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IN THE HIGH COURT AT CALCUTTA
SHAMPA DUTT (PAUL), J.
Bank of Baroda & Ors. – Petitioners
Versus
M/s Jainex Metalliks Ltd. – Opp. Parties
CRR 2787 of 2019 With CRAN 1 of 2019 (Old No. CRAN 4647 of 2019)
Decided On : 10-05-2024
Quashing - Criminal Proceedings - IPC Sections 120B, 403, 409, 418, 420, 380, 500, 384, 511 - The court emphasized that the SARFAESI Act provides a complete framework for recovery and that criminal proceedings initiated against bank officials for lawful actions are an abuse of process.
Fact of the Case:
The petitioners, a nationalized bank and its officers, sought to quash a complaint alleging various IPC offenses related to the denial of credit facilities to a borrower, who had defaulted on payments and initiated criminal proceedings as a counter to the bank's recovery actions.
Finding of the Court:
The court found that the complaint was an abuse of process, as the bank officials acted within their legal rights under the SARFAESI Act, and the allegations did not constitute any offense under the IPC.
Issues: Whether the criminal proceedings against the bank and its officials were maintainable given the actions taken under the SARFAESI Act and the nature of the allegations made.
Ratio Decidendi: The court held that the SARFAESI Act is a complete code for recovery, and criminal proceedings cannot be initiated against bank officials for actions taken in accordance with the law.
Result: The court quashed the criminal proceedings against the petitioners.
JUDGMENT :
(Shampa Dutt (Paul), J.) :
1. In the instant criminal revisional application, the petitioners have prayed for quashing of the proceedings in Complaint Case No. CS/21374 of 2019 under Sections 120B /403 /409 /418 /420 /380 /500 /384 /511 of the Indian Penal Code, pending before the Court of the Learned 19th Metropolitan Magistrate, Calcutta.
2. The petitioners’ case is that:-
(b) The petitioner nos. 2 to 6 are the officers of the Petitioner no. 1 Bank. Petitioner No. 7 is the Managing Director of Bank of Baroda and having his office at Mumbai.
(c) That the opposite party being the borrower of petitioner no.1 filed a Complaint Case No. CS/21374 of 2019 alleging commission of offence punishable under Sections 120B/403/409/418/420/380/500/384/511 of the Indian Penal Code.
3. The allegations made in the petition of complaint is that the petitioner no. 1 Bank of Baroda did not grant credit facility to the opposite party. The prayer of the opposite party for enhancement of the existing credit facilities was also not granted for which the opposite party had allegedly suffered loss. The opposite party has termed such action of officers of the petitioner no.1 as mala fide, arbitrary, illegal and product of conspiracy.
4. The petitioners further state that the borrower opposite party failed and neglected to pay the outstanding dues of the petitioner bank in spite of repeated reminders and persuasion for which the petitioner bank served notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short ‘SARFAESI Act’) and Security Interest (Enforcement) Rules, 2002 and a demand notice was also served upon the opposite party requesting them to repay the outstanding dues within a certain period.
5. Ultimately the borrower opposite party and/or guarantor/s failed to pay the outstanding dues of the petitioner bank in response to the said notice under Section 13(2) of the SARFAESI Act and the petitioner bank without having any further option left initiated SARFAESI action against the borrower opposite party and their guarantor/s. Pursuant thereto possession of the secured asset was taken in terms of the SARFAESI Act.
6. The opposite party field an application under Section 17(1) of the SARFAESI Act before the Learned Debts Recovery Tribunal-I, Kolkata and the said application was numbered as S.A. No. 33 of 2016.
7. During pendency of the said S.A. No. 33 of 2016, the opposite party filed the instant petition of complaint alleging commission of offence as stated hereinabove. The petitioner bank and its officers challenged the said initiation of the complaint case by filing the instant application.
8. During pendency of the instant revisional application, the said S.A. No. 33 of 2016 was dismissed by the judgment and order dated 16th December, 2019 by the Learned Debts Recovery Tribunal – I, Kolkata. Copy of the said order was brought on record before this Hon’ble Court by way of a supplementary affidavit.
9. The opposite party filed an appeal against the said judgment and/or order dated 16th December, 2019 before the Hon’ble Debts Recovery Appellate Tribunal which is still pending.
10. The petitioners have relied upon the judgment in K. Virupaksha & Anr. Vs The State of Karnataka & Anr., reported in 2020 (4) SCC 440.
Compensation claims against banks for theft during possession must be addressed in civil court, as writ jurisdiction is barred by SARFAESI Act.
The court quashed proceedings under Section 340 CrPC, ruling that allegations of forgery lacked merit and constituted an abuse of process due to pending appeal in Debt Recovery Appellate Tribunal.
The jurisdiction of the civil court is excluded in matters related to the classification of loan accounts as NPA under the SARFAESI Act.
The SARFAESI Act provides a complete legal framework for secured creditors, ensuring that their actions are protected when conducted in good faith, and establishes that criminal proceedings cannot be....
Civil Courts have jurisdiction in SARFAESI Act matters only when the secured creditor has not initiated actions under the Act. Limitation laws apply strictly to such actions.
The main legal point established in the judgment is that the protection provided under Section 32 of the SARFAESI Act, 2002 can be invoked to quash criminal proceedings when the actions are taken in ....
The jurisdiction of a civil court is not barred under the relevant debt enforcement act where the dispute relates to the fundamental nature of the security interest or mortgage, as such matters do no....
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