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[Cites 18, Cited by 0]

Delhi District Court

Sweta Singh vs Rajesh Gulaty on 2 March, 2023

             IN THE COURT OF SH. SONU AGNIHOTRI
                    ADDL. SESSIONS JUDGE­03
                  SAKET COURTS, NEW DELHI


Criminal Appeal No. 57/2023
CNR No. DLSE01­001844­2023


SWETA SINGH
W/o Sh. Sunil Kumar Singh
297, Sector­25, Noida,
Gautam Budh Nagar,
Uttar Pradesh­201301.
                                                        .... Appellant


                                 VERSUS

1.     RAJESH GULATY
       Authorized Representative
       Canara Bank, SAM Branch,
       Lajpat Nagar, New Delhi­110 024.

       Also at :
       C­34, 3rd Floor,
       DDA Shopping Complex,
       Defence Colony, New Delhi­110024.

2.     SACHENDRA KUMAR VIMAL
       The then Authorized Representative



CA 57/2023        Sweta Singh Vs. Rajesh Gulaty & Ors       Page no....1 of 30
           Canara Bank, SAM Branch,
          Lajpat Nagar, New Delhi­110 024.

3.        CANARA BANK
          Through its Authorized Representative
          Regd. Off. B­117, Sector­117,
          Noida, Uttar Pradesh­201301.
                                                           .... Respondents


          Date of institution                 :       14.02.2023
          Date of reserving the order         :       25.02.2023
          Date of pronouncement               :       02.03.2023


                                 JUDGMENT

1. This is criminal appeal u/s 341 of the Code of Criminal Procedure preferred by appellant against impugned order dated 11.01.2023 passed by court of Ms. Shivani Chauhan, Ld. CMM, South­East District whereby application of appellant U/sec 340 Cr.P.C was dismissed.

2. Brief facts as mentioned in appeal are that application U/sec 14 of Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....2 of 30 referred as SARFAESI Act) vide Misc. Crl. No. 529/2021 was filed by respondents in December 2021 before Ld. CMM seeking order for taking possession of property / free hold flat built upto 2nd Floor (half portion rear side) without roof rights area measuring 174.50 sq yards in building bearing Municipal No. B­67­AB constructed on total plot area ad­measuring 349 sq yards alongwith proportionate undivided, indivisible and impartible ownership rights in plot situated at Kalkaji, New Delhi owned by appellant herein. It is stated that said application was accompanied by affidavit of respondent No. 2 Sachendra Kumar Vimal, Sworn / Affirmed by respondent No. 2 before Oath Commissioner on 01.12.2021.

3. It is stated that SARFAESI application of respondents (filed on 04.12.2021) was solely based upon alleged happenings of year 2018 and 2019. It is stated that said SARFAESI application was premised on alleged classification of alleged debt as non performing asset on 29.09.2018, the alleged CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....3 of 30 outstanding liability as on 30.06.2019 and the alleged notice u/s 13(2) the SARFAESI Act dated 26.07.2019 whereas various decisive and vital happenings took place subsequently to aforesaid dates of 2018 and 2019 till date of filing of said SARFAESI application in December 2021. It is stated that vital and decisive happenings details of which are mentioned below nullified /vitiated all actions of respondents forming subject of SARFAESI application including aforesaid alleged debt, alleged classification as NPA and alleged notice U/sec 13 (2) of SARFAESI Act. It is stated that on account of subsequent developments, respondents had / have no right to proceed against appellant under SARFAESI Act but respondents did not disclose any of said subsequent and vital developments in their SARFAESI application and statutory affidavit and / or during course of their statement before Ld. Trial Court. It is stated that respondents made false, misleading and concealing statements before Ld. Trial Court with objective of obtaining favourable CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....4 of 30 order from Ld. Trial Court U/sec 14 of SARFAESI Act.

4. It is stated that due to said concealing, false and misleading statements and conduct of respondents, appellant preferred an application U/sec 340 Cr. P. C before Ld. Trial Court seeking initiation of perjury proceedings against respondents. It is stated that wrongful concealments, false and misrepresenting statements of respondents in their aforesaid SARFAESI application and statutory affidavit were pointed out in detail by appellant before Ld. Trial Court vide its said application U/sec 340 Cr. P. C.

5. It is stated that appellant in application U/sec 340 Cr. P. C categorically and specifically submitted / pointed out that respondents are guilty of severe concealment, perjury, misrepresentation and false deposition qua following material, vital and decisive facts in their aforesaid application U/sec 14 of SARFAESI Act and statutory affidavit thereof. CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....5 of 30

a) That vide order 18.07.2018, Hon'ble NCLT admitted petition under Section 9 of Insolvency & Bankruptcy Code, 2016 issuing moratorium under IBC qua corporate debtor therein i.e. M/s Maple Realcon Pvt. Ltd. (respondent No. 1 in SARFAESI application).

b) Hon'ble NCLT while exercising its power U/sec 31 of IBC vide order dated 20.02.2020 approved resolution plan submitted by resolution appellant M/s Apex Heights Pvt. Ltd with majority share of 89.07%.

c) Respondent bank being financial creditor on initiation of CIRP filed its claim of Rs. 10,35,18,740/­ including interest as on insolvency commencement date. During CIRP, respondent bank was offered payment of total amount by aforesaid resolution appellant and proposal of resolution appellant was duly approved by committee of creditors and thereafter by Hon'ble NCLT while exercising its power U/sec 31 of IBC. Approval order provided that entire claim of respondent bank CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....6 of 30 shall be extinguished in full by releasing matured proceeds under FDR for 3 crores held by them towards partial discharge of their admitted liabilities. Approval order further provided that proceeds of said FDR can be appropriated immediately on pronouncement of said approval order. Under the said approval order, resolution appellant was further directed to pay remaining amount in 24 equal monthly installments.

d) During pendency of CIRP and during subsistence of moratorium U/sec 14 of IBC, respondent bank issued alleged demand notice U/sec 13 (2) dated 26.07.2019 calling upon borrower and guarantors therein to pay an amount of Rs. 12,31,43,655.02/­.

e) In reply to above demand notice, M/s Maple Realcon Pvt. Ltd through their counsel raised objection / representation dated 02.09.2019 pointing out therein that demand notice is illegal and untenable.

f) Respondent bank acting in arbitrary, unjust and unlawful CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....7 of 30 manner failed to dispose of said objections of corporate debtor by means of speaking order. Respondent bank violated Section 13 (3­A) of SARFAESI Act and contraverted judgment of Hon'ble Apex Court in case titled as Mardia Chemicals and Blue Coast Hotels.

g) Respondent bank in defiance of approval order of NCLT failed to appropriate fixed deposit given by corporate debtor at the time of availing loan. Respondent bank was directed to appropriate / release matured proceed under FDR of Rs. 3 crores inclusive of interest which was held by respondent bank towards partial discharge of admitted liability. Respondent bank in place of releasing matured proceeds alongwith interest only released an amount of Rs. 2,84,54,126/­ which is much less then total amount alongwith earned interest. Against conduct of respondent bank, resolution appellant lodged its protest which was addressed only on 28.10.2020 by depositing remaining amount of Rs. 24,21,121/­ after delay of more than 180 days. CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....8 of 30

h) Interestingly, respondent bank issued letter dated 28.10.2020 to Director namely Sukhbeer Singh of corporate debtor stating that in terms of approval order, after adjustment of FDR of Rs. 3,08,75,247.33/­ against claim of Rs. 10,35,18,741/­ as per approval order remaining amount to be received by respondent bank from successful resolution appellant is only Rs. 7,26,43,493.67/­.

i) In addition to aforesaid appropriate FDR, payments till date of filing of SARFAESI application i.e. up till December­ 2021 has been received by respondent bank.

j) Respondent bank and its authorized officer further concealed that they have moved an application bearing IA No. 4675/2021 before Hon'ble NCLT seeking following prayers:­

a) Issue directions to non appellants to make payment of remaining installments under the plan in a time bound manner as per order dated 20.02.2020 passed by Hon'ble Adjudicating Authority.

CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....9 of 30

b) Issue directions to non appellants to pay interest on delayed payments.

c) Issue directions to non appellants to withdraw their communications whereby they are refraining appellant to take action against third party guarantors / collateral securities with respect to outstanding dues of M/s Maple Realcon Pvt. Ltd as action taken by appellant is independent of plan which stood approved.

Hon'ble NCLT disposed of above­said application of respondent bank vide order dated 21.02.2022 wherein Hon'ble NCLT directed above­said resolution appellant to adhere to approved resolution plan and did not pass any orders against or qua guarantors including appellant herein.

k) Respondent bank in furtherance of its illegitimate unjustified, extraneous and unlawful designs initiated wrongful actions against all guarantors and alleged secured assets of alleged loan account No. 1630SL5161820003. One of the CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....10 of 30 guarantor Sanjay Sarin approached Hon'ble High Court of Delhi vide WP ( c) No. 2983/2022 against said wrongful action of respondents and in said writ petition, respondent bank and its authorized officer filed short affidavit dated 03.03.2022 admitting therein not only all above­said facts including appropriation of aforesaid FDR but they have also stated that 15 installments amounting to Rs. 4,53,60,000/­ out of aforesaid 24 installments are pending.

l) Similar application U/sec 14 of SARFAESI Act on similar basis / allegations has also been filed by respondents as against property of other guarantor Sanjay Sarin before Court of Ld. CMM, District East, KKD Courts wherein above­said resolution applicant has also preferred an application / petition U/sec 340 r/w Section 195 Cr. P. C as against respondent bank and its authorized officer against their wrongful and criminal acts and Court of Sh. Jitendra Pratap Singh vide order dated 08.09.2022 has been pleased to observe and hold that above­ CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....11 of 30 said application U/sec 340 Cr. P. C is necessary to be dealt with before proceeding U/sec 14 of SARFAESI Act.

m) Actions of respondent bank are not only highly unjustified, extraneous and malicious but same are contrary to / violative of dictum of Hon'ble Supreme Court in case titled as "Ghanshyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd and Ors."

6. It is stated that SARFAESI application, statutory affidavit and aforesaid facts which were in knowledge of respondents and truthful declaration thereof were warranted from respondent were deliberately missing and misrepresented in SARFAESI application and statutory affidavit thereof of respondent No. 2.

7. Ld. Trial Court was warranted to give due consideration to aforesaid application U/sec 340 Cr. P. C of appellant but Ld. Trial Court brushed aside / dismissed the same vide order dated 11.01.2023.

CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....12 of 30

8. Order dated 11.01.2023 of Ld. Trial Court miserably failed to exercise jurisdiction vested in it and failed to consider, take cognizance and appreciate false deposition, false and misleading statements of respondents and to initiate appropriate action against respondents for their wrongful acts which is deserved to be set aside by this court in exercise of its appellant jurisdiction U/sec 341 Cr. P. C and initiation of appropriate action against respondent U/sec 340 Cr. P. C is warranted from this court in exercise of its appellant jurisdiction.

9. Appellant has taken following grounds to challenge impugned order:-

a) Because Ld. Trial court grossly erred in holding that Section 340 Cr.P.C. application of the appellant was premature as respondent bank led no evidence till the date of the said order i.e. 11.01.2023 whereas respondent No.1, in furtherance of and in terms of the aforementioned concealing, false and misleading application u/s 14 of SARFAESI Act and accompanying CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....13 of 30 affidavit thereof of respondent No. 2, deposed / recorded his statement before Ld. Trial Court on the same day i.e. on 11.01.2023. Moreover, respondent No. 1 did not deliberately disclose any of the aforementioned vital and decisive facts, which were in the knowledge of respondent No. 1 before Ld. Trial Court.

b) Because not only the aforesaid concealments, false and misleading statements of respondents were in the knowledge of and before Ld. Trial Court on 11.01.2023 but further subsequent developments having substantive bearing on the proceedings before Ld. Trial Court were also pointed out by appellant before Ld. Trial Court on 11.01.2023. Appellant further brought to the notice of Ld. Trial Court that an appeal bearing Company Appeal (AT) (Ins) No. 317 of 2022 was preferred by respondent bank before Hon'ble National Company Law Appellate Tribunal against the above mentioned order dated 21.02.2022 of Hon'ble NCLT on 1A NO. 4675/2021 of respondent bank CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....14 of 30 wherein respondent bank made following three prayers:

a) Direction was sought to make payment in time bound manner and
b) Further to pay interest on the delayed payment.
c) Direction to the non­applicants to withdraw their communications whereby they are refraining to take action against the third party guarantors / collateral securities with respect to outstanding dues.

The Hon'ble NCLAT vide order dated 28.11.2022 was pleased to dispose off the said appeal of respondent bank with following observations and holdings:

"The resolution plan having been approved the payments are to made by successful resolution applicant as per plan. The installments as per plan are being paid by SRA alongwith some delay. The SRA being ready to pay the interest on delayed payment @ MCLR rate, extension of six months time deserves to be allowed. Coming to the prayer C made in the application CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....15 of 30 no direction need to be issued since the said prayer seeks action against the third party guarantor/ collateral securities which is to governed by the terms and conditions of Resolution Plan."

c) Because not only order dated 28.11.2022 of Hon'ble NCLAT was brought to notice of Ld. Trial Court by appellant on 11.01.2023 but appellant also submitted detailed chart showing due compliance of said order of Hon'ble NCLAT by resolution applicant whereby resolution applicant paid all due installments from 28.11.2022 till 11.01.2023 to respondent bank and there existed no over due amount as on said date. Only an amount of Rs. 1,63,45,000/­ was payable by resolution applicant to respondent bank as on 11.01.2023 and said amount as per order dated 28.11.2022 is to be cleared till 23.06.2023.

d) Because respondents were duty bound not only to disclose to /apprise Ld. Trial Court about afore­said order dated 28.11.2022 to Hon'ble NCLAT and to submit detailed loan CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....16 of 30 account statement as on 11.01.2023 before Ld. Trial Court but they were also obligated to adhere to said order of NCLAT.

e) Because Ld. Trial Court while treating 340 Cr. P. C application of appellant as per­mature erred in recognizing and appreciating that provisions of Section 340 Cr. P. C are attracted not only in case of culprit who gives false evidence but are also attracted in case of culprit who fabricated false evidence for purpose of being used in any stage of judicial proceedings. Due and effective administration of justice ensuring provisions of Section 340 Cr. P. C are attracted not only against person who uses false evidence but are also attracted in case of person who attempts to use as true or genuine any evidence which he knows to be false or fabricated.

f) Because respondents No. 1 and 2 who are / were public servants were bound to make truthful and complete (containing all material facts) statement / declaration before Ld. Trial Court in their affidavit and deposition in terms of Section 14 of CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....17 of 30 SARFAESI Act but they in order to cause serious prejudice and injury to appellant and while playing fraud upon Ld. Trial Court resorted to aforesaid concealments, false and mis­representing statements.

g) Because Ld. Trial Court grossly erred in not taking cognizance of the fact that respondents were duty bound in terms of Section 14 of SARFAESI Act to solemnly affirm and declare true and complete factual position as on date of filing of application but they made false statements and gave false evidence before Ld. Trial Court qua the same. From year 2018 till date of filing of SARFAESI application, there existed no alleged debt of Rs. 12,31,43,655.02/­ as on date of filing of SARFAESI application nor alleged debt / loan account was a non performing asset in December 2021. Moreover, admittedly, there was no notice u/s 13(2) of SARFAESI Act to appellant till December 2021, after approval of resolution plan by Hon'ble NCLAT and subsequent payments by successful resolution CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....18 of 30 applicant. In fact on account of mentioned developments, respondents had no right to invoke provisions of SARFAESI Act against appellant.

h) Because Ld. Trial Court further erred in treating application of applicant as pre­mature as there existed solemnly affirmed affidavit dated 01.12.2021 of respondent No. 2 on record of Ld. Trial Court which was filed by respondent No. 2 in discharge of statutory obligation u/s 14 of SARFAESI Act. Respondent No. 2 being authorized representative of respondent No. 3 was duty bound by law to make truthful statement / declaration in its affidavit under proviso to Section 14 of SARFAESI Act but respondents made false and concealing statements in the said affidavit. Ld. Trial Court failed to appreciate that purpose of Section 340 Cr.P.C. is to ensure and have effective and due administration of justice.

i) Because Ld. Trial Court grossly erred in holding that even if there are concealments and misrepresentations / fraud by CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....19 of 30 respondents qua judicial proceedings before Ld. Trial Court, the same is to be protected or corrected by DRT. Wrongful deposition and false statements were made by respondents with / during course of judicial proceedings before Ld. Trial Court and Ld. Trial Court was duty bound to ensure that judicial proceedings before it are not abused or misused.

j) Because Section 340 Cr.P.C. was patently applicable and attracted against respondents in present case.

k) Because there is no finding by Ld. Trial Court that there was no concealment, misrepresentation or false statements by respondents nor there is any finding by Ld. Trial Court that application of appellant was meritless.

l) Because Ld. Trial Court while holding that grievance of appellant are to be agitated and addressed only by DRT failed to take note that it was statutory duty of Ld. Trial Court to ascertain genuineness and correctness of affidavit of respondents filed in terms of proviso to Section 14 of CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....20 of 30 SARFAESI Act.

m) Because Ld. Trial Court failed to take note of orders dated 11.03.2022 and 07.04.2022 of its Ld. Predecessor wherein Ld. Predecessor while taking cognizance and note of above said subsequent decisive facts was pleased to observe that prima facie it appears to be concealment of material facts by Bank and Ld. Predecessor was pleased to fix matter for deciding maintainability of SARFAESI application of respondents on account of said concealment. Ld. Trial Court not only bypassed order dated 07.04.2022 but in effect reviewed order of her Ld. Predecessor which is not permissible in law.

n) Because Ld. Trial Court erred in not appreciating that as per provisions of Section 14 of SARFAESI Act, SARFAESI application of respondents ought to comply with affidavit duly affirmed by authorized officer of the bank declaring specifically and clearly declarations sought in clause (i) to (ix) of proviso to Section 14 but affidavit of officer of respondent bank does not CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....21 of 30 meet parameters contained therein.

o) Because respondents knew that their SARFAESI application and statutory affidavit is not proved and genuine but they deliberately initiated, deposed and pressed upon the same in an illegal manner thereby causing wrongful loss and injury to appellant.

p) Because Ld. Trial Court erred in not taking cognizance that default as mentioned in Section 13(2) as well as Section 13(4) of SARFAESI Act forming basis of SARFAESI application of respondents was mitigated / settled / restructured in view of approval of resolution plan.

q) Because acts of respondents amounted to criminal breach of trust, interference with administration of justice and process of law and also tantamount to contempt of court and gross abuse of process of law.

10. It is stated that in view of foregoing submissions, conduct of respondents establishes that respondents have made false CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....22 of 30 statements and manipulated documents with motive to misled Ld. Trial Court and hence, committed offences u/s 191/192/193/196 IPC.

11. That since respondents have put forth wrong facts in open Court, twisted and manipulated material facts during course of judicial proceedings with malafide intention to misled Court in order to have favourable orders, respondents have committed offences u/s 199/200/209 IPC.

12. It is prayed to call for TCR, set aside impugned order dated 11.01.2023 and initiate criminal proceedings against respondents.

13. I have heard arguments addressed by respective counsels and perused record including trial court record, judgments and documents filed on behalf of both the parties.

14. During course of arguments, counsel for respondents filed copy of judgment of Hon'ble High Court of Delhi dated 08.08.2022 in W.P.(C) 2983/2022 and CM APPL. 8630/2022 whereby writ petition filed by another guarantor for the same CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....23 of 30 loan namely Sanjay Sarin was dismissed by Hon'ble High Court of Delhi by holding that respondent Bank has right to proceed against collateral securities for recovery of its dues which are independent of resolution plan approved by NCLT. Hon'ble High Court of Delhi in this case discussed judgment of Hon'ble Supreme Court of India in case titled as Lalit Kumar Jain Vs. Union of India wherein it was held that discharge of corporate debtor from a debt owed by it to its creditors, by way of an involuntary process such as insolvency proceedings, does not absolve guarantor of its liability since it arises out of an independent contract. It was further held that passing of a resolution plan does not ipso facto discharge the personal guarantor. Review filed by guarantor Sanjay Sarin against order dated 08.08.2022 was also dismissed by Hon'ble High Court of Delhi vide order dated 16.01.2023 (filed by counsel for respondents during course of arguments).

15. It is not in dispute that appellant gave guarantee while loan was sanctioned to M/s. Maple Realcon Pvt. Ltd. It is also CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....24 of 30 not in dispute that respondent No. 3 casted its dissenting vote to resolution plan passed by Hon'ble NCLT.

16. Counsel for respondents during course of arguments submitted that 24 equal installments were not paid by RA as per approved plan and that interest kept on accruing on not paid installments within time. It was submitted that respondent No. 3 is a public sector bank and is custodian of public money and in view of judgment of Hon'ble Supreme Court of India Lalit Kumar Jain's case, liability of guarantor is different from that of creditor and is not extinguished in view of insolvency proceedings started against principal debtor.

17. Ld. Trial Court impugned order observed that in present case, no evidence has been led by respondent bank till date and hence application filed by appellant alleging fabrication of evidence is pre-mature. It further observed that plea taken by appellant that respondent bank has concealed certain material facts in its application filed u/s 14 of SARFAESI Act may be taken by appellant in DRT. By making these observations, Ld. CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....25 of 30 Trial Court dismissed application of appellant u/s 340 Cr.P.C.

18. Section 17(1) of SARFAESI Act provides that any person including borrower aggrieved by any of the measure referred to in sub section (4) of Section 13 taken by secured creditor or his authorized officer under this chapter, may make an application alongwith such fee, as may be prescribed to the DRT having jurisdiction in the matter within 45 days from the date on which such measure had been taken.

19. Perusal of aforesaid provision of 17 SARFAESI Act shows that remedy of appellant against action taken by respondent bank before Court of Ld. CMM lied before DRT. Perusal of Trial Court record shows that counsel for appellant was appearing before Ld. Trial Court since 11.03.2022 but it did not agitate any remedy before DRT and rather filed application u/s 340 Cr.P.C. before Ld. Trial Court.

20. Section 340 Cr.P.C. is not mandatorily to be allowed by a Court unless Court is of opinion that it is expedient in the interest of justice that an inquiry should be made into offences CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....26 of 30 referred to in clause (b) of sub section (1) of Section 195 which appears to have been committed in or in relation to a proceeding in that Court or as the case may be, in respect of document produced or given in evidence in a proceeding in that Court.

21. Section 35 of SARFAESI Act provides that provisions of the Act shall have effect not withstanding anything inconsistent therewith contained in any other law for the time being enforced or any instrument having effect by virtue of any such law.

22. Section 29 of SARFAESI Act provides that if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules made thereunder, he shall be punishable with imprisonment for a term which may extend to one year or with fine or with both.

23. Respondent Bank filed application u/s 14 of SARFAESI Act before Court of Ld. CMM as per provisions of SARFAESI Act and in case any contravention has been made by respondent Bank of any provision of the Act, it is punishable u/s 29 of the Act.

CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....27 of 30

24. Section 35 of SARFAESI Act as mentioned above confers overriding effect to provisions of this Act.

25. As action was taken by respondent Bank under provisions of SARFAESI Act which according to appellant was not confirming to provisions of SARFAESI Act and was misleading and amounting to concealment of material facts, in view of above mentioned provisions of SARFAESI Act, the appropriate remedy in my point of view lied before DRT. SARFAESI Act was enacted with a view to early recovery of debts of financial institutions. Respondent No. 3 is a public sector bank and no malafide can be attributed to it while initiating proceedings inter alia against appellant u/s 14 of SARFAESI Act. In case, these sort of applications are allowed as a matter of routine, purpose of enacting SARFAESI Act will become infructuous and will open a pandora's box. Further, to express any opinion as to whether alleged debt was NPA or not or how much amount was actually due to be paid to secured creditor / respondent No. 3 will tantamount to usurping CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....28 of 30 jurisdiction of DRT/ NCLT which is not permissible in law. Otherwise and hence, it is not expedient in interest of justice to initiate proceedings against respondents for commission of alleged offences. Judgment of Hon'ble Supreme Court of India (Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and Ors MANU/SC/0273/2021) filed on behalf of appellant is not applicable in facts and circumstances of present case particularity when it does not deal with provisions of Section 340 Cr. P. C.

26. In view of my above made discussion, I am of the view that no fault can be found with impugned order coupled with some more reasoning as given in this appeal. Appeal filed by appellant appears to be without merits and is accordingly dismissed.

27. Trial court record be sent back along with the copy of this judgment.

CA 57/2023 Sweta Singh Vs. Rajesh Gulaty & Ors Page no....29 of 30

28. Appeal file be consigned to record room. 

         Dictated and Announced                      (Sonu Agnihotri)
         in the open court                         ASJ­03 (South­East),
         on 02.03.2023                              Saket Courts, Delhi




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