Madhya Pradesh High Court
Pegasus Assets Reconstruction Pvt Ltd ... vs The State Of Madhya Pradesh on 12 December, 2023
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari
1
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
MCRC No. 52624 of 2023
(PEGASUS ASSETS RECONSTRUCTION PVT LTD THROUGH ITS AUTHORISED REPRESENTATIVE MR.
JAYACHANDRAN G. Vs THE STATE OF MADHYA PRADESH AND OTHERS)
Dated : 12-12-2023
Shri Brien Da Silva, learned Senior Counsel with Shri Abhinav
Malhotra, learned counsel for the petitioner.
Ms. Archana Kher, learned Additional Advocate General with Shri
Garuav Singh Chouhan, learned Govt. Advocate for the respondent
No.1/State.
Shri Pankaj Soni, learned counsel for the respondent No.2.
Shri Zenith Chhablani, learned counsel for the respondent No.3.
Heard on I.A. No.17639/2023 an application for grant of interim relief.
The petitioner has filed the present petition seeking quashment of the
First Information Report(FIR) dated 16.11.2023 registered with Police Station-
Economic Offence Wing(EOW), District - Indore(M.P.) in Crime No.47/2023
for the offence punishable under Sections 406, 409, 420 and 120-B of IPC,
1860 and Section 7 of Prevention of Corruption Act, 1988.
2. Earlier this Court vide order dated 04.12.2023 had issued notice to the
newly added respondent i.e. the complainant. Today, counsel for the
respondent no.2 as well as respondent no.3 appeared for the first time before
the Court and prayed for three days time to oppose the prayer for interim relief.
However, learned Senior Counsel appearing for the petitioner vehemently
opposed the prayer and contended that the application for interim relief may be
considered. Accordingly, the application - I.A. No.17639/2023 is taken up
for hearing.
3. Learned Senior Counsel for the petitioner contended that the FIR has
been wrongly registered against them as there is no mens rea on the part of the
petitioner. The fact remains that the respondents could not lay any claim against
the petitioner before the learned DRT and DRAT and the District Court, Indore,
therefore, with the intent to harass the petitioner, the present FIR has been
lodged. The matter is of purely civil in nature. The petitioner being an Assets
Reconstruction Company had undertaken the process of enforcement of
security interest in strict compliance with the provisions of the SARFAESI Act,
therefore, it cannot be said that the petitioner had committed any offence.
Learned Senior Counsel for the petitioner further submitted that the FIR is
affecting the reputation and impacts the business activity of the petitioner, who
is engaged in recovery of loans involving public money, therefore, in the fitness
of things, interim order to the effect that no coercive action be taken against the
petitioner be passed. He further relied on various judgments of the Apex Court
in the case of Priyanka Srivastava & Anr. Vs. State of Uttar Pradesh &
Ors.[(2015) 6 SCC 287] and K. Virupaksha and Anr. Vs. State of
Karnataka and Anr.[(2020) 4 SCC 440] in support of their contentions.
4. Per contra, learned counsel for the State as well as learned counsel for
the respondent Nos.2 and 3 vehemently opposed the prayer and submitted that
the judgments in the case of Priyanka Srivastava & Anr.(supra) and K.
Virupaksha and Anr.(supra) have been passed by the Apex Court after
coming to the conclusion that the petitioner therein has been wrongly involved
in the matter. In the present case, they have entered appearance today itself and
could require some time to oppose the prayer for grant of interim relief.
5. Learned counsel for the State pointed out that the petitioner has
committed a criminal conspiracy by selling the property in question inspite of
various lapses on their part as well as the undertaking given before the DRT that
they will not sell the property. However, after 20 days, the property has been
sold. This shows the criminal intent of the petitioner to cheat the complainant.
Learned counsel further submitted that even if slightest material is available
against the petitioner, in such situation, the Courts could not normally interfere
with the investigation.
6. Heard the learned counsel for the parties and perused the record.
The Apex Court in the case of Neeharika Infrastructure Pvt. Ltd. Vs.
State of Maharashtra and Ors. in criminal appeal No.330/2021 decided
on 13/04/2021 has laid down certain guide-lines for granting stay of
investigation during pendency of the quashing petition under Section 482 of
Cr.P.C. which are as under :-
"23. In view of the above and for the reasons stated above, our final
conclusions on the principal/core issue, whether the High Court would
be justified in passing an interim order of stay of investigation and/or
"no coercive steps to be adopted", during the pendency of the
quashing petition under Section 482 Cr.P.C and/or under Article 226
of the Constitution of India and in what circumstances and whether the
High Court would be justified in passing the order of not to arrest the
accused or "no coercive steps to be adopted" during the investigation
or till the final report/charge-sheet is filed under Section 173 Cr.P.C.,
while dismissing/disposing of/not entertaining/not quashing the
criminal proceedings/complaint/FIR in exercise of powers under
Section 482 Cr.P.C. and/or under Article 266 of the Constitution of
India, our final conclusions are as under :-
i) Police has the statutory right and duty under the relevant
provisions of the Code of Criminal Procedure contained in Chapter
XIV of the Code to investigate into a cognizable offence;
ii) Courts would not thwart any investigation into the cognizable
offences;
iii) It is only in cases where no cognizable offence or offence of any
kind is disclosed in the first information report that the Court will not
permit an investigation to go on;
iv) The power of quashing should be exercised sparingly with
circumspection, as it has been observed, in the 'rarest of rare cases
(not to be confused with the formation in the context of death penalty).
v) While examining an FIR/complaint, quashing of which is sought, the
court cannot embark upon an enquiry as to the reliability or
genuineness or otherwise of the allegations made in the
FIR/complaint;
vi) Criminal proceedings ought not to be scuttled at the initial stage;
vii) Quashing of a complaint/FIR should be an exception rather than
an ordinary rule;
viii) Ordinarily, the courts are barred from usurping the jurisdiction
of the police, since the two organs of the State operate in two specific
spheres of activities and one ought not to tread over the other sphere;
ix) The functions of the judiciary and the police are complementary,
not overlapping;
x) Save in exceptional cases where non-interference would result in
miscarriage of justice, the Court and the judicial process should not
interfere at the stage of investigation of offences;
xi) Extraordinary and inherent powers of the Court do not confer an
arbitrary jurisdiction on the Court to act according to its whims or
caprice;
xii) The first information report is not an encyclopedia which must
disclose all facts and details relating to the offence reported.
Therefore, when the investigation by the police is in progress, the
court should not go into the merits of the allegations in the FIR. Police
must be permitted to complete the investigation. It would be premature
to pronounce the conclusion based on hazy facts that the
complaint/FIR does not deserve to be investigated or that it amounts
to abuse of process of law. After investigation, if the investigating
officer finds that there is no substance in the application made by the
complainant, the investigating officer may file an appropriate
report/summary before the learned Magistrate which may be
considered by the learned Magistrate in accordance with the known
procedure;
xiii) The power under Section 482 Cr.P.C. is very wide, but conferment
of wide power requires the court to be more cautious. It casts an
onerous and more diligent duty on the court;
xiv) However, at the same time, the court, if it thinks fit, regard being
had to the parameters of quashing and the self-restraint imposed by
law, more particularly the parameters laid down by this Court in the
cases of R.P. Kapur (supra) and Bhajan Lal (supra), has the
jurisdiction to quash the FIR/complaint;
xv) When a prayer for quashing the FIR is made by the alleged
accused and the court when it exercises the power under Section 482
Cr.P.C., only has to consider whether the allegations in the FIR
disclose commission of a cognizable offence or not. The court is not
required to consider on merits whether or not the merits of the
allegations make out a cognizable offence and the court has to permit
the investigating agency/police to investigate the allegations in the
FIR;
xvi) The aforesaid parameters would be applicable and/or the
aforesaid aspects are required to be considered by the High Court
while passing an interim order in a quashing petition in exercise of
powers under Section 482 Cr.P.C. and/or under Article 226 of the
Constitution of India. However, an interim order of stay of
investigation during the pendency of the quashing petition can be
passed with circumspection. Such an interim order should not require
to be passed routinely, casually and/or mechanically. Normally, when
the investigation is in progress and the facts are hazy and the entire
evidence/material is not before the High Court, the High Court should
restrain itself from passing the interim order of not to arrest or "no
coercive steps to be adopted" and the accused should be relegated to
apply for anticipatory bail under Section 438 Cr.P.C. before the
competent court. The High Court shall not and as such is not justified
in passing the order of not to arrest and/or "no coercive steps" either
during the investigation or till the investigation is completed and/or
till the final report/chargesheet is filed under Section 173 Cr.P.C.,
while dismissing/disposing of the quashing petition under Section 482
Cr.P.C. and/or under Article 226 of the Constitution of India.
xvii) Even in a case where the High Court is prima facie of the opinion
that an exceptional case is made out for grant of interim stay of
further investigation, after considering the broad parameters while
exercising the powers under Section 482 Cr.P.C. and/or under Article
226 of the Constitution of India referred to hereinabove, the High
Court has to give brief reasons why such an interim order is
warranted and/or is required to be passed so that it can demonstrate
the application of mind by the Court and the higher forum can
consider what was weighed with the High Court while passing such an
interim order.
xviii) Whenever an interim order is passed by the High Court of "no
coercive steps to be adopted" within the aforesaid parameters, the
High Court must clarify what does it mean by "no coercive steps to be
adopted" as the term "no coercive steps to be adopted" can be said to
be too vague and/or broad which can be misunderstood and/or
misapplied."
7. In view of the aforesaid, this Court is not inclined to stay the
investigation, accordingly I.A. No.17639/2023 for grant of interim relief is
rejected.
List this case in the second week of January, 2024.
(S. A. DHARMADHIKARI) (PRANAY VERMA)
JUDGE JUDGE
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