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2023 Supreme(SC) 1322
SUPREME COURT OF INDIA
KRISHNA MURARI, SANJAY KUMAR, JJ.
Gagan Banga – Petitioner
Versus
Samit Mandal and Another – Respondents
Contempt Petition (Civil) No. 774 of 2023, Criminal Appeal No. 463 of 2022, Writ Petition (Crl.) No. 166 of 2023, Special Leave Petition (Crl.) Nos. 4639-4641 of 2023
Decided On : 04-07-2023
Advocate Appeared:
For the Petitioners: Mukul Rohtagi, Ashish Batra, Gautam Awasthi, Mukul Rohatgi, Karan Bharihoke, Ashish Batra.
For the Respondents: Sunil Fernandes, Anju Thomas, Mantika Haryani, Divyansh Tiwari, Astha Sharma, Sanjay Jain, Shreekant Neelappa Terdal, Arkaj Kumar, Gautam Bhardwaj, Ishaan Sharma, Digvijay Dam, N. Visakamurthy, Zeeshan Diwan, Rajender Wali, B.K. Satija, Abhishek Manu Singhvi, Ravi Prakash Mehrotra, L. Zafeer Ahmed, Rudra Pratap, Amit Bhandari, Deepti R. Mehrotra, M. Shaz Khan, Prasenjit K. Chakarvarti, Apoorv Srivastava, Gayatri Dahiya, Adnan Yousuf, Talha Abdul Rahman.
Headnote:(A) Code of Criminal Procedure - Section 482 - Judgment discusses the abuse of criminal proceedings arising from civil financial disputes, referencing Priyanka Srivastava vs. State of U.P. and Vijay Kumar Ghai vs. State of W.B. - Emerging trend of mala fide criminal actions aimed at intimidating financial institutions unlawfully upheld. (Paras 2, 3)
Facts of the case:
The petitioners assert that borrowers are initiating false criminal prosecutions to avoid recovering enforceable debts connected to financial institutions, involving multiple FIRs across different states.
Findings of Court:
The court permits petitioners to challenge the implicated FIRs in the respective High Courts while directing state authorities to review ongoing criminal matters related to these FIRs swiftly.
Issues: Whether the initiation of criminal proceedings against financial institutions is an abuse of the legal system in civil financial disputes.
Ratio Decidendi: The Court elucidated the trend of criminal law misuse to obstruct legitimate financial recovery processes and emphasized the importance of statutory adherence within economic contexts.
Result: All petitions are disposed of with specific directions.
Certainly. Here are the key points from the provided legal document:
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The court recognizes a pattern of mala fide criminal proceedings initiated against financial institutions and their officers, primarily aimed at obstructing lawful debt recovery processes (!) .
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Such criminal proceedings are often initiated to circumvent statutory recovery mechanisms, like the SARFAESI Act, and to intimidate financial institutions by misrepresenting civil financial disputes as criminal cases (!) .
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The court highlights the misuse of criminal law to impede legitimate economic and financial activities, emphasizing that this trend can adversely affect the economic health of the nation (!) .
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The court permits financial institutions and their officers to challenge the implicated FIRs in the respective High Courts and directs state authorities to review ongoing criminal proceedings related to these FIRs promptly (!) .
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The court has ordered that all pending FIRs and related proceedings can be challenged in the High Courts within a specified timeframe, and further directed that interim protections be granted until the final disposal of these petitions (!) .
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Interim orders have been issued to prevent coercive steps against the petitioner financial institutions and their officers, until the High Courts decide on the petitions on their merits (!) .
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The court emphasizes that all parties are free to raise their legal contentions before the High Courts, which are to decide the cases strictly on their merits and in accordance with law (!) .
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Finally, all pending petitions, including contempt petitions and applications, have been disposed of with the directions and observations outlined above (!) .
These points encapsulate the court's recognition of the misuse of criminal proceedings against financial entities, the procedural directions issued, and the emphasis on fair adjudication by the High Courts.
| Table of Content |
|---|
| 1. criminal proceedings against financial institutions may be initiated mala fide. (Para 1 , 2) |
| 2. court recognizes misuse of criminal law against financial entities. (Para 3) |
| 3. pending firs and ecir will be challenged in high court. (Para 4 , 5) |
| 4. permitting high courts to decide on petitions within a specified timeframe. (Para 6 , 7) |
| 5. interim protections granted until high court's final disposal. (Para 8 , 9 , 10) |
| 6. all petitions are disposed of. (Para 11) |
ORDER :
1. Interlocutory applications for impleadment and to bring on record additional facts are allowed.
2. The petitioners’ case is that there is trend of initiating mala fide criminal proceedings against financial institutions/lenders and their officers, representatives and managers, to somehow restrain them from pursuing recovery proceedings of their enforceable debts, and/or to compel them to make settlement of their dues. FIRs are registered to circumvent legally owed debts by scuttling the statutory regime of SARFAESI, and also by projecting a purely civil financial dispute as a criminal matter with a view to intimidate and in abuse of the criminal process.
3. In Priyanka Srivastava vs. State of U.P. , (2015) 6 SCC 287, this Court had noticed that taking recourse to criminal law by bypassing statutory remedies to bring the financial institutions on their knees, has the inherent potentiality to affect the marrows of economic health of the nation. Further, in Vijay Kumar Ghai and Another vs. State of W.B. and Others , (2022) 7 SCC 124, this Court quashed the criminal proceedings being abuse of law in a purely civil financial dispute and being a case of forum shopping. Despite these judgments, continuation of such trend appears extremely disturbing.
4. Vide order dated 28.04.2023 passed in W.P. (Crl.) No. 166/2023, criminal proceedings in three such FIRs instituted by borrowers in different States, namely FIR No. 646/2022 dated 26.10.2022 registered at P.S. Titagarh, FIR No. 427/2023 dated 09.04.2023 registered at P.S. Indirapuram and FIR No. 25/2021 dated 27.01.2021 registered at P.S. EOW, Delhi were stayed.
5. Further FIR No. 197/2023 dated 15.04.2023 was filed by YEIDA at PS Beta-2, Greater Noida, UP, which also refers to the aforesaid FIR No. 427/2023 dated 09.04.2023 registered at P.S. Indirapuram with some overlapping facts. It is stated that on the basis of these two connected FIRs namely FIR No. 427/2023 and 197/2023, now the ED has registered ECIR bearing No. ECIR/HIU-I/06/2023 in Delhi. The petitioners have now challenged the said FIRs and ECIR.
6. In the circumstances, as it may also involve adjudication on facts, we deem it appropriate to permit the petitioners to approach the respective jurisdictional High Courts to challenge all four FIRs and the ECIR within two weeks from today, with a request to the respective High Courts to consider and decide the petitions expeditiously, not later than six months of their presentation.
7. We also direct DGPs of respective States to look into the matter, examine the contentions 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 28.04.2023 passed in W.P. (Crl.) No. 166/2023 would continue in the three FIRs mentioned therein.
9. In so far as the further FIR No. 197/2023 dated 15.04.2023 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
