Case Note & Summary
The Supreme Court allowed the appeal filed by K. Virupaksha and another, who were Deputy General Managers of Canara Bank, against the order of the Karnataka High Court dismissing their petition under Section 482 CrPC seeking quashing of FIR No. 152/2016 registered for offences under Sections 511, 109, 34, 120B, 406, 409, 420, 405, 417 and 426 IPC. The dispute arose from a loan of Rs. 2.68 crores sanctioned to the complainant on 16.03.2009, secured by a property. The account was declared NPA on 15.01.2013, and the bank initiated recovery under the SARFAESI Act, taking possession on 22.03.2013 and auctioning the property on 31.01.2014 after two failed auctions. The complainant challenged the auction through writ petitions and appeals, all of which were dismissed, and also approached the DRT and DRAT, which were also dismissed. Thereafter, the complainant filed a criminal complaint under Section 200 CrPC alleging conspiracy and undervaluation, leading to the Magistrate ordering investigation under Section 156(3) CrPC. The appellants sought quashing of the FIR, which was dismissed by the High Court. The Supreme Court held that the dispute was essentially civil in nature, arising from a loan transaction and recovery under SARFAESI Act, and the complainant had already availed and failed in civil remedies. The court noted that the allegations did not disclose any criminal intent or offence, and the actions of the bank officers were in discharge of their official duties. The court emphasized that civil disputes cannot be converted into criminal cases to harass the opposite party. The court quashed the FIR and all proceedings arising from it, allowing the appeal.
Headnote
A) Criminal Law - Quashing of FIR - Section 482 CrPC - Abuse of Process - Criminal proceedings initiated against bank officers for actions under SARFAESI Act for loan recovery - Complainant had availed and failed in civil remedies under SARFAESI Act - Held that the dispute is essentially civil in nature and cannot be converted into a criminal case to harass the appellants - FIR quashed (Paras 10-15). B) Criminal Law - Ingredients of Offence - Sections 406, 409, 420, 405, 417, 426, 511, 109, 34, 120B IPC - Criminal Breach of Trust, Cheating, Criminal Conspiracy - Allegations of undervaluation and non-disbursement of loan - No criminal intent established - Actions were in discharge of official duties under SARFAESI Act - Held that the essential ingredients of the alleged offences are not made out (Paras 11-14). C) Criminal Law - Investigation - Section 156(3) CrPC - Order for Investigation - Magistrate's order directing investigation under Section 156(3) CrPC without application of mind - Complaint did not disclose any criminal offence - Held that the order was mechanical and liable to be set aside (Paras 5, 15).
Issue of Consideration
Whether criminal proceedings initiated against bank officers for actions taken under the SARFAESI Act for recovery of loan can be quashed under Section 482 CrPC when the dispute is essentially civil in nature and the complainant has availed and failed in civil remedies.
Final Decision
The Supreme Court allowed the appeal, set aside the order of the High Court, and quashed FIR No. 152/2016 registered at Hubballi Sub-Urban Police Station and all proceedings arising from it.
Law Points
- Criminal proceedings cannot be initiated for acts done in discharge of official duties under SARFAESI Act
- Civil disputes cannot be converted into criminal cases
- Quashing under Section 482 CrPC is warranted when allegations are civil in nature
