Rajasthan High Court - Jodhpur
Anil Kumar Tiwari vs State Of Rajasthan on 9 April, 2024
Author: Kuldeep Mathur
Bench: Kuldeep Mathur
[2024:RJ-JD:12837]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Criminal Misc(Pet.) No. 735/2022
1. Anil Kumar Tiwari S/o Sh. Deen Dayal Tiwari, Aged About
64 Years, Chief Manager, Rc Vyas Colony Branch, Bhilwara
(Retired).
2. Gopal Lal Balai S/o Lt. Sh. Ghasi Lal Balai, Aged About 55
Years, Chief Manager, Bank Of Baroda Regional Office
Jaipur.
3. Ramlakhan Singh Meena S/o Sh. Soji Ram Meena, Aged
About 31 Years, Branch Manager, Bijolia, Bhilwara
(Presently Posted As Senior Manager, Bassi (Chittorgarh).
4. R. Sridharan S/o Lt. Sh. Raghunath Acharya, Aged About
63 Years, Manager, Regional Office, Ajmer (Retired).
----Petitioners
Versus
1. State Of Rajasthan, Through PP
2. Mahendra Kumar Jain S/o Sh. Sunderlal Jain, Pathik
Nagar, Near Girls School Bijolia, Teh. Bijolia-311602, Dist.
Bhilwara, Rajasthan.
----Respondents
For Petitioner(s) : Mr. Saurabh Surana
Ms. Shagun Mathur
For Respondent(s) : Mr. Mahipal Bishnoi
Mr. Rakesh Arora for complainant
HON'BLE MR. JUSTICE KULDEEP MATHUR
Order Reportable 09/04/2024 By way of filing the present criminal misc petition, the petitioners have prayed for the following reliefs:-
"It is most humbly and respectfully prayed that appropriate order or direction for the following may kindly be passed:-
1. The cognizance taken against petitioner vide order dated 22.01.2018 passed by Judicial Magistrate, First Class, Bijoliya in criminal case no.27/2018 be kindly quashed and set aside.(Downloaded on 11/04/2024 at 08:38:08 PM)
[2024:RJ-JD:12837] (2 of 14) [CRLMP-735/2022]
2. The revision order dated 04.10.2021 passed by Additional Session Judge No.3, Bhilwara, Mandalagarh camp passed in Revision petition 38/2018 wherein the learned Court has upheld order 22.01.2018 be kindly quashed and set aside."
Succinctly stated facts of the present case are that M/s Parashwanath Stone Impex (hereinafter referred to as "the firm"), through its partners i.e. the respondent No.2 Mr. Mahendra Kumar Jain, Smt. Nirmala Jain and Smt. Seema Sunil Shah, had availed a Cash Credit loan of Rs.20,00,000/- and a Term loan of Rs.50,00,000/- (in total Rs.70,00,000/-) from Bank of Baroda, Bijoliya Branch, District Bhilwara against the following securities:-
1) Demand Promissory Note dated 25/03/2014
2) Hypothecation agreement of Plant & Machinery
3) Industrial land of Shri Mahendra Kumar Son of Shri Sundar Lal Jain, on part of Araji Nos.1417/1, 1418 & 1419 Khata No.229 admeasuring 2590.90 Sq. Mtrs.
4) Industrial land of Shri Sunil Roopchand Shah on part of Araji Nos.1417/1, 1418 & 1419 Khata No.229 admeasuring 2510 Sq. Mtrs.
5) Personal Guarantee made by Mr. Sunil Roop Chand Shah.
The borrowers failed to make payment of the principal as well as the interest charged on the loan and therefore, the aforesaid loans were declared non-performing assets and a demand notice dated 29.04.2016 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") for the total due amount of Rs.66,45,613/- along with interest w.e.f. 31.03.2016 was served upon the firm. In the notice it was clearly stated that in case the demand/payment (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (3 of 14) [CRLMP-735/2022] is not made, the immovable property i.e. Industrial land admeasuring 2590.90 Sq. Mtrs. on part of Araji Nos.1417/1, 1418 & 1419, Khata No.229, situated at back side of Shri Parashwanath Jain Mandir, Near NH-76, Gram Bijoliya, Tehsil Bijoliya, District Bhilwara shall be subjected to proceedings under Section 13(4) of SARFAESI Act for the enforcement of security interest.
Indisputedly, the firm could not satisfy the demand raised vide the demand notice dated 29.04.2016. In these circumstances, on 04.10.2016, under the orders of the District Magistrate, the possession of the secured assets was taken by the Authorized Officer and a tender auction notice dated 16.07.2016 with the reserve price of Rs.90,00,000/- was published.
The petitioners being the Authorized Officers of Bank of Baroda, on 20.12.2016, conducted auction of the secured assets as per the provisions of SARFAESI Act. The auction proceedings were conducted in the presence of the respondent No.2. The bid made by co-accused-Mr. Sunil Shah (also the guarantor), of Rs.1,10,02,000/- (for Plant and Machinery Rs.45.01 lacs and for land Rs.65.02 lacs) being the highest was accepted.
The demand draft of unsuccessful bidders were returned to them on their request and the auction proceedings were concluded successfully.
Being aggrieved by the auction dated 20.12.2016 for the sale of plant and machinery as well as the property of the firm, the respondent No.2 on 28.12.2016 filed a Securitisation Application No.138/2016 (Mahendra Kumar Jain Vs. Bank of Baroda) before the DRT, Jaipur (DRT) seeking quashing of the auction sale dated 20.12.2016 and restraining the respondent (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (4 of 14) [CRLMP-735/2022] bank from confirming the sale. The Presiding Officer of the DRT, Jaipur, after going through the entire auction proceedings vide order dated 31.05.2019, was pleased to dismiss the SA No.138/2016 being devoid of merit.
It is pertinent to note here that prior to filing of SA No.138/2016 before the DRT, Jaipur, on 23.12.2016, respondent No.2 had also filed an application under Section 156(3) Cr.P.C. before the learned Judicial Magistrate, Bijoliya, District Bhilwara for initiating criminal proceedings against the bank officials. The learned Judicial Magistrate, Bijoliya vide order dated 24.12.2016 directed SHO Police Station, Bijoliya to register an FIR under Sections 420 and 120-B IPC in the matter. In pursuance of the same, The Investigating Officer, Police Station, Bijoliya, registered the F.I.R. and after making the necessary investigation in the matter, submitted a negative final report (05/2017) dated 21.03.2017 before the learned Judicial Magistrate, Bijoliya.
Being dissatisfied by the negative final report, the respondent No.2 filed a protest petition before the learned Judicial Magistrate, Bijoliya against the negative final report (05/2017) submitted by the Investigating Officer, Police Station, Bijoliya, whereupon, the learned Judicial Magistrate vide order dated 22.01.2018 took cognizance in the matter and directed the Investigating Officer to register a regular criminal case against the bank officials and successful bidder i.e. Mr. Sunil Shah (also the guarantor) for the offences punishable under Sections 420, 406 & 120-B of IPC.
The petitioners herein, being aggrieved by the order taking cognizance dated 22.01.2018, preferred a Revision Petition before (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (5 of 14) [CRLMP-735/2022] the learned Additional Sessions Judge No.3, Bhilwara (Raj.) (Mandalgarh Camp). The Revisional Court vide order dated 04.10.2021 dismissed the Revision Petition and affirmed the order dated 22.01.2018 passed by the learned Judicial Magistrate, Bijoliya, District Bhilwara in Case No.27/2018 (State of Rajasthan Vs. Mahendra Kumar) was upheld.
Learned counsel for the petitioners implored that the order of cognizance dated 22.01.2018 passed by the learned Judicial Magistrate, Bijoliya District Bhilwara and the order dated 04.10.2022 passed by the learned Revisional Court deserve to be quashed and set aside by this Court as they have been passed without due application of mind and without taking into consideration the relevant provisions of SARFAESI Act.
Learned counsel for the petitioners submitted that the petitioners being the employees of Bank of Baroda, conducted the auction of the secured assets with due diligence and under good faith and are entitled to immunity from prosecution or other legal proceedings in conformity with the provisions under Section 32 of SARFAESI Act. Learned counsel submitted that the learned Judicial Magistrate before directing registration of the FIR against the petitioners should have adverted to provisions contained in Section 32 of SARFAESI Act as the object of the said Section is to protect the secured creditors or any of the officers from prosecution or other legal proceedings for any of the actions taken by them against the borrowers in good faith and in due compliance of SARFAESI Act.
Learned counsel further contended that the learned Judicial Magistrate and the learned Revisional Court while passing the (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (6 of 14) [CRLMP-735/2022] impugned orders have failed to consider the fact that the disputes pertaining to challenging of auction proceedings and the matters incidental thereto are to be adjudicated by the DRT, Jaipur only. Further, the respondent No.2 had already challenged the auction proceedings before the DRT, Jaipur by way of filing SA No.138/2016 (Mahendra Kumar Jain Vs. Bank of Baroda). The DRT, Jaipur after considering the entire record pertaining to the auction proceedings dated 20.12.2016, vide order dated 31.05.2019 had dismissed the SA No.138/2016.
It was urged that the application under Section 156(3) Cr.P.C submitted by respondent No.2 before the learned Judicial Magistrate, Bijoliya District Bhilwara was not accompanied with an affidavit of the complainant to establish the veracity of the contents made in the application. However, the learned Judicial Magistrate proceeded to direct SHO, P.S. Bijoliya to lodge an FIR against the petitioners. The Investigating Officer after making a thorough investigation had submitted a negative final report in the matter, as in the opinion of the Investigating Officer, the dispute was purely of civil nature and no case was made out against the present petitioners for offences punishable under Sections 420 and 120-B of IPC.
Learned counsel contended that while taking cognizance against the petitioners, the learned Judicial Magistrate had failed to consider that in order to constitute an offence under Section 420 IPC, it is necessary that a person must commit the offence of cheating under Section 415 IPC; and the person so cheated must have been dishonestly induced to a) deliver property to any person; or b) make, alter or destroy valuable security or anything (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (7 of 14) [CRLMP-735/2022] signed or sealed and capable of being converted into valuable security. In the present case, the petitioners are bank employees who had acted in good faith as per the provisions of SARFAESI Act and there is no evidence/material available on record to establish that the respondent No.2 had parted with his property acting on a false representation made by the petitioners or that the petitioners had any dishonest intention from the very inception of the proceedings.
Learned counsel in support of his arguments, placed reliance on the following judgments:-
i). Priyanka Srivastava Vs. State of U.P reported in (2015) 6 SCC 287.
ii). K. Virupaksha & Anr. Vs. The State of Karnataka & Anr.
(Criminal Appeal No.377 of 2020).
iii). A.P. State Financial Corporation Vs. M/s. Gar Re-rolling Mills reported in AIR 1994 SC 2151.
iv). Mehmood UI Rehman Vs. Khazir Mohammad Tunda reported in A.I.R. 2015 SC 2195.
v). Prof. R.K. Vijayasarathy Vs. Sudha Seetharam reported in (2019) 16 SCC 739.
vi). Dr. Lakshman Vs. State of Karnataka reported in (2019) 9 SCC 677.
vii). CENTRAL BUREAU OF INVESTIGATION, HYDERABAD VS. K. NARAYANA RAO reported in 2012(9) SCC 512.
Per contra, learned counsel for respondent No.2 submitted that a bare perusal of the order dated 22.01.2018 passed by the learned Judicial Magistrate, Bijoliya, District Bhilwara taking cognizance against the present petitioners clearly shows that the (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (8 of 14) [CRLMP-735/2022] auction proceedings in the present case were conducted by the petitioners, who are bank officials in connivance of the co-accused Mr. Sunil Shah. The learned Judicial Magistrate, Bijoliya in the said order, had recorded a pertenent finding that one Arya Stones had submitted highest bid of Rs.62,00,000/- independently for the machinery whereas, the bank officials had accepted the joint bid of machinery and land offered by the co-accused Mr. Sunil Shah for a sum of Rs.1,10,02,000/-. Further, the fact that the bids were received by the bank officials in a sealed envelope whereas, the option of conducting an open auction was available, is manifest of malice on part of the accused petitioners.
Learned counsel submitted that it is settled law that at the stage of taking cognizance, the Court is not required to make an in-depth analysis or appreciation of the evidence or delve into the merits of the case. At the stage of taking cognizance, the Court is only required to see whether a prima facie case is made out against the accused or not on the basis of the allegations levelled against him. The defense of the accused is not required to be considered at the time of taking cognizance or in other words, the probative value of defense evidence need not be ascertained at a preliminary stage.
Learned counsel submitted that the order of cognizance and the order passed by the Revisional Court are well-reasoned and have been passed after due application of mind. It was submitted that no illegality or irregularity has been committed while passing the impugned orders. The trial Judge has exercised his judicial discretion within the four corners of law and thus, the impugned order dated 22.01.2018 passed by the Judicial Magistrate, Bijoliya, (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (9 of 14) [CRLMP-735/2022] District Bhilwara and order dated 04.10.2021 passed by the Revisional Court deserve to be upheld by this Court.
In support of the arguments advanced, learned counsel for the respondents placed reliance on the following judgments:-
i). Bhuta Ram Vs. State of Rajasthan & Ors: S.B. Criminal Appeal No.1482/2023.
ii). Sushan Singh Yadav Vs. State of Rajasthan: S.B. Criminal Misc. Petition No.6571/2022.
Heard submissions advance at Bar and perused the material available on record as well as the impugned orders.
This Court on 15.05.2022, while admitting the present criminal misc. petition was pleased to stay further proceedings pending before the Court of Judicial Magistrate First Class, Bijoliya, District Bhilwara.
The interim order dated 15.02.2022 passed by this Court is reproduced herein below for the sake of ready reference:-
"Learned counsel for the petitioner has submitted that the trail court while passing the impugned orders has failed to take into consideration the provision of Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 which provides protection to the officials of secured creditor from prosecution or legal proceedings.
Admit.
Issue notice. Issue notice of stay petition also. Learned Public Prosecutor accepts notice on behalf of the respondent - State.
Let notice be issued to the respondent No.2 only. Notice upon the respondent No.2 shall be served through the S.H.O. Police Station Bijolia, District Bhilwara, who shall ensure the personal service of notice upon the respondent No.2 positively by the next date of hearing.
In the meantime, further proceedings in connection with Final Report No.05/17 arising out of FIR No.06/17 of Police Station Bijolia, District (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (10 of 14) [CRLMP-735/2022] Bhilwara pending in the court of Judicial Magistrate, First Class Bijolia, Bhilwara shall remain stayed."
The petitioners before this Court are the employees of Bank of Baroda who had conducted the auction proceedings dated 20.12.2016 of the secured assets as per the provisions of SARFAESI Act.
There can be no dispute with regard to the preposition that the secured creditor has lien over the securities until the loan is repaid by the borrower. In case, the borrower fails to repay the amount borrowed, then the secured creditor, on declaration of the loan account as Non-Performing Asset (NPA), takes over possession of the secured assets and get a right to recover the dues by selling/auctioning the securities.
It is not in dispute before this Court that the firm had taken Cash Credit Loan of Rs.20,00,000/- and Term Loan of Rs.50,00,000/- (in total Rs.70,00,000/-) from Bank of Baroda, Bijoliya Branch, District Bhilwara against various securities including industrial land of the respondent No.2, on part of Araji Nos.1417/1, 1418 & 1419, Khata No.229 admeasuring 2590.90 Sq. Mtrs. and Hypothecation Agreement of Plant and Machinery. It is also not in dispute before this Court that upon failure of the firm to repay the loan amount, the aforesaid loan was declared as Non- Performing Asset (NPA) and after following the due process, the tender auction notice of the aforesaid securities was published in accordance with the provisions of SARFAESI Act, with the reserve price of Rs.90,00,000/- and the bids for the same were invited.
Co-accused Mr. Sunil Shah submitted a joint bid for Plant and Machinery and Land for a sum of Rs.1,10,02,000/- which was (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (11 of 14) [CRLMP-735/2022] accepted by the officials of the Bank of Baroda, being the highest bid.
In the order dated 22.01.2018 passed by learned Judicial Magistrate taking cognizance against the present petitioners, a finding has been recorded that as per the terms and conditions of the auction which were published and circulated, separate bids ought to have been accepted by the bank officials. The acceptance of joint bid submitted by co-accused Mr. Sunil Shah indicates that fair and transparent auction proceedings were not conducted by the bank officials and therefore, prima facie case for taking cognizance against the petitioners for offences under Sections 420/406 IPC read with Section 120-B IPC is made out. The relevant portion of the note appended with the auction notice reads as under:-
"uksV%& loZizFke IykUV ,oa e"khujh dk foØ; fd;k tk,xk rRi"pkr Jh egsUnz dqekj tSu ¼_.kh½ dh laifRr dk foØ; fd;k tk,xk mlds i"pkr Hkh vxj dksbZ "ks'k jgrk gS rks Jh lqfuy :i pUn "kkg ¼tekurnkj½ dh laifRr dk foØ; fd;k tk,xkA "
This Court after carefully scanning the material produced on record by both the parties, finds that though as per the aforesaid note, the auction of Plant and Machinery was to take place first and thereafter, if the entire loan amount is not recovered then the land of the respondent No.2 was to be auctioned. However, at the same time, there is nothing on record to indicate that had the Plant and Machinery been auctioned independently then the entire due amount would have been recovered. Respondent No.2 has failed to show/establish that the same has caused prejudice or loss to him. On the contrary, it is well established that remaining six bidders including the second highest bidder - Mr. Lalchand (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (12 of 14) [CRLMP-735/2022] Yadav from Arya Stone Hub Pvt. Ltd. had already taken back the demand draft submitted by them towards the earnest money. The unsuccessful bidders had also not challenged the auction proceedings before any Court/Tribunal.
Hon'ble The Supreme Court of India in the case of Arce Polymers Pvt. Ltd. Vs. M/s Alphine Pharmaceuticals Pvt. Ltd and Ors: Civil Appeal No.7372/2021 was pleased to hold that the law recognizes that the lender knows its interests and how to secure best value of the property given the fact that mortgaged property had to be sold for recovery of the debts due and payable to the bank.
True it is, that at the stage of taking cognizance, there is no need of an extensive discussion or meticulous appreciation of evidence and at the same time, the probable defence of the accused is not supposed to be looked into. However, it is expected at the stage of taking cognizance, the Court determines after evaluating/assessing the material produced before it, as to whether a case against the accused is sufficiently made out or not warranting trial and the said exercise must not be based on erroneous or vexatious grounds. This is for the reason that issuance of process against any person so as to compel him to face criminal proceedings would certainly amount to infringement of his fundamental rights, if the material produced before the learned trial Court/Judicial Magistrate is not sufficient to constitute prima facie case against the accused. The term 'prima facie case' would thus mean a case established by preliminary evidence which is sufficient in law to raise a presumption of fact or an established fact in question unless rebutted. (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (13 of 14) [CRLMP-735/2022] It is apposite to note that in the present case after complaint was sent to the police by the learned Judicial Magistrate, a thorough investigation was conducted and the Investigating Agency reached to a definite conclusion that no offence has been made out since the disputes between the parties are of civil nature. A perusal of the impugned orders shows that at the time of considering the protest petition filed by respondent No.2, the learned Judicial Magistrate failed to take into consideration the grounds of the closure report vis-a-vis other material placed on record by the complainant. The disagreement with the negative report submitted by the investigating agency, without proper discussion or recording of dissatisfaction by the learned trial Court and issuance of process simply on the assertion of the complainant clearly shows non-application of mind.
In the present case, both the courts also failed to appreciate that the auction proceedings had been challenged by respondent No.2 before the DRT, Jaipur by way of filing SA No.138/2016 which was dismissed vide order dated 31.05.2019. The courts below also failed to appreciate that the petitioners had conducted auction proceedings as per the provisions of SARFAESI Act, in order to recover the amount due to the bank. The price higher than the reserve price had been received against the joint auction of the Plant and Machinery and Land.
Even from the admitted allegations, it has not been shown/proven/established that respondent No.2 parted with his property on a representation made by the petitioners which they had known to be false and that the accused-petitioners had any dishonest intention to cheat respondent No.2 from the very (Downloaded on 11/04/2024 at 08:38:08 PM) [2024:RJ-JD:12837] (14 of 14) [CRLMP-735/2022] beginning. As a matter of fact, as per the material placed before this Court, the petitioners and the complainant never came in contact prior to the auction of the disputed property and no property was delivered to the petitioners by respondent No.2 or that he parted away with a valuable security. Thus, the ingredients to constitute offence under Sections 420 & 406 IPC are not present in this case.
In wake of discussion made hereinabove, this Court is unable to agree with the reasons recorded in the order of cognizance dated 22.01.2018 passed by the learned Judicial Magistrate, First Class, Bijoliya District Bhilwara and the order dated 04.10.2021 passed by the Additional Judge No.3, Bhilwara (Mandalagarh Camp) in the Revision Petition No.38/2018 rejecting the revision petition preferred on behalf of the petitioners.
In the result, the present criminal misc. petition is allowed. The order of cognizance dated 22.01.2018 passed by the Judicial Magistrate, First Class, Bijoliya, District Bhilwara in the Criminal Case No.27/2018 and the order dated 04.10.2021 passed by the Additional Judge No.3, Bhilwara (Mandalagarh Camp) in the revision petition No.38/2018 are hereby quashed and set aside.
All pending applications also stand disposed of.
(KULDEEP MATHUR),J 422-himanshu/-
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