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TMI Blog2025 (1) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... General assisted by Sri Suresh Singh, Advocate, for the Yamuna Expressway Industrial Development Authority (YEIDA), Sri J. K. Upadhya, learned AGA for the State; Sri Sikandar B. Kochar as well as Sri Zoheb Hossain (through VC), learned Advocates for the Enforcement Directorate (ED); Sri Vinay Saran, learned Senior Advocate assisted by Sri Prashant Kumar, Sri Sarvesh Kumar Tiwari, Sri Saumitra Dwivedi and Sri Devesh Srivastava, Advocates for the complainant/intervener and Sri Syed Imran Ibrahim, learned Advocate for the private respondent. 2. These three writ petitions have been heard together and are being disposed of by this common judgment. Criminal Misc. Writ Petition No. 10893 of 2023 (Niraj Tyagi and another Vs. State of U.P. and 3 others) is taken as the lead case. These petitions alongwith Writ Petition Nos. 11837 of 2023 & 11838 of 2023 were placed before this Court pursuant to an order of nomination passed by the Hon'ble Chief Justice on 4.3.2024. The other two petitions i.e. Criminal Misc. Writ Petition Nos. 11837 of 2023 and 11838 of 2023 have been allowed by this Court on 15.4.2024 and the First Information Report, dated 22.7.2023, registered as Case Crime No. 611 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d herein, is on the ground that no offences, as alleged therein are made out and the allegations made therein at best disclose existence of pure commercial and civil dispute between the parties, in respect of which initiation of criminal proceedings is nothing but an abuse of the process of law. The short question that arises for our consideration in the facts of the present case is as to whether lodging of the impugned FIRs and the consequential ECIR is an abuse of the criminal process? 8. In order to appreciate the controversy raised in these petitions narration of background facts would be necessary. Indiabulls Housing Finance Limited is a non-banking financial institution registered under the provisions of Indian Companies Act, 1956 (hereinafter referred to as 'Indiabulls'). It claims to be one of the largest premier housing finance company and is regulated by Reserve Bank of India. It is accorded 'AA' rating by CRISIL and ICRA. 'Indiabulls' is petitioner no. 2 in the leading writ petition no. 10893 of 2023, while petitioner no. 1 Niraj Tyagi is its President, Legal. 9. Indiabulls sanctioned loan facility of Rs. 2478 crores to M/s Shipra Group of Companies; comprising various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tune of Rs. 38 crores each, which swelled to Rs. 219 crores each, as of 31.7.2020. On account of this default the Noida Authority revoked its permission/NOC for creation of mortgage in favour of Indiabulls vide letters/orders dated 2nd & 4th September, 2020. 13. In terms of the loan agreement, Indiabulls issued a cure notice on 20.10.2020 calling upon the borrowers to cure the impaired security (mortgaged plot no. GH-1B & 1C, Sector 43, NOIDA) within 15 days of the notice. The borrowers apparently took no steps to regularize the impaired securities. Consequently, Indiabulls issued loan recall notices on 5.11.2020 and 15.12.2020, recalling the entire outstanding loan and demanded repayment of Rs. 1763.61 crores within 7 days from the receipt of notice. Notice was also issued by Indiabulls under Section 95 of the Insolvency and Bankruptcy Code, 2016 to the personal guarantor of loan agreements Mr. Mohit Singh. 14. On failure of borrowers to respond and clear the dues in terms of the notices issued as per loan agreements Indiabulls proceeded to issue loan recall notice to the borrowers. On 14.1.2021 a notice was also issued invoking provisions of Section 176 of the Contract Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Lucknow where the matter is pending. Question as to whether the auction purchaser has exceeded its possession beyond the property transferred in auction purchase is also open for examination before the DRT, Lucknow. Such issues are otherwise civil in nature and cannot be allowed to be raised by lodging an First Information Report. Vague and unsubstantiated ancillary allegations made of encroachment, beyond the transferred secured asset, or alleged irregularity in conduct of auction etc. cannot be allowed to be raised by lodging an FIR and thereby vest jurisdiction in the police regarding civil issues which are required to be adjudicated exclusively by the DRT or the civil court. The tendency of the defaulter to invoke criminal proceedings for resisting coercive action under the SARFAESI Act has to be curbed. The Parliamentary vision of vesting exclusive jurisdiction in specialized tribunal viz DRT, in respect of banking transactions relating to loan, debt etc. has to be respected. Criminal proceedings cannot be pressed into action at the instance of defaulter to scuttle proceedings under the SARFAESI Act on issues exclusively triable by DRT. 23. For the reasons recorded above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi High Court disposed of the application under Section 9 of the Act of 1996 vide judgment dated 20.5.2021. The Court prima facie concluded that element of default had occurred as the security in respect of the mortgaged properties was impaired. Learned Single Judge relied upon the statement made on behalf of Indiabulls that shares would be transferred in a fair and transparent manner and noted that Indiabulls has disclosed the purchaser and also the amount at which the sale is being done. Offer given by Indiabulls to the borrower to redeem the pledged shares on a payment of Rs. 900 crores and the inability to avail such offer by borrower was specifically noticed. The Court ultimately rejected section 9 petition after recording its prima facie findings in the matter. 21. Indiabulls and DLF in between had entered into an agreement on 20.4.2021 to sell pledged shares for a consideration of Rs. 900 crores. Rs. 750 crores was to be paid by DLF while Indiabulls had to infuse approximately Rs. 150 crores in Kadam so as to enable it to repay the loans of M/s Shipra Estate Limited. Mutually settled Share Sale Agreement was to be formalized between the parties within 21 days subject to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F. DLF is a developer and intends to develop the Sale Property. The entire transaction between the parties as recorded in the ATS is premised on the basis that DLF would use the Sale Property for development of its real estate project. Insofar as Indiabulls is concerned, concededly, it is a money lender and its interest is essentially to recover the loans along with interest as claimed by it. Thus, as far as Indiabulls is concerned, it can always be compensated in terms of money. There is no dispute that Kadam is a part of the Shipra Group of entities and admittedly, had mortgaged the Sale Property with Indiabulls to secure the repayment obligations of the Borrowers. The Borrowers claim that Indiabulls had agreed to accept the consideration payable by DLF under the ATS as full and final settlement of its claims. Plainly, if Kadam and the Borrowers prevail in their case that the dues owed to Indiabulls were fully settled, they would stand discharged of their liability on Indiabulls receiving the consideration as provided under the ATS. However, if they fail in this case, the Borrowers would continue to be liable to discharge their dues. Insofar as Kadam is concerned, Kadam is not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Private Limited has purchased the entire equity share holding of Kadam from Indiabulls. It is this part of the transaction which is the subject matter of the two FIRs under challenge in these petitions. 29. At this stage, we may note that the loan agreement pursuant to which 100% shares of Kadam were pledged in favour of Indiabulls contained an arbitration clause. This clause has already been invoked by the borrowers and various proceedings therein are already undertaken. Mr. Justice Vikramjit Sen, a retired Judge of the Supreme Court, has already been appointed an arbitrator in the matter. 30. In the arbitration proceedings instituted by M/s DLF Limited also Mr. Justice Vikramjit Sen has been appointed an arbitrator and the proceedings are pending before the learned arbitrator. The Arbitrator has already passed an order of status-quo in respect of the 73 acre mortgaged land of Kadam. These proceedings and the orders passed therein are, however, not referred to in the two FIRs or the complaint of borrower. 31. We shall refer to the proceedings of arbitration, a little later, while considering petitioners' argument that invocation of criminal proceedings vide impugned FIRs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of Kadam was agreed upon to be purchased by M/s DLF for Rs. 1250 crores but eventually it has been transferred to M/s Final Step Developer Private Limited for Rs. 900 crores only. The Mall belonging to Shipra Group has also been unauthorizedly encroached upon by Indiabulls. The FIR allegations further are that as against sanctioned loan of Rs. 1939 crores only Rs. 1256.6 crores has been paid to the borrower and Rs. 683 crore has not been disbursed to the borrower company despite the fact that Rs. 163 crore was paid till March, 2023 to Indiabulls. 37. The 2nd FIR is lodged by YEIDA in furtherance of the 1st FIR. The contents of the subsequent FIR is (i) that the transfer of shares of Kadam pledged with Indiabulls in favour of Creative Souls Technology India Private Limited was without the consent of YEIDA (the informant authority); (ii) non-payment of transfer charges has resulted in financial loss caused to the public authority to the extent of Rs. 200 crore; (iii) the contents of the FIR in Case Crime No. 427 of 2023 is also referred to and relied upon in the subsequent FIR. 38. On the basis of the above two FIRs proceedings have been initiated by the Enforcement Directorate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty consisting of 73 acres of land situated at Sector 128 NOIDA in collusion with M/s M3M Private Limited as also grabbing the Shipra Mall situated at Ghaziabad; (c) Shipra Mall is being sold at an undervalued price." 42. The 1st FIR is challenged on the ground that it is an abuse of the process of law. It is urged that Mr. Amit Walia is the authorized signatory of borrower i.e. M/s Shipra Group, who had filed proceedings before the Delhi High Court, the arbitrator, the debt recovery tribunal and before the Supreme Court of India in respect of the grievances raised in the FIRs wherein the borrower M/s Shipra Group failed to obtain any relief but these facts have been withheld; the FIR does not disclose any criminal intent; the transactions are entirely fiscal in nature and no criminality is reflected; it is argued that sanction of loan, creation of mortgage and the manner in which the sanctioned loan were to be released are all contractual matters which are governed by the terms of contract and the provisions of the SARFAESI Act and Rules and issues in that regard cannot be raised by lodging an FIR; the impugned FIRs are lodged by the borrowers to escape their liability to repay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the petitioners in respect of the contents of FIRs, and to take appropriate measures in accordance with law within a period of one month. 8. Till final disposal of the respective petitions, interim order dated 28-4-2023 [Gagan Banga v. State of W.B., 2023 SCC OnLine SC 1814] passed in WP (Crl.) No. 166 of 2023 would continue in the three FIRs mentioned therein. 9. Insofar as the further FIR No. 197/2023 dated 15-4- 2023 filed by Yeida and ECIR bearing No. ECIR/HIU-I/06/2023 are concerned, no coercive steps would be taken against the petitioner financial institution and its officers, representatives and managers till final disposal of such petitions by the High Court, and it would be open for the petitioners to seek stay of proceedings which would be considered by the High Court on its own merits. It is clarified that this interim protection would only be applicable to the petitioner financial institution and its officers, representatives and managers, and not to any other person. 10. All contentions available to the parties in law are being kept open to be raised before the High Court and the High Court shall decide the petitions strictly on their own merits and in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said FIR till the final disposal of the petition which was to be filed, the question of permitting the petitioners to again seek stay of proceedings in relation to the said FIR before the High Court was unnecessary. 17. Further, the stay of proceedings granted by this Court in the writ petition, in relation to the first three FIRs, was directed to continue till the disposal of the writ petitions to be filed before the High Courts. When a party is relegated to the High Court to pursue its remedies, it would not be proper, in the normal course, to bind the said High Court with directions in relation to the proceedings to be impugned before such Court. Ordinarily, this Court would leave all issues open for the party so relegated to raise and pursue before the High Court. In Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra11, a 3-Judge Bench of this Court laid down guidelines for exercise of power under Section 482 CrPC, cautioning that criminal proceedings ought not to be scuttled and Courts, in the usual course, should not thwart investigation into cognizable offences. That being so and as no compelling reasons were recorded by this Court in the order dated 04.07.2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th it; market value of these mortgaged properties are about Rs. 6000 crores; intent of Indiabulls from the very beginning was not fair and it wanted to grab the properties of the borrower; by playing fraud Indiabulls wanted the borrower to be shown as defaulter and thereby grab its properties; Rs. 1686 crores were not released to the borrower, instead only Rs. 866.88 crores were credited to the account of borrower and immediately withdrawn and balance Rs. 820 crores were not credited to the account of borrower; false assurances were extended to the borrower by Indiabulls; loan recall notice was issued collusively by Indiabulls; an amount of Rs. 552.76 crores has been fraudulently embezzled by Indiabulls; loan amount as well as dues payable have been inflated contrary to the guidelines of RBI; sanctioned loan amount payable to borrower has been withheld by Indiabulls; Directors of borrower have been ill-treated and threatened; although Rs. 1939 crores were to be credited to the account of the borrower as per loan agreement but only Rs. 1256.6 crores were credited to the account of the borrower and Rs. 683 crores has still not been paid even though borrower has paid Rs. 163 crores ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by the borrower while instituting complaint before the Chief Judicial Magistrate cannot be viewed kindly. The effect of such misrepresentation would render the proceedings of borrower tainted. In a recent judgment of Kusha Duruka v. State of Odisha, (2024) 4 SCC 432, the Supreme Court of India emphasized the importance of disclosing correct facts before a court of law. Reliance was placed upon a previous judgment of the Court in K.D. Sharma Vs. Steel Authority of India and others, 2008 (12) SCC 481, wherein the Court observed as under in para 39:- "39. If the primary object as highlighted in Kensington Income Tax Commrs. [(1917) 1 KB 486 : 86 LJKB 257 : 116 LT 136 (CA)] is kept in mind, an applicant who does not come with candid facts and "clean breast" cannot hold a writ of the court with "soiled hands". Suppression or concealment of material facts is not an advocacy. It is a jugglery, manipulation, manoeuvring or misrepresentation, which has no place in equitable and prerogative jurisdiction. If the applicant does not disclose all the material facts fairly and truly but states them in a distorted manner and misleads the court, the court has inherent power in order to protect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] . It was a case where the appellant before this Court had challenged the order [Saumya Chaurasia v. Directorate of Enforcement, 2023 SCC OnLine Chh 1907] passed by the High Court [ High Court of Chhattisgarh at Bilaspur in Miscellaneous Crl. Case No. 1258 of 2023] rejecting his bail application. He was accused of committing various crimes under the Penal Code, 1860 and the Prevention of Money-Laundering Act, 2002. His bail application was rejected by the High Court on 23-6-2023 [Saumya Chaurasia v. Directorate of Enforcement, 2023 SCC OnLine Chh 1907] . In the pleadings before this Court, it was mentioned that the High Court had committed gross error in not considering the charge-sheet dated 8-6-2023 and the cognizance order dated 16-6-2023, which clearly suggested that there was an error apparent on the fact of it. The fact which was available on record was that an order in the bail application was reserved by the High Court on 17-4-2023 [Saumya Chaurasia v. Enforcement Directorate, 2023 SCC OnLine Chh 5838] and pronounced on 23-6-2023 [Saumya Chaurasia v. Directorate of Enforcement, 2023 SCC OnLine Chh 1907] . Having some suspicion, this Court directed the appellant to file an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrower, including M/s Shipra Leasing Pvt. Ltd. as well as Kadam and Shipra Estate Limited had already approached the Delhi High Court by invoking its jurisdiction under Section 9 of Act of 1996. The proceedings travelled upto the Hon'ble Supreme Court of India. On remand, the petition under Section 9 of the Act of 1996 came to be decided by an elaborate judgment of the learned Single Judge of the Delhi High Court on 20.05.2021. After noticing the background in which the controversy arose learned Single Judge noticed the contention of borrower in para 5.1 to para 5.19, which are reproduced hereinafter:- "5.1. The loan facility granted in favour of the Borrowers has been arbitrarily recalled by Indiabulls vide loan recall notices dated 05th November, 2020 and 15th December, 2020, on account of an alleged 'impairment of the security' under Clause 12.1.9 of the Loan Agreement. The three ingredients of an Event of Default, as defined under Clause 12.1.9(a), being - (i) 'impairment of the security', (ii) causing the security to become 'unsatisfactory', and (iii) 'in the judgment of the lender' (i.e. Indiabulls) - are not met in the instant case. The same is demonstrated as below: 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtgaged properties to the extent of approx. Rs. 5200 crores - which is more than the 2x security cover required under Clause 2.3 of the Loan Agreements (which amounts to Rs. 3372 crores). NO FINANCIAL DEFAULTS IN PAYMENTS 5.5. There has never been a default in repayment of loans on the part of the Borrowers. They have followed the repayment schedule in letter and spirit. In fact, Indiabulls has, at its sole discretion, rescheduled the loan agreements various times in the past, however, it has never been the case that any re-schedulment charges were imposed on Borrowers. Further, on account of the outbreak of COVID-19 pandemic, revised loan repayment schedule was provided to the Borrowers, towards which further PDCs and UDCs were obtained by Indiabulls from the Borrowers. Reschedulment charges towards loans rescheduled on account of the COVID-19 pandemic is inconceivable even in terms of the guidelines provided by the RBI. 5.6. Indiabulls has further concealed that a sum of Rs. 3.33 crores is currently lying in the escrow account of the Shipra Group which is in complete control and custody of Indiabulls. 5.7. In the past, Indiabulls has never banked on any of the security ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be reasonable in terms of Clause 12.3. The clear use of 'and/or' in the Clause is indicative that the meaning of the word 'security' can be taken to either mean either each security individually, or to mean all the securities jointly. In such a situation, we are guided by the introductory part of the clause, which clearly stated that the meaning thereof has to be understood 'as the context requires'. Further, Clause 12.1.9(a) uses the phrase 'impairment of the Security, if any, or any part thereof'. Thus, even if we were to hypothetically accept that security must mean all securities as a whole, there is a clear provision for any part of the same to become impaired, leading to it becoming unsatisfactory in the judgment of the Lender, in which case, an Event of Default would occur. This argument, therefore, does not hold any water. Though, the correlation between the 'Securities' and the 'Borrower's dues' is a novel argument, it is not a persuasive one, and would amount to misinterpretation of clause 2.2 for the purpose deciding whether an Event of Default has occurred. If a security is impaired, which causes it to be become unsatisfactory as to character or value, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a continuing default, as the amount of Rs. 38 crores was payable "immediately" on 23rd February, 2018 when the NoC was first granted. Thus, this is nothing less than a wilful impairment. Today, the court can only speculate as to the circumstances whereunder, without the payment to Noida Authority, the Mortgage Deed got registered, or the reasons for the delayed action of Noida Authority. These aspects would have to be examined in arbitration. Nevertheless, the fact of the matter is that Indiabulls cannot enforce the impaired securities, and is constrained to recall the loan. In these circumstances, the question arises whether the Court can interdict Indiabulls from taking recourse to the provisions of the Loan Agreement for enforcing other securities. The answer to this question has to be in the negative." 60. Upon consideration of borrower's plea regarding nonexistence of financial default learned Single Judge held that an event of default has occurred and that such default is more serious and fundamental than dishonour of an EMI. The Court consequently rejected the application of borrower under Section 9 of the Act of 1996 vide observations made in para 25 and 26 of the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed the amount of sale and offered that in case the Borrowers were interested to redeem the security, they could do so on payment of Rs. 900 crores. However, no interest was shown by the Borrowers. 30. On the aspect of valuation, we note that KDPL, the company whose shares have been sold by Indiabulls to DLF, is a lease-holder and the title-holder of the plot of land, which is its only valuable asset. Thus, the valuation of the shares of KDPL has been done primarily on the basis of the value of the parcel of land, the shares having no other intrinsic value. Indiabulls supports its valuation on the basis of the reports on record, which are disputed and countered by the Petitioners. The valuation of land is not an exact science. It requires expertise, and certainly cannot be gone into in the present proceedings. The credibility of rival reports would be examined during the arbitration to determine which one is correct and realistic. At this juncture, the Court only has to see if the contractual terms as agreed between the parties under the Pledge Agreement have been adhered to. Undisputedly, notice of invocation had been issued by Indiabulls giving Borrowers and the Pledgor an opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to the provisions in question, this Court cannot interfere on this aspect, and deprive Indiabulls from enforcing its right under the Pledge Agreement." 62. In light of the above discussions, learned Single Judge of the Delhi High Court rejected the borrower's petition under Section 9 of the Act of 1996. The undertaking given by the counsel for Indiabulls, at an earlier stage of the proceedings, were discharged. The Court also observed that observations made by it are prima facie in nature and would not come in the way of arbitral tribunal in adjudicating the dispute between the parties. 63. The aforesaid judgment of learned Single Judge was unsuccessfully assailed by the borrower in appeal preferred before the Division Bench of Delhi High Court. After referring to various observations of learned Single Judge the Division Bench concluded that in view of categorical observations made in last para of the judgment of learned Single Judge the apprehension of borrower that the observations of learned Single Judge would prejudice the arbitral proceedings is non-existent. The appeal was disposed of accordingly. The matter rests at it. 64. We are rather amazed that the bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCR Suppl. (3) 259; State of Telangana Vs. Habib Abdullah Jeelani and others, (2017) 2 SCC 779 and Neeharika Infrastructure Pvt. Ltd. Vs. State of Maharashtra and others, (2021) 19 SCC 401. 69. The allegation in the FIRs that the Directors of Indiabulls contacted the borrower and induced the borrower to avail loan on rates lower than the market rate so as to grab the property of borrower cannot be countenanced. At the cost of repetition, we may reiterate that borrower herein is an established company which is aware of normal financing practices as also the terms on which loan is offered to it. To avail finance on terms indicated in the loan agreement is a commercial/managerial decision of the borrower. Availing of finance cannot be foisted upon the borrower by a non-banking finance company. Admittedly, loan was sanctioned to the borrower vide 16 separate loan agreements executed between 2017 to 2020. The event of default occurred in early 2021 itself. The borrower availed of remedies in Arbitration proceedings against Indiabulls and its interim application against coercive action has already failed. 70. Interestingly, in the Arbitration proceedings there are no allegations that D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be resolved in Arbitration. Institution of criminal action can therefore be said to be with oblique motive. 74. Various issues in respect of the loan transaction are to be determined in accordance with the terms of contract. Any differences between the parties, in respect of such contract has to be resolved by Arbitration. The borrower as of now is prima facie a defaulter and its claim requires determination in Arbitration, which is pending before Hon'ble Mr. Justice Vikramjit Sen (Retired). We are, therefore, not required to enter into various claims of parties with any sense of definiteness regarding loan agreement or its performance when the issues are seized before the Arbitrator. 75. The allegation that entire loan amount was not disbursed or that a lesser amount was actually released to the borrower is also a grievance raised for the first time in criminal proceeding instituted with unexplained delay. Such claims can otherwise be determined only in accordance with the terms of loan agreement/contract and the disputes or differences between the parties, raised for the first time in criminal proceedings cannot be appreciated. 76. Any adjudication, in criminal proceedings, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is some difference of opinion in the High Courts of India on this point. No hard-and-fast rule can be laid down but we do not consider that the possibility of conflicting decisions in the civil and criminal courts is a relevant consideration. The law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassment. 13. Another factor which weighs with us is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should wait till everybody concerned has forgotten all about the crime. The public interests demand that criminal justice should be swift and sure; that the guilty should be punished while the events are still fresh in the public mind and that the innocent should be absolved as early as is consistent with a fair and impartial trial. Another reason is that it is undesirable to let things slide till memories have grown too dim to trust. This, however, is not a hard-and- fast rule. Special considerations obtaining in any particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinguished the judgment in Sardool Singh (supra) by observing that in Syed Askari (supra) a criminal case had already been instituted and the question before it was as to whether it should be allowed to continue or not? It was in that context that the Court allowed the criminal proceedings to go on as not only the aspect of forgery of will, pending adjudication in civil proceedings was the subject of criminal trial but even trespass was alleged in the FIR. The Court held as under in para 43:- "43. The FIR was lodged not only in regard to forgery of the will but also on the cause of action of a trespass. The appellant admittedly is facing trial under Sections 420, 468 and 448 IPC. It is, thus, possible that even if the will is found to be genuine and that no case under Section 468 IPC is found to have been made out, the appellant may be convicted for commission of other offences for which he has been charged against, namely, trespass into the property and cheating. If it is found that the appellant is guilty of trespass, he may be asked to hand over possession of the premises in question to the complainant." 83. The judgment in Syed Askari therefore has no applicability in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f specific findings returned by learned Single Judge of the Delhi High Court in the judgment dated 20th May, 2021, against which no interference is made in appeal by the Division Bench of Delhi High Court on 30th November, 2022. 88. Once the contention of borrower that no event of default has taken place or that securities twice above the loan are pledged/mortgaged and, therefore, Indiabulls cannot proceed against the pledged shares of Indiabulls is rejected by the Delhi High Court and issues in that regard are to be finally determined in Arbitration by virtue of loan agreements it would not be appropriate to allow such issues to be raked up in criminal proceedings. This is so as inter se between the parties it is decided that these issues are to be resolved by way of Arbitration. The borrower's anxiety to overreach this position by seeking criminal adjudication of civil issues would clearly amount to abuse of the process of law. 89. So far as the stand of ED is concerned, we find that its allegation about undervaluation of shares on the strength of report of valuers or that the valuers report are manipulated has to be examined in the context of the financial transaction in its e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he borrower which has defaulted in repayment of loan. Its objection against revocation of loan and coercive steps against pledged property has prima facie not found favour with the Delhi High Court in proceedings under Section 9 of the Act of 1996 and the issues, in that regard, are yet to be determined by the Arbitrator already appointed by the Delhi High Court under Section 11 of the Act of 1996. It is in this background that we are not inclined to sustain the invocation of criminal adjudicatory process by suppressing binding adjudications already done between the parties. 95. So far as the 2nd FIR lodged by YEIDA is concerned, the same is substantially based upon the allegations made in the 1st FIR. In a way the 2nd FIR is an offshoot of the 1st FIR. 96. So far as the allegation with regard to non obtaining of permission before transfer of shares of Kadam is concerned the petitioners allege that there are no applicable provision in law which required any permission to be obtained before such transfer of shares. 97. The 2nd FIR records that YEIDA had granted permission on 9.1.2018 for 73 acre land owned by Kadam to be mortgaged to Indiabulls. The 2nd FIR refers to the lodging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was disposed of. 104. It is on 27.1.2014, after nearly 9 months of the registration of FIR that a demand notice for Rs. 243.73 crores on account of transfer of shares is again issued by YEIDA against Kadam. This notice is sub-judice before this Court wherein an interim order is operating. 105. The issue as to whether any transfer charges is payable on account of transfer of shares of Kadam is yet to be determined in pending writ proceedings before this Court where an interim order is operating. In our opinion the right of YEIDA to recover such transfer charges would have to be determined in the pending writ proceedings before this Court and such claim in no way would be effected by the outcome of the present petitions filed for quashing of the FIRs. If it is ultimately held by this Court in pending Writ Petition that transfer charges are payable the amount so determined would remain recoverable from Kadam on account of first charge over it by YEIDA notwithstanding the outcome of present petitions. 106. The 2nd FIR is otherwise in continuation to the 1st FIR and is on the prompting of the borrower. The transfer of pledged shares of Kadam by the Indiabulls pursuant to pledge ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the valuers report had played any role in such undervaluation or not? Not much reliance can be placed upon the correctness or otherwise of the valuers report, without first ascertaining the aspect of undervaluation of shares. 113. Further, the borrower has already alleged undervaluation before the Arbitral Tribunal and has also sought alleged damages in respect of it. Thus, this question cannot be agitated in the present criminal proceedings. 114. In K. Virupaksha v. State of Karnataka, (2020) 4 SCC 440, the Supreme Court dealt with a similar case of defaulter initiating criminal action against the lender bank. After examining the issue the Court held as under:- 9. As noted, the undisputed fact is that the complainant had approached Canara Bank for financial assistance, wherein the appellants herein were the officers in the circle office. The complainant had availed the loan facility to the tune of Rs 2.68 crores on 16-3-2009. Though the complainant contends that the entire amount of Rs 2.68 crores was not released, but only a sum of Rs 90 lakhs was released and the remaining amount was adjusted as repayment, the question would be as to whether that aspect and the other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstance, as already taken note of 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, 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 the Sarfaesi Act. This view is fortified by the decision of this Court in Indian Overseas Bank v. Ashok Saw Mill [Indian Overseas Bank v. Ashok Saw Mill, (2009) 8 SCC 366 : (2009) 3 SCC (Civ) 403] wherein it is held as hereunder : (SCC pp. 375-76, paras 34-37) "34. The provisions of Section 13 enable the secured creditors, such as banks and financial institutions, not only to take possession of the secured assets of the borrower, but also to take over the management of the business of the borrower, including the right to transfer by way of lease, assignment or sale for realising secured assets, subject to the conditions indicated in the two provisos to clause (b) of sub-section (4) of Section 13. 35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimidatory tactic and an afterthought which is an abuse of the process of law. In the matter of present nature, if the grievance as put forth is taken note of 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 and the orders passed by the competent court under the Sarfaesi Act which is neither desirable nor permissible and the banking system cannot be allowed to be held to ransom by such intimidation. Therefore, the present case is a fit case wherein the extraordinary power is necessary to be invoked and exercised." 115. In M.N. Ojha Vs. Alok Kumar Srivastav, (2009) 9 SCC 682, the Supreme Court observed as under in paras 33, 34 & 35 of the judgment, which are reproduced:- 33. This is one case where the averments and allegations made in the complaint do not disclose the commission of any offence by the appellants or any one of them. They were merely discharging their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On an earlier occasion, in G. Sagar Suri v. State of U.P. [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636 : 2000 SCC (Cri) 513], this Court has also observed : (SCC p. 643, para 8) "8. Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which the High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice." 41. Furthermore, in the landmark judgment of State of Haryana v. Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] regarding exercise of inherent powers under Section 482CrPC, this Court has laid down the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of charge-sheet dated 29-3-2017 against the appellants for the offences under Sections 406, 419, 420 read with Section 34 IPC stands quashed." 117. In Vijay Kumar Ghai Vs. State of West Bengal, (2022) 7 SCC 124, the Supreme Court observed in Paras 24, 25, 37, 38, as under: 24. This Court in G. Sagar Suri v. State of U.P. [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636 : 2000 SCC (Cri) 513] observed that it is the duty and obligation of the criminal court to exercise a great deal of caution in issuing the process, particularly when matters are essentially of civil nature. 25. This Court has time and again cautioned about converting purely civil disputes into criminal cases. This Court in Indian Oil Corpn. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] noticed the prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. The Court further observed that : (Indian Oil Corpn. case [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188], SCC p. 749, para 13) "13. ... Any effort to settle civil disputes and claims, which do not involve any crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by this Court in Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786], the distinction between mere breach of contract and cheating, which is criminal offence, is a fine one. While breach of contract cannot give rise to criminal prosecution for cheating, fraudulent or dishonest intention is the basis of the offence of cheating. In the case at hand, complaint filed by Respondent 2 does not disclose dishonest or fraudulent intention of the appellants." 118. In Sarabjit Kaur Vs. State of Punjab, 2023 (5) SCC 360, the Summit Court held as under in para 11 to 13 of the report, which are reproduced: 11. Still not satisfied as the result of the earlier complaint was not to the liking of Respondent 2. He filed another complaint on 23-1-2017. Thereafter, another complaint was filed by Respondent 2 on 15-6-2017 on the basis thereof FIR in question was registered. On the facts of the case in hand, it is evident that the effort of Respondent 2 was merely to put pressure on the appellant while involving her in a criminal case to get his money back whereas there is nothing pleaded that Respondent 2 that he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly, in Lalit Chaturvedi and others Vs. State of Uttar Pradesh, 2024 SCC OnLine SC 171, the Court held as under in paras 5, 6, 7, 9, 10, 11:- "5. This Court, in a number of judgments, has pointed out the clear distinction between a civil wrong in the form of breach of contract, non-payment of money or disregard to and violation of the contractual terms; and a criminal offence under Sections 420 and 406 of the IPC. Repeated judgments of this Court, however, are somehow overlooked, and are not being applied and enforced. We will be referring to these judgments. The impugned judgment dismisses the application filed by the appellants under Section 482 of the Cr. P.C. on the ground of delay/laches and also the factum that the chargesheet had been filed on 12.12.2019. This ground and reason is also not valid. 6. In "Mohammed Ibrahim v. State of Bihar"4, this Court had referred to Section 420 of the IPC, to observe that in order to constitute an offence under the said section, the following ingredients are to be satisfied:- "18. Let us now examine whether the ingredients of an offence of cheating are made out. The essential ingredients of the offence of "cheating" are as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made in the complaint are correct, but even then, a criminal offence under Section 420 read with Section 415 of the IPC is not established in the absence of deception by making false and misleading representation, dishonest concealment or any other act or omission, or inducement of the complainant to deliver any property at the time of the contract(s) being entered. The ingredients to allege the offence are neither stated nor can be inferred from the averments. A prayer is made to the police for recovery of money from the appellants. The police is to investigate the allegations which discloses a criminal act. Police does not have the power and authority to recover money or act as a civil court for recovery of money. 10. The chargesheet also refers to Section 406 of the IPC, but without pointing out how the ingredients of said section are satisfied. No details and particulars are mentioned. There are decisions which hold that the same act or transaction cannot result in an offence of cheating and criminal breach of trust simultaneously.10 For the offence of cheating, dishonest intention must exist at the inception of the transaction, whereas, in case of criminal breach of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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