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Madhya Pradesh High Court
Allahabad Bank vs The State Of Madhya Pradesh on 31 March, 2026
NEUTRAL CITATION NO. 2026:MPHC-JBP:25261
1 MCRC-212-2015
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE B. P. SHARMA
ON THE 31st OF MARCH, 2026
MISC. CRIMINAL CASE No. 212 of 2015
ALLAHABAD BANK
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Appearance:
Shri Gaurav Tiwari - Advocate for the petitioner.
Shri Aatmaram Bain - Deputy Government Advocate for the respondent
No.1/State.
None for the respondent No.2.
ORDER
The petitioner-Bank has filed the present petition under Section 482 of
Code of Criminal Procedure, 1973 seeking quashment of FIR bearing Crime
No.874/2014 registered on 13.12.2014 at Police Station Habibganj, Bhopal
for offences under Sections 409, 420, 467, 468 and 471 of IPC, registered on
the basis of a written complaint submitted by respondent No.2.
2. The Bawadia Kalan Gurukul Shiksha Samiti, Village Semre
Sayeed, Post Simaliya, near Bhanpur, Vidisha Road, Bhopal (hereinafter
referred to as "the Society"), is an educational society registered under the
provisions of the Registrikaran Adhiniyam, 1973. The Society had applied
for financial assistance from the petitioner-Bank for establishment of an
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Engineering and Management College under the name "Sparta Institute of
Technology and Management." In the year 2010, the Society submitted a
loan application to the petitioner-Bank. The son of respondent No.2 was one
of the office bearers of the Society, and the loan proposal was processed
through him. After due appraisal, the petitioner-Bank sanctioned a loan of
Rs.970 lakhs to the Society vide sanction letter dated 19.08.2010, subject to
furnishing of requisite securities.
3. Initially, the Society proposed to create an equitable mortgage of a
residential property situated at Gwalior. However, subsequently the Society
requested the Bank to substitute the said property with a residential property
situated at Lal Bahadur Shastri Nagar, Vidisha, owned by respondent No.2.
The said request was forwarded by the Branch to the Zonal Office and was
accepted by the Bank vide letter dated 10.09.2010, permitting substitution of
collateral security. Thereafter, the office bearers of the Society accepted the
modified terms and executed necessary loan and security documents. On
16.09.2010, the Society executed a term loan agreement with the petitioner-
Bank. On the same date, respondent No.2 being the guarantor executed the
letter of confirmation of deposit of title deeds, thereby creating an equitable
mortgage over his residential property situated at Lal Bahadur Shastri Nagar,
Puranpura, Vidisha as collateral security for repayment of the loan.
Respondent No.2 also submitted an affidavit and declarations confirming that
he had voluntarily mortgaged the said property in favour of the Bank as
security for the loan granted to the Society.
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4. The Society availed the loan facility, but failed to repay the
outstanding dues as per the repayment schedule. Consequently, the loan
account was classified as Non-Performing Asset (NPA). The petitioner-Bank
thereafter initiated recovery proceedings under the provisions of the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act). A demand notice dated
01.11.2013 under Section 13(2) of the SARFAESI Act was issued to the
borrowers and guarantors, including respondent No.2, calling upon them to
repay the outstanding amount. As the dues were not cleared, the Bank
proceeded under Section 13(4) of the Act and took possession of the
mortgaged properties, including the residential property of respondent No.2,
on 10.01.2014. The possession notice was also published in the newspapers
Dainik Bhaskar and The Times of India, on 17.01.2014.
5. The Bank further initiated steps for sale of the secured assets
through public e-auction after issuing necessary sale notices and publication
in newspapers. Meanwhile, the borrower Society filed Securitisation
Application No.25/2014 before the Debt Recovery Tribunal (DRT), Jabalpur
under Section 17 of the SARFAESI Act challenging the action of the Bank.
After hearing the parties, the DRT dismissed the said application vide order
dated 24.03.2014.
6. The petitioner-Bank thereafter filed an application under Section
14 of the SARFAESI Act before the District Magistrate, Vidisha seeking
assistance for taking physical possession of the secured property. During the
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pendency of the said proceedings, respondent No.2 submitted a complaint
dated 26.12.2013 at Police Station Habibganj, Bhopal, making allegations
against the petitioner-Bank regarding illegal mortgage of his property. In
response, the petitioner-Bank supplied all relevant documents and
explanations to the police authorities clarifying that the mortgage of the
property was created voluntarily by respondent No.2 as collateral security
after obtaining approval for substitution of the earlier proposed property.
Despite the documentary evidence furnished by the petitioner-Bank, the
police registered FIR bearing Crime No.874/2014 on 13.12.2014 for offences
under Sections 409, 420, 467, 468 and 471 of IPC on the basis of the
complaint made by respondent No.2. which is under challenge in the present
petition.
7. Learned counsel for the petitioner submits that the allegations
made in the FIR, even if taken at their face value, do not disclose the
essential ingredients of the offences punishable under Sections 409, 420,
467, 468 and 471 of IPC. Therefore, registration of the impugned FIR is
nothing but an abuse of the process of law. It is further submitted that the
dispute arises out of a purely commercial transaction between the petitioner-
Bank and the borrower Society. Respondent No.2, who is the father of the
Secretary of the borrower Society, had voluntarily agreed to equitably
mortgage his residential property as collateral security for the loan and had
executed the necessary security documents with full knowledge and consent.
This fact is also reflected from the documents submitted before the police
authorities during the preliminary enquiry. Learned counsel contends that
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despite being apprised of the relevant documents clearly showing the
voluntary mortgage of the property, the SHO, Police Station Habibganj,
Bhopal maliciously and with an ulterior motive proceeded to register the
impugned FIR. The action of the police authorities is alleged to be arbitrary
and intended to pressurize the officials of the petitioner-Bank and to frustrate
the lawful recovery proceedings initiated by the Bank against the borrower
and guarantors. It is further submitted that the impugned FIR has been
registered only to harass the officials of the petitioner-Bank and to enable
respondent No.2 to avoid his legal liability arising out of the mortgage
created in favour of the Bank.
8. In the aforesaid circumstances, learned counsel for the petitioner
submits that the impugned FIR is frivolous and an abuse of the process of
law, and therefore, deserves to be quashed in order to secure the ends of
justice and to prevent unnecessary harassment of the petitioner and its
officials.
9. Learned counsel for the respondent/State submits that the
allegations made in the complaint and the material collected during the
preliminary enquiry disclose the commission of cognizable offences under
Sections 409, 420, 467, 468 and 471 of IPC, and therefore, the registration of
the FIR is justified and in accordance with law. It is further submitted that
the issues raised by the petitioner pertain to disputed questions of fact, which
cannot be examined in proceedings under Section 482 of Code of Criminal
Procedure, 1973. The veracity of the allegations and the defense raised by
the petitioner can only be determined after a proper investigation and trial.
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10. Learned counsel for the respondent/State further contends that at
the stage of registration of FIR, the Court is only required to see whether the
allegations prima facie disclose the commission of a cognizable offence.
Since the complaint discloses such offences, the police authorities were duty-
bound to register the FIR and conduct investigation. It is, therefore,
submitted that the present petition is premature and devoid of merit, and the
petitioner cannot seek quashment of the FIR at the threshold when the
investigation is still in progress. Hence, the petition deserves to be dismissed.
11. Heard the arguments advanced by learned counsel for the parties
and perused the material available on reocrd.
12. At the outset, what assumes paramount significance in the
present matter is the absolute admission made by the respondent
no.2/complainant himself in the FIR that he had, in fact, mortgaged his
residential house situated at Vidisha and signed other mortgaged
documentswith the petitioner-Bank. This admission, coming from the
complainant himself, strikes at the very root of the allegations of fraud,
cheating and illegal mortgage. Once the execution of mortgage is admitted
and documents signed by the complainant, the substratum of criminality
sought to be projected in the FIR stands substantially eroded. The Court
cannot overlook such a crucial admission and proceed as if the same does not
exist.
13. Apart from the aforesaid admission, the documentary record
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placed before this Court overwhelmingly establishes that the respondent
No.2 had voluntarily and with full knowledge of all material particulars,
participated in the creation of mortgage in favor of the petitioner-Bank. The
sequence of events, as borne out from the record, clearly reflects that initially
a property situated at Gwalior was proposed as collateral security; however,
at the instance of the borrower Society and its office bearers, including
persons closely connected with respondent No.2, a conscious decision was
taken to substitute the said property with the residential house situated at Lal
Bahadur Shastri Nagar, Vidisha.
14. From the letter dated 07.07.2010 ( Annexure P/6) a specific
request was made to the petitioner-Bank for replacement of the mortgaged
property. This was not a unilateral act of the Bank, but a request made from
the borrower side itself. The said request was duly considered by the
competent authority and accepted, as is evident from the permission letter
dated 10.09.2010 (Annexure P/7). Thereafter, the entire transaction
culminated into execution of formal loan and security documents including
the term loan agreement dated 16.09.2010.
15. It is further borne out from the record that the respondent No.2
not only acquiesced to the substitution of property but actively participated
in the process by executing the necessary documents, including declarations
and affidavits, thereby confirming that he had mortgaged his property in
favor of the petitioner-Bank as collateral security for repayment of the loan.
The material placed on record further indicates that he was fully aware of the
nature of the transaction, the extent of liability and the consequences that
NEUTRAL CITATION NO. 2026:MPHC-JBP:25261
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would ensue in the event of default. The element of consent, knowledge and
voluntariness stands firmly established.
16. In such a factual scenario, the subsequent attempt on the part of
the respondent/complainant to portray the mortgage as fraudulent or
unauthorized is not only contrary to the record but appears to be a deliberate
attempt to mislead and misuse the criminal process. This Court cannot ignore
the fact that the complaint came to be lodged only after the loan account was
declared as Non-Performing Asset and the petitioner-Bank initiated recovery
proceedings. The timing of the complaint is not a mere coincidence but is
indicative of the underlying intent to thwart and obstruct the lawful recovery
proceedings undertaken by the Bank.
17. It is also of considerable relevance that the petitioner-Bank has
acted strictly in accordance with law at every stage. From sanction of loan,
acceptance of collateral, execution of documents to initiation of recovery
proceedings, all actions have been supported by documentary evidence. The
Bank has not acted arbitrarily or beyond the scope of its authority. On the
contrary, it is the respondent who, having availed the benefit of the loan
facility through the borrower Society, has sought to evade the consequences
of default by setting the criminal law into motion.
18. The allegations made in the FIR, when examined in light of the
documentary material, do not satisfy the essential ingredients of the offences
alleged. There is no material to demonstrate any dishonest or fraudulent
intention at the inception of the transaction, which is a sine qua non for the
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offence of cheating. Similarly, there is no material indicating any
entrustment and subsequent misappropriation so as to attract the offence of
criminal breach of trust. The allegations of forgery and use of forged
documents are also wholly unsupported by any credible material, particularly
when the documents in question have been admittedly executed by the
complainant himself.
19. This Court is of the considered opinion that the dispute between
the parties is essentially civil and commercial in nature, arising out of a loan
transaction and enforcement of security interest. The attempt to give a
criminal color to such a dispute, would amount to allowing the criminal
justice system to be used as a tool for coercion and harassment.
20. Furthermore, the role attributed to the police authorities in the
FIR, despite the existence of clear documentary evidence, raises serious
concerns regarding the manner in which the impugned FIR has been
registered. The record indicates that despite being apprised of the true factual
position and the supporting documents, the police proceeded to register the
FIR, which lends credence to the contention of the petitioner that the same
has been done under extraneous influence and with ulterior motive.
21. In the totality of circumstances, this Court is satisfied that the
impugned FIR is manifestly attended with mala fide intention, is devoid of
substance and has been instituted with the sole object of harassing the
petitioner-Bank and its officials, as well as to stop the recovery proceedings.
Therefore, allowing the investigation and further proceedings pursuant to the
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impugned FIR to continue would not only result in abuse of the process of
law but would also cause undue harassment to the petitioner-Bank and its
officials, who have acted strictly in accordance with law in discharge of their
official duties.
22. Consequently, the petition is allowed and the FIR bearing Crime
No.874/2014 registered at Police Station Habibganj, Bhopal for offences
under Sections 409, 420, 467, 468 and 471 of IPC, along with all
consequential proceedings arising therefrom, is hereby quashed.
Certified copy as per rules.
(B. P. SHARMA)
JUDGE
@shish^
