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2020 Supreme(Mad) 1783
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. Pongiappan, J.
Santhosam & Another – Petitioner
Versus
State rep. by the Inspector of Police, Central Crime Branch, Chennai & Another – Respondents
Crl.O.P. No. 18185 of 2019 & Crl.M.P. Nos. 9222 & 12047 of 2019
Decided On : 22-12-2020
Advocate Appeared:
For the Petitioner:R. Vivekananthan, Advocate.
For the Respondent:S. Karthikeyan, Additional Public Prosecutor, K. Jayasudha, Advocate.
The judgment established that mere default in loan repayment does not necessarily constitute criminal breach of trust or cheating under Sections 406 and 420 of IPC.
Headnote:
SARFAESI - Loan Transaction - Sections 406, 420 of IPC - [Sathishchandra Ratanlal Shah Vs. State of Gujarat and Another, 2019 (9) SCC (Civil) 148; Arun Bhandari Vs. State of Uttar Pradesh and Others, 2013 (2) SCC 801; CBI Vs. Duncans Agro Industries Limited, 1996 (5) SCC 591]
Fact of the Case:
The petitioners, proprietors of a ladies hostel, obtained a loan from a finance company to purchase a property. Subsequently, the finance company initiated SARFAESI proceedings due to default in loan repayment, leading to the registration of a case against the petitioners for offenses under Sections 406 and 420 of IPC.
Finding of the Court:
The court found that the allegations did not constitute the necessary ingredients for the offenses under Sections 406 and 420 of IPC. The court relied on legal precedents to establish that the petitioners' actions did not amount to criminal breach of trust or cheating.
Issues: Whether the allegations against the petitioners constituted offenses under Sections 406 and 420 of IPC.
Ratio Decidendi: The court applied legal principles from relevant judgments to determine that the petitioners' actions did not fulfill the essential elements of the alleged offenses.
Final Decision: The Criminal Original Petition was allowed, and the FIR registered against the petitioners was quashed.
JUDGMENT :
(Prayer: Petition filed under Section 482 Cr.P.C., to call for the records in Cr.No.85 of 2019 on the file of the respondent police and quash the same as against the petitioners.)
1. This Criminal Original Petition has been filed to call for the records in Cr.No.85 of 2019, on the file of the respondent police and to quash the same, as against the petitioners.
2. Heard Mr.R.Vivekananthan, learned counsel appearing for the petitioners, Mr.S.Karthikeyan, learned Additional Public Prosecutor appearing for the 1st respondent police and Mrs.K.Jayasudha, learned counsel appearing for the 2nd respondent Finance Company and perused the materials available on record.
3. The case of the prosecution is that the petitioners, who are arrayed as 1st and 2nd accused, in Cr.No.85 of 2019, are the Proprietors of M/s. Nissi Ladies Hostel, running at Old No.78/104, New No.104, Lattice Bridge Road, Adyar, Chennai. In the Month of February 2017, the petitioners/1st and 2nd accused approached the 2nd respondent Finance Company and submitted a Housing Loan Application in respect to purchase of a property situated at Old No.78/104, New No.104, Lattice Bridge Road, Adyar, comprised in S.No.1078/93, Town Survey No.7/1, Block No.18, Pallipatti Village, Mylapore-Triplicane Taluk. The said loan application has been submitted for a loan amount of Rs.9,30,00,000/-.
4. After considering the financial capacities of the petitioners, the office bearers of the 2nd respondent company sanctioned the loan amount. In the mean time, the office bearers of the 2nd respondent company inspected the property and had reliably learnt that the ground floor of the property was occupied by one Mr.S.K.A.Abdul Khader and his family members, who are alleged to have been carrying their family business, under the name and style of M/s.Rassi Glass and Timber. Apart from the ground floor, rest of the portion, is occupied by the petitioners and they were running the Hostel i.e., M/s.Nissi Ladies Hostel.
5. Further, during the time of property inspection, the officers of the 2nd respondent company reliably learnt that the owner of the said premises is Mrs.G.Vijayalakshmi and others. After inspection, the loan amount of Rs.9,30,00,000/- was sanctioned to the petitioners/1st and 2nd accused, repayable within a period of 127 months. Thereby on 30.03.2017, the petitioners/1st and 2nd accused entered into a sale agreement in respect of the abovesaid property owned by Mrs.G.Vijayalakshmi and others.
6. In turn, by virtue of the sale agreement, on 12.04.2017, the said property has been purchased by the petitioners for a sale consideration of Rs.9,30,00,000/- and the sale was registered at Sub Registrar’s office, Adyar. Consequentially, the petitioners executed a mortgage deed and Memorandum of deposit of title deeds, in favour of the 2nd respondent Finance Company.
7. In the said situation, on 12.12.2018, the 2nd respondent company have been served with an impleading notice issued by one Mrs.N.H.Rahima, D/o.Mr.S.K.A.Abdul Kader. In turn, on verification, the 2nd respondent company came to know that a suit is pending between the family members of Mr.S.K.A.Abdul Kader, who are the tenants in the petition mentioned property.
8. Thereafter only in the said circumstances, the 2nd respondent Finance Company lodged a complaint, based on which, a case has been registered against the petitioners in Crime No.85 of 2019, for offence under Sections 406 and 420 r/w 34 of IPC.
9. The learned counsel appearing for the petitioners would contend that in respect to the loan transaction, had between the petitioners and the 2nd respondent, already the 2nd respondent initiated a SARFAESI proceedings and as of now, the symbolic possession is with the 2nd respondent Finance Company.
10. More than that, after availing the loan, till June 2018, the petitioners repaid the instalments without any default. Only due to the inability, now the petitioners have not paid the instalments and therefore, the same is not an offe
