~Shubham Phophalia


Priyanka Srivastava and Another v State of UP and Others [Full judgment here]

Bench : Deepak Mishra and Prafulla Pant, JJ.

Judgment By: Deepak Mishra, J.

CRIMINAL APPEAL NO.781 OF 2012

The present is a case where the accused persons are serving in high positions in the bank. The position per se 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.”

  • Respendent no 3, Prakash bajaj, the son of pradeep bajaj took a housing loan from Punjab National Bank Housing Finance Ltd(PNBHFL) on 21 Jan, 2001.
  • Loan taken in the his name and his wife, Jyotsna.
  • Due to default in instalments, the same treated as Non Performing Assets(NPA).
  • Authorities issued notice u/s 13(2) of SARFAESI Act, 2002.
  • Application submitted by PNBHFL before DM, Varanasi, for taking necessary action u/s 13(4) of the said act.
  • Writ Petition filed by respondent as opposition was rejected by High Court.
  • Respondent no 3 with idea of nurturing self centric solomen’s wisdom, filed a criminal complaint u/s 200 of CrPC against Sahay, Sandesh Tiwari and VK Khanna for offences punishable u/s 163, 193 and 506 of IPC, but the said magistrate after taking cognizance and hearing complainant and examining witness dismissed the complaint.
  • He filed revision petition under Additional sessions judge who took upon the matter and set aside the earlier order and remanded the matter to Trial court with the direction that complaint to be hear again and order to be passed upon the merits of the case.

Important thing to note here is that no notoice was issued to accused persons herein which is required to be taken into consideration as held in Muljhibhai Kakadia & Anr v Shaileshbhai Patel[1], ‘Parliament being alive to the legal position that the accused/suspects are not entitled to be heard at any stage of the proceedings until issuance of process under Section 204, yet in Section 401(2) of the Code provided that no order in exercise of the power of the revision shall be made by the Sessions Judge or the High Court, as the case may be, to the prejudice of the accused or the other person unless he had an opportunity of being heard either personally or by pleader in his own defence.’

SC observed that  in a revision petition preferred by the complainant before the High Court or the Sessions Judge challenging an order of the Magistrate dismissing the complaint under Section 203 of the Code at the stage under Section 200 or after following the process contemplated under Section 202 of the Code, the accused or a person who is suspected to have committed the crime is entitled to hearing by the Revisional Court. This simply shows that a borrower with vengeance could ultimately exhibit his high handedness.

  • Summons issued to three accused persons. The accused knocked the doors of High Court u/s 482 of CrPC and the said application was allowed and the criminal complaint case pending in Add CJM is quashed. Meanwhile the objection was raised by borrowers u/s 13(3A) of SARFAESI Act, but got rejected, and then filed Securitisation Appeal before Debt Recovery Appellate Tribunal, Allahabad, which got rejected and appeal was filed at DRAT.
  • The respondent didn’t stop here and filed another application u/s 156(3) of CrPc against accused alleging criminal conspiracy and forging of documents. He also filed another application alleging that there has been undervaluation of property and the said FIR was registered against the accused persons.
  • After filing all these applications, he tried to enter into a one-time settlement with the officials and said was acted upon and he deposited Rs 15 Lakh.
  • Meanwhile, as stated earlier, the appeal filed before DRAT, the order came that as the settlement has taken place worth Rs 15 Lakhs, the grievance of the appellant (Res 3) is that the bank should be directed to return the deed, as the same was not returned.
Arguments of Appellant and respondent Bank :

When the full amount under the settlement has been paid, the respondent-Bank was duty bound to return the title deed, which has not been returned to the appellant.

It was contended on behalf of the respondent-Bank that the settlement was accepted, wherein the condition was mentioned that the appellant shall withdraw the complaint case which he has filed before the Criminal Court.

 Counsel for the appellant submitted that he has no objection to withdraw the complaint case but the title deed must be returned to the appellant. The title deed shall be returned by the respondent-Bank to the appellant within seven days from today and thereafter, the appellant shall move an application to withdraw the Criminal Case which is pending before the Chief Judicial Magistrate, Varanasi.”

  • But It appears that he had the indefatigable spirit to indulge himself in the abuse of the process of the Court. The respondent No.3 had filed an application under Section 156(3) Cr.P.C. before the learned Additional Chief Judicial Magistrate on 30th October 2011, against the present appellants, but in reality, no FIR was registered and hence no cases got registered at the police station.
  • The additional CJM observed that,“It is stated in the statement of applicant that he had already given 3 postdated cheques to the financial bank for payment and despite the availability of the postdated cheques in the financial society, even a single share in the loan account has not been got paid. The opposite parties deliberately due to conspiracy and prejudice against applicant have not deposited previously mentioned postdated cheques for payment and these people are doing a conspiracy to grab the valuable property of the applicant. Under a criminal conspiracy, illegally and on false and fabricated grounds a petition has been filed before District Collector (Finance & Revenue) Varanasi, which comes under the ambit of cognizable offence. Keeping in view the facts of the case, commission of cognizable offence appears to be made out and it shall be justifiable to get done the investigation of the same by the police.”
  • FIR registered for offences punishable u/s 465, 467 and 471 of IPC, against which appellants moved to High Court but it declined to interfere in the matter and hence appeal filed as SLP.
  • Counsel for state of UP submitted that the investigating agency has already submitted the final report as “Complainant in the present case has not appeared before any of the investigators, even after repeated summoning. And that the action of Smt. Priyanka Srivastava has been done as per her legal rights in ‘good faith’, which is protected under Section 32 of the SARFAESI Act, 2002. With the abovestated investigations, the present report is concluded.”
  • Ajay Kumar, counsel appearing for the appellants submitted that the Magistrate has the option to accept the report by rejecting the final form/final report under Section 190 Cr.P.C. and may proceed against the appellants or may issue notice to the complainant, who is entitled to file a protest petition and, thereafter, may proceed with the matter and, therefore, this Court should address the controversy on merits and quash the proceedings.
  • Supreme Court observed that the statutory remedies have cleverly been bypassed and prosecution route has been undertaken for instilling fear amongst the individual authorities compelling them to concede to the request for one time settlement which the financial institution possibly might not have acceded. That apart, despite agreeing for withdrawal of the complaint, no steps were taken in that regard at least to show the bonafide. The Magistrate while exercising his power u/s 156(3), w/o any application of mind, passed the order to register FIR for the said offences mentioned in application.

In Anil Kumar v MK Aiyyappa[2],”The scope of Section 156(3) CrPC came up for consideration before the Court in several cases. The Court in Maksud Saiyed [(2008) 5 SCC 668] examined the requirement of the application of mind by the Magistrate before exercising jurisdiction under Section 156(3) and held that where jurisdiction is exercised on a complaint filed in terms of Section 156(3) or Section 200 CrPC, the Magistrate is required to apply his mind, in such a case, the Special Judge/Magistrate cannot refer the matter under Section 156(3) against a public servant without a valid sanction order. The application of mind by the Magistrate should be reflected in the order.”

In Dilawar Singh v State of Delhi[3],” Even if a Magistrate does not say in so many words while directing investigation under Section 156(3) of the Code that an FIR should be registered, it is the duty of the officer in charge of the police station to register the FIR regarding the cognizable offence disclosed by the complainant because that police officer could take further steps contemplated in Chapter XII of the Code only thereafter.” 


 Gist of observations:

“If on a reading of the complaint, he finds that the allegations therein disclose a cognizable offence and the forwarding of the complaint to the police for investigation under Section 156(3) will be conducive to justice and save the valuable time of the Magistrate from being wasted in enquiring into a matter which was primarily the duty of the police to investigate, he will be justified in adopting that course as an alternative to taking cognizance of the offence itself. However, if he once takes such cognizance and embarks upon the procedure embodied in Chapter XV, he is not competent to revert back to the pre-cognizance stage and avail of Section 156(3).”

It is thus unequivocally clear that registration of FIR is mandatory and also that it is to be recorded in the FIR book by giving a unique annual number to each FIR to enable strict tracking of each and every registered FIR by the superior police officers as well as by the competent court to which copies of each FIR are required to be sent.

The present is a case where the accused persons are serving in high positions in the bank. The position per se 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.

It 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.


Conclusion

A stage has come in this country where Section 156(3) Cr.P.C. applications are to be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate. The learned Magistrate would be well advised to verify the truth and also can verify the veracity of the allegations. This affidavit can make the applicant more responsible. These kind of applications are being filed in a routine manner without taking any responsibility whatsoever only to harass certain persons. That apart, it becomes more disturbing and alarming when one tries to pick up people who are passing orders under a statutory provision which can be challenged under the framework of said Act or under Article 226 of the Constitution of India. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores. There has to be prior applications under Section 154(1) and 154(3) while filing a petition under Section 156(3). Both the aspects should be clearly spelt out in the application and necessary documents to that effect shall be filed. The warrant for giving a direction that the application under Section 156(3) be supported by an affidavit so that the person making the application should be conscious and also endeavour to see that no false affidavit is made. It is because once an affidavit is found to be false, he will be liable for prosecution in accordance with law. This will deter him to casually invoke the authority of the Magistrate under Section 156(3).

Referring to section 32 of SARFAESI Act, which speaks about protection of action taken in good faith, the parliament in its wisdom has made such a provision to protect secured creditors or its officers, and needs to emphasize the legislative intent to be kept in mind.

Order passed by HC was set aside and registration of FIR was quashed.


[1] (2012) 10 SCC 517.

[2] (2013) 10 SCC 705.

[3] (2007) 12 SCC 496.


About the Author- Shubham is a 2nd-year B.A.LL.B student at Gujarat National Law University and he is also pursuing CS EXECUTIVE


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