# Himri Estate Pvt. Ltd. & Ors v. State of U.P. & Ors

- **Citation:** (2024) 4 ILRA 68
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-04-15
- **Case number:** Criminal Misc. Writ Petition No. 11838 of 2023
- **Bench:** Ashwani Kumar Mishra, Ashutosh Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/himri-estate-pvt-ltd-ors-v-state-of-u-p-ors-51842
- **Pages:** 11

## Headnote

Law
-
Securitisation
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 - Sections 13, 14, 17 & 32 - Indian
Penal Code, 1860 - Sections 420, 120-B
- Registration Act, 1908 - Section 82 -
Constitution of India,1950 - Article 226
-
Petitioners
challenged
FIR
dated
22.07.2023 alleging fraudulent transfer of
property under SARFAESI Act, claiming it
was a civil dispute and an abuse of process.
Court held: (1) FIR filed by defaulterborrower company, after failing to secure
relief
against SARFAESI
proceedings in
multiple forums, was an attempt to scuttle
lawful auction of secured asset (Plot No. 9,
Ahinsakhand, Ghaziabad) (K. Virupaksha Vs
St. of Karn., (2020) 4 SCC 440). (2) Issues
regarding valuation, auction legality, or
alleged encroachment beyond transferred
property are civil in nature, exclusively
triable by Debt Recovery Tribunal (DRT)
under Section 17 of SARFAESI Act, not
through
criminal
proceedings
(Indian
Overseas Bank Vs Ashok Saw Mill, (2009) 8
SCC 366). (3) Section 32 of SARFAESI Act
protects actions taken in good faith by
secured creditors, barring prosecution unless
mala
fides
are
established
(Priyanka
Srivastava Vs St. of U.P., (2015) 6 SCC 287).
(4) Vague allegations
of encroachment
without specifics and absence of Section 441
I.P.C. charge rendered FIR unsustainable, as
criminal proceedings cannot override DRT's
jurisdiction. (5) Allowing FIR would enable
defaulters to misuse criminal process to
challenge SARFAESI actions, undermining
legislative intent of specialized tribunals. FIR
quashed; petitions allowed. (Paras 14-23)

Writ Petitions Allowed.

List of Cases cited:

## Text

68 INDIAN LAW REPORTS ALLAHABAD SERIES

35. The petitioners have also failed to
substantiate that the opposite parties have
intentionally not considered the claim for
regularization of their services and they
have also failed to demonstrate that the
exercises, which were being carried out by
the
State
Government
including
the
preparation of select list dated 22-07-1997
as well as the litigations challenging the
action of the State Government while
proceeding with the regularization of the
services of the petitioners, were not in their
knowledge.

36. While the direction in the order
dated 19.08.1992, the words 'taking steps'
is said meaningfully, as the same clearly
encapsulates the intention and cautiousness
of the writ court regarding the time taking
process of regularization. At the same time,
the writ court was also cautious enough
regarding the nature of the posts, which are
under the purview of U.P. Public Service
Commission and therefore, the time which
was consumed either in several set of
litigations or in the exercises done to ease
out the process of regularization, enough to
show that the element of deliberate or
intentional disobedience is missing in the
present matter.

37. It is trite law that the willful and
deliberate defiance of the order is pivotal
aspect in so far as adjudicating the
contempt proceedings against a contemnor.
It is the factual matrix, which can be
interpreted and looked into, to come to a
final conclusion that is there any intention
of the alleged contemnor to commit
defiance of any order or direction passed by
the court. If in a case, the contemnor
succeeds to demonstrate that if a particular
time or period prescribed for compliance of
the Judgment and Order is disobeyed for
some reasonable causes or those were not
within the approach of such contemnor or
such disobedience is the out-come of some
compelling circumstances which created
impossibility for the contemnor to comply
with the order, the same cannot be termed
as wilful or deliberate contempt, though
this could be considered on the facts of
each and every case. Hon'ble Apex Court
has also considered the issue with respect
to wilful and deliberate contempt in the
case of Rama Narag Vs. Ramesh Narang
and Others, Contempt Petition (Civil) No.
92 of 2008, Kunwar Singh Saini Vs High
Court of Delhi, 2012(4) SCC 307 and
1994(6)SCC 332 and the case of the
contemnors/opposite parties is squarely
covered with the ratio of the Judgment
abovesaid.

38. In view of abovesaid submissions
and discussions,no contempt is made out
against the contemnors/opposite parties.
Consequently, the contempt notices are
hereby discharged.

39.

The
contempt
petition
is
dismissed accordingly.

40. Consigned to records.
----------
(2024) 4 ILRA 68
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 15.04.2024

BEFORE

THE HON'BLE ASHWANI KUMAR MISHRA, J.
THE HON'BLE ASHUTOSH SRIVASTAVA, J.

Criminal Misc. Writ Petition No. 11838 of 2023
With
Criminal Misc. Writ Petition No. 11837 of 2023

Himri Estate Pvt. Ltd. & Ors. ...Petitioners
Versus
State of U.P. & Ors. ...Respondents
4 All. Himri Estate Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
69
Counsel for the Petitioners:
Sri Varad Nath

Counsel for the Respondents:
G.A.

Criminal
Law
-
Securitisation
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 - Sections 13, 14, 17 & 32 - Indian
Penal Code, 1860 - Sections 420, 120-B
- Registration Act, 1908 - Section 82 -
Constitution of India,1950 - Article 226
-
Petitioners
challenged
FIR
dated
22.07.2023 alleging fraudulent transfer of
property under SARFAESI Act, claiming it
was a civil dispute and an abuse of process.
Court held: (1) FIR filed by defaulterborrower company, after failing to secure
relief
against SARFAESI
proceedings in
multiple forums, was an attempt to scuttle
lawful auction of secured asset (Plot No. 9,
Ahinsakhand, Ghaziabad) (K. Virupaksha Vs
St. of Karn., (2020) 4 SCC 440). (2) Issues
regarding valuation, auction legality, or
alleged encroachment beyond transferred
property are civil in nature, exclusively
triable by Debt Recovery Tribunal (DRT)
under Section 17 of SARFAESI Act, not
through
criminal
proceedings
(Indian
Overseas Bank Vs Ashok Saw Mill, (2009) 8
SCC 366). (3) Section 32 of SARFAESI Act
protects actions taken in good faith by
secured creditors, barring prosecution unless
mala
fides
are
established
(Priyanka
Srivastava Vs St. of U.P., (2015) 6 SCC 287).
(4) Vague allegations
of encroachment
without specifics and absence of Section 441
I.P.C. charge rendered FIR unsustainable, as
criminal proceedings cannot override DRT's
jurisdiction. (5) Allowing FIR would enable
defaulters to misuse criminal process to
challenge SARFAESI actions, undermining
legislative intent of specialized tribunals. FIR
quashed; petitions allowed. (Paras 14-23)

Writ Petitions Allowed.

List of Cases cited:

1. K. Virupaksha Vs St. of Karn., (2020) 4 SCC
440 (Para 20)
2. Indian Overseas Bank Vs Ashok Saw Mill,
(2009) 8 SCC 366 (Para 20)

3. Priyanka Srivastava Vs St. of U.P., (2015) 6
SCC 287 (Para 21)

4. Army Headquarters Vs CBI, (2012) 6 SCC 228
(Para 20)

(Delivered by Hon'ble Ashwani Kumar
Mishra, J.
&
Hon'ble Ashutosh Srivastava, J.)

1. Petitioners have invoked the
extraordinary jurisdiction of this Court
under Article 226 of the Constitution of
India, challenging the First Information
Report lodged against them on 22.07.2023,
registered as Case Crime No.611 of 2023,
under Sections 420, 120-B of IPC and
Section 82 of Registration Act, 1908,
Police Station - Kavi Nagar, District -
Ghaziabad. It is urged that the FIR is
maliciously instituted in respect of a civil
dispute and is thus an abuse of the process
of law. It is also urged that the first
informant has lodged the FIR on behalf of
the borrower company, which undertook
loan and defaulted in its repayment, on
account
of
which
proceedings
were
initiated in accordance with the provisions
of Securitization and Reconstruction of
Financial Assets and Enforcement of
Security Interest Act, 2002 (hereinafter
referred to as the 'SARFAESI Act').
Borrower company since has failed to seek
any protection before the competent forum,
in respect of coercive proceedings under
the SARFAESI Act, it has lodged the
impugned FIR with the intent to pressurize
the finance company as well as auction
purchaser to withdraw lawful actions
initiated against the borrower/defaulter.
Prayer accordingly is made to quash the
aforesaid FIR.
70 INDIAN LAW REPORTS ALLAHABAD SERIES

2. We have heard Sri Gopal S.
Chaturvedi and Sri Siddharth Agarwal
(through VC), learned Senior Advocate
assisted by Sri Dhruv Kapur, Sri Debashish
Chauhan, Sri Varad Nath, Sri Rajan Kohli,
Sri Divya Lamba, Sri Maharshi Kaler and
Sri Chiranjivi Sharma (through VC),
Advocates for the petitioners in Writ
Petition No. 11838 of 2023; Sri Anoop
Trivedi, learned Senior Advocate assisted
by Sri Raghav Dwivedi, Advocate for the
petitioner in Writ Petition No. 11837 of
2023 and Sri Syed Imran Ibrahim, learned
counsel for the first informant/respondent
no. 3 and Sri J.K. Upadhya and Sri Pankaj
Kumar, learned AGA for the State and
perused the materials on record.

3. The writ petition was entertained
and despite the matter being deferred on
different occasions no counter affidavit
has been filed in the matter. When the
matter was taken last on 14th March,
2024, following orders were passed:-

"Learned State Counsel as well
as Sri Syed Imran Ibrahim, learned
counsel
appearing
for
the
private
respondents pray for and are allowed
three weeks and no more time to file
counter affidavit. Rejoinder affidavit may
be filed within one week thereafter.

List this case on 15.04.2024."

4. Though a stop order was passed
granting last opportunity to the informant
and the State to file a counter affidavit
the respondents have not chosen to file
any counter affidavit in the matter so far.
Since opportunity to file counter affidavit
has not been availed, we proceed with the
hearing of the matter treating the
averments made in the writ petition to be
correct by applying the doctrine of nontraverse.

5. The first informant i.e. respondent
no.3 claims to be a resident of District
Ghaziabad and authorized representative of
M/s Shipra Hotel Private Limited, a company
registered
under
the
Companies
Act.
Allegation in the first information report is
that Plot No. 9, Ahinsakhand, Indirapuram,
District Ghaziabad is owned by M/s Shipra
Hotel Private Limited on which a Shipra Mall
was constructed, which has been fraudulently
and unauthorizedly transferred to the owners
of M/s Himri Estate Pvt. Ltd. namely, Sumit
Kumar Narwar through its authorized
representative Rajeev Goel, by Smt. Reena
Bagga, authorized representative of M/s India
Bulls Housing Finance Limited on 12.5.2023
by way of a registered transfer deed for a
consideration of Rs.551 crores, although its
value is Rs.2000 crores so as to cause
financial loss to the U.P. Government. It is
also alleged that Sumit Kumar Narwar by
exercising undue influence and extending
threats has got the agreement entered into
between Shipra Mall and Shipra Estate and
other companies cancelled. The FIR further
recites that a securitization appeal raising
such issue is pending before the Debt
Recovery Tribunal at Lucknow. It is also
alleged that in addition to the property kept as
mortgaged certain other property has also
been encroached by M/s Himri Estate Private
Limited, though such property was not
specifically kept as mortgage with M/s India
Bulls Pvt. Ltd. Allegations are also made that
the accused persons are influential and
despite a complaint made to the concerned
Police Station Incharge no action has been
taken and, therefore, request has been made
to the Chief Minister of the State of U.P. to
take appropriate steps to ensure justice for the
informant.

6. The first information report is
challenged by the two petitioners namely
M/s Himri Estate Private Limited and its
4 All. Himri Estate Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
71
officer-bearers (hereinafter referred to as
the 'auction purchasers') as well as Smt.
Reena Bagga authorized representative of
M/s India Bulls Housing Finance Limited
as well as M/s India Bulls Housing Finance
Limited a non-banking finance company
limited incorporated under the provisions
of the Indian Companies Act, 1956
(hereinafter referred to as the 'Finance
Company').

7. The petitioners state that Plot No.
9, Ahinsakhand, Indirapuram, District -
Ghaziabad, on which Shipra Mall was
established by M/s Shipra Hotel Private
Limited, was kept as mortgage with the
Finance Company in lieu of loan availed by
M/s Shipra Hotel Private Limited and its
sister concerns (hereinafter referred to as
the 'borrower') of approximately Rs.2000
crores. It is asserted that the borrower
company has defaulted in repayment of
loan amount to the finance company. It is
thereafter
that
the
finance
company
proceeded to recover its dues from the
assets of the borrower company, which
were kept as mortgage, for securing the
loan.

8. According to petitioners about 16
loan agreements were entered into between
the finance company and the borrower
company details whereof are mentioned in
para 30 of writ petition no. 11837 of 2023.
It is also asserted in para 33 of the said
petition that in order to secure the loan
amount the borrower company has kept
various assets as mortgage with the finance
company which included Plot No. 9,
Ahinsakhand,
Indirapuram,
District
Ghaziabad on which exists the Shipra Mall.

9. It is further stated that on account
of default in repayment of loan by borrower
company, proceedings were initiated under
the SARFAESI Act with issuance of a
notice
under
Section
13(2)
of
the
SARFAESI Act on 28.7.2021 in respect of
the property in question i.e. Plot No.9,
Ahinsakhand,
Indirapuram,
District
Ghaziabad. This notice was acknowledged
by the borrower company vide its reply
dated 25.9.2021. Jurisdiction under Section
14 of the SARFAESI Act was then invoked
by the competent authority who passed an
order on 30.5.2022 permitting taking of
possession of the property in question i.e.
Plot No.9, Ahinsakhand, Indirapuram,
District Ghaziabad.

10. Action taken under Section 14 of
the SARFAESI Act was challenged by the
borrower company by filing writ petition
no. 22594 of 2022 before this Court. A Coordinate Bench by a detailed judgment
dismissed the writ petition on 25th
November, 2022. Aggrieved by this order,
the M/s Shipra Hotels Limited and another
approached the Hon'ble Supreme Court by
filing Special Leave Petition (Civil) No.
40574 of 2022, which was dismissed as
withdrawn on 28th February, 2023, vide
following orders:-

"1. Upon being mentioned, taken
on board.

2. Mr Sajan Poovayya, senior
counsel appearing on behalf of the
petitioners, states that the petitioners are
advised to withdraw the Special Leave
Petition so as to pursue the alternate
remedy which is available under the
provisions
of
the
Securitisation
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2002
before the Debts Recovery Tribunal.

3.
Since
the
Special
Leave
Petition is not pressed, we clarify that this
Court has not expressed any opinion on the
merits.
72 INDIAN LAW REPORTS ALLAHABAD SERIES

4. The Special Leave Petition is
dismissed as withdrawn."

11. The borrower company also
invoked arbitration proceedings and an
order came to be passed by the learned
arbitrator on 30.8.2022 staying the auction
proceedings
initiated
by
the
finance
company. This order was challenged before
the Delhi High Court in arbitration appeal
under Section 37 of the Arbitration and
Conciliation Act, 1996. The appeal was
allowed by the Delhi High Court on 21st
February, 2023. The Delhi High Court set
aside the order passed by the Arbitrator and
allowed the auction proceedings to proceed
as per law.

12. The order of Delhi High Court
was then challenged by the borrower
company before the Supreme Court and the
SLP was withdrawn vide following orders
on 24.4.2023:-

"1. Mr CA Sundaram, senior
counsel appearing on behalf of the
petitioner seeks liberty to withdraw the
Special Leave Petition on the ground that
the petitioner has been advised to pursue
its remedies under the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act.

2. The Special Leave Petition is
dismissed as withdrawn with liberty to
pursue remedies under the Securitisation
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act."

13. Our attention has been invited by
Sri Anoop Trivedi appearing for the
petitioner in writ petition no. 11837 of
2023 to the assertions made in para 12 of
the writ petition which refers to various
steps taken by M/s Shipra Hotel for
challenging the proceedings initiated under
the SARFAESI Act. For the sake of
convenience
we
reproduce
the
chart
contained in para 12 of the writ petition:-

Sl.
No.
Case
No.
Particulars
Forum
Status

Application under
Section 17 of the
A & C Act.
Ld. Sole
Arbitrat
or
The
Application
was allowed
by the Ld.
Sole
Arbitrator
vide
Order
dated
30.08.2022,
which
was
set aside in
Appeal
by
the
Hon'ble
Delhi
High
Court
vide
Order
dated
21.02.2023.
The
Shipra
Group
has
preferred
SLP(C) No.
70847089/2023
against
the
Order
dated
21.02.2023
which
has
also
been
dismissed as
withdrawn by
Shipra Group
vide
order
dated
24.04.2023.

2.
W.P.(
C)
No.
22594
/2022
Writ
Petition
under Article 226
of the Constitution
of
India
challenging
the
Order of the Ld.
District Magistrate
dated 30.05.2022.
This
Hon'ble
Court
Dismissed
vide
Order
dated
25.11.2022.
3.
SLP(
C)
Diary
No.
40574
/2022
Special
Leave
Petition
under
Article 136 of the
Constitution
of
India challenging
the Order dated
25.11.2022.
Hon'ble
Suprem
e Court
Dismissed as
withdrawn
vide
Order
dated
28.02.2023.
4.
S.A.
No.
906/2
022
Securitization
Application dated
17.12.2022 under
Section 17 of the
SARFAESI
Act
challenging
the
possession
and
sale notice dated
12.12.2022.
Debt
Recover
y
Tribunal
Dismissed
vide
Order
dated
16.03.2023.
5.
Matte
rs
under
Writ
Petition
under Article 227
of the Constitution
This
Hon'ble
Court
Dismissed
vide
Order
dated
4 All. Himri Estate Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
73
Articl
e 227
No.
1501/
2023
of
India
challenging
the
Order
dated
16.03.2023 passed
by the Ld. DRT
28.03.2023
6.
S.A.
No.
248/2
023
Securitization
Application dated
22.03.2023 under
Section 17 of the
SARFAESI
Act
challenging
the
possession.
Debt
Recover
y
Tribunal
Dismissed
vide
Orders
dated
19.04.2023
7.
S.A.
No.
337/2
023
Securitization
Application under
Section 17 of the
SARFAESI
Act
challenging
the
sale notice dated
08.04.2023
Debt
Recover
y
Tribunal
Pending
adjudication
of
maintainabili
ty. However,
no stay has
been granted.
8.
S.A.
No.
469/2
023
Securitization
Application under
Section 17 of the
SARFAESI
Act
challenging
the
sale
dated
27.04.2023
and
valuation.
Debt
Recover
y
Tribunal
Pending
adjudication.
However, no
stay has been
granted.

14. Various steps in accordance with
the provisions of the SARFAESI Act were
then undertaken by the finance company
against the borrower company in respect of
property in question. Notice of sale in
terms of Rule 8(6) read with Rule 9(1) and
its
proviso
to
the
Security
Interest
(Enforcement) Rules, 2002 was issued
lastly on 8.4.2023. E-auction notice was
published in newspaper on 11.4.2023 in
respect
of
Plot
No.9,
Ahinsakhand,
Indirapuram, District Ghaziabad (excluding
specified shops on lower ground floor and
first floor) under the Rules framed under
the SARFAESI Act. It is asserted that
pursuant to these lawful proceedings
initiated under the SARFAESI Act the
property popularly known as Shipra Mall
has been transferred by the finance
company in favour of M/s Himri Estate
Private Limited (the auction purchaser).
The petitioners have also brought on record
the sale certificate issued in favour of the
auction purchaser on 10.5.2023. It is also
pointed out that the proceedings initiated
under the SARFAESI Act have been
challenged
by
the
defaulter-borrower
company
by
instituting
Securitization
Application No. 906 of 2022 and the same
is engaging attention of DRT at Lucknow.
It is submitted that lawful proceedings
initiated under the SARFAESI Act cannot
be assailed at the instance of a defaulter by
lodging an FIR as the same amounts to an
abuse of the process of law.

15. So far as the allegation in the FIR
with
regard
to
petitioners
having
encroached upon other property of M/s
Shipra Group is concerned, it is argued
vehemently on behalf of the petitioners that
neither the property allegedly encroached
upon has been specified, nor any details in
that regard have been mentioned. It is
submitted that the auction purchaser has
taken possession of the properties of the
borrower on Plot No.9, Ahinsakhand,
Indirapuram, District Ghaziabad popularly
known as Shipra Mall. It is pointed out that
there is no allegation of trespass and the
FIR has not even been registered under
Section 441 IPC. Contention is that in the
absence of any details furnished in the FIR
with regard to the property allegedly
encroached upon it would not be open for
the petitioners to effectively controvert
such vague allegations. It is nevertheless
asserted that the petitioners have not
encroached
upon
any
land
and
its
possession is restricted only to the property
which has been validly obtained in public
auction, for lawful consideration, under the
provisions of the SARFAESI Act.

16. The first information report in the
present case has been lodged by the first
informant on behalf of the defaulterborrower company i.e. M/s Shipra Group.
The assertions made in the writ that finance
to the tune of Rs. 2000 crores has been
availed by the borrower company from the
finance company i.e. petitioner no.2, in
74 INDIAN LAW REPORTS ALLAHABAD SERIES
Writ Petition No.11837 of 2023, remains
undisputed. The further assertion that the
borrower company i.e. M/s Shipra Group
has failed to repay the loan availed from
the finance company i.e. M/s India Bulls
Housing Finance Ltd. equally remains
undisputed. Records further reveal that on
account of failure on part of the borrower
company to repay the loan availed by it
various steps have been taken by the
finance company i.e. M/s India Bulls
Housing Finance Ltd. by invoking the
provisions of the SARFAESI Act. A notice
under Section 13(2) of the SARFAESI Act
has been issued on 28.7.2021. This notice
is followed with steps taken under Section
13(4) of the Act. Auction notices have also
been issued pursuant to which the property
identified as Plot No. 9, (except specified
shops on the lower ground floor and first
floor) has been transferred by the finance
company i.e. M/s India Bulls Housing
Finance Ltd. to M/s Himri Estate Private
Limited. Sale certificate is also on record,
which would go to show that the property
has been transferred on a consideration of
Rs. 551 crores. Stamp duty has also been
paid of Rs. 38,57,00000/-. It is otherwise
acknowledged by the informant that action
taken under the SARFAESI Act resulting
in transfer of property in question to M/s
Himri Estate (auction purchaser) is subject
matter of challenge in Securitization
Application No. 906 of 2022.

17. It is also reflected from the
materials placed on record that repeated
attempts
of
the
defaulter-borrower
company M/s Shipra Hotel Limited to
assail the ongoing auction proceedings
before the competent forum, where such
issues
can
be
examined,
have
not
succeeded, so far. The matter is otherwise
sub-judice before the Debt Recovery
Tribunal at Lucknow. It is in this context
that this Court is required to consider as to
whether proceedings initiated under the
SARFAESI Act, 2002 culminating in
auction of secured assets can be questioned
by lodging an FIR?

18. Records reveal that the secured
asset
i.e.
Plot
No.9,
Ahinsakhand,
Indirapuram, District Ghaziabad has been
transferred to the auction purchaser M/s
Himri Estate Pvt. Ltd. by the secured
creditor M/s India Bulls Housing Finance
Ltd.
pursuant
to
the
proceedings
undertaken under the SARFAESI Act.
Though
the
defaulter
company
has
instituted
various
proceedings
before
different forums to stall the auction
proceedings but without any success. The
matter is otherwise pending before the
competent forum i.e. the Debt Recovery
Tribunal,
Lucknow.
Such
auction
proceedings
conducted
under
the
SARFAESI Act cannot be allowed to be
challenged by lodging an FIR as it would
amount to opening a new avenue for the
defaulter
to
challenge
the
auction
proceedings, which is not countenanced in
law. We are, therefore, of the considered
opinion that the FIR at the instance of the
defaulter company on the allegations
contained therein cannot be allowed to
proceed any further as it would amount to
an abuse of the process of law.

19. Once that be so, we fail to
understand as to how a first information
report can be lodged in respect of various
transactions undertaken by the finance
company
culminating
in
transfer
of
property in question to the auction
purchaser. We are, therefore, of the view
that impugned FIR could not have been
lodged at the instance of the defaulter
company which is already contesting this
matter before DRT at Lucknow. In the
4 All. Himri Estate Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
75
event we allow first information report of
the present kind to be entertained, it would
only
enable
the
defaulter-borrower
company
getting
another
avenue
to
challenge the auction proceedings, on the
pretext of criminal action, against the
finance company or the auction purchasers.

20. The issue as to whether legality of
the
auction
proceedings
undertaken
pursuant to SARFAESI Act could be
questioned by lodging an FIR came to be
examined by the Hon'ble Supreme Court in
K. Virupaksha and Anr. vs. State of
Karnataka and Anr. (2020) 4 SCC 440. The
High Court of Karnataka repelled the
challenge laid to the initiation of criminal
action in respect of auction proceedings
under the SARFAESI Act, at the instance
of the defaulter-borrower. In appeal, the
Supreme Court noticed the facts of the case
in para 14 and after scrutinizing the scope
of SARFAESI Act proceeded to hold that
issues such as valuation of property or
conduct of auction can be examined only in
proceedings
before
the
DRT.
Consequently, the criminal proceedings
initiated in respect of such issues came to
be quashed. Para 14 to 18.1 of the
judgment
in
Virupaksha
(supra)
are
reproduced hereinafter:-

"14. The issue, however is, as to
whether such proceedings by the police in
the present facts and circumstances could
be permitted. At 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 Canara Bank in
that regard. The loan admittedly was
sanctioned on 16-3-2009. 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 15-1-2013. Initially, the issue
raised was only with regard to the
undervaluation 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 DRT, which option
is also availed. It is only, thereafter, the
impugned complaint was filed on 20-52016.

15. 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 of 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,
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 the Sarfaesi Act. This view is fortified
by the decision of this Court in Indian
Overseas Bank v. Ashok Saw Mill [Indian
Overseas Bank v. Ashok Saw Mill, (2009) 8
SCC 366 : (2009) 3 SCC (Civ) 403]
wherein it is held as hereunder : (SCC pp.
375-76, paras 34-37)

"34. The provisions of Section 13
enable the secured creditors, such as banks
and financial institutions, not only to take
possession of the secured assets of the
borrower, but also to take over the
management of the business of the
76 INDIAN LAW REPORTS ALLAHABAD SERIES
borrower, including the right to transfer by
way of lease, assignment or sale for
realising secured assets, subject to the
conditions indicated in the two provisos to
clause (b) of sub-section (4) of Section 13.

35. In order to prevent misuse of
such wide powers and to prevent prejudice
being caused to a borrower on account of
an error on the part of the banks or
financial institutions, certain checks and
balances have been introduced in Section
17 which allow any person, including the
borrower, aggrieved by any of the
measures referred to in sub-section (4) of
Section 13 taken by the secured creditor, to
make an application to the DRT having
jurisdiction in the matter within 45 days
from the date of such measures having
taken for the reliefs indicated in subsection (3) thereof.

36.
The
intention
of
the
legislature is, therefore, clear that while
the banks and financial institutions have
been vested with stringent powers for
recovery of their dues, safeguards have
also been provided for rectifying any error
or wrongful use of such powers by vesting
the DRT with authority after conducting an
adjudication into the matter to declare any
such action invalid and also to restore
possession even though possession may
have been made over to the transferee.

37. The consequences of the
authority vested in the DRT under subsection (3) of Section 17 necessarily
implies that the DRT is entitled to question
the action taken by the secured creditor
and the transactions entered into by virtue
of Section 13(4) of the Act. The legislature
by including sub-section (3) in Section 17
has gone to the extent of vesting the DRT
with authority to even set aside a
transaction including sale and to restore
possession to the borrower in appropriate
cases.
Resultantly,
the
submissions
advanced by Mr Gopalan and Mr Altaf
Ahmed that the DRT has no jurisdiction to
deal with a post-Section 13(4) situation,
cannot be accepted."
(emphasis supplied)

16. 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 DRT has been
dismissed and Appeal No. 523 of 2015 filed
before 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 of 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
exercised.
4 All. Himri Estate Pvt. Ltd. & Ors. Vs. State of U.P. & Ors.
77

17. The appellants herein had
also referred to the provision as contained
in Section 32 of the Sarfaesi Act which
provides for the immunity from prosecution
since protection is provided thereunder for
the action taken in good faith. The learned
Senior Counsel for the complainant has in
that regard referred to the decision of this
Court in Army Headquarters v. CBI [Army
Headquarters v. CBI, (2012) 6 SCC 228 :
(2012) 3 SCC (Cri) 88] to contend that the
defence relating to good faith and public
good are questions of fact and they are
required to be proved by adducing
evidence. Though 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.

18. In that view, for all the
reasons
stated
above,
we
pass
the
following:
Order

18.1. The complaint bearing PC
No. 389 of 2016 and the order dated 20-52016 passed therein as also FIR No. 0152
of 2016 insofar as the appellants herein are
concerned stand quashed concerned."

21. In Priyanka Srivastava vs. State of
U.P. (2015) 6 SCC 287 the Supreme Court
considered the entertainment of application
under Section 156(3) Cr.P.C. in respect of
proceedings initiated under the SARFAESI
Act. The Hon'ble Court emphasized that a
separate procedure existed in respect of
SARFAESI Act proceedings under the
Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 and,
therefore, the Magistrate must show an
attitude of care, caution and circumspection
while
entertaining
application
under
Section 156(3) Cr.P.C. Section 32 of the
SARFAESI Act, 2002 has been referred to
and relied upon by the Court in para 32 and
33 of the judgment in Priyanka Srivastava
(supra) which are reproduced hereinafter:-

"32. 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.

33. 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."

In the present case, we are
obligated
to
say
that
the
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
Parliament in its wisdom has made such a
provision to protect the secured creditors
or any of its officers, and needless to
emphasize, the legislative mandate has to
be kept in mind."

22. We have carefully perused the
allegations made in the impugned First
Information Report which are in respect of
transfer of secured asset in favour of
78 INDIAN LAW REPORTS ALLAHABAD SERIES
auction
purchaser
by
the
secured
creditor/finance
company
under
the
SARFAESI
Act.
Allegations
that
proceedings
have
not
been
lawfully
undertaken or that the secured asset is
undervalued are aspects which can only be
examined in pending proceedings before
the Debt Recovery Tribunal. The defaulter
company has already approached the
Supreme Court twice and such proceedings
were withdrawn with liberty to approach
the Debt Recovery Tribunal. The defaulter
company has already approached the DRT,
Lucknow where the matter is pending.
Question as to whether the auction
purchaser has exceeded its possession
beyond the property transferred in auction
purchase is also open for examination
before the DRT, Lucknow. Such issues are
otherwise civil in nature and cannot be
allowed to be raised by lodging an First
Information
Report.
Vague
and
unsubstantiated ancillary allegations made
of encroachment, beyond the transferred
secured asset, or alleged irregularity in
conduct of auction etc. cannot be allowed
to be raised by lodging an FIR and thereby
vest jurisdiction in the police regarding
civil issues which are required to be
adjudicated exclusively by the DRT or the
civil court. The tendency of the defaulter to
invoke criminal proceedings for resisting
coercive action under the SARFAESI Act
has to be curbed. The Parliamentary vision
of
vesting
exclusive
jurisdiction
in
specialized tribunal viz DRT, in respect of
banking transactions relating to loan, debt
etc.
has
to
be
respected.
Criminal
proceedings cannot be pressed into action
at the instance of defaulter to scuttle
proceedings under the SARFAESI Act on
issues exclusively triable by DRT.

23. For the reasons recorded above,
these two petitions succeed and are
allowed. The First Information Report,
dated 22.07.2023, registered in Case Crime
No.611 of 2023, under Sections 420, 120-B
of IPC and Section 82 of Registration Act,
1908, Police Station - Kavi Nagar, District
- Ghaziabad is quashed.
----------
(2024) 4 ILRA 78
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 05.04.2024

BEFORE

THE HON'BLE RAJAN ROY, J.
THE HON'BLE NARENDRA KUMAR JOHARI, J.

Habeas Corpus Writ Petition No. 211 of 2023

Sandeep Yadav ...Petitioner
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioner:
Rajendra Prasad Mishra

Counsel for the Respondents:
A.S.G.I., Dr. Pooja Singh, Dr. Pooja Singh,
G.A.

Criminal Law - Constitution of India, 1950
- Articles 21, 22 - National Security Act,
1980 - Section 3(2) & 3(3) - Habeas Corpus
Petition - Preventive Detention - Distinction
Between Public Order and Law and Order -
Delay
in
Detention
Order
-
Subjective
Satisfaction of Detaining Authority - Single
Offence
Without
Criminal
History
-
The
petitioner, Sandeep Yadav, challenged the
detention order dated 17.05.2023 passed by the
District Magistrate, Gonda, under Section 3(2) of
the National Security Act, 1980 (NSA), seeking
release through a habeas corpus petition filed
by his brother. The detention stemmed from an
FIR (Crime No. 008/2023) alleging that on
28.01.2023, the petitioner and an accomplice
murdered Krishna Kumar Yadav, a teacher,
inside his rented room in Gonda, after a dispute
over money, under Sections 452, 302, 379 IPC,
later expanded to Sections 449, 380, 411, 201