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2023 Supreme(AP) 438
ANDHRA PRADESH HIGH COURT AT AMARAVATI
Prashant Kumar Mishra, CJ.
Indian Bank, Alamuru – Appellant
Versus
Nekkanti Veerraju – Respondent
Criminal Petition No. 9962 of 2014
Decided On : 03-03-2023
Sreedhar Valiveti, Advocate, Mangena Sree Rama Rao, Advocate
A loan transaction is a civil transaction, and allowing prosecution of bank officials for obtaining signatures of the borrower on blank forms would set a wrong trend of misuse of criminal law.
Headnote:
CRIMINAL PROCEDURE CODE - QUASHING OF FIR - SECTION 482 - FIR QUASHED - ABUSE OF PROCESS OF LAW - LOAN TRANSACTION - CIVIL DISPUTE - SARFAESI ACT PROCEEDINGS PENDING - NO CRIMINAL LIABILITY - FORGERY - INVESTIGATION STAYED.
Fact of the Case:
The complainant approached the bank for a building loan of Rs.50 lakh in 2005. The bank agreed and demanded a guarantee in the shape of property and person. The complainant agreed and produced the required documents. He signed numerous documents without verifying them, relying on the bank officials' instructions. Accused No.1 opened false accounts in the name of the complainant and others and created a guarantee by the complainant, misleading him into believing it was necessary for the loan. The complainant later learned that the Rs.2 lakh he paid to accused No.1 was used for personal use and that he never received a loan for house construction. He approached another financial institution for a loan, but the bank had initiated proceedings under the SARFAESI Act, dissuading the institution from granting the loan. The complainant filed a complaint under Sections 190 and 200 Cr.P.C., alleging offenses under Sections 393, 409, 420, 468, 471, and 477-A read with Section 34 IPC. The Magistrate sought a report under Section 156(3) Cr.P.C., leading to the registration of an FIR.
Finding of the Court:
The court held that the allegations in the complaint did not disclose any criminal offense and that the case was a purely civil dispute. Allowing the police investigation to continue would amount to an abuse of the process of court. The court also noted that proceedings under the SARFAESI Act had already been initiated in September 2009 and that the entire transaction was subject to scrutiny by the authorities under the Act. If any forgery was committed by the accused, it would be revealed in the SARFAESI Act proceedings, and the competent authority could direct the lodging of an FIR.
Issues: Whether the FIR should be quashed as an abuse of process of law.
Ratio Decidendi: The court relied on the principles laid down by the Hon'ble Supreme Court in Kapil Agarwal and others v. Sanjay Sharma and others and Uma Shankar Gopalika v. State of Bihar. The court held that the complaint did not disclose any criminal offense and that the case was a purely civil dispute. Allowing the police investigation to continue would amount to an abuse of the process of court. The court also noted that proceedings under the SARFAESI Act had already been initiated and that the entire transaction was subject to scrutiny by the authorities under the Act.
Final Decision: The court quashed FIR No. 114 of 2014 dated 19.07.2014 on the file of the Station House Officer, Alamuru Police Station, East Godavari District, against petitioners/accused Nos.2 to 4.
JUDGMENT
Prashant Kumar Mishra, Cj. - This petition, under Section 482 of Cr.P.C., would seek quashing of FIR No.114 of 2014 dated 19.07.2014 on the file of the Station House Officer, Alamuru Police Station, East Godavari District, preceded by a criminal complaint in C.C (Sr.) No.1572 of 2014, on the file of the Judicial First Class Magistate, Alamuru, against petitioners/accused Nos.2 to 4.
2. The complainant/informant/respondent No.1-Nekkanti Veerraju filed a complaint under Sections 190 and 200 Cr.P.C., alleging commission of offences by the accused under Sections 393, 409, 420, 468, 471 and 477-A read with Section 34 IPC, on which the Magistrate concerned sought for a report under Section 156(3) Cr.P.C., whereafter Police concerned registered the subject FIR for the offences mentioned above.
3. It is alleged in the complaint that the accused persons including the present petitioners are officers of Indian Bank, a Nationalized Bank. The complainant approached the bank with a request to provide building loan for Rs.50 lakh in the year 2005; the bank agreed to sanction the loan and demanded to produce guarantee in the shape of property and person, to which the complainant agreed and produced L.2 and his four title deeds as detailed in the complaint. They put their signatures on number of documents without verifying the loan application and other documents merely on the dictates of the bank officials. Accused No.1 got opened false accounts in the name of L.W.3, L.W.8 and four others and also created guarantee by the complainant, which the complainant believed that they are required for building construction loan and, thus, he was misled by accused No.1. As the construction was in progress, the complainant needed more amount and requested the bank officials for the same, however, no amounts were given and instead the bank officials started pressurizing the complainant to repay the amount already disbursed to him. To the surprise of the complainant, he received information that Rs.2 lakh paid by him to accused No.1 has been utilized for his personal use and to his utter dismay, he was informed that he has never received loan for construction of house, but, it was shown to be 'KIRANA LOANS'.
4. It is further alleged that the complainant, thereafter, approached another financial institution - DHFL for sanction of loan, but, in the meanwhile, the accused-bank had initiated proceedings under the SARFAESI Act, as a result of which DHFL also got dissuaded from giving a loan to the complainant and, thus, reputation of the complainant was badly damaged.
5. Law is well settled as to when writ court would exercise power under Section 482 Cr.P.C. or under Article 226 of the Constitution of India; to quash an FIR or criminal proceeding when the same is an abuse of process of law and/or the same has been lodged only to harass the accused. Recently, the Hon'ble Supreme Court reiterated the principle in paragraph 18 of the judgment in Kapil Agarwal and others v. Sanjay Sharma and others - (2021) 5 SCC 524, which reads as under:
'However, at the same time, if it is found that the subsequent FIR is an abuse of process of law and/or the same has been lodged only to harass the accused, the same can be quashed in exercise of powers under Article 226 of the Constitution or in exercise of powers under Section 482 CrPC. In that case, the complaint case will proceed further in accordance with the provisions of the CrPC.'
6. In Uma Shankar Gopalika v. State of Bihar - (2005) 10 SCC 336, the Hon'ble Supreme Court held as under:
'In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-B IPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court an
