Summary
The Supreme Court quashed criminal proceedings for cheating and forgery against an HDFC officer arising from a SARFAESI auction sale of property that had already been acquired by the Tamil Nadu Housing Board. The appellant was not the authorised officer when the auction was held and the sale certificate issued in 2012; he became Manager only in November 2014 and had no role in the transaction, so continuing the prosecution would be an abuse of process.
Issues
- Whether the High Court was right in refusing to quash, under Section 482 CrPC, the chargesheet for offences under Sections 197, 417, 418, 467, 468 and 420 IPC against the appellant.
- Whether an officer who was not the authorised officer under the Security Interest (Enforcement) Rules, 2002 at the time of the auction and issuance of the sale certificate can be prosecuted for alleged suppression of an encumbrance in that sale.
Provisions considered
- Section 482, Code of Criminal Procedure, 1973The High Court had dismissed the appellant's Section 482 petition holding a prima facie case of cheating and forgery was made out. The Supreme Court held that, since the appellant was neither the authorised officer at the relevant time nor responsible for the auction or sale certificate, continuation of the proceedings would be an abuse of process and a miscarriage of justice, and quashed them. (¶¶ 2, 7, 18, 19)
- Rule 2(a), Security Interest (Enforcement) Rules, 2002Rule 2(a) defines 'authorised officer' as an officer not less than a chief manager of a public sector bank or equivalent, as specified by the secured creditor's board, to exercise the rights of a secured creditor. The appellant was only an Assistant Manager in 2012 and only the Manager could initiate SARFAESI proceedings; the sale certificate was issued by his predecessor. (¶¶ 10, 17, 18)
- Section 32, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002The appellant invoked the good-faith immunity for secured creditors and their officers and the respondent argued it did not cover deliberate concealment; the Court did not decide the point, resting its decision on the appellant's lack of any role in the transaction. (¶¶ 13, 16, 17)
- Sections 197, 417, 418, 420, 467 and 468, Indian Penal Code, 1860The FIR and chargesheet alleged cheating, forgery and issuing a false certificate by suppressing the Housing Board's acquisition of the auctioned property. The Court found the allegations against the appellant baseless as he was not a signatory to the sale certificate and had no role in the auction. (¶¶ 6, 7, 18)
Held
- Where the sale certificate in a SARFAESI auction was issued by the appellant's predecessor and the appellant was not the authorised officer during the auction process or at the time of issuance of the sale certificate, having assumed the office of Manager only in November 2014, he had no role in the transaction leading to the FIR and the allegations against him do not attract criminal liability. (¶¶ 17, 18)
- Continuation of criminal proceedings against a person implicated without due cause, who was neither the authorised officer nor responsible for the auction or sale certificate, would amount to abuse of process of law and cause miscarriage of justice; such proceedings are liable to be quashed under Section 482 CrPC. (¶¶ 18, 19)
Result
Appeals allowed; impugned High Court order set aside; criminal proceedings against the appellant arising out of CC No. 308 of 2016 before the Judicial Magistrate No. 1, Tirunelveli quashed; pending interlocutory applications disposed of.