TaxTMI 
TaxTMI 
2025 (1) TMI 484
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.... Manish Goel, learned Additional Advocate General assisted by Sri Suresh Singh, Advocate, for the Yamuna Expressway Industrial Development Authority (YEIDA), Sri J. K. Upadhya, learned AGA for the State; Sri Sikandar B. Kochar as well as Sri Zoheb Hossain (through VC), learned Advocates for the Enforcement Directorate (ED); Sri Vinay Saran, learned Senior Advocate assisted by Sri Prashant Kumar, Sri Sarvesh Kumar Tiwari, Sri Saumitra Dwivedi and Sri Devesh Srivastava, Advocates for the complainant/intervener and Sri Syed Imran Ibrahim, learned Advocate for the private respondent. 2. These three writ petitions have been heard together and are being disposed of by this common judgment. Criminal Misc. Writ Petition No. 10893 of 2023 (Niraj Tyagi and another Vs. State of U.P. and 3 others) is taken as the lead case. These petitions alongwith Writ Petition Nos. 11837 of 2023 & 11838 of 2023 were placed before this Court pursuant to an order of nomination passed by the Hon'ble Chief Justice on 4.3.2024. The other two petitions i.e. Criminal Misc. Writ Petition Nos. 11837 of 2023 and 11838 of 2023 have been allowed by this Court on 15.4.2024 and the First Information Report, dated 22.7....
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....he challenge to the two FIRs as also the ECIR, impugned herein, is on the ground that no offences, as alleged therein are made out and the allegations made therein at best disclose existence of pure commercial and civil dispute between the parties, in respect of which initiation of criminal proceedings is nothing but an abuse of the process of law. The short question that arises for our consideration in the facts of the present case is as to whether lodging of the impugned FIRs and the consequential ECIR is an abuse of the criminal process? 8. In order to appreciate the controversy raised in these petitions narration of background facts would be necessary. Indiabulls Housing Finance Limited is a non-banking financial institution registered under the provisions of Indian Companies Act, 1956 (hereinafter referred to as 'Indiabulls'). It claims to be one of the largest premier housing finance company and is regulated by Reserve Bank of India. It is accorded 'AA' rating by CRISIL and ICRA. 'Indiabulls' is petitioner no. 2 in the leading writ petition no. 10893 of 2023, while petitioner no. 1 Niraj Tyagi is its President, Legal. 9. Indiabulls sanctioned loan facility of Rs. 2478 c....
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....18. It transpires that the borrowers failed to clear dues of Noida in respect of these two plots to the tune of Rs. 38 crores each, which swelled to Rs. 219 crores each, as of 31.7.2020. On account of this default the Noida Authority revoked its permission/NOC for creation of mortgage in favour of Indiabulls vide letters/orders dated 2nd & 4th September, 2020. 13. In terms of the loan agreement, Indiabulls issued a cure notice on 20.10.2020 calling upon the borrowers to cure the impaired security (mortgaged plot no. GH-1B & 1C, Sector 43, NOIDA) within 15 days of the notice. The borrowers apparently took no steps to regularize the impaired securities. Consequently, Indiabulls issued loan recall notices on 5.11.2020 and 15.12.2020, recalling the entire outstanding loan and demanded repayment of Rs. 1763.61 crores within 7 days from the receipt of notice. Notice was also issued by Indiabulls under Section 95 of the Insolvency and Bankruptcy Code, 2016 to the personal guarantor of loan agreements Mr. Mohit Singh. 14. On failure of borrowers to respond and clear the dues in terms of the notices issued as per loan agreements Indiabulls proceeded to issue loan recall notice to the ....
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....ithdrawn with liberty to approach the Debt Recovery Tribunal. The defaulter company has already approached the DRT, Lucknow where the matter is pending. Question as to whether the auction purchaser has exceeded its possession beyond the property transferred in auction purchase is also open for examination before the DRT, Lucknow. Such issues are otherwise civil in nature and cannot be allowed to be raised by lodging an First Information Report. Vague and unsubstantiated ancillary allegations made of encroachment, beyond the transferred secured asset, or alleged irregularity in conduct of auction etc. cannot be allowed to be raised by lodging an FIR and thereby vest jurisdiction in the police regarding civil issues which are required to be adjudicated exclusively by the DRT or the civil court. The tendency of the defaulter to invoke criminal proceedings for resisting coercive action under the SARFAESI Act has to be curbed. The Parliamentary vision of vesting exclusive jurisdiction in specialized tribunal viz DRT, in respect of banking transactions relating to loan, debt etc. has to be respected. Criminal proceedings cannot be pressed into action at the instance of defaulter to scutt....
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....e in proceedings under section 9 of the Act of 1996 under orders of the Supreme Court dated 06.05.2021. Learned Single Judge of Delhi High Court disposed of the application under Section 9 of the Act of 1996 vide judgment dated 20.5.2021. The Court prima facie concluded that element of default had occurred as the security in respect of the mortgaged properties was impaired. Learned Single Judge relied upon the statement made on behalf of Indiabulls that shares would be transferred in a fair and transparent manner and noted that Indiabulls has disclosed the purchaser and also the amount at which the sale is being done. Offer given by Indiabulls to the borrower to redeem the pledged shares on a payment of Rs. 900 crores and the inability to avail such offer by borrower was specifically noticed. The Court ultimately rejected section 9 petition after recording its prima facie findings in the matter. 21. Indiabulls and DLF in between had entered into an agreement on 20.4.2021 to sell pledged shares for a consideration of Rs. 900 crores. Rs. 750 crores was to be paid by DLF while Indiabulls had to infuse approximately Rs. 150 crores in Kadam so as to enable it to repay the loans of M/....
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....assed on 8.11.2021:- "116. In the facts of the present case, this Court is of the view that the balance of convenience lies in favour of DLF. DLF is a developer and intends to develop the Sale Property. The entire transaction between the parties as recorded in the ATS is premised on the basis that DLF would use the Sale Property for development of its real estate project. Insofar as Indiabulls is concerned, concededly, it is a money lender and its interest is essentially to recover the loans along with interest as claimed by it. Thus, as far as Indiabulls is concerned, it can always be compensated in terms of money. There is no dispute that Kadam is a part of the Shipra Group of entities and admittedly, had mortgaged the Sale Property with Indiabulls to secure the repayment obligations of the Borrowers. The Borrowers claim that Indiabulls had agreed to accept the consideration payable by DLF under the ATS as full and final settlement of its claims. Plainly, if Kadam and the Borrowers prevail in their case that the dues owed to Indiabulls were fully settled, they would stand discharged of their liability on Indiabulls receiving the consideration as provided under the ATS. H....
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....p Developer Private Limited. The transferee Company is the subsidiary company of M/s M3M India Private Limited (Petitioner No. 1 in Writ Petition No. 14053 of 2023). On 1.7.2023, M/s M3M India Private Limited has purchased the entire equity share holding of Kadam from Indiabulls. It is this part of the transaction which is the subject matter of the two FIRs under challenge in these petitions. 29. At this stage, we may note that the loan agreement pursuant to which 100% shares of Kadam were pledged in favour of Indiabulls contained an arbitration clause. This clause has already been invoked by the borrowers and various proceedings therein are already undertaken. Mr. Justice Vikramjit Sen, a retired Judge of the Supreme Court, has already been appointed an arbitrator in the matter. 30. In the arbitration proceedings instituted by M/s DLF Limited also Mr. Justice Vikramjit Sen has been appointed an arbitrator and the proceedings are pending before the learned arbitrator. The Arbitrator has already passed an order of status-quo in respect of the 73 acre mortgaged land of Kadam. These proceedings and the orders passed therein are, however, not referred to in the two FIRs or the co....
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....cuments have been forged to dupe M/s Shipra Group of its prime properties and that an appropriate report be lodged in the matter so as to unearth the fraud. 36. It is also alleged that the pledged shares of Kadam was agreed upon to be purchased by M/s DLF for Rs. 1250 crores but eventually it has been transferred to M/s Final Step Developer Private Limited for Rs. 900 crores only. The Mall belonging to Shipra Group has also been unauthorizedly encroached upon by Indiabulls. The FIR allegations further are that as against sanctioned loan of Rs. 1939 crores only Rs. 1256.6 crores has been paid to the borrower and Rs. 683 crore has not been disbursed to the borrower company despite the fact that Rs. 163 crore was paid till March, 2023 to Indiabulls. 37. The 2nd FIR is lodged by YEIDA in furtherance of the 1st FIR. The contents of the subsequent FIR is (i) that the transfer of shares of Kadam pledged with Indiabulls in favour of Creative Souls Technology India Private Limited was without the consent of YEIDA (the informant authority); (ii) non-payment of transfer charges has resulted in financial loss caused to the public authority to the extent of Rs. 200 crore; (iii) the conten....
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.... Writ Petition No. 14101 of 2023 contending that there are three basic allegations levelled in the FIR which are as under:- "(a) Finance company has disbursed only Rs. 866 instead of Rs. 1686 crore; (b) finance company has the fraudulent intention of grabbing the mortgaged property consisting of 73 acres of land situated at Sector 128 NOIDA in collusion with M/s M3M Private Limited as also grabbing the Shipra Mall situated at Ghaziabad; (c) Shipra Mall is being sold at an undervalued price." 42. The 1st FIR is challenged on the ground that it is an abuse of the process of law. It is urged that Mr. Amit Walia is the authorized signatory of borrower i.e. M/s Shipra Group, who had filed proceedings before the Delhi High Court, the arbitrator, the debt recovery tribunal and before the Supreme Court of India in respect of the grievances raised in the FIRs wherein the borrower M/s Shipra Group failed to obtain any relief but these facts have been withheld; the FIR does not disclose any criminal intent; the transactions are entirely fiscal in nature and no criminality is reflected; it is argued that sanction of loan, creation of mortgage and the manner in whi....
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....tional High Courts to challenge all four FIRs and the ECIR within two weeks from today, with a request to the respective High Courts to consider and decide the petitions expeditiously, not later than six months of their presentation. 7. We also direct the DGPs of respective States to look into the matter, examine the contentions of the petitioners in respect of the contents of FIRs, and to take appropriate measures in accordance with law within a period of one month. 8. Till final disposal of the respective petitions, interim order dated 28-4-2023 [Gagan Banga v. State of W.B., 2023 SCC OnLine SC 1814] passed in WP (Crl.) No. 166 of 2023 would continue in the three FIRs mentioned therein. 9. Insofar as the further FIR No. 197/2023 dated 15-4- 2023 filed by Yeida and ECIR bearing No. ECIR/HIU-I/06/2023 are concerned, no coercive steps would be taken against the petitioner financial institution and its officers, representatives and managers till final disposal of such petitions by the High Court, and it would be open for the petitioners to seek stay of proceedings which would be considered by the High Court on its own merits. It is clarified that this inter....
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....tay of proceedings in relation thereto, which was to be considered by the High Court on merits. In effect, though they stood protected from coercive action in relation to this FIR, proceedings pursuant thereto were permitted to go on and it was left open to them to seek stay of such proceedings before the High Court. Once, no coercive steps were permitted in connection with the said FIR till the final disposal of the petition which was to be filed, the question of permitting the petitioners to again seek stay of proceedings in relation to the said FIR before the High Court was unnecessary. 17. Further, the stay of proceedings granted by this Court in the writ petition, in relation to the first three FIRs, was directed to continue till the disposal of the writ petitions to be filed before the High Courts. When a party is relegated to the High Court to pursue its remedies, it would not be proper, in the normal course, to bind the said High Court with directions in relation to the proceedings to be impugned before such Court. Ordinarily, this Court would leave all issues open for the party so relegated to raise and pursue before the High Court. In Neeharika Infrastructure Pvt....
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....nd the consequential ECIR, under challenge in these writ petitions. In substance, allegations are that the borrowers needed funds for its housing and commercial projects. The Directors of Indiabulls came to the borrowers and offered to provide an amount of Rs. 1939 crores on rates below the market rate and extend assistance for other projects also provided six properties of borrower are mortgaged with it; market value of these mortgaged properties are about Rs. 6000 crores; intent of Indiabulls from the very beginning was not fair and it wanted to grab the properties of the borrower; by playing fraud Indiabulls wanted the borrower to be shown as defaulter and thereby grab its properties; Rs. 1686 crores were not released to the borrower, instead only Rs. 866.88 crores were credited to the account of borrower and immediately withdrawn and balance Rs. 820 crores were not credited to the account of borrower; false assurances were extended to the borrower by Indiabulls; loan recall notice was issued collusively by Indiabulls; an amount of Rs. 552.76 crores has been fraudulently embezzled by Indiabulls; loan amount as well as dues payable have been inflated contrary to the guidelines of....
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....e Act of 1996 and many other relevant facts which have a material bearing on the issue in question. 53. Shri Amit Walia who has filed the complaint is the authorized representative of the borrower and has instituted most of the proceedings before different forums, yet, he has concealed all previous proceedings in respect of the loan transactions in question. 54. Suppression and concealment of material facts by the borrower while instituting complaint before the Chief Judicial Magistrate cannot be viewed kindly. The effect of such misrepresentation would render the proceedings of borrower tainted. In a recent judgment of Kusha Duruka v. State of Odisha, (2024) 4 SCC 432, the Supreme Court of India emphasized the importance of disclosing correct facts before a court of law. Reliance was placed upon a previous judgment of the Court in K.D. Sharma Vs. Steel Authority of India and others, 2008 (12) SCC 481, wherein the Court observed as under in para 39:- "39. If the primary object as highlighted in Kensington Income Tax Commrs. [(1917) 1 KB 486 : 86 LJKB 257 : 116 LT 136 (CA)] is kept in mind, an applicant who does not come with candid facts and "clean breast" cannot hol....
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....eve anything except truth. Someone rightly said that:"Lies are very sweet, while truth is bitter, that's why most people prefer telling lies." 7. In a recent matter, this Court again came across a litigant who had tried to overreach the Court by concealing material facts in Saumya Chaurasia v. Enforcement Directorate [Saumya Chaurasia v. Enforcement Directorate, (2024) 6 SCC 401 : 2023 SCC OnLine SC 1674 : 2023 INSC 1073] . It was a case where the appellant before this Court had challenged the order [Saumya Chaurasia v. Directorate of Enforcement, 2023 SCC OnLine Chh 1907] passed by the High Court [ High Court of Chhattisgarh at Bilaspur in Miscellaneous Crl. Case No. 1258 of 2023] rejecting his bail application. He was accused of committing various crimes under the Penal Code, 1860 and the Prevention of Money-Laundering Act, 2002. His bail application was rejected by the High Court on 23-6-2023 [Saumya Chaurasia v. Directorate of Enforcement, 2023 SCC OnLine Chh 1907] . In the pleadings before this Court, it was mentioned that the High Court had committed gross error in not considering the charge-sheet dated 8-6-2023 and the cognizance order dated 16-6-2023, which cle....
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....e. Indiabulls from proceeding against the pledged property had not succeeded. The non-disclosure of material facts would lead to an inference that criminal proceedings are maliciously instituted with the intent to avoid repayment of availed loan facility; to secure leverage in pending Arbitration and other proceedings inter-se between the parties; coerce the lender i.e. Indiabulls to succumb to the terms dictated by the defaulter borrower. 57. The borrower, including M/s Shipra Leasing Pvt. Ltd. as well as Kadam and Shipra Estate Limited had already approached the Delhi High Court by invoking its jurisdiction under Section 9 of Act of 1996. The proceedings travelled upto the Hon'ble Supreme Court of India. On remand, the petition under Section 9 of the Act of 1996 came to be decided by an elaborate judgment of the learned Single Judge of the Delhi High Court on 20.05.2021. After noticing the background in which the controversy arose learned Single Judge noticed the contention of borrower in para 5.1 to para 5.19, which are reproduced hereinafter:- "5.1. The loan facility granted in favour of the Borrowers has been arbitrarily recalled by Indiabulls vide loan recall noti....
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....conduct itself is indicative of the fact that there is no Event of Default. As recently as 9th September, 2020, Indiabulls had issued a satisfaction letter certifying that the loan account of the Borrowers was standard and satisfactory. 5.4. The cure notice dated 5th November, 2020 was only with respect to property situated at GH-1B mortgaged by VCL. However, even if the value of the allegedly impaired securities is deducted from the total value of security cover offered, Indiabulls still holds mortgaged properties to the extent of approx. Rs. 5200 crores - which is more than the 2x security cover required under Clause 2.3 of the Loan Agreements (which amounts to Rs. 3372 crores). NO FINANCIAL DEFAULTS IN PAYMENTS 5.5. There has never been a default in repayment of loans on the part of the Borrowers. They have followed the repayment schedule in letter and spirit. In fact, Indiabulls has, at its sole discretion, rescheduled the loan agreements various times in the past, however, it has never been the case that any re-schedulment charges were imposed on Borrowers. Further, on account of the outbreak of COVID-19 pandemic, revised loan repayment schedule was ....
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....of the Loan Agreement is widely worded and means, 'as the context requires' - a mortgage, charge, hypothecation, escrow, guarantee, pledge, lien and/or other security interest created in the favour of the Lender. It cannot be construed that 'impairment of the security' as an Event of Default has to mean impairment of all the securities as a whole, or that, as long as the 'the Security' (meaning all the securities as a whole) provided by Borrowers was sufficient to secure fulfilment of obligations, the judgment exercised by the Lender under Clause 12.1.9(a) would not be reasonable in terms of Clause 12.3. The clear use of 'and/or' in the Clause is indicative that the meaning of the word 'security' can be taken to either mean either each security individually, or to mean all the securities jointly. In such a situation, we are guided by the introductory part of the clause, which clearly stated that the meaning thereof has to be understood 'as the context requires'. Further, Clause 12.1.9(a) uses the phrase 'impairment of the Security, if any, or any part thereof'. Thus, even if we were to hypothetically accept that security must mean all securities as a whole, there is a clear provisi....
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....rity has gone un36 responded. In these circumstances, the requirement stipulated in Clause 12.1.9(a), that the security has become impaired, has occurred. There cannot be reservations or uncertainty about this aspect. The payment of Rs. 38,19,24,525/-, in terms of NOC issued by Noida Authority was to be done immediately. Borrowers defaulted in making the payment leading this to not only become overdue but it has burgeoned to Rs. 219 crores each. This court finds merit in the contention of Indiabulls that the default did not occur on the date of cancellation of NoC, but was a continuing default, as the amount of Rs. 38 crores was payable "immediately" on 23rd February, 2018 when the NoC was first granted. Thus, this is nothing less than a wilful impairment. Today, the court can only speculate as to the circumstances whereunder, without the payment to Noida Authority, the Mortgage Deed got registered, or the reasons for the delayed action of Noida Authority. These aspects would have to be examined in arbitration. Nevertheless, the fact of the matter is that Indiabulls cannot enforce the impaired securities, and is constrained to recall the loan. In these circumstances, the question a....
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....duced hereinafter:- "29. Indiabulls is bound by the statement recorded in the said order, that the pledge of shares will be undertaken in a completely transparent manner on a fair evaluation of the shares. Prima facie the Court finds that the sale of the pledge shares is being done in a transparent manner. Indiabulls has disclosed the purchaser and also the amount at which the sale has been done. When the Petitioners filed an application asking for furnishing of documents, Indiabulls provided the same without hesitation. In fact, before commencement of arguments, Mr. Nayar candidly disclosed the amount of sale and offered that in case the Borrowers were interested to redeem the security, they could do so on payment of Rs. 900 crores. However, no interest was shown by the Borrowers. 30. On the aspect of valuation, we note that KDPL, the company whose shares have been sold by Indiabulls to DLF, is a lease-holder and the title-holder of the plot of land, which is its only valuable asset. Thus, the valuation of the shares of KDPL has been done primarily on the basis of the value of the parcel of land, the shares having no other intrinsic value. Indiabulls supports its....
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....echanically followed by Collector, as a sole factor, to determine market value of the property in question." 32. As discussed above, the objection made by Shipra Group on valuation of sold pledged shares is a matter of accounts, which can be only adjudicated upon by the Arbitral Tribunal, and the remedy available with the Borrowers is to claim damages. The Court cannot enter into the arena of what constitutes a fair valuation of shares. Does it mean that till the time the Arbitrator examines this question, Indiabulls should refrain from taking recourse as available to it under contract? In the opinion of the Court, having regard to the provisions in question, this Court cannot interfere on this aspect, and deprive Indiabulls from enforcing its right under the Pledge Agreement." 62. In light of the above discussions, learned Single Judge of the Delhi High Court rejected the borrower's petition under Section 9 of the Act of 1996. The undertaking given by the counsel for Indiabulls, at an earlier stage of the proceedings, were discharged. The Court also observed that observations made by it are prima facie in nature and would not come in the way of arbitral tribunal in adj....
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....ulter conceals previous adjudications, inter-se between the parties, in arbitral proceedings. It otherwise remains undisputed that the loan transaction contains an arbitration clause which is already invoked and issues raised in criminal proceedings are pending adjudication before the arbitrator appointed by the Delhi High Court. 68. Nevertheless, we have examined the allegations made in the two FIRs as also the ECIR within the limited scope of this Court to interfere in it as is settled by the Supreme Court in Madhu Limaye Vs. The State of Maharashtra, 1977 (4) SCC 551; The State of Haryana and others Vs. Bhajan Lal and others, 1990 SCR Suppl. (3) 259; State of Telangana Vs. Habib Abdullah Jeelani and others, (2017) 2 SCC 779 and Neeharika Infrastructure Pvt. Ltd. Vs. State of Maharashtra and others, (2021) 19 SCC 401. 69. The allegation in the FIRs that the Directors of Indiabulls contacted the borrower and induced the borrower to avail loan on rates lower than the market rate so as to grab the property of borrower cannot be countenanced. At the cost of repetition, we may reiterate that borrower herein is an established company which is aware of normal financing practices a....
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....in Arbitration. 73. We find substance in the petitioners' argument that the conduct of borrower in initiating criminal action vide Complaint instituted under Section 156(3) Cr.P.C. on 23.3.2023 is lacking in bona fide. Admittedly, the borrower with open eyes had entered into commercial transaction with the Indiabulls and having prima facie defaulted in honouring the terms of contract, availed the remedy in respect of the coercive action taken against it. After having failed at it the borrower has initiated criminal action, concealing the orders of Delhi High Court in pending Arbitration proceedings as per which the issues raised are required to be resolved in Arbitration. Institution of criminal action can therefore be said to be with oblique motive. 74. Various issues in respect of the loan transaction are to be determined in accordance with the terms of contract. Any differences between the parties, in respect of such contract has to be resolved by Arbitration. The borrower as of now is prima facie a defaulter and its claim requires determination in Arbitration, which is pending before Hon'ble Mr. Justice Vikramjit Sen (Retired). We are, therefore, not required to enter int....
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....ver, whether civil or criminal proceedings ought to be given preference in a given case will depend upon the facts and circumstances of each case. The borrower has placed reliance upon the judgments of the Supreme Court in M.S. Sheriff & another Vs. State of Madras, AIR 1954 SC 397; P. Swaroopa Rani Vs. M. Hari Narayan @ Hari Babu, 2008 (5) SCC 765 and Syed Askari Hadi Ali Augustine Imam Vs. State (Delhi Administration), 2009 (5) SCC 528. 80. In M.S. Sheriff (supra) the Court held as under in para 12 and 13 of the judgment:- "12. As between the civil and the criminal proceedings we are of the opinion that the criminal matters should be given precedence. There is some difference of opinion in the High Courts of India on this point. No hard-and-fast rule can be laid down but we do not consider that the possibility of conflicting decisions in the civil and criminal courts is a relevant consideration. The law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassm....
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.... on this allegation when the validity of the will is being tested before a civil court. We, therefore, allow the appeal, set aside the order of the High Court, and quash the criminal proceedings pending in the Court of the Judicial Magistrate, First Class, Chandigarh in the case entitled Smt Nasib Kaur v. Sardool Singh. This will not come in the way of instituting appropriate proceedings in future in case the civil court comes to the conclusion that the will is a forged one. We of course refrain from expressing any opinion as regards genuineness or otherwise of the Will in question as there is no occasion to do so and the question is wide open before the lower courts." 82. The Court distinguished the judgment in Sardool Singh (supra) by observing that in Syed Askari (supra) a criminal case had already been instituted and the question before it was as to whether it should be allowed to continue or not? It was in that context that the Court allowed the criminal proceedings to go on as not only the aspect of forgery of will, pending adjudication in civil proceedings was the subject of criminal trial but even trespass was alleged in the FIR. The Court held as under in para 43:- ....
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....ct of 1996 came to be rejected by the Delhi High Court it made an offer to settle all dues of Indiabulls by offering Rs. 1300 crores (Interest free) as one time settlement vide proposal of informant Amit Walia vide Mail dated 1st July 2021. This proposal has been rejected by Indiabulls on 5th July, 2021. This fact is also suppressed by Amit Walia in his complaint filed before the Chief Judicial Magistrate, Gautambuddh Nagar. 87. The borrowers' contention in the criminal complaint that no event of default has taken place or that securities twice above the loan are pledged/mortgaged and, therefore, Indiabulls cannot proceed against the pledged shares of Indiabulls also cannot be countenanced in view of specific findings returned by learned Single Judge of the Delhi High Court in the judgment dated 20th May, 2021, against which no interference is made in appeal by the Division Bench of Delhi High Court on 30th November, 2022. 88. Once the contention of borrower that no event of default has taken place or that securities twice above the loan are pledged/mortgaged and, therefore, Indiabulls cannot proceed against the pledged shares of Indiabulls is rejected by the Delhi High Court....
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....t and misrepresentation overlooking the scheme for adjudication. 93. So far as the plea of round tripping of funds for purchase of transferred shares is concerned, the allegation stems from a flawed understanding of the banking system itself. These are standard banking practices and unless it is shown to be violating any law that makes it an offence the institution of criminal proceedings would be impermissible. No such violation of law is pointed out by the defaulter. Moreover, issues being pending before the Arbitrator any further comments on this aspect, by us, would be unwarranted. 94. While adjudicating the instant cause we are mindful of the fact that the informant in the 1st FIR is a representative of the borrower which has defaulted in repayment of loan. Its objection against revocation of loan and coercive steps against pledged property has prima facie not found favour with the Delhi High Court in proceedings under Section 9 of the Act of 1996 and the issues, in that regard, are yet to be determined by the Arbitrator already appointed by the Delhi High Court under Section 11 of the Act of 1996. It is in this background that we are not inclined to sustain the invocati....
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....w or policy of YEIDA requiring imposition of transfer charges on the change in shareholding of a lessee. Such a policy has been introduced only on 8.10.2021. YEIDA was otherwise informed about the transfer of shares by Kadam on 29.7.2021 but no objection to it was taken nor any demand towards transfer charges was levied then. 103. YEIDA issued a demand notice only on 11.4.2023 imposing transfer charges on account of change of shareholding against Kadam pursuant to the complaint of borrower which led to lodging of the 2nd FIR. Kadam challenged the demand by filing writ petition no. 16196 of 2023 wherein an interim protection was granted. During pendency of the writ YEIDA withdrew the notice dated 11.4.2023 and consequently the writ petition was disposed of. 104. It is on 27.1.2014, after nearly 9 months of the registration of FIR that a demand notice for Rs. 243.73 crores on account of transfer of shares is again issued by YEIDA against Kadam. This notice is sub-judice before this Court wherein an interim order is operating. 105. The issue as to whether any transfer charges is payable on account of transfer of shares of Kadam is yet to be determined in pending writ proceedi....
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....nter affidavit filed by it only demonstrates that the investigation undertaken by it casts a doubt on the genuineness of valuers report as well as round tripping of funds for purchase of pledged shares of Kadam. 111. In any case the valuers report is at best an input for assessing the value of shares of Kadam. Since the larger issue of undervaluation of such transferred shares of Kadam is an aspect to be gone into by the Arbitrator, at the first instance, it would not be proper to allow the ED to proceed in the matter at this stage and overreach the proceedings of the Arbitrator. 112. Whether at all there is undervaluation of the shares of Kadam is to be determined finally in Arbitration, first. It is only thereafter that it can be ascertained as to whether the valuers report had played any role in such undervaluation or not? Not much reliance can be placed upon the correctness or otherwise of the valuers report, without first ascertaining the aspect of undervaluation of shares. 113. Further, the borrower has already alleged undervaluation before the Arbitral Tribunal and has also sought alleged damages in respect of it. Thus, this question cannot be agitated in the presen....
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....int in time and avail his remedy. On the other hand, the complainant had proceeded with the transaction, maintained the loan account until the account was classified as NPA on 15-1- 2013. Initially, the issue raised was only with regard to the undervaluation of the property when it was brought to sale. On that aspect, as taken note, the writ proceedings were filed and the learned Single Judge having examined, though did not find merit had reserved liberty to raise it before DRT, which option is also availed. It is only, thereafter, the impugned complaint was filed on 20-5- 2016. 15. The Sarfaesi Act is a complete code in itself which provides the procedure to be followed by the secured creditor and also the remedy to the aggrieved parties including the borrower. In such circumstance, as already taken note of by the High Court in writ proceedings, if there is any discrepancy in the manner of classifying the account of the appellants as NPA or in the manner in which the property was valued or was auctioned, DRT is vested with the power to set aside such auction at the stage after the secured creditor invokes the power under Section 13 of the Sarfaesi Act. This view is fortif....
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....n, cannot be accepted." (emphasis supplied) 16. We reiterate, the action taken by the Banks under the Sarfaesi Act is neither unquestionable nor treated as sacrosanct under all circumstances but if there is discrepancy in the manner the Bank has proceeded it will always be open to assail it in the forum provided. Though in the instant case, the application filed by the complainant before DRT has been dismissed and Appeal No. 523 of 2015 filed before DRAT is also stated to be dismissed the appellants ought to have availed the remedy diligently. In that direction, the further remedy by approaching the High Court to assail the order of DRT and DRAT is also available in appropriate cases. Instead the petitioner after dismissal of the application before the DRT filed the impugned complaint which appears to be an intimidatory tactic and an afterthought which is an abuse of the process of law. In the matter of present nature, if the grievance as put forth is taken note of and if the same is allowed to be agitated through a complaint filed at this point in time and if the investigation is allowed to continue it would amount to permitting the jurisdictional police to redo the pr....
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....rmination of issues which are of civil nature, pursuant to which Respondent 2 has even instituted multiple civil suits, one can by no means stretch the dispute to an extent, so as to impart it a criminal colour. As has been rightly emphasised upon by this Court, by way of an observation rendered in Indian Oil Corpn. v. NEPC India Ltd. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188], as under : (SCC p. 749, para 14) "14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law." 40. On an earlier occasion, in G. Sagar Suri v. State of U.P. [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636 : 2000 SCC (Cri) 513], this Court has also observed : (SCC p. 643, para 8) "8. Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court ....
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....gal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 45. In view of the above facts and discussions, the impugned order dated 13-8-2019 [Ramanlal M. Sha v. State of Karnataka, 2019 SCC OnLine Kar 3504] passed by the High Court of Karnataka is set aside. The impugned FIR No. 185 of 2016 dated 29-3-2016 and proceedings in CC No. 20609 of 2017 on the file of VIth Additional CMM, Bengaluru, in pursuance of charge-sheet dated 29-3-2017 against the appellants for the offences under Sections 406, 419, 420 read with Section 34 IPC stands quashed." 117. In Vijay Kumar Ghai Vs. State of West Bengal, (2022) 7 SCC 124, the Supreme Court observed in Paras ....
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....g. In the present case, it has nowhere been stated that at the very inception that there was intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420IPC. 7. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-BIPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482CrPC which it has erroneously refused." 38. There can be no doubt that a mere breach of contract is not in itself a criminal offence and gives rise to the civil liability of damages. However, as held by this Court in Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786], the distinction between mere breach of contract ....
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....gainst the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by Respondent 2. When the offence was made out on the basis of the first complaint, the second complaint was filed with improved version making allegations against the appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which FIR was registered was filed nearly three years after the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the court." 119. Similarly, in Lalit Chaturvedi and others Vs. State of Uttar Pradesh, 2024 SCC OnLine SC 171, the Court held as under in paras 5, 6, 7, 9, 10, 11:- "5. This Court, in a number....
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....ise or representation thereof, from the very beginning of the formation of contract. Further, in the absence of the averments made in the complaint petition wherefrom the ingredients of the offence can be found out, the High Court should not hesitate to exercise its jurisdiction under Section 482 of the Cr. P.C. Section 482 of the Cr. P.C. saves the inherent power of the High Court, as it serves a salutary purpose viz. a person should not undergo harassment of litigation for a number of years, when no criminal offence is made out. It is one thing to say that a case has been made out for trial and criminal proceedings should not be quashed, but another thing to say that a person must undergo a criminal trial despite the fact that no offence has been made out in the complaint. This Court in V.Y. Jose (supra) placed reliance on several earlier decisions in "Hira Lal Hari Lal Bhagwati v. CBI"6, "Indian Oil Corporation v. NEPC India Ltd."7, "Vir Prakash Sharma v. Anil Kumar Agarwal"8 and "All Cargo Movers (I) (P) Ltd. v. Dhanesh Badarmal Jain"9." 9. We will assume that the assertions made in the complaint are correct, but even then, a criminal offence under Section 420 read wit....