Natraj Rajendra Babu, Nizamabad ... vs P.P., Hyd 3 Othrs
2021 Latest Caselaw 2039 Tel

               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

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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

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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.

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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

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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

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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

(2015) 6 SCC 287

(2015) 6 ALD 665

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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

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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.

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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

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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.

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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

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