# Rajpal Singh v. State of U.P. & Ors

- **Citation:** (2023) 1 ILRA 325
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-12-21
- **Case number:** Criminal Misc. Writ Petition No. 10571 of 2022
- **Bench:** Suneet Kumar, Syed Waiz Mian
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/rajpal-singh-v-state-of-u-p-ors-49156
- **Pages:** 10

## Headnote

A. Criminal Law - Constitution of India,
1950 - Article 226 - Indian Penal Code,
1860-Sections 420 & 406-Securitization
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002-Section 13(2), 13(4), 14 & 17-Debt
Recovery Tribunal Act,1993-Section 19Quashing of FIR-Default in repayment of
loan-Assets seized by Bank in proceedings
under the Act, 2002 was stolen due to
negligence of officials of bank-complaint
filed by the complainant is an intimidatory
tactic and afterthought-the officials of the
financial institution/bank are
provided
immunity from prosecution u/s 32 of
SARFAESI Act-the issue relates to the
exercise of remedy relating to a secured
assests as defined in the Act, cannot be in
dispute-SARFAESI Act is a complete Code
in itself which provides the procedure to be
followed
by
the
secured creditor
by
invoking section 13 of the Act-Hence,
criminal
proceedings
would
not
be
sustainable in the present matter-direction
issued-FIR quashed.(Para 1 to 60)

The writ petition is allowed. (E-6)

List of Cases cited:

## Text

1 All. Rajpal Singh Vs. State of U.P. & Ors.
325

12. Hon'ble Apex Court in State of
Haryana and others vs. Bhajan Lal and
others6; M/s Neeharika Infrastructure
Pvt. Ltd. Vs. State of Maharashtra7, as
well as in Leelavati Devi @ Leelawati &
another vs. the State of Uttar Pradesh8
has further reiterated above principle.

13. The statements raised by learned
counsel for the petitioner called for
determination of question of fact, which
may be adequately discerned either through
proper
investigation
or
it
may
be
adjudicated upon only by the trial court and
even the statements made on points of law
can also be more properly gone into by the
trial Court in case charge-sheet is submitted
in this case. The perusal of record makes
out prima facie offence at this stage and
there appears to be sufficient ground for
investigation in the case. This Court does
not find any justification to quash the
impugned FIR or proceeding against the
accused-petitioner arising out of above case
crime number as the case does not fall in all
the categories recognized by the Apex
Court, which may justify their quashing.
Moreover,
in
the
similar
matter,
a
coordinate Bench of this Court has already
dismissed Criminal Misc. Writ Petition
No.489 of 2021 on 16.7.2021.

14. Accordingly, the writ petition is
dismissed.
----------
(2023) 1 ILRA 325
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 21.12.2022

BEFORE

THE HON'BLE SUNEET KUMAR, J.
THE HON'BLE SYED WAIZ MIAN, J.

Criminal Misc. Writ Petition No. 10571 of 2022
along with Crl. Misc. Writ Petitions No. 11425 of
2021 & 11148 of 2021

Rajpal Singh ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Anil Kumar Bahpai

Counsel for the Respondents:
G.A., Sri Gaurav Pundir

A. Criminal Law - Constitution of India,
1950 - Article 226 - Indian Penal Code,
1860-Sections 420 & 406-Securitization
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002-Section 13(2), 13(4), 14 & 17-Debt
Recovery Tribunal Act,1993-Section 19Quashing of FIR-Default in repayment of
loan-Assets seized by Bank in proceedings
under the Act, 2002 was stolen due to
negligence of officials of bank-complaint
filed by the complainant is an intimidatory
tactic and afterthought-the officials of the
financial institution/bank are
provided
immunity from prosecution u/s 32 of
SARFAESI Act-the issue relates to the
exercise of remedy relating to a secured
assests as defined in the Act, cannot be in
dispute-SARFAESI Act is a complete Code
in itself which provides the procedure to be
followed
by
the
secured creditor
by
invoking section 13 of the Act-Hence,
criminal
proceedings
would
not
be
sustainable in the present matter-direction
issued-FIR quashed.(Para 1 to 60)

The writ petition is allowed. (E-6)

List of Cases cited:
1. Priyanka Srivastava & anr. Vs St. of U.P &
ors..

2. K. Virupaksha & anr. Vs St. of Karn. & anr.

3. St. of Har. & ors. Vs Bhajan Lal & ors..

(Delivered by Hon'ble Suneet Kumar, J. &
Hon'ble Syed Waiz Mian, J.)
326 INDIAN LAW REPORTS ALLAHABAD SERIES

1. Heard Shri Anil Kumar Bajpai,
learned counsel for the petitioners, learned
A.G.A. for the State and Shri Gaurav Pundir,
learned counsel for respondent no. 4.

2. The batch of writ petitions arise from
the same cause and incident, accordingly, are
being heard and decided together on the
consent of the parties.

3. The facts of Writ Petition No. 10571
of 2021 is being referred to for the sake of
convenience.

4. The writ petitioners before the Court
are bank officials of the rank of Assistant
General Manager, Field General Manager,
Chief Manager and Branch Manager.

5. By the instant petition, petitioners
seek quashing of the impugned First
Information
Report
dated
16.10.2021,
registered as Case Crime No. 0412/2021,
under Sections 420 and 406 I.P.C., Police
Station Fatehpur, District Saharanpur.

6. Union Bank of India is a body
corporate duly constituted under the Banking
Companies (Acquisition and Transfer of
Undertaking) Act, 1970 (Act No. V of 1970)
having its Head Office at Mumbai1. The
petitioner was posted as Branch Manager at
Saharanpur Main Branch, Saharanpur.

7. M/s Shyamvi Steels Private Limited,
incorporated under the Companies Act, 1956,
having its Head Office, at Ghaziabad, and
Registered Office at New Delhi, and
Unit/Works at Village Rehdi, Post Office
Chuttmalpur, District Saharanpur2. The firstinformant/ respondent no. 4 is one of the
Directors of the Company.

8. The Bank sanctioned loan to the
Company on 01.03.2013. Fund Based Loan
at Rs. 175.00 Lakh and Term Loan at Rs.
400.00 Lakh i.e. total loan amount at Rs.
575.00 Lakh was sanctioned to the Company.
Collateral
security
was
furnished
and
hypothecated to the Bank at Rs. 4,41,780.00.

9. A Hypothecation Agreement of
goods and debts for Rs. 1.75 crores was
executed by the Company through its
directors. The Company also hypothecated
stock of raw material, office equipments,
furniture and fixtures, air conditioners, stock
in process, finished goods, consumables,
plant and machinery, receivables, all present
and future goods, book debts, all other
movable assets of the company, plant and
machinery, both present and future and bills
etc. in favour of the Bank.

10. Further, to secure the credit facility
Company mortgaged its immovable property
with the Bank as an equitable mortgage or
primary /collateral security, for the amount
due to the Bank by depositing original title
deed and also confirmed the creation of
mortgage in favour of the Bank.

11. The Company through fourth
respondent again requested to enhance the
cash credit limit to Rs. 2.75 crores and on the
said request Bank sanctioned/modified credit
facilities to the Company on 01.03.2014.
Thereafter, the credit facilities aggregating at
Rs. 5,91,28,000.00 was sanctioned and
disbursed by the Bank to the Company.

12. Fund Based Loan i.e. Rs. 175.00
Lakh was enhanced to Rs. 275.00 Lakh and
on review the Term Loan was also
enhanced
at
Rs.
316.28
Lakh
on
25.02.2014.

13. The Company availed various
credit facilities from the Bank aggregating
at Rs. 575.00 Lakhs. The directors of the
1 All. Rajpal Singh Vs. State of U.P. & Ors.
327
Company have also executed letter of
personal guarantee securing the credit
facility granted by the Bank to the
Company.

14.

The
Company
defaulted,
consequently, the debt was classified NonPerforming Asset3 on 01.02.2015.

15. The Bank issued notice dated
12.03.2015, under Section 13(2) of the
Securitization
and
Reconstruction
of
Financial Assets and Enforcement of
Security Interest Act, 20024 duly served/
delivered to the Company, whereby, the
Company was called upon to discharge its
liability in full with future interest and
incidental expenses costs, within a period
of 60 days from the date of notice, failing
which Bank would proceed under SubSection (4) of Section 13 of the SARFAESI
Act. The Bank on 02.06.2015 issued and
delivered
possession
notice
to
the
mortgagors.

16. The fourth respondent challenged the
aforesaid notice before the Debts Recovery
Tribunal, Lucknow5 by filing S.A. No. 444
of 2015 (M/s Shyamvi Steel Private
Limited & two others Vs Union Bank of
India).

17. The aforesaid application was
allowed by the DRT, on technical ground
directing the Bank to hand over the
possession of the seized assets.

18. The Bank filed an application
being Original Application No. 852 of 2016
(Union Bank of India Vs M/s Shyamvi
Steels Private Limited) before the DRT,
against the directors of the Company for
recovery of the amount due under Section
19 of the Debt Recovery Tribunal Act,
19936.

19. A stay application was also filed
by the Bank in the aforesaid application
praying for setting aside the recovery
citation dated 11.11.2016, issued by the
Collector, Saharanpur, under Sections 284
and 286 of the U.P. Zamindari Abolition &
Land Reforms Act, 1950, for recovery of
the electricity dues at Rs. 2,11,55,523/-
against the Company. The Presiding Officer
passed an interim order on 09.12.2016, in
favour of Bank.

20. The Bank handed over the
possession of the Factory to the Company
on 29.07.2017.

21. Thereafter, Bank again issued a
corrected notice dated 05.06.2018, under
Section 13(4) of the SARFAESI Act and
took possession of the Factory.

22. The Bank made a complaint
before the Station House Officer, Police
Station Sadar, Saharanpur, alleging therein
that some persons, who are hand-men of
the fourth respondent, have broken the lock
of the factory, but no action was taken by
the police.

23. The Bank came to know from the
customers that there was certain dues of the
Electricity
Department
against
the
Company, consequently, Additional District
Magistrate (City), Saharanpur, forcibly had
taken possession of the premises of the
Company from the Bank on 08.12.2018.

24. In the meantime the S.A. No. 444
of 2015, filed by the fourth respondent
before the DRT, came to be dismissed for
non-prosecution.

25. The fourth respondent moved an
application for One Time Settlement7
before the Bank on 12.07.2019.
328 INDIAN LAW REPORTS ALLAHABAD SERIES

26. The police arrested a person on
11.09.2019,
who
was
carrying
iron
materials, which were the theft items, at
about 2.00 P.M. near Kali Temple of Redi
Village; on query he disclosed his name as
Haseen, son of Naseem, resident of Muslim
Colony,
Chhutmalpur,
Police
Station
Fatehpur, Saharanpur. The aforesaid person
was caught by one Ravindra, son of
Manmohan, resident of Redi, Police Station
Fatehpur,
District
Saharanpur.
Subsequently, a First Information Report8
was
also
lodged
by
Ravindra
on
11.09.2019;
being
Case
Crime
No.
0306/2019, under Sections 379 & 411
I.P.C., Police Station Fatehpur, District
Saharanpur.

27. The fourth respondent in his letter
dated 15.09.2019, made allegations against
the Electricity Department and the persons
involved with the Electricity Department.
But subsequently, fourth respondent taking
somersault, moved an application under
Section
156(3)
Code
of
Criminal
Procedure, 19739, before the Chief Judicial
Magistrate, Saharanpur, deviating from his
earlier allegations levelled in the letter
dated 15.09.2019, and the entire allegations
of theft was fastened against the Bank
officers, including, the petitioner.

28. The Bank received letter dated
14.07.2020, issued by the Ministry of
Finance, Government of India, New Delhi,
directing the Managing Director/Chief
Executive Officer, Union Bank of India, to
take action, strictly, in accordance with the
representation of the Company.

29. Pursuant thereof, Bank sent a
letter dated 18.03.2020, to the fourth
respondent, accepting the offer for OTS
submitted by the fourth respondent at Rs.
4,46,07,745.00.

30. The Bank, however, was compelled
to
send
letters
dated
04.09.2020
and
17.12.2020, to the fourth respondent informing
that since the fourth respondent did not
comply with the terms and conditions of the
OTS offered by the Bank, therefore, the Bank
proceeded to reject the OTS and sought
recovery of the dues.

31. The fourth respondent moved an
application on 03.02.2021, under Section
156(3) Cr.P.C., before the Chief Judicial
Magistrate, Saharanpur, praying for registering
criminal case against the officers of the Bank.

32. The Bank officially informed the
fourth respondent vide letter dated 18.02.2021,
that OTS has finally been cancelled as he had
not complied with the terms and conditions of
the OTS. Bank informed that the outstanding
dues of the Company on date stands at Rs.
12,49,15,622.83, plus legal charges.

33. The Chief Judicial Magistrate,
Saharanpur, directed Bank to submit inventory
prepared at the time of taking possession of the
Company under the SARFAESI Act. Pursuant
thereto, petitioner supplied the inventory
prepared by the Bank on 05.06.2018.

34. The fourth respondent further
attempted to create obstacles, accordingly,
entered into a registered rent agreement letting
out the premises of the Company in favour of
one Ashok Gupta, son of, Late Ram Nath
Gupta, Proprietor of M/s Ram Prem Stocky
Yard, resident of Roorkie Road, Chhutmalpur,
District Saharanpur, the possession of which
was taken by the Bank on 05.06.2018.

35. The Chief Judicial Magistrate,
Saharanpur,
passed
an
order
dated
30.09.2021, in Misc. Application No. 245
of 2021 (Sanjay Tomar Vs Rajpal Singh
and others), filed by respondent no. 4 under
1 All. Rajpal Singh Vs. State of U.P. & Ors.
329
Section 156(3) Cr.P.C., wherein, Station
House Officer, Police Station Fatehpur,
District Saharanpur, was directed to register
F.I.R. and investigate the matter. The
impugned First Information Report in
compliance was lodged on 16.10.2021,
which is under challenge by the petitioner.

36. In the counter affidavit filed by the
fourth respondent, the facts are not being
disputed. It is, however, submitted that F.I.R.
should have also been lodged under Section
409 I.P.C. against the accused petitioners
being public servant and having committed
breach of trust as some of the materials and
articles, as per the inventory, was stolen while
it was in the custody and possession of the
Bank. It is further submitted that the
possession of the premises (secured assets)
was taken by the Bank with the assistance of
the District Magistrate and police personnal
in the absence of the fourth respondent.

37. In this backdrop, it is urged that it
was the bounden duty of the Bank officials to
have protected the assets. It is further urged
that the bank officials were not only negligent
with regard to the security and safety of the
assets, but, attempted to grab the articles, as
well as, the machinery of the Company out of
malafide intention. The petition being devoid
of merit is liable to be dismissed.

38.

Rival
submissions
fall
for
consideration .

39. The sole question that arises for
consideration is as to whether it is a case of
malicious prosecution against the Bank and
whether ingredients of the offence under
Section 420, 406 I.P.C. is made out from the
impugned F.I.R.

40. The petitioners herein are officials
of the Bank, the malafide intent of the
complainant is reflected from the fact that
the fourth respondent has lodged F.I.R. in
retaliation
to
counter
the
recovery
proceedings, and to coerce the officers of
the Bank from not taking possession of the
Company
under
Section
13
of
the
SARFAESI Act.

41. It is not being disputed by learned
counsel for the fourth respondent that the
Company is borrower and the complainant
happens to be the Director. Company
defaulted and further failed to accept the
OTS
scheme
offered
by
the
Bank,
consequently, Bank proceeded to exercise
its statutory and contractual right as per the
SARFAESI Act to take possession of the
secured assets of the Company and ensure
recovery of the amount due to the Bank.
Proceedings of recovery is pending before
the DRT, wherein, Company and the
Revenue authorities i.e. the Collector are
parties. The SARFAESI Act and DRT Act
is a complete code for redressal of the
grievance of the debtor company and at the
same time it is always open for the debtor
company to raise counter claim against the
Bank for the loss of inventory/assets for
any reason, including, theft.

42. The allegations made in the F.I.R.
taken on face value alleges that the assets
seized by the Bank in proceedings under
SARFAESI Act was stolen due to the
negligence of the officials of the Bank,
consequently, on an application under
Section 156(3) Cr.P.C. the impugned F.I.R.
came to be lodged. The allegations taken as
it is, would not make out a case of cheating
(Section 415 I.P.C.) as there is no deception
of any person, fraudulently or dishonestly
inducing such a person to deceive to deliver
any property. Further, it is also not the case
of cheating and dishonestly inducing the
delivery of property to any person or to
330 INDIAN LAW REPORTS ALLAHABAD SERIES
make alter or destroy the whole or any part
of a valuable security or anything which is
signed or sealed, and which is capable of
being converted into a valuable security.

43. Criminal breach of trust (Section
405 I.P.C.) mandates that for whoever,
being in any manner entrusted with
property, or with any dominion over
property, dishonestly misappropriates or
converts to his own use of property, or
dishonestly uses or disposes of that
property in violation of any direction of law
or of any legal contract which he has made
touching the discharge of such trust
commits "criminal breach of trust".

44. To constitute an offence of
criminal breach of trust, it is essential that
the prosecution must prove first of all that
the accused was entrusted with some
property or with any dominion or power. It
has to be established further that in respect
of the property so entrusted, there was
dishonest, misappropriation or dishonest
conversion or dishonest use or disposal in
violation of a property or law of legal
contract by the accused himself or some
one else which he willingly suffered to do.
It follows automatically from the defence
that the ownership or beneficial interest in
property in respect of which criminal
breach of trust alleged to have been
committed must be in some person other
than the accused and the later must hold it
on account of misappropriation and some
ways for his benefit.

45. In this backdrop, admittedly, the
Company, of which complainant is one of
the Director, had obtained loan from the
bank, on default, the Bank was within its
statutory/contractual right to recover the
assets mortgaged/hypothecated to the Bank
as per law. The Bank taking recourse as per
law had taken possession of the property
with the intervention of the District
Collector and the police officials, which the
Bank was entitled in proceedings under
Section 13/14 of the SARFAESI Act. It is
also not in dispute that the Company had
outstanding electricity dues, for recovery
thereof, it is alleged that the Revenue
authorities attempted to take possession of
the property, which was in the custody of
the
Bank.
The
Bank
while
taking
possession had drawn an inventory of the
assets, which as per the complainant is
alleged to have been stolen while in
custody of the Bank, therefore, the officials
of the Bank are liable to face criminal
prosecution.

46. The proceedings initiated and the
action taken by the Bank under SARFAESI
Act are assailable under the said Act before
the higher forum and if, borrower is
allowed to take recourse to criminal law in
the manner, as it has been taken, it needs no
special emphasis to state, has an inherent
potential to affect the financial health of the
Bank. It is noticeable by the conduct of the
fourth
respondent
that
the
statutory
remedies have cleverly been pypassed and
prosecution route has been undertaken for
instilling fear amongst the officials of the
Bank compelling them to concede to the
request of the Company for settlement.

47. It needs to be reiterated that the
learned Magistrate has to remain vigilant
with regard to the allegations made and the
nature of allegations in an application filed
under Section 156(3) Cr.P.C. and not to
issue directions without proper application
of mind. The petitioners herein are officers
of the Bank and the complainant is the
Director of the defaulted Company. The
bank has statutory right of effecting
recovery of the security interest, which if
1 All. Rajpal Singh Vs. State of U.P. & Ors.
331
allowed to be given criminal colour by the
defaulting Company would be fatal to the
Banking System.

48. 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 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 separate
procedure under the DRT Act/SARFAESI
Act, an attitude of more care, caution and
circumspection had to be adhered to by the
Magistrate.

49.

The
evil
design
of
the
complainant is writ large while lodging the
complaint, was to harass the petitioners
with the sole intent to avoid payment of
loan and to pressurize Bank for settlement
as per the terms of the Company. When a
person avails a loan from a financial
institution, it is his obligation to pay back
the loan, in the event of default the
financial institution is at liberty to proceed
in accordance with law to enforce the
contractual obligation at the statutory
forum prescribed by the law.

50. Taking a case that the assets
seized and taken possession by the Bank
to secure its dues, some of it may have
been stolen, as is being alleged by the
complainant, that would not give rise to
criminal prosecution as it is always open
to the aggrieved defaulter Company to
raise the issue before the DRT and plead
counter claim for the value of the stolen
inventory. In the event, it is found that the
inventory, in any manner is deficit, while
it was in possession of the Bank, at the
most the Bank would have to adjust the
deficit amount against the dues sought to
be recovered by the Bank against the
Company. Taking recourse to criminal
prosecution
against
the
Bank
is
unwarranted.

51. In Indian Overseas Bank
Versus Ashok Saw Mill10, Supreme
Court held as follows:

"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
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 subsection (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 sub-section (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
332 INDIAN LAW REPORTS ALLAHABAD SERIES
and also to restore possession even though
possession may have been made over to the
transferee."

52. In the facts and circumstances of
the case, the issue as per the allegations in
the F.I.R. relates to the exercise of remedy
relating to a secured asset as defined under
the SARFAESI Act, cannot be in dispute.
The
fact
that
the
account
of
the
complainant Company was classified NPA
is also admitted position. The OTS was also
not acted upon. In that regard when a right
accrues to the secured creditor to enforce
the security interest, the procedure as
contemplated under Sections 13 and 14 of
the SARFAESI Act is to be resorted to by
the Bank. If the complainant, as a borrower
had any grievance with regard to any of the
measures taken by the secured creditor
invoking the provisions of Section 13 of the
SARFAESI Act, the remedy is provided
under Section 17/19 of the SARFAESI Act,
and certainly not to take recourse of
criminal proceedings. 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.

53. In the given admitted facts, the
complaint filed by the complainant was an
intimidatory tactic and afterthought which is
an abuse of process of law. Further, the
officials of the financial institution/bank are
provided with immunity from prosecution
under Section 32 of SARFAESI Act. The act
or action of the Bank officials having not
taken in good faith, that aspect of the matter
is also an aspect which can be examined in
the proceedings under the SARFAESI Act
before the prescribed forum. In such
circumstances, criminal proceedings would
not be sustainable in a matter of the present
nature, exposing the petitioners to proceeding
before the investigating officer or the
criminal court, would not be justified.

54. In Priyanka Srivastava and
another Vs. State of U.P. and others11,
Supreme Court while allowing the appeal
filed by an officer of the financial institution
set aside the order passed by the High Court
and quashed the registration of F.I.R. lodged
through an application under Section 156 (3)
Cr.P.C. The Court in the opening paragraph
observed as follows:

"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."

55. The Court further reiterated that
the learned Magistrate while exercising
jurisdiction under Section 156 (3) Cr.P.C.
1 All. Rajpal Singh Vs. State of U.P. & Ors.
333
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. The
Court in Para-27 observed as follows:

"..........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."

56. Recently, in K. Virupaksha and
another Versus State of Karnataka and
another12, Supreme Court in an appeal
filed by Deputy General Manager, Canara
Bank, quashed the complaint and the order
passed therein, as also the F.I.R. insofar as
the appellants are concerned. The financial
institution
had
initiated
recovery
proceeding against the defaulting party but
in retaliation and counterblast, the officials
were exposed to criminal prosecution. The
Court in paragraph 16 observed as follows:

"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."

57. In State of Haryana & Ors. Vs.
Bhajan Lal & Ors.13 Supreme Court
considered in detail the scope of the High
Court powers under Section 482 Cr.P.C.
and/or Article 226 of the Constitution of
India to quash the FIR and referred to
several judicial precedents and held that the
High Court should not embark upon an
inquiry into the merits and demerits of the
allegations and quash the proceedings
without allowing the investigating agency
to complete its task. The Court, inter alia,
identified the following cases in which
FIR/complaint can be quashed:

"102. (1) Where the allegations made
in the first information report or the
complaint, even if they are taken at their
face value and accepted in their entirety do
not prima facie constitute any offence or
make out a case against the accused.

(2) ..... .... ....

(7) Where a criminal proceeding is
manifestly attended with mala fide and/or
where
the
proceeding
is
maliciously
instituted with an ulterior motive for
wreaking vengeance on the accused and
with a view to spite him due to private and
personal grudge."

58. Having regard to the facts and
circumstances of the case, the order of the
Magistrate directing lodging of the F.I.R.
against
the
officers
of
the
Bank,
mechanically and without application of
mind cannot be appreciated. The writ
petitions are liable to succeed and is
ordered accordingly.

59. The writ petitions are allowed.
The complaint, the order of the Magistrate
passed therein and also the impugned
F.I.R., insofar, it relates to the petitioners is
set aside and quashed.

60. The cost assessed at Rs. 50,000/-
to be paid by the fourth respondent to the
Bank, at the Branch, within, six weeks
from the date of order.
334 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2023) 1 ILRA 334
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.12.2022

BEFORE

THE HON'BLE SUNEET KUMAR, J.
THE HON'BLE SYED WAIZ MIAN, J.

Criminal Misc. Writ Petition No. 16983 of 2022
along with Crl. Misc. Writ Petition No. 18326 of
2022

Ambuj Parag Dubey & Ors. ...Petitioners
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
Sri Rakesh Dubey, Sri Manish Tiwary, Sr.
Advocate

Counsel for the Respondents:
G.A.

A. Criminal Law - U.P. Gangsters and
Anti-Social
Activities
(Prevention)
Act, 1986-Section 3(1)-Quashing of
FIR-FIR lodged against gang leader
and members of
gang-they
have
been chargesheeted in base cases
shown in gang chart-But that alone
is not basis for prosecution under
Gangster Act- Where the competent
authority is not convinced on the
material
placed
by
police
authorities, the competent authority
may necessarily decide to call for a
discussion to
prima facie
satisfy
himself
that
prosecution
is
warranted-FIR
that
follows
the
approval of gang chart cannot be
faulted or quashed merely for want
of discussion.(Para 1 to 43)

The writ petition is dismissed. (E-6)

List of Cases cited:
1. Ashok Kumar Dixit Vs St. of U.P.(1987) AIR
All 235(All HC, FB)
2. Romesh Thappar Vs St. of Madras (1950) AIR
SC 124

3. Nagen Murmu Vs St. of W.B. (1973) AIR SC
844

4. Bablu Mitra Vs St. of W. B. (1973) AIR SC 197

5. Jadunandan Sha Vs DM, Dhanbad (1983) 4
SCC 301

(Delivered by Hon'ble Suneet Kumar, J. &
Hon'ble Syed Waiz Mian, J.)

1. Heard Sri Rakesh Dubey, learned
counsel appearing for the petitioners and
learned A.G.A. for the State-respondents.

2. Facts of Writ Petition No. 16983 of
2022 is being referred to for the sake of
convenience.

3. Petitioners by the instant writ
petition, seek quashing of FIR bearing Case
Crime No. 0424 of 2022 lodged under
Section 3(1) of the The Uttar Pradesh
Gangsters
and
Anti-Social
Activities
(Prevention)
Act,
1986
(For
short
''Gangster
Act')
at
Police
StationBhognipur, District Kanpur Dehat. The FIR
came to be lodged by the In-charge
Inspector P.S. Bhognipur, wherein, the
second petitioner has been shown as the
gang leader along with ten other members
of the gang, including, first and third
petitioners.
Against
the
second
petitioner/gang leader three base cases have
been included in the gang-chart, whereas,
against the first and second petitioners one
base case have been shown. In Writ
Petition No. 18326 of 2022, the petitioner
is at serial no. 6 of the gang-chart and two
cases have been shown against him.

4. It is alleged in the FIR that the
petitioners, along with other members, are