Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Crl.), 781 of 2012, Judgment Date: Mar 19, 2015

                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO.781 OF 2012


Mrs. Priyanka Srivastava and Another                            Appellants

                                  Versus

State of U.P. and Others                                       Respondents

                               J U D G M E N T

Dipak Misra, J.

      The present appeal projects and frescoes a scenario which is not  only
disturbing but also has the potentiality to create a  stir   compelling  one
to ponder in a perturbed  state  how  some  unscrupulous,  unprincipled  and
deviant litigants can ingeniously and innovatively design  in  a  nonchalant
manner to knock at the doors of the Court, as if, it is a  laboratory  where
multifarious experiments can take   place  and  such  skillful  persons  can
adroitly abuse the process of the Court at their  own  will  and  desire  by
painting a canvas of agony by assiduous assertions made in  the  application
though the real intention is to harass the  statutory  authorities,  without
any remote remorse, with the inventive design primarily to create  a  mental
pressure on the said officials as individuals, for they would  not  like  to
be dragged to a court  of  law  to  face  in  criminal  cases,  and  further
pressurize in such a  fashion  so  that  financial  institution  which  they
represent would ultimately be constrained to accept the  request  for  "one-
time settlement" with the fond hope that the obstinate  defaulters  who  had
borrowed money from it would withdraw the  cases  instituted  against  them.
The facts, as we proceed to adumbrate, would  graphically  reveal  how  such
persons, pretentiously aggrieved but potentially dangerous, adopt the  self-
convincing mastery methods to achieve so.  That is the sad  and  unfortunate
factual score forming the fulcrum of the case at  hand,  and,  we  painfully
recount.
2.    The facts which need to  be  stated  are  that  the  respondent  No.3,
namely, Prakash Kumar Bajaj, son of  Pradeep  Kumar  Bajaj,  had  availed  a
housing loan from the financial institution, namely,  Punjab  National  Bank
Housing Finance Limited (PNBHFL) on 21st January, 2001,  vide  housing  loan
account No.IHL-583.  The loan was taken in the name of the  respondent  No.3
and his wife, namely, Jyotsana Bajaj.  As there was default  in  consecutive
payment of the  installments,  the  loan  account  was  treated  as  a  Non-
Performing Asset (NPA) in accordance  with  the  guidelines  framed  by  the
Reserve Bank of India.  The authorities of the financial institution  issued
notice to the borrowers  under  Section  13(2)  of  the  Securitisation  and
Reconstruction of Financial Assets  and  Enforcement  of  Security  Interest
Act, 2002,  (for  short,  'the  SARFAESI  Act')  and  in  pursuance  of  the
proceedings undertaken in the said Act,  the  PNBHFL,  on  5th  June,  2007,
submitted an application before the District Magistrate, Varanasi, U.P.  for
taking appropriate action under Section 13(4) of the  SARFAESI Act.
3.    At this juncture, the  respondent  No.3  preferred  W.P.  No.44482  of
2007, which was dismissed by the High Court on 14th  September,  2007,  with
the observation  that  it  was  open  to  the  petitioner  therein  to  file
requisite  objection  and,  thereafter,  to  take  appropriate   action   as
envisaged under Section 17 of the SARFAESI Act.    After  the  dismissal  of
the writ petition with  the  aforesaid  observation,  the  respondent  No.3,
possibly nurturing the  idea  of  self-centric  Solomon's  wisdom,  filed  a
Criminal Complaint Case No.1058 of 2008, under Section 200  Cr.P.C.  against
V.N. Sahay,  Sandesh  Tiwari  and  V.K.  Khanna,  the  then  Vice-President,
Assistant President and the  Managing  Director  respectively  for  offences
punishable under Sections 163, 193 and 506 of the Indian Penal  Code  (IPC).
It was alleged  in  the  application  that  the  said  accused  persons  had
intentionally taken steps to cause injury to him.   The  learned  Magistrate
vide order dated 4th October, 2008,  dismissed the  criminal  complaint  and
declined  to  take  cognizance  after  recording  the   statement   of   the
complainant under Section 200 Cr.P.C.  and  examining  the  witnesses  under
Section 202 Cr.P.C.
4.    Being grieved by the aforesaid order, the respondent No.3 preferred  a
Revision Petition No.460 of 2008, which was eventually heard by the  learned
Additional Sessions Judge, Varanasi, U.P.  The learned  Additional  Sessions
Judge after adumbrating the facts and taking note of the submissions of  the
revisionist, set aside the order dated 4th October, 2008  and  remanded  the
matter to the trial  Court  with  the  direction  that  he  shall  hear  the
complaint again and pass a cognizance order according to law  on  the  basis
of merits according to the directions  given  in  the  said  order.   Be  it
noted, the learned Additional Sessions  Judge  heard  the  counsel  for  the
respondent No.3 and the learned counsel for the  State  but  no  notice  was
issued to the accused  persons  therein.   Ordinarily,  we  would  not  have
adverted to the same because that lis is the subject matter in  the  appeal,
but it has become imperative to do only  to  highlight  how  these  kind  of
litigations are being dealt with and also to show the  respondents  had  the
unwarranted enthusiasm to move the courts.  The  order  passed  against  the
said accused persons at that time was  an  adverse  order  inasmuch  as  the
matter was remitted.  It was incumbent to hear the respondents  though  they
had  not  become  accused  persons.   A  three-Judge  Bench  in  Manharibhai
Muljibhai Kakadia and Anr. v. Shaileshbhai  Mohanbhai  Patel  and  others[1]
has opined that in a case arising out of a complaint petition, when  travels
to the superior Court and an adverse order  is  passed,  an  opportunity  of
hearing has to be given.  The relevant passages are reproduced hereunder:
46. .......If the Magistrate finds that there is no  sufficient  ground  for
proceeding with the complaint and dismisses the complaint under Section  203
of the Code, the question is whether  a  person  accused  of  crime  in  the
complaint can claim right of hearing in a revision application preferred  by
the complainant against  the  order  of  the  dismissal  of  the  complaint.
Parliament being alive to the legal position that the  accused/suspects  are
not entitled to be heard at any stage of the proceedings until  issuance  of
process under Section 204, yet in Section 401(2) of the Code  provided  that
no order in exercise of the power of the  revision  shall  be  made  by  the
Sessions Judge or the High Court, as the case may be, to  the  prejudice  of
the accused or the other person unless he had an opportunity of being  heard
either personally or by pleader in his own defence.

                              xxxxx xxxxx xxxxx

48. In a case where the complaint  has  been  dismissed  by  the  Magistrate
under Section 203 of the Code either at the stage of Section 200  itself  or
on completion of inquiry by the Magistrate under Section 202 or  on  receipt
of the report from the police or from any person to whom the  direction  was
issued by  the  Magistrate  to  investigate  into  the  allegations  in  the
complaint,  the  effect  of  such  dismissal  is  termination  of  complaint
proceedings. On a plain reading  of  sub-section  (2)  of  Section  401,  it
cannot be said that the  person  against  whom  the  allegations  of  having
committed the offence have been made in the complaint and the complaint  has
been dismissed by the Magistrate under Section  203,  has  no  right  to  be
heard because no process has been issued. The dismissal of complaint by  the
Magistrate  under  Section  203-although  it  is   at   preliminary   stage-
nevertheless results in termination of proceedings in  a  complaint  against
the persons who are alleged to have committed the crime.  Once  a  challenge
is laid to such order at the instance  of  the  complainant  in  a  revision
petition before the High Court or the Sessions Judge, by virtue  of  Section
401(2) of the Code, the  suspects  get  the  right  of  hearing  before  the
Revisional  Court   although   such   order   was   passed   without   their
participation. The right given to "accused"  or  "the  other  person"  under
Section 401(2) of being heard before  the  Revisional  Court  to  defend  an
order which  operates  in  his  favour  should  not  be  confused  with  the
proceedings before a Magistrate under Sections 200, 202,  203  and  204.  In
the revision petition before the High Court or the  Sessions  Judge  at  the
instance  of  the  complainant  challenging  the  order  of   dismissal   of
complaint, one of the things that could happen is reversal of the  order  of
the Magistrate and revival of the complaint. It  is  in  this  view  of  the
matter that the accused or other person cannot be  deprived  of  hearing  on
the face of the express provision contained in Section 401(2) of  the  Code.
The stage is not important whether it is pre-process stage or  post  process
stage.

                              xxxxx xxxxx xxxxx

53. We are in complete agreement with the view expressed by  this  Court  in
P. Sundarrajan2, Raghu Raj Singh Rousha3 and A.N. Santhanam4.  We  hold,  as
it must be, that in a revision petition preferred by the complainant  before
the High Court or the Sessions Judge challenging an order of the  Magistrate
dismissing the complaint under Section 203 of the Code at  the  stage  under
Section 200 or after following the process contemplated  under  Section  202
of the Code, the accused or a person who is suspected to have committed  the
crime is entitled to hearing by the Revisional Court. In other words,  where
the complaint has been dismissed by the Magistrate under Section 203 of  the
Code, upon challenge to the legality of the said order  being  laid  by  the
complainant in a revision petition before the High  Court  or  the  Sessions
Judge, the persons who are arraigned as accused  in  the  complaint  have  a
right to be heard in such revision petition. This is a plain requirement  of
Section 401(2) of the Code. If the Revisional Court overturns the  order  of
the Magistrate dismissing the complaint and the  complaint  is  restored  to
the file of the Magistrate and it is sent back for fresh consideration,  the
persons who are alleged in the complaint to have committed the  crime  have,
however, no right to participate in the proceedings nor  are  they  entitled
to  any  hearing  of  any  sort  whatsoever  by  the  Magistrate  until  the
consideration of the matter by the Magistrate for issuance of process."

      Though the present controversy is different, we have  dealt  with  the
said facet as we intend to emphasize how the  Courts  have  dealt  with  and
addressed to  such  a  matter  so  that  a  borrower  with  vengeance  could
ultimately exhibit his high-handedness.
5.    As the narration further  proceeds,  after  the  remand,  the  learned
Magistrate vide order dated 13th July,  2009,  took  cognizance  and  issued
summons to V.N. Sahay, Sandesh Tripathi and V.K. Khanna.  The  said  accused
persons knocked at the doors of the High Court  under  Section  482  Cr.P.C.
and the High Court in Crl. Misc. No.13628 of 2010, by order dated 27th  May,
2013, ruled thus:
"A perusal of the complaint filed by  the  respondent  no.2  also  indicates
that the issues were with regard to the action of the bank officers  against
respondent no.2 on the ground of alleged malafide and  as  such  an  offence
under sections 166/500 I.P.C. was made  out.   Both  the  sections  are  non
cognizable and bailable and triable by Magistrate of First Class.   For  the
foregoing reasons the 482 Petition deserves to be allowed and  the  criminal
complaint filed by the respondent no.2 being Complaint Case No.1058 of  2009
is liable to be quashed.

Accordingly the application under section 482 Cr.P.C.  is  allowed  and  the
Criminal Complaint Case No.1058 of 2009, Prakash Kumar Bajaj  versus  P.N.B.
Housing Finance Ltd. And others, pending in the Court  of  Additional  Chief
Judicial Magistrate, Court No.2 Varanasi is quashed."

6.    Presently, we are required to sit in the time  machine  for  a  while.
In the interregnum period the borrowers filed  an  objection  under  Section
13(3A) of the SARFAESI Act.  Be it noted, as the  objection  was  not  dealt
with, the respondent  No.3  preferred  W.P.  No.22254  of  2009,  which  was
disposed of on 5th May, 2009 by the High Court, directing  disposal  of  the
same.  Eventually, the objection was rejected  by  the  competent  authority
vide order dated June 1, 2009.  Being grieved  by  the  aforesaid  order  of
rejection, the respondent No.3 filed Securitisation  Appeal  No.5  of  2010,
before  the  Debt  Recovery  Tribunal  (DRT),  Allahabad,  U.P.,  which  was
rejected vide order dated 23rd November, 2012.  The non-success  before  the
DRT impelled the borrowers to prefer an appeal  before  the  Debts  Recovery
Appellate Tribunal (DRAT), Allahabad, U.P.

7.    At this stage, it is apposite to state that the third  respondent,  if
we allow ourselves to say so, have possibly mastered how to create  a  sense
of fear in the mind of the officials who  are  compelled  to  face  criminal
cases.  After the High Court had quashed the earlier proceeding,  the  third
respondent, in  October,  2011,  filed  another  application  under  Section
156(3) CrPC against V.N. Sahay, Sandesh Tripathi and  V.K.  Khanna  alleging
criminal conspiracy and forging of documents referring to  three  post-dated
cheques and eventually it was  numbered  as  Complaint  Case  No.  344/2011,
which gave rise to FIR No. 262 of 2011 under Sections 465,  467,  468,  471,
386, 506,  34  and  120B  IPC.   Being  not  satisfied  with  the  same,  on
30.10.2011, he filed another application under Section  156(3)  against  the
present appellants alleging that  there  has  been  under-valuation  of  the
property.  It was numbered as Complaint Case No. 396/2011 wherein the  Trial
Magistrate directed the SHO to register FIR against the present  appellants.
 Pursuant to the said order, FIR No. 298/2011 was registered.
8.    At this juncture, it is imperative to state that the third  respondent
made the officials agree to  enter  into  one  time  settlement.   The  said
agreement was arrived  at  with  the  stipulation  that  he  shall  withdraw
various cases filed by him on acceptance of the  one  time  settlement.   As
the factual matrix would reveal,  the  third  respondent  did  not  disclose
about the initiation of the complaint cases no. 344/2011 and  396/2011.   On
28.11.2011, the one time settlement was acted upon and the third  respondent
deposited Rs.15 lakhs.
9.    At this stage, it is apt to mention that V.N.  Sahay  and  two  others
approached the High Court of Allahabad in Writ (C)  No.  17611/2013  wherein
the learned Single Judge heard  the  matter  along  with  application  under
Section 482 CrPC in Crl. Misc. No. 13628/2010.  We have  already  reproduced
the relevant part of the order  passed  therein.   Be  it  noted,  the  writ
petition has also been disposed of by the High Court by stating thus:
"Heard Mr. Manish Trivedi, learned counsel for  the  petitioner,  Mr.  Vivek
Kumar Srivastava, learned counsel appearing on  behalf  of  respondent  no.3
and learned AGA.

It is submitted by learned AGA that in the present  case  investigation  has
been completed and final report has been submitted,  considering  the  same,
this petition has become infructuous.

The interim order dated 2.12.2011 is hereby vacated.

Accordingly, this petition is disposed of."
10.   At this juncture, we are impelled to look  at  the  past  again.   The
respondent had preferred, as has been stated before, an  appeal  before  the
DRAT.  The said appeal was numbered as Appeal No. 5 of 2013.   In  the  said
appeal, the following order came to be passed:
"During the pendency of the said application, a proposal  was  submitted  by
the borrower to settle the claim for an amount of Rs.15.00 lacs.   The  said
proposal was accepted by the Bank by its letter  dated  15.11.2011  and  the
appellant also deposited the full  amount,  for  which  the  settlement  was
arrived at i.e. Rs.15.00 lacs.  Thereafter, the grievance of  the  appellant
was that since the full amount of  the  settlement  has  been  paid  by  the
appellant, therefore, the bank should be directed to return the title  deed,
as the title deed was not returned.

The Tribunal was of the  view  that  since  the  matter  has  been  settled,
therefore, the securitization application was dismissed as  infructuous  and
the Tribunal  did  not  pass  any  order  for  return  of  the  title  deed.
Therefore, the appellant being aggrieved of the  judgment  dated  23.11.2011
passed by the Tribunal has filed the present appeal.

Learned counsel for the appellant submitted that after when the full  amount
under the settlement has been paid, the respondent-Bank was  duty  bound  to
return the title deed, which has not been returned to the appellant.

It is contended on behalf of the respondent-Bank  that  the  settlement  was
accepted by letter dated 14.11.2011, wherein  the  condition  was  mentioned
that the appellant shall withdraw the complaint  case  which  he  has  filed
before the Criminal Court.

Learned counsel for the appellant submitted that  he  has  no  objection  to
withdraw the complaint case but the title  deed  must  be  returned  to  the
appellant.

The title deed shall be returned by the  respondent-Bank  to  the  appellant
within seven days from today and thereafter, the  appellant  shall  move  an
application to withdraw  the  Criminal  Case  No.1058/09  which  is  pending
before the Chief Judicial Magistrate, Varanasi."

11.   The labyrinth maladroitly created by the respondent No.3 does not  end
here. It appears that he had the indefatigable spirit to indulge himself  in
the abuse of the process of the Court.  The respondent  No.3  had  filed  an
application under Section  156(3)  Cr.P.C.  before  the  learned  Additional
Chief Judicial  Magistrate  on  30th  October,  2011,  against  the  present
appellants, who are the Vice-President and the valuer respectively.  In  the
body of the petition, as we find in the paragraphs 19 and 20,  it  has  been
stated thus:
"That the aforesaid case was referred to the  Deputy  Inspector  General  of
Police, Varanasi through speed post but no  proceeding  had  been  initiated
till today in that regard.

That the aforesaid act done by the aforesaid accused  prima-facie  comes  in
the ambit of section 465, 467, 471, 386, 504, 34 & 120B IPC and in this  way
cognizable offence is made out and proved well."

12.   On the basis of  the  aforesaid  application  the  learned  Additional
Chief Judicial Magistrate, Varanasi, U.P., called  for  a  report  from  the
concerned police station and received the information that no FIR  had  been
lodged and hence, no case  was  registered  at  the  local  police  station.
Thereafter, the learned Additional Chief  Judicial  Magistrate  observed  as
follows:
"It has been stated clearly in the application by the applicant that  it  is
the statement of applicant that he had already given 3 postdated cheques  to
the  financial  bank  for  payment  and  despite  the  availability  of  the
postdated cheques in the financial society, even a single share in the  loan
account has not been got paid.  The opposite  parties  deliberately  due  to
conspiracy and prejudice against applicant  have  not  deposited  previously
mentioned postdated cheques  for  payment  and  these  people  are  doing  a
conspiracy to  grab  the  valuable  property  of  the  applicant.   Under  a
criminal conspiracy,  illegally  and  on  false  and  fabricated  grounds  a
petition has been  filed  before  District  Collector  (Finance  &  Revenue)
Varanasi, which comes under the ambit of  cognizable  offence.   Keeping  in
view the facts of the case, commission of cognizable offence appears  to  be
made out and it shall be justifiable to get done the  investigation  of  the
same by the police."

After so stating it directed as follows:
"In the light of the application, SHO Bhelpur, Varanasi is  hereby  directed
to register the case and investigate the same."

13.   On the basis of  the  aforesaid  order,  F.I.R.  No.298  of  2011  was
registered, which gave rise to case Crime No.415 of 2011  for  the  offences
punishable under Sections 465, 467, and 471 I.P.C.  Being dissatisfied  with
the aforesaid order, the appellants moved  the  High  Court  in  Crl.  Misc.
No.24561 of 2011.  The High Court in  a  cryptic  order  opined  that  on  a
perusal of the F.I.R. it cannot be said that no cognizable offence  is  made
out.  Being of this view, it has  declined  to  interfere  with  the  order.
Hence, this appeal by special leave.
14.   In course of hearing, learned  counsel  for  the  State  of  U.P.  has
submitted that the investigating agency  has  already  submitted  the  final
report on 21st November, 2012.  The said report reads as follows:
"Complainant in the  present  case  has  not  appeared  before  any  of  the
investigators, even after repeated summoning.  And that the action  of  Smt.
Priyanka Srivastava has been done as per her legal rights in  'good  faith',
which is protected under Section 32 of the SARFAESI  Act,  2002.   With  the
abovestated investigations, the present report is concluded."

15.   On a query being made, learned counsel for  the  State  would  contend
that the learned Magistrate has not passed any order on  the  final  report.
Mr. Ajay Kumar, learned counsel appearing for the  appellants  would  submit
that the  learned  Magistrate  has  the  option  to  accept  the  report  by
rejecting the final form/final report under  Section  190  Cr.P.C.  and  may
proceed against the appellants or may issue notice to the  complainant,  who
is entitled to file a protest petition and,  thereafter,  may  proceed  with
the matter and, therefore, this Court  should  address  the  controversy  on
merits and quash the proceedings.
16.   We have narrated the facts in detail as the present case, as we  find,
exemplifies in  enormous  magnitude  to  take  recourse  to  Section  156(3)
Cr.P.C., as if, it is a routine  procedure.   That  apart,  the  proceedings
initiated and the action taken by the authorities  under  the  SARFAESI  Act
are assailable under the  said  Act  before  the  higher  forum  and  if,  a
borrower is allowed to take recourse to criminal law in the  manner  it  has
been taken it,  needs  no  special  emphasis  to  state,  has  the  inherent
potentiality to affect the marrows of economic health of the nation.  It  is
clearly noticeable that the statutory remedies have cleverly  been  bypassed
and prosecution route has been undertaken for instilling  fear  amongst  the
individual authorities compelling them to concede to  the  request  for  one
time settlement which the financial  institution  possibly  might  not  have
acceded.  That apart, despite agreeing for withdrawal of the  complaint,  no
steps were taken in that regard at least  to  show  the  bonafide.   On  the
contrary, there is a contest with a  perverse  sadistic  attitude.   Whether
the complainant could have withdrawn the  prosecution  or  not,  is  another
matter.  Fact remains, no efforts were made.
17.   The learned Magistrate, as we find, while exercising the  power  under
Section  156(3)  Cr.P.C.  has  narrated  the  allegations  and,  thereafter,
without any application of mind, has passed an order to register an FIR  for
the offences mentioned in the application.  The duty  cast  on  the  learned
Magistrate, while exercising power under Section 156(3) Cr.P.C.,  cannot  be
marginalized.  To understand the real purport of the same, we think  it  apt
to reproduce the said provision:
"156. Police officer's power  to  investigate  congnizable  case.  -(1)  Any
officer in  charge  of  a  police  station  may,  without  the  order  of  a
Magistrate,  investigate  any  cognizable  case   which   a   Court   having
jurisdiction over the local area within the limits  of  such  station  would
have power to inquire into or try under the provisions of Chapter XIII.

(2) No proceeding of a police officer in any such case shall  at  any  stage
be called in question on the  ground  that  the  case  was  one  which  such
officer was no empowered under this section to investigate.

(3)  Any  Magistrate  empowered  under  section  190  may  order   such   an
investigation as above-mentioned."

18.   Dealing with the nature of power exercised  by  the  Magistrate  under
Section  156(3)  of  the  CrPC,   a   three-Judge   Bench   in   Devarapalli
Lakshminarayana Reddy and others v. V. Narayana Reddy and others[2], had  to
express thus:
"It may be noted further  that  an  order  made  under  sub-section  (3)  of
Section 156, is in the nature of a peremptory reminder or intimation to  the
police to exercise their  plenary  powers  of  investigation  under  Section
156(1).  Such an investigation embraces the entire continuous process  which
begins with the collection of evidence under Section 156  and  ends  with  a
report or chargesheet under Section 173."

19.   In Anil Kumar v. M.K. Aiyappa[3],  the  two-Judge  Bench  had  to  say
this:
"The scope of Section 156(3) CrPC came  up  for  consideration  before  this
Court in several cases. This Court in  Maksud  Saiyed  [(2008)  5  SCC  668]
examined the requirement of  the  application  of  mind  by  the  Magistrate
before exercising jurisdiction under Section  156(3)  and  held  that  where
jurisdiction is exercised on a complaint filed in terms  of  Section  156(3)
or Section 200 CrPC, the Magistrate is required to apply his mind,  in  such
a case, the Special Judge/Magistrate cannot refer the matter  under  Section
156(3) against  a  public  servant  without  a  valid  sanction  order.  The
application of mind by the Magistrate should be reflected in the order.  The
mere statement that he has gone through the complaint, documents  and  heard
the  complainant,  as  such,  as  reflected  in  the  order,  will  not   be
sufficient. After going through the complaint,  documents  and  hearing  the
complainant, what weighed with the Magistrate to order  investigation  under
Section 156(3) CrPC, should be reflected in the  order,  though  a  detailed
expression of his views is neither required nor warranted. We  have  already
extracted the order passed by the learned Special Judge which, in our  view,
has stated no reasons for ordering investigation."

20.   In Dilawar Singh v. State of Delhi[4], this Court ruled thus:
"18. ...11. The clear position therefore is that  any  Judicial  Magistrate,
before taking cognizance of  the  offence,  can  order  investigation  under
Section 156(3) of the Code. If  he  does  so,  he  is  not  to  examine  the
complainant on oath because he was not  taking  cognizance  of  any  offence
therein. For the purpose of enabling the police to  start  investigation  it
is open to the Magistrate to direct the police to register an FIR. There  is
nothing illegal in doing so. After all registration of an FIR involves  only
the process of entering the substance of the  information  relating  to  the
commission of the cognizable offence in  a  book  kept  by  the  officer  in
charge of the police station as indicated in Section 154 of the  Code.  Even
if a Magistrate does not say in so many words while directing  investigation
under Section 156(3) of the Code that an FIR should  be  registered,  it  is
the duty of the officer in charge of the police station to register the  FIR
regarding the cognizable offence disclosed by the complainant  because  that
police officer could take further steps contemplated in Chapter XII  of  the
Code only thereafter."

21.   In CREF Finance Ltd. v. Shree Shanthi Homes  (P)  Ltd.[5],  the  Court
while dealing  with  the  power  of  Magistrate  taking  cognizance  of  the
offences, has opined that having considered the  complaint,  the  Magistrate
may consider it  appropriate  to  send  the  complaint  to  the  police  for
investigation under Section 156(3) of the Code of Criminal Procedure.
      And again:
"When a Magistrate receives a complaint he is not bound to  take  cognizance
if the facts  alleged  in  the  complaint  disclose  the  commission  of  an
offence. The Magistrate has discretion in the matter. If  on  a  reading  of
the complaint, he finds that the allegations therein disclose  a  cognizable
offence and the forwarding of the complaint to the police for  investigation
under [pic]Section  156(3)  will  be  conducive  to  justice  and  save  the
valuable time of the Magistrate  from  being  wasted  in  enquiring  into  a
matter which was primarily the duty of the police to  investigate,  he  will
be justified in adopting that course as an alternative to taking  cognizance
of the offence  itself.  As  said  earlier,  in  the  case  of  a  complaint
regarding the commission of cognizable  offence,  the  power  under  Section
156(3) can be invoked by the Magistrate before he takes  cognizance  of  the
offence under Section 190(1)(a). However, if he once takes  such  cognizance
and embarks upon the procedure embodied in Chapter XV, he is  not  competent
to revert back to the pre-cognizance stage and avail of Section 156(3)."

22.   Recently,  in  Ramdev  Food  Products  Private  Limited  v.  State  of
Gujarat[6], while dealing with the exercise of power  under  Section  156(3)
CrPC by the learned Magistrate, a three-Judge Bench has held that:
".... the direction under  Section  156(3)  is  to  be  issued,  only  after
application of mind by the Magistrate.  When the Magistrate  does  not  take
cognizance and does not find it necessary to postpone  instance  of  process
and finds a case made out to proceed forthwith,  direction  under  the  said
provision is issued.  In other words, where on  account  of  credibility  of
information available, or weighing the interest of justice it is  considered
appropriate to  straightaway  direct  investigation,  such  a  direction  is
issued.  Cases where Magistrate takes cognizance and postpones  issuance  of
process are cases where the Magistrate has yet to  determine  "existence  of
sufficient ground to proceed."

23.   At this stage, we may usefully refer to what  the  Constitution  Bench
has to say in Lalita Kumari v. Govt. of U.P.[7] in this regard.  The  larger
Bench had posed the following two questions:-
"(i) Whether the immediate  non-registration  of  FIR  leads  to  scope  for
manipulation   by   the   police   which   affects   the   right   of    the
victim/complainant  to  have  a  complaint  immediately  investigated   upon
allegations being made; and
(ii) Whether in cases  where  the  complaint/information  does  not  clearly
disclose the commission of a cognizable offence but the FIR is  compulsorily
registered then does it infringe the rights of an accused."

      Answering the questions posed, the larger Bench opined thus:
"49. Consequently, the condition that is sine qua non for recording  an  FIR
under Section 154 of the Code is that there must  be  information  and  that
information  must  disclose  a  cognizable  offence.  If   any   information
disclosing a cognizable offence is led before an officer in  charge  of  the
police station satisfying  the  requirement  of  Section  154(1),  the  said
police officer has no other option except to enter the substance thereof  in
the prescribed form, that is to say, to register a  case  on  the  basis  of
such information. The provision of Section 154 of the Code is mandatory  and
the officer concerned is duty-bound to register the case  on  the  basis  of
information disclosing a cognizable [pic]offence. Thus, the plain  words  of
Section 154(1) of the Code have to be given their literal meaning.
"Shall"
            xxx        xxx        xxx        xxx

72. It is thus unequivocally clear that registration  of  FIR  is  mandatory
and also that it is to be recorded in  the  FIR  book  by  giving  a  unique
annual number to each FIR to  enable  strict  tracking  of  each  and  every
registered FIR by the superior police officers as well as by  the  competent
court to which copies of each FIR are required to be sent.
"Information"

            xxx        xxx        xxx        xxx

111. The Code gives power to the police to close a matter  both  before  and
after investigation. A  police  officer  can  foreclose  an  FIR  before  an
investigation under Section 157 of the Code,  if  it  appears  to  him  that
there is no sufficient ground to investigate the same.  The  section  itself
states that a police officer can start investigation when he has "reason  to
suspect the commission  of  an  offence".  Therefore,  the  requirements  of
launching an investigation under Section 157 of the  Code  are  higher  than
the requirement under Section 154 of the Code. The police officer can  also,
in a given case, investigate the matter and then file a final  report  under
Section 173 of the Code  seeking  closure  of  the  matter.  Therefore,  the
police is not liable to launch  an  investigation  in  every  FIR  which  is
mandatorily registered on receiving information relating to commission of  a
cognizable offence.

            xxx        xxx        xxx        xxx

115. Although, we, in unequivocal terms, hold that Section 154 of  the  Code
postulates the mandatory registration of FIRs on receipt of  all  cognizable
offences, yet, there may be  instances  where  preliminary  inquiry  may  be
required owing to the change in genesis  and  novelty  of  crimes  with  the
passage of time. One such instance is in the case  of  allegations  relating
to medical negligence on  the  part  of  doctors.  It  will  be  unfair  and
inequitable to prosecute a medical professional only on  the  basis  of  the
allegations in the complaint."

After so stating the constitution Bench proceeded  to  state  that  where  a
preliminary  enquiry  is  necessary,  it  is  not  for   the   purpose   for
verification or otherwise of the information received but only to  ascertain
whether the information reveals any cognizable offence.  After  laying  down
so, the larger Bench proceeded to state:-

"120.6. As to what type and in which cases  preliminary  inquiry  is  to  be
conducted will depend on the facts  and  circumstances  of  each  case.  The
category of cases in which preliminary inquiry may be made are as under:
(a) Matrimonial disputes/family disputes
(b) Commercial offences
(c) Medical negligence cases
(d) Corruption cases
(e) Cases where  there  is  abnormal  delay/laches  in  initiating  criminal
prosecution, for example, over 3  months'  delay  in  reporting  the  matter
without satisfactorily explaining the reasons for delay.
The aforesaid are only illustrations and not exhaustive  of  all  conditions
which may warrant preliminary inquiry.

120.7. While ensuring and protecting the  rights  of  the  accused  and  the
complainant, a preliminary inquiry should be  made  time-bound  and  in  any
case it should not exceed 7 days. The fact of such delay and the  causes  of
it must be reflected in the General Diary entry."

We have referred to the aforesaid pronouncement  for  the  purpose  that  on
certain circumstances the police is also  required  to  hold  a  preliminary
enquiry whether any cognizable offence is made out or not.
24.   Regard being had to the aforesaid enunciation of law, it needs  to  be
reiterated that the learned Magistrate has to remain  vigilant  with  regard
to the allegations made and the nature  of  allegations  and  not  to  issue
directions without proper application of mind.  He has also to bear in  mind
that sending the matter would be conducive to justice and then he  may  pass
the requisite order.  The present is a case where the  accused  persons  are
serving in high positions in the bank.  We  are  absolutely  conscious  that
the position does not matter, for nobody is above  law.   But,  the  learned
Magistrate should take note of the allegations  in  entirety,  the  date  of
incident and whether any cognizable case is remotely made out.  It  is  also
to be noted that when a borrower of the financial institution covered  under
the SARFAESI Act, invokes the jurisdiction under Section 156(3) Cr.P.C.  and
also there is a separate procedure under the Recovery of Debts due to  Banks
and Financial Institutions Act, 1993, an attitude of more care, caution  and
circumspection has to be adhered to.
25.   Issuing a direction stating "as per the application" to lodge  an  FIR
creates a very unhealthy situation in the  society  and  also  reflects  the
erroneous approach  of  the  learned  Magistrate.  It  also  encourages  the
unscrupulous and unprincipled litigants, like the respondent  no.3,  namely,
Prakash Kumar Bajaj, to take adventurous steps  with  courts  to  bring  the
financial institutions on their knees.   As  the  factual  exposition  would
reveal, he had prosecuted the earlier authorities and after  the  matter  is
dealt with by the High Court in a writ petition recording a  settlement,  he
does not withdraw the criminal case and waits for  some  kind  of  situation
where he can take vengeance as if he is the emperor of all he  surveys.   It
is interesting to note that during the tenure of the appellant No.1, who  is
presently occupying the position of Vice-President,  neither  the  loan  was
taken, nor the default was made, nor any action under the SARFAESI  Act  was
taken.  However, the action under the SARFAESI Act was taken on  the  second
time at the instance of the present appellant No.1.   We  are  only  stating
about the devilish design of the respondent No.3 to  harass  the  appellants
with the sole intent to avoid the payment of loan.  When a citizen avails  a
loan from a financial institution, it is his obligation to pay back and  not
play truant or for that matter play possum.  As  we  have  noticed,  he  has
been able to do such adventurous acts as  he  has  the  embedded  conviction
that he will not be taken to  task  because  an  application  under  Section
156(3) Cr.P.C. is  a  simple  application  to  the  court  for  issue  of  a
direction to the investigating  agency.    We  have  been  apprised  that  a
carbon copy of a document  is  filed  to  show  the  compliance  of  Section
154(3), indicating  it  has  been  sent  to  the  Superintendent  of  police
concerned.
26. At this stage it is seemly to state  that  power  under  Section  156(3)
warrants application of judicial mind.  A court of law is involved.   It  is
not the police taking steps at the stage of Section  154  of  the  code.   A
litigant at his own whim cannot invoke the authority of the  Magistrate.   A
principled and really grieved  citizen  with  clean  hands  must  have  free
access to invoke the said power.  It protects the citizens but when  pervert
litigations takes this route to harass their fellows citizens,  efforts  are
to be made to scuttle and curb the same.
27.   In our considered opinion, a stage has  come  in  this  country  where
Section 156(3) Cr.P.C. applications are to  be  supported  by  an  affidavit
duly sworn by the applicant who seeks the invocation of the jurisdiction  of
the Magistrate.  That apart, in an appropriate case, the learned  Magistrate
would be well advised to verify the truth and also can verify  the  veracity
of  the  allegations.   This  affidavit  can   make   the   applicant   more
responsible.   We are compelled to say so as such kind of  applications  are
being  filed  in  a  routine  manner  without  taking   any   responsibility
whatsoever only to harass certain persons.   That  apart,  it  becomes  more
disturbing and alarming when one tries to pick up  people  who  are  passing
orders under a  statutory  provision  which  can  be  challenged  under  the
framework of said Act or under Article 226 of  the  Constitution  of  India.
But it cannot be done to take undue advantage in  a  criminal  court  as  if
somebody is determined to settle the  scores.   We  have  already  indicated
that there has to be prior applications  under  Section  154(1)  and  154(3)
while filing a petition under Section 156(3).  Both the  aspects  should  be
clearly spelt out in the application and necessary documents to that  effect
shall be filed.  The warrant for giving a direction that an the  application
under Section 156(3) be supported by an affidavit so that the person  making
the application should be conscious and also endeavour to see that no  false
affidavit is made.  It is because once an affidavit is found  to  be  false,
he will be liable for prosecution in accordance with law.  This  will  deter
him to casually  invoke  the  authority  of  the  Magistrate  under  Section
156(3).  That apart, we have already stated that the veracity  of  the  same
can also be verified by the learned Magistrate,  regard  being  had  to  the
nature of allegations of the case.  We are compelled to say so as  a  number
of cases pertaining to fiscal sphere, matrimonial  dispute/family  disputes,
commercial offences, medical negligence  cases,  corruption  cases  and  the
cases  where  there  is  abnormal  delay/laches   in   initiating   criminal
prosecution, as are illustrated in Lalita  Kumari  are  being  filed.   That
apart, the learned Magistrate would also be aware of the  delay  in  lodging
of the FIR.
28.   The present lis can be perceived from another angle. We  are  slightly
surprised that the financial institution has been compelled  to  settle  the
dispute and we are also disposed to think that it has  so  happened  because
the complaint cases were filed.  Such a situation should not happen.
29.   At this juncture, we  may  fruitfully  refer  to  Section  32  of  the
SARFAESI Act, which reads as follows :

"32. Protection of action taken in good faith.-

No suit, prosecution or  other  legal  proceedings  shall  lie  against  any
secured creditor or any of his officers or manager  exercising  any  of  the
rights of the secured creditor or borrower for anything done or  omitted  to
be done in good faith under this Act."

30.   In the present case, we are obligated to say that  learned  Magistrate
should have kept himself alive to the aforesaid provision  before  venturing
into directing registration of the FIR under Section 156(3) Cr.P.C.   It  is
because the Parliament in its wisdom has made such a  provision  to  protect
the secured creditors or any of its officers, and needles to emphasize,  the
legislative mandate, has to be kept in mind.
31.   In view of the aforesaid analysis, we allow the appeal, set aside  the
order passed by the High Court and quash the  registration  of  the  FIR  in
case Crime  No.298  of  2011,  registered  with  Police  Station,  Bhelupur,
District Varanasi, U.P.
32.   A copy of the order  passed  by  us  be  sent  to  the  learned  Chief
Justices of all the High Courts by the Registry of this Court  so  that  the
High Courts would circulate the same amongst  the  learned  Sessions  Judges
who, in turn, shall circulate it among the learned Magistrates so that  they
can remain more vigilant and  diligent  while  exercising  the  power  under
Section 156(3) Cr.P.C.

                                             .......................J.
                                             [Dipak Misra]


                                             .......................J.
                                             [Prafulla C. Pant]
New Delhi
March 19, 2015.


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[1]
        (2012) 10 SCC 517
[2]     (1976) 3 SCC 252
[3]     (2013) 10 SCC 705
[4]     (2007) 12 SCC 496
[5]     (2005) 7 SCC 467
[6]    Criminal Appeal No. 600 of 2007 decided on 16.03.2015
[7]     (2014) 2 SCC 1

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