Property pledged as loan security allegedly undervalued and sold receives interim protection from HC

The Allahabad HC granted interim protection to petitioners in a case involving property pledged as loan security that was allegedly undervalued and sold. The matter arose from financial institutions pursuing debt recovery proceedings. Despite the Additional Advocate General's argument that petitioners wouldn't be arrested and proceedings would follow Apex Court directions in Niraj Tyagi case, the court found it appropriate to grant broader interim protection beyond arrest protection. The petition was listed before the Division Bench for further orders, with the court determining this was a suitable case for interim relief given the nature of the financial dispute.

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Issues Involved:
1. Quashing of the First Information Report (FIR).
2. Interim protection from arrest and coercive steps.
3. Stay on investigation and consequential actions.
4. Costs of the writ petition.

Summary:

1. Quashing of the First Information Report (FIR):
The petitioners sought to quash the FIR dated 22.07.2023, registered as Case Crime No. 611 of 2023 under Sections 420 and 120-B IPC and Section 82 of the Registration Act, 1908, at Police Station Kavi Nagar, Ghaziabad. The FIR was filed by the informant alleging illegal sale and undervaluation of property, resulting in financial loss to the state. The petitioners argued that the FIR was part of a civil dispute related to loan transactions and property auctions, and multiple FIRs were being filed for the same loan transaction involving different properties.

2. Interim Protection from Arrest and Coercive Steps:
The petitioners requested interim protection from arrest and any coercive steps until the next date of listing. One judge granted interim protection based on the Supreme Court's interim protection in a similar case, while the other judge denied it, stating that arrest was not essential under Section 41-A Cr.P.C. and that the state should be given time to respond.

3. Stay on Investigation and Consequential Actions:
The petitioners sought a stay on all investigations and consequential actions arising from the FIR. The judge who granted interim protection extended it to the petitioners, citing the Supreme Court's order and a similar interim order by the High Court in another case. The other judge did not find a prima facie case for interim protection without responses from the informant and the state.

4. Costs of the Writ Petition:
The petitioners requested the court to award the costs of the writ petition.

Separate Judgments:
The two judges delivered separate judgments. One judge granted interim protection, citing the Supreme Court's interim protection in a similar case and a High Court order. The other judge denied interim protection, emphasizing the need for state response and the non-essential nature of arrest under Section 41-A Cr.P.C. The matter was referred to the Chief Justice for nomination of a bench to resolve the difference of opinion.

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