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2024 Supreme(AP) 1206
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
K. MANMADHA RAO, J.
H.R. Agnihotri and Ors. – Appellants
Versus
The Honble II Addl Judicial First Class Magistrate and Ors. – Respondents
Writ Petition No. 2746 of 2016
Decided On : 18-06-2024
Advocate Appeared:
For the Appellant : C. Subodh
For the Respondents: G. Ronald Raju, A. Jacuv Uppal and Venkateswarlu Posani
IMPORTANT POINT
The court ruled that actions taken in good faith under the SARFAESI Act are protected from prosecution, leading to the quashing of the lower court's order.
Headnote:
(A) Constitution of India - Article 226 - Writ of Certiorari - Petition filed to quash the order dated 01.07.2015 passed by the II Additional Judicial Magistrate of I Class, Eluru - The petitioners contended that the prosecution was illegal as per Section 32 of the SARFAESI Act, which prohibits prosecution for actions taken in good faith under the Act. (Paras 4, 12)
(B) Legal Principles - The court emphasized that a writ of certiorari is issued for correcting errors of jurisdiction and does not review findings of fact reached by inferior courts. (Paras 8, 12)
Facts of the case:
The petitioners were accused of defamation due to a demand notice published under the SARFAESI Act, which mistakenly included the property of the 2nd respondent. The petitioners claimed the action was taken in good faith and apologized for the error.
Findings of Court:
The court found that the petitioners acted in good faith and that the prosecution was barred under Section 32 of the SARFAESI Act.
Issues: The main issue was whether the prosecution against the petitioners was maintainable given the provisions of the SARFAESI Act.
Ratio Decidendi: The court ruled that the petitioners' actions fell under the protection of Section 32 of the SARFAESI Act, thus quashing the lower court's order.
Result: Writ Petition allowed, order dated 01.07.2015 quashed.
ORDER :
Dr. K. Manmadha Rao, J.
1. This petition is filed under Article 226 of the Constitution of India for the following relief:-
"to issue an order direction or writ more particularly one in the nature of Writ of Certiorari calling for the records in C.C.No.1033 of 2015 from the file of the Hon'ble II Additional Judicial Magistrate of I Class, Eluru, West Godavari District and to quash the Order dated 01.07.2015 as illegal and void and to pass such other order or orders……."
2. The precise case of the petitioners is that the 2nd respondent filed a complaint dated 07.05.2005 vide S.R.No.5398 of 2012 before the 1st respondent against the petitioners alleging the commission of offence under Section 500 read with Section 34 of IPC, stating that the authorized officer of the Bank of Maharashtra, Sultan Branch published a Demand Notice dated 05.10.2011 under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (in short 'SARFAESI Act)with regard to the property bearing D.No.22-5-20 near RTC Bus Stand, Narasimharaopet, Eluru for recovery of debt due from the 3rd respondent company. The 1st respondent passed the impugned order dated 01.07.2015 that the record prima facie discloses offence against the A1 to A11 for the offence under Section 500 read with 34 IPC. Hence case is taken on file against them and issued summon to them, which is illegal and arbitrary. Hence, the present writ petition came to be filed.
3. Heard Mr. C. Subhodh, learned counsel for the petitioners; Mr. Posani Venkateswarlu, learned counsel for the 1st respondent and Ms. Amulya, learned counsel, representing Mr. G. Ronald Raju, learned counsel for the 2nd respondent appeared virtually.
4. During hearing learned counsel for the petitioners reiterated the contents urged in the writ affidavit and mainly contended that the Bank of Maharashtra, Sultan Bazar Branch, Hyderabad, proceeded to recover the debt in good faith after following due procedures laid down under Section 32 of the SARFAESI Act prohibits the prosecution of the petitioners or its officers for the action taken in respect of recovery the debt under the Act and reiterated the Section 32 of the SARFAESI Act, which reproduced hereunder:
"Section 32 :- No suit, prosecution or other legal proceedings shall lie against any secured creditor or any of his officers or Manager exercising any of the rights of the secured or borrower for anything done or omitted to be done in good faith under this Act."
5. Therefore, the action of the respondents in proceeding with the prosecution of the petitioners in C.C.No.1033 of 2015 is nothing but arbitrary, illegal and violative of Article 14, 191(g) of the Constitution of India.
6. Per contra, the 2nd respondent filed counter-affidavit, denying all material averments made in the writ affidavit and mainly contended that this respondent is not a borrower and he never incurred any debt due to the bank and he never committed any default. There is no financial asset and his property never comes under the category of NPA and same is not a secured asset and the bank is not a secured creditor to the 2nd respondent. The 2nd respondent never entered into any security agreement with the petitioners' bank. The petitioners are responsible for the commissions and omissions committed by the Bank of Maharashtra and its employees, as all the transactions of the Bank of Maharashtra or directly under the control of the petitioners. The petitioners in furtherance of their common intention and criminal conspiracy to defame the 2nd respondent in the eye of public and published a demand notice on 19.10.2011 in Andhra Jyothi Telugu News Paper through the 1st petitioner by invoking the provisions of SARFAESI Act, wherein the property of the 2nd respondent shown i.e 8073 Sq.ft., in T.S.No.57, Ward No.3, bearing D.No.22-5-20, near RTC Bus Stand, Narasimharaopet, Eluru along with the Apartment under construction and flats therein etc., as und
