Case: K. VIRUPAKSHA &amp; ANR Vs. THE STATE OF KARNATAKA &amp; ANR

3. The brief facts leading to the present situation is that the respondent No.2 herein (hereinafter referred to as the Complainant) had approached the Canara Bank at Hubballi pursuant to which credit facilities were sanctioned on 16.03.2009. The total credit facility sanctioned amounted to Rs.2.68 crores. The property bearing Survey No. 213/2002 situated at Anchatageri Village, Hubballi measuring 3 acres 2 Guntas was offered as security for the said loan and a charge was created. The said property is hereinafter referred to as the Secured Asset. As per the case of Canara Bank, the Complainant had not repaid the loan amount and in that view having committed default, the account of the Complainant was classified as Non¬Performing Asset (NPA for short) on 15.01.2013. The Canara Bank thus having invoked the power under Section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act for short) had issued appropriate notices and ultimately the possession of the secured asset as contemplated under Section 14 of the SARFAESI Act was taken on 22.03.2013. The secured asset was thereafter evaluated and was brought to auction through the public notice dated 13.10.2013 indicating the date of auction as 15.11.2013. The reserve price of the secured asset was fixed at Rs.2,28,51,000/-. Though publication was made, no bids were received in the auction proposed on 15.11.2013 and since the same was a public holiday declared in the State of Karnataka the auction was postponed to 04.12.2013. Even on the said date no bids were received4. Accordingly, the Canara Bank had revised the valuation, indicating the reserve price as Rs.1.10 Crore since the earlier reserve price at a higher rate had not attracted purchasers and issued the fresh auction notice dated 30.12.2013. The Complainant claiming to be aggrieved by such action, assailed the auction notice in a Writ Petition filed before the High Court of Karnataka, Dharwad Bench in Writ Petition No. 100382/2014. The learned Single Judge having considered the matter, apart from taking note of the contentions put forth by the Complainant had also taken into consideration the alternate remedy available to the Complainant under the SARFAESI Act and accordingly dismissed the writ petition with cost of Rs.10,000/-, on 22.01.2014. The Complainant assailed the said order by filing a Writ Appeal before the Division Bench in WA No. 100349/2014. The Division Bench through the order dated 19.08.2014 dismissed the Writ Appeal. The Complainant thereafter availed the remedy under Section 17(1) of the SARFAESI Act by filing an application in IR No.3044/2014 (SA) and also accompanying the same with an application under Section 5 of the Limitation Act bearing IA No. 4482/2014. The application seeking condonation of delay and consequently the main application were dismissed by the Debts Recovery Tribunal (DRT for short) through its order dated 12.06.2015. Pursuant thereto the Complainant is stated to have filed an Appeal before the Debts Recovery Appellate Tribunal, Chennai (DRAT for short) which is also stated to be dismissed5. It is in the said backdrop the Complainant filed the complaint under Section 200 of the Cr.P.C in the Court of the Principal Civil Judge (Junior Division) & JMFC, Hubballi in P.C. No.389/2016 alleging that the Officers of the Canara Bank in connivance with the auction purchaser had caused wrongful loss to the Complainant. To the said complaint, apart from the Canara Bank, the highly placed officials, the appellants herein, the valuers and the auction purchaser were shown as the accused. The said complaint being taken on record, the learned Magistrate has referred the same for investigation under Section 156(3) of Cr.P.C. and to submit a report. Based on such direction the FIR No.0152/2016 is registered. The appellants, therefore, claiming to be aggrieved had preferred the Criminal Petition under Section 482 of Cr.P.C in Criminal Petition No.100323/2018, which was dismissed by the High Court through the order dated 21.01.2019 which is assailed herein10. As noted, the undisputed fact is that the Complainant had approached the Canara Bank for financial assistance, wherein the appellants herein were the Officers in the Circle Office. The Complainant had availed the loan facility to the tune of Rs.2.68 Crores on 16.03.2009. Though the Complainant contends that the entire amount of Rs.2.68 Crores was not released, but only a sum of Rs.90 lakh was released and the remaining amount was adjusted as repayment, the question would be as to whether that aspect and the other aspects as raised with regard to the non¬ consideration of the OTS as also the value for which the property was sold and the manner in which it was sold could be investigated into by the police merely because allegations are made and certain sections of the Indian Penal Code are invoked when the action is resorted to and regulated under SARFAESI Act. While taking note of the sequence of events it is noticed that the secured asset though sold in the auction conducted on 31.01.2014 and the grievances as sought to be put forth at this point in the criminal complaint was available at that juncture, it is not as if the complaint was immediately filed. On the other hand, when the auction notice dated 13.10.2013 was issued, no grievance was made out by the Complainant before any judicial forum. However, the sale did not take place for want of purchasers and a fresh auction notice dated 30.12.2013 was issued indicating the reserve price at Rs.1.10 Crores11. At that stage the Complainant approached the High Court of Karnataka, Dharwad Bench in a Writ Petition filed under Articles 226 and 227 of the Constitution of India in W.P. No.100382/2014. The auction notice dated 30.12.2013 was impugned therein. The allegation which is now sought to be put forth in the complaint filed under Section 200 of the Cr.PC wherein the appellants herein along with others have been accused of with regard to the under valuation of the secured assets was the very contention which was urged in the said Writ Petition. The learned Single Judge in the said Writ Petition had taken note of the contention that the reserve price in respect of the secured assets was fixed at Rs.228.51 Lakhs initially, thereafter in the subsequent auction conducted the same was fixed at Rs.1.10 Crores and has thereafter concluded as hereunder:Undisputedly, petitioner is the debtor and has suffered an order passed by jurisdictional Debt Recovery Tribunal. The Debt Recovery Tribunal, Bangalore has issued recovery certificate in favour of respondent¬Bank to recover the said amount. Property mortgaged to respondent¬ Bank by the petitioner has been brought for sale by auction. In the event of Bank not adhering to provisions of SARFAESI Act in conducting the sale or there being any infraction in this regard, petitioner has an alternate remedy available under SARFAESI Act. Hence, at the stage of auction being conducted by respondent¬Bank for recovery of its legitimate dues, this Court would not interfere with said auction in the normal courseIn the instant case, reserve price earlier fixed at Rs.228.51 lakhs has not fetched customers and as such, respondent¬ Bank has fixed the reserve price at Rs.110 lakhs which would be the price with which the public auction starts and auction bidders are not permitted to give bids below the floor value or reserve price. If the petitioner is able to secure a customer or a bidder who can offer his bid for the value as proposed by the petitioner itself, it would be needless to state that secured creditor would definitely accept the said bid since earlier attempts by it to auction the property has been in vainIn the instant case, as already noticed hereinabove, petitioner is a borrower and it had defaulted in payment of monies due to the Bank. In other words, public money due by petitioner to the Bank has not been repaid. Petitioner loan account having been classified as a non¬performing asset, respondent¬Bank has initiated proceedings under the SARFAESI Act to recover the dues. In the earlier auctions conducted, reserve price fixed was Rs.228.51 lakhs i.e., in the auction which was to be held on 15.11.2013 and 04.12.2013. However, in the paper publication that has been issued on 30.12.2013 Annexure¬C in the auction proposed to be held on 31.01.2014 at 3.30 p.m. (E-auction), reserve price has been fixed at Rs.110 lakhs. The grievance of the petitioner is that value of the property is more than Rs.405.21 lakhs and as such, property in question cannot be sold for a pittance. If value of the property as contended by petitioner is Rs.405.21 lakhs, nothing prevents the petitioner from getting a purchaser or a bidder to purchase the property for the said value and clear off the debts due by it to the respondent which even according to petitioner is around Rs.285.71 lakhs as on 31.01.2014 (which was Rs.261 lakhs as on 11.10.2013). However, without taking said recourse, petitioner is attempting to stall the auction proceedings which is not permissible inasmuch as the respondent¬ Bank being a nationalised Bank which is the custodian of public money is taking steps to recover its dues by auctioning the property through e-auction and the action of respondent¬Bank cannot be flawed. Respondent-Bank has adopted one of the courses suggested by the Honble Apex Court in United India Assurance case referred to supra namely Public Auction by which process there would be larger participation. If at all the auction is to be set¬aside for any reason whatsoever, petitioner can take recourse to the remedy available under SARFAESI Act and get the sale set aside. However, petitioner cannot be permitted to stall the auction itself under extraordinary jurisdiction of this Court12. While arriving at such conclusion the learned Single Judge had kept in view the provisions as contained in the SARFAESI Act, as also the decisions of this Court, more particularly in the case of United Bank of India vs. Satyawati Tondon & Ors. (2009) 1 SCC 168 . In that view though the learned Single Judge did not accept the contentions as put forth had also indicated that if at all the auction is to be set aside for any reason whatsoever, the Complainant who was the petitioner therein can take recourse to the remedy under SARFAESI Act and get the sale set aside. In that view the learned Single Judge was of the opinion that the Complainant cannot be permitted to stall the auction itself through the prayer made in the Writ Petition. The Complainant had assailed the said order in an intra¬ court appeal bearing W.A. No.100349/2014. The Division Bench by its order dated 19.08.2014 had taken note of the consideration made by the learned Single Judge with reference to the case of Satyawati Tondon & Ors. (Supra) and had accordingly dismissed the Writ Appeal.

Reasoning:
9. Before adverting to the rival contentions urged on behalf of the parties we have kept in perspective the decision of this Court in the case of State of Haryana vs. Bhajan Lal (1992) Supp (1) SCC 335 placed for consideration by the learned senior counsel for the Complainant which lays down the parameters that are to be kept in view while exercising the extraordinary power/inherent power to quash the criminal proceeding. On stating the parameters, this Court has cautioned that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in rare cases. In that background, keeping in view the nature of transaction and the manner in which the earlier proceedings were resorted to on the same subject matter, the present situation is required to be consideredThough that be the position, in the instant case the appellants are before this Court to exercise the remedy available and as such the dismissal of the said petitions cannot prejudice their case when this Court is required to take a view on the matter though it has not been availed in the earlier casesAt the outset the sanction of loan, creation of mortgage and the manner in which the sanctioned loan was to be released are all contractual matters between the parties. The Complainant is an industrialist who had obtained the loan in the name of his company and the loan account was maintained by the Canara Bank in that regard. The loan admittedly was sanctioned on 16.03.2009. When at that stage the amount was released and if any amount was withheld, the Complainant was required to take appropriate action at that point in time and avail his remedy. On the other hand, the Complainant had proceeded with the transaction, maintained the loan account until the account was classified as NPA on 15.01.2013. Initially the issue raised was only with regard to the under valuation of the property when it was brought to sale. On that aspect, as taken note the writ proceedings were filed and the learned Single Judge having examined, though did not find merit had reserved liberty to raise it before the DRT, which option is also availed. It is only thereafter the impugned complaint was filed on 20.05.201616. The SARFAESI Act is a complete code in itself which provides the procedure to be followed by the secured creditor and also the remedy to the aggrieved parties including the borrower. In such circumstance as already taken note by the High Court in writ proceedings if there is any discrepancy in the manner of classifying the account of the appellants as NPA or in the manner in which the property was valued or was auctioned, the DRT is vested with the power to set aside such auction at the stage after the secured creditor invokes the power under Section 13 of SARFAESI Act. This view is fortified by the decision of this Court in the case of Authorised Officer, Indian Overseas Bank & Anr. vs. Ashok Saw Mill (2009) 8 SCC 366 17. We reiterate, the action taken by the Banks under the SARFAESI Act is neither unquestionable nor treated as sacrosanct under all circumstances but if there is discrepancy in the manner the Bank has proceeded it will always be open to assail it in the forum provided. Though in the instant case the application filed by the Complainant before the DRT has been dismissed and the Appeal No.523/2015 filed before the DRAT is also stated to be dismissed the appellants ought to have availed the remedy diligently. In that direction the further remedy by approaching the High Court to assail the order of DRT and DRAT is also available in appropriate cases. Instead the petitioner after dismissal of the application before the DRT filed the impugned complaint which appears to be an intimidatory tactic and an afterthought which is an abuse of the process of law. In the matter of present nature if the grievance as put forth is taken note and if the same is allowed to be agitated through a complaint filed at this point in time and if the investigation is allowed to continue it would amount to permitting the jurisdictional police to redo the process which would be in the nature of reviewing the order passed by the learned Single Judge and the Division Bench in the writ proceedings by the High Court and the orders passed by the competent Court under the SARFAESI Act which is neither desirable nor permissible and the banking system cannot be allowed to be held to ransom by such intimidation. Therefore, the present case is a fit case wherein the extraordinary power is necessary to be invoked and exercisedThough on the proposition of law as enunciated therein there could be no cavil, that aspect of the matter is also an aspect which can be examined in the proceedings provided under the SARFAESI Act. In a circumstance where we have already indicated that a criminal proceeding would not be sustainable in a matter of the present nature, exposing the appellants even on that count to the proceedings before the Investigating Officer or the criminal court would not be justified.