach of the learned
Magistrate. It also encourages the unscrupulous and
unprincipled litigants, like the respondent no. 3, namely,
Prakash Kumar Bajaj, to take adventurous steps with courts
to bring the financial institutions on their knees. As the
factual exposition would reveal, he had prosecuted the earlier
authorities and after the matter is dealt with by the High
Court in a writ petition recording a settlement, he does not
withdraw the criminal case and waits for some kind of
situation where he can take vengeance as if he is the emperor
of all he surveys. It is interesting to note that during the
tenure of the appellant No. 1, who is presently occupying the
position of Vice-President, neither the loan was taken, nor the
default was made, nor any action under the SARFAESI Act
was taken. However, the action under the SARFAESI Act was
taken on the second time at the instance of the present
appellant No. 1. We are only stating about the devilish
design of the respondent No. 3 to harass the appellants with
the sole intent to void the payment of loan. When a citizen
avails a loan from a financial institution, it is his obligation to
pay back and not play truant or for that matter play possum.
As we have noticed, he has been able to do such adventurous
acts as he has the embedded conviction that he will not be
taken to task because an application under Section 156(3) Cr.
P. C. is a simple application to the court for issue of a
direction to the investigating agency. We have been apprised
that a carbon copy of a document is filed to show the
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compliance of Section 154(3), indicating it has been sent to
the Superintendent of police concerned."
22) From a perusal of these paragraphs, it is apparent that by
issuance of notice under section 13(2) of the SARFAESI Act, no offence
is committed by a public financial institution or a Bank and which can
be said to be punishable under the IPC or a penal law. Once issuance of
notice is in furtherance of the powers and vested by the statute, then,
nothing that is punishable as an offence can be attributed to the public
financial institution and its officers.
23) In the present case as well, we find that the position is that
the second Respondent/complainant has approached a criminal court
with a complaint and essentially based on the notice under section
13(2) of the SARFAESI Act and the act of the Petitioner No. 1 in issuing
the same. We do not see any offence being committed much less
punishable under section 383 of the Indian Penal Code. The notice is
not intended to extort money but to recover public funds by exercise of
powers under the law enacted by the Parliament and found to be
constitutionally valid. In these circumstances, the criminal complaint is
a gross abuse of the process of the Court. The learned Magistrate ought
to have applied his mind and not mechanically pass an order under
section 156(3) of the Criminal Procedure Code. He does not stop there
and proceeded further to direct registration of FIR. In his entire order,
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we do not see that he has adverted to the allegations in the complaint
and concluded whether they disclose prima facie commission of any
offence. That is how he had to proceed in law. He having not
proceeded in this manner, we do not find any justification to sustain his
order.
24) We are left only to deal with the Judgments and authorities
brought to our notice. To be fair to him, even if he is not a practicing
Advocate, Respondent No. 2 seems to be familiar with principles of law.
He has tried to persuade us in applying the tests laid down in the case
of State of Haryana vs. Bhajan Lal and Ors. reported in 1992 SCC Supl.
(1) 335. It is precisely these tests that we have applied. It is the
further test that though inherent powers have to be sparingly exercised,
but they have to be exercised to secure the ends of justice that we have
held as above. We do not think that we have deviated from any of the
principles that have been delineated and summarised in this case. We
have also taken note of the decision relied upon by the complainant to
the effect that the powers in this Court are extraordinary in nature and
should not be a normal and mechanical exercise. We have applied our
mind independently and after referring to the complaint and reading it
as a whole and taking all the allegations therein at their face value that
we are of the firm opinion that no prima facie case of commission of any
offence has been disclosed therein.
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24) As a result of the above discussion, the Writ Petition
succeeds. Rule is made absolute in terms of prayer clause (a). We
however clarify that we have not expressed any opinion on the liability
and the outstanding amount due and payable by the second
Respondent. That is a matter which must be resolved by both and by
approaching competent Courts. We are only concerned with the request
of the Petitioners, a financial institution and its officials for quashing of
a criminal complaint. Our order and Judgment is based on the
allegations in the complaint and taking note of them alone. It is
unfortunate that parties like the complainant take recourse to criminal
prosecution despite the caution and warning from the Hon'ble Supreme
Court. Such pressure and coercive act takes them nowhere leave alone
enabling them to avoid a admitted liability to repay a loan sanctioned
by a Bank or public financial institution. There are proper legal
remedies available to dispute and challenge the recovery. There civil
proceedings can be resorted to for resolving contractual disputes. Any
vexatious criminal prosecution of the above is bound to recoil or
rebound on the complainant.
(G.S.KULKARNI, J.) (S.C.DHARMADHIKARI, J.)
J.V.Salunke,PA
