2015 (5) TMI 47 - SC - Indian Laws

Supreme Court Quashes FIR Against Bank Officials, Emphasizes Judicial Scrutiny

Mrs. Priyanka Srivastava and Another Versus State of UP. and Others

Mrs. Priyanka Srivastava and Another Versus State of UP. and Others - (2015) 6 SCC 287 Issues Involved:1. Abuse of the judicial process by unscrupulous litigants.2. Application of Section 156(3) of the CrPC.3. Role and responsibility of Magistrates in issuing directions under Section 156(3) CrPC.4. Protection under Section 32 of the SARFAESI Act.5. Settlement agreements and their implications on ongoing legal proceedings.Detailed Analysis:1. Abuse of the Judicial Process by Unscrupulous Litigants:The Supreme Court highlighted a disturbing scenario where litigants misuse the judicial system to harass statutory authorities. The Court noted that such litigants ingeniously design their complaints to create mental pressure on officials, compelling financial institutions to accept 'one-time settlements.' The case at hand involved a borrower who, after defaulting on a housing loan, filed multiple criminal complaints against bank officials to create pressure for a favorable settlement. This behavior was termed as 'potentially dangerous' and 'sad and unfortunate.'2. Application of Section 156(3) of the CrPC:The borrower filed a series of criminal complaints under Section 156(3) CrPC, leading to the registration of FIRs against bank officials. The Supreme Court emphasized that the power under Section 156(3) CrPC should not be invoked casually. The Court stated that applications under this section should be supported by an affidavit to ensure the applicant's responsibility and to prevent misuse. The Magistrate must apply judicial mind before issuing directions for investigation under this section.3. Role and Responsibility of Magistrates in Issuing Directions under Section 156(3) CrPC:The Supreme Court criticized the Magistrate for issuing directions to register FIRs without proper application of mind. The Court reiterated that the Magistrate must remain vigilant regarding the allegations and ensure that sending the matter for investigation is conducive to justice. The Court referred to several precedents, including *Devarapalli Lakshminarayana Reddy v. V. Narayana Reddy* and *Anil Kumar v. M.K. Aiyappa*, to underline the necessity of judicial scrutiny before invoking Section 156(3) CrPC.4. Protection under Section 32 of the SARFAESI Act:The Court pointed out that Section 32 of the SARFAESI Act provides protection to secured creditors and their officers for actions taken in good faith under the Act. The Magistrate should have considered this provision before directing the registration of FIRs against bank officials. The legislative intent behind this provision is to protect officials from legal proceedings arising out of their bona fide actions under the SARFAESI Act.5. Settlement Agreements and Their Implications on Ongoing Legal Proceedings:The borrower entered into a one-time settlement agreement with the financial institution, agreeing to withdraw various cases filed by him. However, he did not disclose the initiation of new complaint cases and did not withdraw the earlier complaints, demonstrating a lack of bona fides. The Supreme Court noted that such behavior undermines the settlement process and reflects a perverse attitude aimed at harassing the financial institution and its officials.Conclusion:The Supreme Court allowed the appeal, set aside the High Court's order, and quashed the FIR registered against the bank officials. The Court directed that a copy of the judgment be circulated among Magistrates to ensure vigilance and diligence while exercising power under Section 156(3) CrPC. The judgment underscores the importance of judicial scrutiny and the need to prevent the misuse of legal provisions by unscrupulous litigants.