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2015 (5) TMI 47 - SUPREME COURT OF INDIA

2015 (5) TMI 47 - SUPREME COURT OF INDIA - TMI - Respondent took housing loan from financial institution - on default in payment of installments, account treated as non-performing asset - recovery - Authorities of financial institution, issued notice to borrowers under section 13(2) of the SARFAESI Act. - Respondent filed several litigations and also criminal complaint against appellants, consequent to which an FIR was registered against appellants - Held that:- Present case, as we find, exempli .....

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oticeable 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. On the contrary, there is a contest with a perverse sadistic attitude. Whether .....

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ate 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 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 .....

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y to state that power under Section 156(3) warrants application of judicial mind. A court of law is involved. It is not the police taking steps at the stage of Section 154 of the code. A litigant at his own whim cannot invoke the authority of the Magistrate. A principled and really grieved citizen with clean hands must have free access to invoke the said power. It protects the citizens but when pervert litigations takes this route to harass their fellows citizens, efforts are to be made to scutt .....

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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. We have already indicated t .....

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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).

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 legisla .....

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disturbing but also has the potentiality to create a stir compelling one to ponder in a perturbed state how some unscrupulous, unprincipled and deviant litigants can ingeniously and innovatively design in a nonchalant manner to knock at the doors of the Court, as if, it is a laboratory where multifarious experiments can take place and such skillful persons can adroitly abuse the process of the Court at their own will and desire by painting a canvas of agony by assiduous assertions made in the a .....

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faulters who had borrowed money from it would withdraw the cases instituted against them. The facts, as we proceed to adumbrate, would graphically reveal how such persons, pretentiously aggrieved but potentially dangerous, adopt the self-convincing mastery methods to achieve so. That is the sad and unfortunate factual score forming the fulcrum of the case at hand, and, we painfully recount. 2. The facts which need to be stated are that the respondent No.3, namely, Prakash Kumar Bajaj, son of Pra .....

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ties of the financial institution issued notice to the borrowers under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short, 'the SARFAESI Act') and in pursuance of the proceedings undertaken in the said Act, the PNBHFL, on 5th June, 2007, submitted an application before the District Magistrate, Varanasi, U.P. for taking appropriate action under Section 13(4) of the SARFAESI Act. 3. At this juncture, the res .....

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under Section 200 Cr.P.C. against V.N. Sahay, Sandesh Tiwari and V.K. Khanna, the then Vice-President, Assistant President and the Managing Director respectively for offences punishable under Sections 163, 193 and 506 of the Indian Penal Code (IPC). It was alleged in the application that the said accused persons had intentionally taken steps to cause injury to him. The learned Magistrate vide order dated 4th October, 2008, dismissed the criminal complaint and declined to take cognizance after r .....

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r to the trial Court with the direction that he shall hear the complaint again and pass a cognizance order according to law on the basis of merits according to the directions given in the said order. Be it noted, the learned Additional Sessions Judge heard the counsel for the respondent No.3 and the learned counsel for the State but no notice was issued to the accused persons therein. Ordinarily, we would not have adverted to the same because that lis is the subject matter in the appeal, but it .....

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10 SCC 517 has opined that in a case arising out of a complaint petition, when travels to the superior Court and an adverse order is passed, an opportunity of hearing has to be given. The relevant passages are reproduced hereunder: 46. .......If the Magistrate finds that there is no sufficient ground for proceeding with the complaint and dismisses the complaint under Section 203 of the Code, the question is whether a person accused of crime in the complaint can claim right of hearing in a revisi .....

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nless he had an opportunity of being heard either personally or by pleader in his own defence. xxxxx xxxxx xxxxx 48. In a case where the complaint has been dismissed by the Magistrate under Section 203 of the Code either at the stage of Section 200 itself or on completion of inquiry by the Magistrate under Section 202 or on receipt of the report from the police or from any person to whom the direction was issued by the Magistrate to investigate into the allegations in the complaint, the effect o .....

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mination of proceedings in a complaint against the persons who are alleged to have committed the crime. Once a challenge is laid to such order at the instance of the complainant in a revision petition before the High Court or the Sessions Judge, by virtue of Section 401(2) of the Code, the suspects get the right of hearing before the Revisional Court although such order was passed without their participation. The right given to accused or the other person under Section 401(2) of being heard befo .....

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n cannot be deprived of hearing on the face of the express provision contained in Section 401(2) of the Code. The stage is not important whether it is preprocess stage or post process stage. xxxxx xxxxx xxxxx 53. We are in complete agreement with the view expressed by this Court in P. Sundarrajan2, Raghu Raj Singh Rousha3 and A.N. Santhanam4. We hold, as it must be, that in a revision petition preferred by the complainant before the High Court or the Sessions Judge challenging an order of the Ma .....

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the High Court or the Sessions Judge, the persons who are arraigned as accused in the complaint have a right to be heard in such revision petition. This is a plain requirement of Section 401(2) of the Code. If the Revisional Court overturns the order of the Magistrate dismissing the complaint and the complaint is restored to the file of the Magistrate and it is sent back for fresh consideration, the persons who are alleged in the complaint to have committed the crime have, however, no right to p .....

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ned Magistrate vide order dated 13th July, 2009, took cognizance and issued summons to V.N. Sahay, Sandesh Tripathi and V.K. Khanna. The said accused persons knocked at the doors of the High Court under Section 482 Cr.P.C. and the High Court in Crl. Misc. No.13628 of 2010, by order dated 27th May, 2013, ruled thus: A perusal of the complaint filed by the respondent no.2 also indicates that the issues were with regard to the action of the bank officers against respondent no.2 on the ground of all .....

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N.B. Housing Finance Ltd. And others, pending in the Court of Additional Chief Judicial Magistrate, Court No.2 Varanasi is quashed. 6. Presently, we are required to sit in the time machine for a while. In the interregnum period the borrowers filed an objection under Section 13(3A) of the SARFAESI Act. Be it noted, as the objection was not dealt with, the respondent No.3 preferred W.P. No.22254 of 2009, which was disposed of on 5th May, 2009 by the High Court, directing disposal of the same. Even .....

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state that the third respondent, if we allow ourselves to say so, have possibly mastered how to create a sense of fear in the mind of the officials who are compelled to face criminal cases. After the High Court had quashed the earlier proceeding, the third respondent, in October, 2011, filed another application under Section 156(3) CrPC against V.N. Sahay, Sandesh Tripathi and V.K. Khanna alleging criminal conspiracy and forging of documents referring to three post-dated cheques and eventually i .....

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id order, FIR No. 298/2011 was registered. 8. At this juncture, it is imperative to state that the third respondent made the officials agree to enter into one time settlement. The said agreement was arrived at with the stipulation that he shall withdraw various cases filed by him on acceptance of the one time settlement. As the factual matrix would reveal, the third respondent did not disclose about the initiation of the complaint cases no. 344/2011 and 396/2011. On 28.11.2011, the one time sett .....

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s: Heard Mr. Manish Trivedi, learned counsel for the petitioner, Mr. Vivek Kumar Srivastava, learned counsel appearing on behalf of respondent no.3 and learned AGA. It is submitted by learned AGA that in the present case investigation has been completed and final report has been submitted, considering the same, this petition has become infructuous. The interim order dated 2.12.2011 is hereby vacated. Accordingly, this petition is disposed of. 10. At this juncture, we are impelled to look at the .....

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was arrived at i.e. ₹ 15.00 lacs. Thereafter, the grievance of the appellant was that since the full amount of the settlement has been paid by the appellant, therefore, the bank should be directed to return the title deed, as the title deed was not returned. The Tribunal was of the view that since the matter has been settled, therefore, the securitization application was dismissed as infructuous and the Tribunal did not pass any order for return of the title deed. Therefore, the appellant .....

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raw the complaint case which he has filed before the Criminal Court. Learned 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 No.1058/09 which is pending before the Chief Judicial Magistrate, Varanasi. 11. The labyr .....

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ated thus: That the aforesaid case was referred to the Deputy Inspector General of Police, Varanasi through speed post but no proceeding had been initiated till today in that regard. That the aforesaid act done by the aforesaid accused prima-facie comes in the ambit of section 465, 467, 471, 386, 504, 34 & 120B IPC and in this way cognizable offence is made out and proved well. 12. On the basis of the aforesaid application the learned Additional Chief Judicial Magistrate, Varanasi, U.P., cal .....

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cial 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 th .....

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the offences punishable under Sections 465, 467, and 471 I.P.C. Being dissatisfied with the aforesaid order, the appellants moved the High Court in Crl. Misc. No.24561 of 2011. The High Court in a cryptic order opined that on a perusal of the F.I.R. it cannot be said that no cognizable offence is made out. Being of this view, it has declined to interfere with the order. Hence, this appeal by special leave. 14. In course of hearing, learned counsel for the State of U.P. has submitted that the in .....

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learned counsel for the State would contend that the learned Magistrate has not passed any order on the final report. Mr. Ajay Kumar, learned counsel appearing for the appellants would submit that the learned 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, there .....

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manner it has been taken it, needs no special emphasis to state, has the inherent potentiality to affect the marrows of economic health of the nation. It is clearly noticeable 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 withdra .....

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the offences mentioned in the application. The duty cast on the learned Magistrate, while exercising power under Section 156(3) Cr.P.C., cannot be marginalized. To understand the real purport of the same, we think it apt to reproduce the said provision: 156. Police officer s power to investigate congnizable case. -(1) Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a Court having jurisdiction over the local area within the .....

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, a three- Judge Bench in Devarapalli Lakshminarayana Reddy and others v. V. Narayana Reddy and others(1976) 3 SCC 252, had to express thus: It may be noted further that an order made under sub-section (3) of Section 156, is in the nature of a peremptory reminder or intimation to the police to exercise their plenary powers of investigation under Section 156(1). Such an investigation embraces the entire continuous process which begins with the collection of evidence under Section 156 and ends wit .....

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on 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. The mere statement that he has gone through the complaint, documents and heard the complainant, as such, as reflected in the order, will not be sufficient. After going through the complaint, documents and hearing the c .....

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before taking cognizance of the offence, can order investigation under Section 156(3) of the Code. If he does so, he is not to examine the complainant on oath because he was not taking cognizance of any offence therein. For the purpose of enabling the police to start investigation it is open to the Magistrate to direct the police to register an FIR. There is nothing illegal in doing so. After all registration of an FIR involves only the process of entering the substance of the information relat .....

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emplated in Chapter XII of the Code only thereafter. 21. In CREF Finance Ltd. v. Shree Shanthi Homes (P) Ltd.(2005) 7 SCC 467, the Court while dealing with the power of Magistrate taking cognizance of the offences, has opined that having considered the complaint, the Magistrate may consider it appropriate to send the complaint to the police for investigation under Section 156(3) of the Code of Criminal Procedure. And again: When a Magistrate receives a complaint he is not bound to take cognizanc .....

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be justified in adopting that course as an alternative to taking cognizance of the offence itself. As said earlier, in the case of a complaint regarding the commission of cognizable offence, the power under Section 156(3) can be invoked by the Magistrate before he takes cognizance of the offence under Section 190(1)(a). 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 precognizance stage and avail of Secti .....

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made out to proceed forthwith, direction under the said provision is issued. In other words, where on account of credibility of information available, or weighing the interest of justice it is considered appropriate to straightaway direct investigation, such a direction is issued. Cases where Magistrate takes cognizance and postpones issuance of process are cases where the Magistrate has yet to determine existence of sufficient ground to proceed. 23. At this stage, we may usefully refer to what .....

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t the FIR is compulsorily registered then does it infringe the rights of an accused. Answering the questions posed, the larger Bench opined thus: 49. Consequently, the condition that is sine qua non for recording an FIR under Section 154 of the Code is that there must be information and that information must disclose a cognizable offence. If any information disclosing a cognizable offence is led before an officer in charge of the police station satisfying the requirement of Section 154(1), the s .....

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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. Information xxx xxx xxx xxx 111. The Code gives power to the police to close a matter both before and after investigation. A police officer can foreclose an FIR before an investigation under Se .....

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173 of the Code seeking closure of the matter. Therefore, the police is not liable to launch an investigation in every FIR which is mandatorily registered on receiving information relating to commission of a cognizable offence. xxx xxx xxx xxx 115. Although, we, in unequivocal terms, hold that Section 154 of the Code postulates the mandatory registration of FIRs on receipt of all cognizable offences, yet, there may be instances where preliminary inquiry may be required owing to the change in gen .....

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the information reveals any cognizable offence. After laying down so, the larger Bench proceeded to state:- 120.6. As to what type and in which cases preliminary inquiry is to be conducted will depend on the facts and circumstances of each case. The category of cases in which preliminary inquiry may be made are as under: (a) Matrimonial disputes/family disputes (b) Commercial offences (c) Medical negligence cases (d) Corruption cases (e) Cases where there is abnormal delay/laches in initiating .....

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al Diary entry. We have referred to the aforesaid pronouncement for the purpose that on certain circumstances the police is also required to hold a preliminary enquiry whether any cognizable offence is made out or not. 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 b .....

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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 t .....

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l 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 avoid the payme .....

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how the compliance of Section 154(3), indicating it has been sent to the Superintendent of police concerned. 26. At this stage it is seemly to state that power under Section 156(3) warrants application of judicial mind. A court of law is involved. It is not the police taking steps at the stage of Section 154 of the code. A litigant at his own whim cannot invoke the authority of the Magistrate. A principled and really grieved citizen with clean hands must have free access to invoke the said power .....

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lso can verify the veracity of the allegations. This affidavit can make the applicant more responsible. We are compelled to say so as such 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 Constit .....

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avit 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). That apart, we have already stated that the veracity of the same can also be verified by the learned Magistrate, regard being had to the nature of allegations of the cas .....

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