SC Halts Misuse of Criminal Cases Against Banks, Orders Fast-Track Resolution in Debt Recovery Disputes.

The SC addressed the misuse of criminal proceedings against financial institutions to obstruct debt recovery. It stayed proceedings in multiple FIRs and allowed petitioners to challenge FIRs and an ECIR in the respective HCs within two weeks, with expedited decisions mandated within six months. The DGPs were instructed to review the petitioners' claims and act within a month. Interim orders staying certain FIRs remain until final resolution. No coercive actions are permitted against the financial institution pending HC decisions, with all legal arguments preserved for HC consideration. All related petitions and applications were disposed of.

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Issues involved: Trend of initiating mala fide criminal proceedings against financial institutions/lenders and their officers, abuse of criminal process to scuttle recovery proceedings, quashing of criminal proceedings in civil financial disputes, challenge to FIRs and ECIR.

Summary:
The Supreme Court addressed the issue of a trend where mala fide criminal proceedings were being initiated against financial institutions/lenders and their officers to impede recovery proceedings or force settlements of debts, circumventing statutory remedies like SARFAESI. Referring to past judgments, the Court emphasized the detrimental impact of such actions on the economic health of the nation. In a specific case, criminal proceedings in multiple FIRs were stayed, and a new FIR and ECIR were challenged. The Court allowed the petitioners to approach the respective High Courts within two weeks to challenge all FIRs and the ECIR, with a directive for expedited decisions within six months. The DGPs of respective States were directed to examine the contentions of the petitioners and take appropriate measures within one month. The interim order staying proceedings in certain FIRs was to continue until final disposal. For the new FIR and ECIR, no coercive steps were to be taken against the petitioner financial institution and its officers pending the High Court's decision, with the option to seek a stay of proceedings. The Court kept all legal contentions open for the parties to raise before the High Court, emphasizing that decisions should be made on their own merits and in accordance with the law. Consequently, all petitions, including contempt petitions and pending applications, were disposed of.

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