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2012 DIGILAW 296 (HP)

Prabha Bhagra v. State of Himachal Pradesh

2012-05-21

RAJIV SHARMA

body2012
ORDER : Rajiv Sharma, J. The present petition has been filed, under section 482 of the Code of Criminal Procedure for quashing the summoning order dated 8.3.2011 as well as criminal proceedings in case No. 23/1 of 2011 titled State v. Prabha Bhagra and another, pending in the Court of Judicial Magistrate, 1st Class, Court No. 4, Shimla. 2. Material facts necessary for the adjudication of this petition are that petitioner No.1 is the Managing Director of M/s Bhagra Resort Private Limited, village Siodhora, Tehsil and District Shimla and petitioner No.2 is one of its Directors. The company has set up a hotel/resort in the name and style of "Whispering Pine" at Mashobra in the year 1994. The Himachal Pradesh Industrial Development Corporation financed a sum of Rs. 132.00 lacs. Respondent No.3 extended financial assistance of Rs. 3.00 crores to take over the loan as financed by H.P.S.I.D.C. in the year 2005. The loan was payable in equated monthly installments of Rs. 5.71 lacs constituting the principal and interest thereon and to secure the repayment of the loan, the company equitably mortgaged its land and building situated at village Sidhora. The company and respondent No.3 entered into memorandum of agreement of equitable mortgage dated 7.7.2005 whereby it was agreed that a sum of Rs. 3.00 crores would be paid by the company on or before 31.7.2012. The fact of the matter is that respondent No.3 has declared the account as nonperforming account. The rehabilitation proposal was also submitted by the company. It was rejected by the bank on 17.3.2008. Thereafter, a demand notice dated 10.4.2008, under section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'Act' for brevity sake) demanding Rs. 3,90,76,986.00 inclusive of interest upto 29.9.2008 was issued. Objections were filed by the company on 31.5.2008. The same stood rejected on 11.6.2008. The Bank approached the District Magistrate under section 14 of the Act. The representatives of the company appeared before the District Magistrate and sought three months time to settle the matter. The District Magistrate issued order on 1.5.2010. The company, i.e. Bhagra Resort Private Limited, Managing Director petitioner No.1, Director K.K. Bhagra petitioner No.2 filed CWP No.1767/2010 in this Court assailing order dated 1.5.2010. The Division Bench passed the following order on 3.5.2010 : "The learned counsel for the petitioners submits that Sh. The District Magistrate issued order on 1.5.2010. The company, i.e. Bhagra Resort Private Limited, Managing Director petitioner No.1, Director K.K. Bhagra petitioner No.2 filed CWP No.1767/2010 in this Court assailing order dated 1.5.2010. The Division Bench passed the following order on 3.5.2010 : "The learned counsel for the petitioners submits that Sh. Suresh Rorr, C-125, Kandriya Bihar, Sector-56, Gurgaon, Haryana is the intending purchaser of the establishment. Sh. Suresh Rorr will stand impleaded as 6th respondent. Notice dasti to the 6th respondent. Post on 7.5.2010. In case the petitioners have not been dispossessed so far, further proceedings in that regard will be deferred till 7.5.2010." 3. Order dated 3.5.2010 was extended on 7.5.2010. Thereafter, the civil writ petition was withdrawn on 20.12.2010. In order to complete the facts, it would be appropriate to take note of possession notice issued on 5.5.2010 followed by sale notice 24.12.2010 to the company. The company, i.e. Bhagra Resort Private Limited approached the Debts Recovery Tribunal, Chandigarh under section 17 (1) of the Act assailing demand notice dated 10.4.2008 published on 5.5.2010 and sale notice dated 24.12.2010. Learned Debts Recovery Tribunal quashed the demand notice, possession notice and sale notice and respondent No.3 was directed to handover the possession to the company and the Receiver for this purpose was appointed. 4. In view of this backdrop, Mr. Ajay Kumar, learned Senior Advocate has strenuously argued that the criminal proceedings instituted against his clients on the basis of F.I.R. under sections 448 and 34 of the Indian Penal Code is abuse of process of law. He then argued that institution of these proceedings is mala fide and instituted with ulterior motive to secure the loan amount by respondent No.3. He has also argued that the possession of the suit property was never taken over even on 3.5.2010 though futile attempt was made by respondent No.2 to take over the possession. However, on the basis of orders passed by this Court on 3.5.2010, possession was never taken over by respondent No.2 on behalf of respondent No.3 bank. He finally contended that the demand notice, possession notice and sale notice have already been quashed by the learned Debts Recovery Tribunal, Chandigarh and in view of this the criminal proceedings bearing case No. 23/1 of 2011 cannot continue. He has also referred to sub-section (5) of section 17 of the Act. 5. Mr. He finally contended that the demand notice, possession notice and sale notice have already been quashed by the learned Debts Recovery Tribunal, Chandigarh and in view of this the criminal proceedings bearing case No. 23/1 of 2011 cannot continue. He has also referred to sub-section (5) of section 17 of the Act. 5. Mr. Rajinder Dogra, learned Additional Advocate General and Bhupender Gupta, learned Senior Advocate have vehemently argued that the possession was taken over on 3.5.2010 and thereafter the petitioners have been dispossessed, which has led to registration of F.I.R. under sections 448 and 34 of the Indian Penal Code and consequently, the challan has been put up before the competent court of law. 6. I have heard the learned counsel for the parties and have perused the pleadings carefully. 7. What emerges from the facts enumerated hereinabove is that order dated 1.5.2010 was assailed by the company before this Court. This Court has ordered that in case the petitioners have not been dispossessed so far, further proceedings in that regard would be deferred till 7.5.2011. Order dated 3.5.2010 was further extended on 7.5.2010. In the meantime, notice was issued on 5.5.2010. Civil Writ Petition bearing No. 1767/2010 was withdrawn on 20.12.2010. Thereafter, sale notice was also issued to the company on 24.12.2010. The company has specifically challenged the demand notice and sale notice before the Debts Recovery Tribunal, Chandigarh by way of S.A. No. 169/2010. It was contended before the Debts Recovery Tribunal, Chandigarh that respondents No.2 and 3 have tried to take forcible possession on 3.5.2010 without waiting for the Naib Tehsildar appointed by the District Magistrate to take over the possession, as provided under section 14 of the Act. It was contended by the company before the Debts Recovery Tribunal that the Act and the Rules framed thereunder have not been followed at the time of taking over the possession. 8. It was contended by the company before the Debts Recovery Tribunal that the Act and the Rules framed thereunder have not been followed at the time of taking over the possession. 8. It is evident from the plain reading of section 14 of the Act that where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate in whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof and the Chief Metropolitan Magistrate or as the case may be, the District Magistrate shall on such request being made to him : (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor. 9. In these circumstances, it was not permissible for respondent No. 2 to make attempt to take over the possession of the suit property. This could only be done by the District Magistrate or a person authorised by him, i.e. Naib Tehsildar. It has come in the order passed by the Debts Recovery Tribunal that as per report of the Naib Tehsildar dated 4.5.2010, when he reached the site at 12.30 P.M., the Authorised Officer had started taking over the possession on the spot. This could only be done by the District Magistrate or the person appointed by him, i.e. Naib Tehsildar. This attempt of respondent No.3 to take the assets of the company was in contravention of the mandatory provisions of section 14 of the Act. The Company has also contended before the Debts Recovery Tribunal that neither rule 8 (1) nor rule 8 (2) was followed by the authorities. The notice of delivery of possession has to be given to the party as per rule 8 (1) and thereafter the possession notice is also required to be published as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. The respondent bank has not placed the copy of the possession notice before this Court or before the Debts Recovery Tribunal. The publication has taken place only after the notice dated 10.4.2008 was published in English language not in vernacular. Learned Debts Recovery Tribunal has held that the sale notice published on 24.12.2010 describing that the bank has taken possession on 3.5.2010 was factually incorrect. In these circumstances, Debts Recovery Tribunal appointed Receiver to handover the suit property to the company after taking over possession from the bank. Respondent No.3 has also preferred an appeal against the order dated 11.2.2011. The same, as per the pleadings, has been withdrawn. It is evident from the phraseology employed in section 17 of the Act that in case the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder and require restoration of the management of the secured assets to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and restore the possession of the secured assets to the borrower or restore the management of the secured assets to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13. 10. In this case, the Debts Recovery Tribunal has already ordered restoration of the possession after declaring demand notice dated 10.4.2008, possession notice 5.5.2010 and sale notice 24.12.2010 invalid. It is also evident, in view of the facts enumerated hereinabove that futile attempt was made to take forcible possession. This Court has already stayed dispossession vide order dated 3.5.2010. This order was extended on 7.5.2010. 11. Their Lordships of the Hon'ble Supreme Court in V.P. Shrivastava v. Indian Explosives Limited and others, (2010) 10 SCC 361 have discussed the circumstances under which the inherent jurisdiction should be exercised under section 482 of the Code of Criminal Code as under : "15. This order was extended on 7.5.2010. 11. Their Lordships of the Hon'ble Supreme Court in V.P. Shrivastava v. Indian Explosives Limited and others, (2010) 10 SCC 361 have discussed the circumstances under which the inherent jurisdiction should be exercised under section 482 of the Code of Criminal Code as under : "15. Before evaluating the contentions advanced on behalf of the parties, it will be useful to briefly notice the scope and ambit of the inherent powers of the High Court under Section 482 of the Code. The section itself envisages three circumstances under which the inherent jurisdiction may be exercised, namely; (i) to give effect to an order under the Code; (ii) to prevent an abuse of the process of court; and (iii) to otherwise secure the ends of justice. Nevertheless, it is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction of the court. Undoubtedly, the power possessed by the High Court under the said provision is very wide but is not unlimited. It has to be exercised sparingly, carefully and cautiously, ex debito justitiae to do real and substantial justice for which alone the court exists. It needs little emphasis that the inherent jurisdiction does not confer an arbitrary power on the High Court to act according to whim or caprice. The power exists to prevent abuse of authority and not to produce injustice." 12. Their Lordships of the Hon'ble Supreme Court in Maharashtra State Electricity Distribution Company Limited and another v. Datar Swtichgear Limited and others, (2010) 10 SCC 479 have held that inherent power of the High Court under section 482 of the Code of Criminal Procedure are very wide in amplitude, yet they are not unlimited. Their Lordships have further held that where the allegations in the first information report or the complaint taken at its face value and accepted in their entirety do not constitute the offence alleged, the High Court would be justified in invoking its powers under Section 482 of the Code to quash the criminal proceedings. 13. Their Lordships have further held that where the allegations in the first information report or the complaint taken at its face value and accepted in their entirety do not constitute the offence alleged, the High Court would be justified in invoking its powers under Section 482 of the Code to quash the criminal proceedings. 13. Their Lordships of the Hon'ble Supreme Court in State of Andhra Pradesh v. Gourishetty Mahesh and others, (2010) 11 SCC 226 have held that it is true that the court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, it would be an instrument in the hands of a private complaint to unleash vendetta to harass any person needlessly. Their Lordships have held as under : "18. While exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an enquiry whether the evidence in question is reliable or not or whether on a reasonable appreciation of it accusation would not be sustained. That is the function of the trial Judge/Court. It is true that Court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, other wise, it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly. At the same time, Section 482 is not an instrument handed over to an accused to short-circuit a prosecution and brings about its closure without full-fledged enquiry. 20. Though the powers possessed by the High Court under Section 482 are wide, however, such power requires care/caution in its exercise. The interference must be on sound principles and the inherent power should not be exercised to stifle a legitimate prosecution. We make it clear that if the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of inherent powers under Section 482." 14. We make it clear that if the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of inherent powers under Section 482." 14. Similarly, their Lordships of the Hon'ble Supreme Court in Harshendra Kumar D. v. Rebatilata Koley and others, (2011) 3 SCC 351 have held that in order to prevent injustice or abuse of process or to promote justice, High Court may look into materials which have significant bearing on the matter at prima facie stage, High Court can quash complaint if materials relied upon by accused are beyond suspicion or doubt or which are in the nature of public documents and are uncontroverted. Their Lordships have held as under : "25. In our judgment, the above observations cannot be read to mean that in a criminal case where trial is yet to take place and the matter is at the stage of issuance of summons or taking cognizance, materials relied upon by the accused which are in the nature of public documents or the materials which are beyond suspicion or doubt, in no circumstance, can be looked into by the High Court in exercise of its jurisdiction under Section 482 or for that matter in exercise of revisional jurisdiction under Section 397 of the Code. It is fairly settled now that while exercising inherent jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an enquiry in respect of merits of the accusations. However, in an appropriate case, if on the face of the documents - which are beyond suspicion or doubt - placed by accused, the accusations against him cannot stand, it would be travesty of justice if accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at prima facie stage." 15. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at prima facie stage." 15. Accordingly, in view of the observations and discussions made hereinabove, F.I.R. under sections 448 and 34 of the Indian Penal Code was misconceived and the proceedings initiated on the basis of F.I.R., which has led to filing of challan are bad in law. Consequently, summoning the petitioner on 8.3.2011 is also declared illegal. 16. As a result of above analysis, the petition is allowed. The criminal proceedings initiated in Case No. 23/1 of 2011 along with summoning order dated 8.3.2011 are quashed and set aside. Pending application(s), if any, also stands disposed of. No costs.