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2020 (3) TMI 192 - SC - Indian LawsAuction - mortgaged property - Non-performing asset - whether in a matter of the present nature the appellants should be exposed to the ignominy of going through the process of criminal proceedings? - 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 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. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Quashing of the High Court's dismissal of the Criminal Petition under Section 482 of Cr.P.C. 2. Validity of the criminal complaint against the bank officers. 3. Applicability of SARFAESI Act provisions and remedies. 4. Allegations of wrongful loss and undervaluation of secured assets. 5. Immunity from prosecution under Section 32 of the SARFAESI Act. Detailed Analysis: 1. Quashing of the High Court's Dismissal of the Criminal Petition under Section 482 of Cr.P.C.: The appellants, who were Deputy General Managers of Canara Bank, challenged the High Court of Karnataka's order dismissing their Criminal Petition No.100323/2018. They sought to quash the order of the Principal Civil Judge & JMFC which referred the matter for investigation and registration of FIR under various sections of IPC. The Supreme Court granted leave to appeal and scrutinized the High Court's decision, emphasizing that the High Court failed to appreciate the matter correctly and that the investigation would prejudice the appellants. 2. Validity of the Criminal Complaint Against the Bank Officers: The criminal complaint was filed by the Complainant alleging wrongful loss caused by the bank officers in connivance with the auction purchaser. The appellants argued that they had no role in the transaction and that the entire process was regulated under the SARFAESI Act. The Supreme Court noted that the Complainant had already availed remedies under the SARFAESI Act and had failed in those proceedings. The Court highlighted that initiating criminal proceedings at this stage appeared to be an abuse of the process of law and an intimidatory tactic. 3. Applicability of SARFAESI Act Provisions and Remedies: The Supreme Court emphasized that the SARFAESI Act is a complete code that provides procedures and remedies for grievances related to secured assets. The Court reiterated that the Complainant had the option to challenge the actions of the bank under the SARFAESI Act before the DRT and DRAT, which he had already done unsuccessfully. The Court underscored that allowing the criminal complaint would undermine the statutory remedies provided under the SARFAESI Act. 4. Allegations of Wrongful Loss and Undervaluation of Secured Assets: The Complainant alleged that the secured asset was undervalued and sold at a lower price in connivance with the auction purchaser. The Supreme Court noted that these allegations were already considered in earlier writ proceedings and the DRT. The Court pointed out that the High Court had dismissed the writ petition and writ appeal, suggesting the Complainant to avail remedies under the SARFAESI Act. The Court concluded that the criminal complaint was an afterthought and not sustainable in law. 5. Immunity from Prosecution Under Section 32 of the SARFAESI Act: The appellants invoked Section 32 of the SARFAESI Act, which provides immunity from prosecution for actions taken in good faith. The Supreme Court acknowledged this provision but also referred to the decision in General Officer Commanding, Rashtriya Rifles vs. CBI, stating that good faith and public good are factual matters requiring evidence. However, the Court held that in the present case, exposing the appellants to criminal proceedings was not justified. Order: The Supreme Court quashed the complaint bearing P.C. No.389/2016, the order dated 20.05.2016, and the FIR No.0152/2016 insofar as the appellants were concerned. The Court allowed the appeal, granting the Complainant liberty to pursue remedies under the SARFAESI Act if he chose to challenge the orders of the DRT and DRAT. The appeal was allowed with no order as to costs, and any pending applications were disposed of.
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