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2024 Supreme(Online)(SC) 9837
SUPREME COURT OF INDIA
GAGAN BANGA – Appellant
Versus
THE STATE OF WEST BENGAL – Respondent
MA-001861 - 2023
The court affirmed the necessity of protecting financial institutions from frivolous criminal proceedings initiated by defaulting borrowers, ensuring adherence to natural justice principles.
Headnote:
Writ - Criminal Proceedings - Article 32 - The court addressed the misuse of criminal proceedings against financial institutions by disgruntled borrowers, emphasizing the need for guidelines to protect fundamental rights under Articles 14, 19, and 21 of the Constitution.
Fact of the Case:
The writ petitioners sought to quash multiple FIRs filed against them by defaulting borrowers, alleging abuse of process of law. They requested guidelines to prevent criminal proceedings against financial institutions in such disputes.
Finding of the Court:
The court allowed the writ petitioners to approach the High Courts for quashing the FIRs and provided interim protection against coercive actions until the High Courts decided the matters on their merits.
Issues: Whether the FIRs filed against the financial institutions constituted an abuse of process of law and if the court's earlier order required modification.
Ratio Decidendi: The court emphasized the importance of hearing all parties before passing adverse orders and recognized its inherent power to rectify mistakes in its judgments.
Final Decision: The court modified its earlier order, allowing the High Courts to consider the FIRs without being influenced by previous observations.
J U D G M E N T
SANJAY KUMAR, J
1. Writ Petition (Crl.) No. 166 of 2023 was filed by Gagan Banga and Indiabulls Housing Finance Limited, New Delhi, under
‘In the facts and circumstances of the instant case, it is, therefore, most respectfully prayed that this Hon’ble Court may graciously be pleased to:
i. Issue a writ, order or direction in the nature of mandamus or any other appropriate writ or order thereby laying down appropriate guidelines to be followed by all including the police officials and Judicial Magistrate to desist from initiating or directing initiation of criminal proceedings against the financial institutions, its assignees, management, officers, employees, lawful transferees and purchasers of secured assets at the behest of disgruntled defaulting borrowers, so as to protect their fundamental rights inter alia guaranteed under
ii. Issue a writ, order or direction in the nature of certiorari or any other appropriate writ or order thereby quashing the FIR’s mentioned at Table 1 above registered by or at the instance of disgruntled defaulting borrowers in abuses of process of law by giving criminal colour to civil dispute, with consequential reliefs;
iii. Impose exemplary costs on the Respondents for abusing the process of law;
iv. Pass any other other(s) as this Hon’ble Court may deem fit and proper.’
2. Table 1, referred to in prayer ii above, was set out in paragraph 5 of the writ petition and mentioned 3 FIRs, viz., FIR No. 646 of 2022 dated 26.10.2022 registered at PS Titagarh, West Bengal; FIR No. 427 of 2023 dated 09.04.2023 registered at PS Indirapuram, Ghaziabad, Uttar Pradesh; and FIR No. 25 of 2021 dated 27.01.2021 registered at PS Economic Offences Wing, Delhi.
3. By interim order dated 28.04.2023, this Court granted stay of all proceedings pursuant to the impugned FIRs in three different States.
4. Thereafter, on 03.07.2023, the writ petitioners filed three I.A.s in the writ petition. I.A. No. 122408 of 2023 was filed by them seeking to implead Yamuna Industrial Development Authority (YIDA), Greater Noida, Uttar Pradesh, and the Enforcement Directorate, New Delhi, as respondent Nos. 7 and 8 in the writ petition. They stated that FIR No. 197 of 2023 dated 15.04.2023 was registered at PS Bita-2, Greater Noida, Uttar Pradesh, at the behest of YIDA and then, the Enforcement Directorate, New Delhi, registered ECIR No. ECIR/HIU-1/06/2023 based on the said FIR and the earlier FIR No. 427 dated 09.04.2023. By way of I.A. No. 122410 of 2023, they sought stay of further proceedings pursuant to FIR No. 197 of 2023 and ECIR No. ECIR/HIU-I/06/2023. I.A. No. 122413 of 2023 was filed by them seeking to bring on record additional facts and include an additional prayer to quash FIR No. 197 of 2023 dated 15.04.2023 and ECIR No. ECIR/HIU-1/06/2023 in so far as they were concerned.
5. The writ petition was taken up for hearing on 04.07.2023 and disposed of with directions. The final order records that the IAs for im00.pleadment and to bring on record additional facts were both allowed. Taking note of the facts of the case, this Court deemed it appropriate to permit the writ petitioners to approach the jurisdictional High Courts to challenge all four FIRs and the ECIR within two weeks, requesting the High Courts to consider and decide the petitions expeditiously and not later than six months from the date of their presentation. Till the final disposal of the respective petitions, the earlier interim order dated 28.04.2023 passed in the writ petition in respect of the first three FIRs was directed to continue.
6. As regards FIR No. 197 of 2023 and ECIR No. ECIR/HIU-I/06/2023, this Court directed that no coercive steps should be taken against the petitioner financial institution and its officers, representatives and managers till the final disposal of such petitions by the High Court and left it open to
