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2020 (3) TMI 192

..... ngs? - rejection on the ground of delay against which an appeal is said to have been filed before the DRAT and it was pending though it is now stated to be dismissed. HELD THAT:- The SARFAESI Act is a complete code in itself which provides the procedure to be followed by the secured creditor and also the remedy to the aggrieved parties including the borrower. In such circumstance as already taken note by the High Court in writ proceedings if there is any discrepancy in the manner of classifying the account of the appellants as NPA or in the manner in which the property was valued or was auctioned, the DRT is vested with the power to set aside such auction at the stage after the secured creditor invokes the power under Section 13 of SARFAESI Act. In the matter of present nature if the grievance as put forth is taken note and if the same is allowed to be agitated through a complaint filed at this point in time and if the investigation is allowed to continue it would amount to permitting the jurisdictional police to redo the process which would be in the nature of reviewing the order passed by the learned Single Judge and the Division Bench in the writ proceedings by the High Court an .....

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..... ferred to as the Secured Asset . As per the case of Canara Bank, the Complainant had not repaid the loan amount and in that view having committed default, the account of the Complainant was classified as NonPerforming Asset ( NPA for short) on 15.01.2013. The Canara Bank thus having invoked the power under Section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ( SARFAESI Act for short) had issued appropriate notices and ultimately the possession of the secured asset as contemplated under Section 14 of the SARFAESI Act was taken on 22.03.2013. The secured asset was thereafter evaluated and was brought to auction through the public notice dated 13.10.2013 indicating the date of auction as 15.11.2013. The reserve price of the secured asset was fixed at ₹ 2,28,51,000/. Though publication was made, no bids were received in the auction proposed on Page 3 of 27 15.11.2013 and since the same was a public holiday declared in the State of Karnataka the auction was postponed to 04.12.2013. Even on the said date no bids were received. 4. Accordingly, the Canara Bank had revised the valuation, indicating the reserve pric .....

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..... der dated 21.01.2019 which is assailed herein. 6. Heard Mr. Brijesh Kumar Tamber, learned counsel appearing for the appellants, Ms. Kiran Suri, learned senior counsel for the Complainant, Mr. Shubhanshu Padhi, learned counsel for the State of Karnataka and perused the appeal papers. 7. The learned counsel for the appellants would contend that apart from the appellants having no role in the transaction between the Complainant and the Canara Bank, being the Deputy General Managers and working at the Circle Office, even otherwise cannot be held liable to face a criminal action of the present nature. It is contended that the loan transaction and the account being treated as NPA due to the non-repayment of loan cannot be disputed. In that circumstance the entire action taken, upto the stage of the sale of the property is as regulated under the provisions of the SARFAESI Act which provides not only for the procedure but also for redressal of the grievance of the parties concerned. In that circumstance even if the grievance as sought to be made out by the Complainant are taken note, the same cannot form the basis for maintaining the criminal complaint and in such event the learned Magistr .....

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..... learned Magistrate was justified and the High Court has appropriately refrained from interfering in the matter at this stage. It is, therefore, contended that the contention as urged in the instant appeal by the appellants does not merit consideration and the appeal is liable to be rejected. The learned counsel for the State of Karnataka would contend that pursuant to direction issued by the learned Magistrate the FIR had been registered and the investigation is in progress and therefore, the same be permitted to be taken to its logical conclusion. 9. Before adverting to the rival contentions urged on behalf of the parties we have kept in perspective the decision of this Court in the case of State of Haryana vs. Bhajan Lal (1992) Supp (1) SCC 335 placed for consideration by the learned senior counsel for the Complainant which lays down the parameters that are to be kept in view while exercising the extraordinary power/inherent power to quash the criminal proceeding. On stating the parameters, this Court has cautioned that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in rare cases. In that background, keeping in .....

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..... khs initially, thereafter in the subsequent auction conducted the same was fixed at ₹ 1.10 Crores and has thereafter concluded as hereunder: Undisputedly, petitioner is the debtor and has suffered an order passed by jurisdictional Debt Recovery Tribunal. The Debt Recovery Tribunal, Bangalore has issued recovery certificate in favour of respondent-Bank to recover the said amount. Property mortgaged to respondent-Bank by the petitioner has been brought for sale by auction. In the event of Bank not adhering to provisions of SARFAESI Act in conducting the sale or there being any infraction in this regard, petitioner has an alternate remedy available under SARFAESI Act. Hence, at the stage of auction being conducted by respondent-Bank for recovery of its legitimate dues, this Court would not interfere with said auction in the normal course. In the instant case, reserve price earlier fixed at ₹ 228.51 lakhs has not fetched customers and as such, respondentBank has fixed the reserve price at ₹ 110 lakhs which would be the price with which the public auction starts and auction bidders are not permitted to give bids below the floor value or reserve price. If the petitioner .....

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..... upplied) 12. While arriving at such conclusion the learned Single Judge had kept in view the provisions as contained in the SARFAESI Act, as also the decisions of this Court, more particularly in the case of United Bank of India vs. Satyawati Tondon & Ors. (2009) 1 SCC 168. In that view though the learned Single Judge did not accept the contentions as put forth had also indicated that if at all the auction is to be set aside for any reason whatsoever, the Complainant who was the petitioner therein can take recourse to the remedy under SARFAESI Act and get the sale set aside. In that view the learned Single Judge was of the opinion that the Complainant cannot be permitted to stall the auction itself through the prayer made in the Writ Petition. The Complainant had assailed the said order in an intracourt appeal bearing W.A. No.100349/2014. The Division Bench by its order dated 19.08.2014 had taken note of the consideration made by the learned Single Judge with reference to the case of Satyawati Tondon & Ors. (Supra) and had accordingly dismissed the Writ Appeal. 13. Having taken note of the nature of consideration made by the High Court in the said writ proceedings and keepi .....

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..... red to take a view on the matter though it has not been availed in the earlier cases. Further the learned senior counsel has also referred to the statements of two former Officers of the Canara Bank, namely, Gurupadayya and Bapu which was recorded during the course of the investigation and a reference was made by the learned senior counsel to the detailed report regarding investigation wherein the Investigating Officer, namely, the Assistant Police Sub Inspector, Sub-Urban Police Station, Hubballi had concluded that as per the investigation it is found that all the accused persons with conspiracy and in collusion with each other have cheated the Complainant by releasing only ₹ 90 Lakhs out of the sanctioned amount of ₹ 2.68 Crores and by later not releasing the remaining amount had caused economic stumbling block and sold the property mortgaged to one of the accused. 15. The issue however is, as to whether such proceedings by the police in the present facts and circumstances could be permitted. At the outset the sanction of loan, creation of mortgage and the manner in which the sanctioned loan was to be released are all contractual matters between the parties. The Compl .....

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..... erson, including the borrower, aggrieved by any of the measures referred to in subsection (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in subsection (3) thereof. 36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee. 37. The consequences of the authority vested in the DRT under subsection (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13(4) of the Act. The legislature by including subsection (3) in Section 17 has gone to the extent of vesting the DRT with authority to even set aside a trans .....

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..... h and public good are questions of fact and they are required to be proved by adducing evidence. Though on the proposition of law as enunciated therein there could be no cavil, that aspect of the matter is also an aspect which can be examined in the proceedings provided under the SARFAESI Act. In a circumstance where we have already indicated that a criminal proceeding would not be sustainable in a matter of the present nature, exposing the appellants even on that count to the proceedings before the Investigating Officer or the criminal court would not be justified. 19. In that view, for all the reasons stated above we pass the following: ORDER (i) The complaint bearing P.C. No.389/2016 and the order dated 20.05.2016 passed therein as also the FIR No.0152/2016 insofar as the appellants herein are concerned stand quashed. (ii) Insofar as the grievance of the Complainant, he is at liberty to avail his remedies in accordance with law if he chooses to assail the order dated 12.06.2015 passed in I.R. No.3044/2014 and the order dated 31.05.2017 passed in Appeal No.523/2015 by the DRT and DRAT respectively in accordance with law. (iii) The appeal is accordingly allowed with no order as to .....

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