Supreme Court Quashes Criminal Case Against HDFC Manager: 'No Role in Auction Process' I 'Continuation of Proceedings Would Be Abuse of Process and Cause Miscarriage of Justice'
Isabella Mariam
The Supreme Court of India has quashed criminal proceedings initiated against a manager of HDFC Limited, stating that the accused had no direct involvement in the auction process which led to the alleged offence. The judgment was delivered by a Division Bench comprising Justice Vikram Nath and Justice Sandeep Mehta. The court stated that continuation of the criminal proceedings would amount to an abuse of the process of law and would unjustly harass the appellant. The Supreme Court allowed the appeal, setting aside the judgment of the High Court of Madras which had earlier declined to quash the chargesheet filed against the appellant.
The appellant, an officer of HDFC Limited, challenged the judgment and order dated 12.01.2023 passed by the High Court of Madras in Criminal Original Petition (MD) Nos. 21417 of 2016 and 10979 of 2016. The High Court had dismissed the appellant’s petition filed under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) seeking quashing of the chargesheet and consequential proceedings arising out of C.C. No. 308 of 2016.
The prosecution case was that the first accused, serving as a Branch Manager of HDFC Limited at Palayankottai, and the appellant, alleged to be a Manager at the Head Office at Thiruvananthapuram, committed offences while handling a loan transaction. One Mr. A. Kannan had borrowed a loan from HDFC Limited by mortgaging property situated at Keela Natham Village, Palayankottai Taluk, Tirunelveli District.
Due to default in loan repayment, HDFC Limited initiated proceedings under the SARFAESI Act, leading to an auction notice published on 22.05.2012. Respondent No. 2, the de-facto complainant, participated in the public auction and purchased the property for Rs. 7,25,000/-. Despite paying the full consideration and receiving the sale certificate in July 2012, the complainant later discovered that the property had already been acquired by the Tamil Nadu Housing Board.
Subsequently, the complainant filed a consumer complaint in Consumer O.P. No. 58/2013 and a criminal complaint under Section 190 of Cr.P.C., which led to registration of FIR No. 21/2014 under Sections 197, 417, 418, 467, 468, and 420 of the Indian Penal Code (IPC).
The appellant, seeking quashing of the proceedings, argued that he was appointed Manager at HDFC only in November 2014, after the auction and sale certificate issuance in 2012. At that time, he was an Assistant Manager, not an authorized officer empowered to act under the SARFAESI Act. Rule 2(a) of the Security Interest (Enforcement) Rules, 2002, defines an authorized officer as “an officer not less than a chief manager of a public sector bank or equivalent,” which the appellant was not.
The appellant submitted that dragging him into criminal proceedings when he was not involved in the transaction would amount to an abuse of process and that he was being harassed due to failure of the complainant in the consumer forum.
Further, the appellant cited Section 32 of the SARFAESI Act, which provides immunity to secured creditors and their officers for acts done in good faith.
Conversely, respondent no. 1 submitted that the complainant had no knowledge of the property acquisition and that concealment of this fact amounted to fraudulent misrepresentation. It was argued that “as is where is” and “as is what is” conditions would not shield the bank officials from liability. Reliance was placed on Section 55 of the Transfer of Property Act, 1882 and on the decision in Mrs. Leelamma Mathew v. M/s Indian Overseas Banks & Ors.
The respondent further submitted that the protection under Section 32 of the SARFAESI Act was not available where actions were not taken in good faith.
The Division Bench recorded that "the appellant's argument as to him not being the authorized officer at the relevant time has caught our attention and calls for our deliberation."
After examining the material, the Court stated, "It is evident that the sale certificate was issued by the appellant’s predecessor and, at the relevant time, the appellant was not the authorized officer empowered to issue the certificate."
The Court further recorded, "Right from the initiation of the auction process to the issuance of sale certificate, no direct involvement of the appellant can be seen as he was not the authorized officer during the said period and assumed the office of Manager only in November, 2014."
The Court reasoned, "Since the appellant was neither the authorized officer at the relevant time nor responsible for the auction process or issuance of the sale certificate, the allegations against him are baseless and do not attract criminal liability."
The Bench observed, "The continuation of the instant criminal proceedings against the appellant shall lead to abuse of process of law, cause nothing but miscarriage of justice and inordinately harass the appellant who has been implicated without due cause."
Regarding the protection under Section 32 of the SARFAESI Act, the Court noted that while the respondent argued against its applicability, the appellant's case did not require evaluation under good faith since his non-involvement was evident.
The Supreme Court, after considering the submissions of the parties and the material on record, directed that the appeals are allowed and the impugned order passed by the High Court is set aside. The Court specifically stated that the criminal proceedings against the appellant arising out of CC No. 308 of 2016 on the file of the Judicial Magistrate No. 1, Tirunelveli are hereby quashed. The Court found that since the appellant was neither the authorized officer at the relevant time nor responsible for the auction process or issuance of the sale certificate, the allegations against him were baseless and did not attract criminal liability. It was further observed that the continuation of the criminal proceedings against the appellant would lead to an abuse of the process of law, cause miscarriage of justice, and result in harassment of the appellant without due cause. Therefore, the Court found it just and necessary to quash the criminal proceedings to prevent the miscarriage of justice.
Additionally, the Court ordered that all interlocutory application(s), if any, shall stand disposed of.
Advocates Representing the Parties:
For the Petitioners: Mr. Soumya Chakraborty, Senior Advocate; Mr. Santosh Kumar, Advocate; Mr. Praneet Pranav, Advocate; Mr. Tadimalla Bhaskar Gowtham, Advocate; Mr. Alabhya Dhamija, Advocate; Mr. Rishikesh Haridas, Advocate; Mr. Shreevardhan Dhoot, Advocate; Mr. Pravartak Pathak, Advocate; Mr. Subodh S. Patil, Advocate-on-Record (AOR)
For the Respondents: Mr. Raghenth Basant, Senior Advocate; Mr. Vishnu P, Advocate; Mr. Haris Ea, Advocate; Ms. Kaushitaki Sharma, Advocate; Ms. Hima Bhardwaj, Advocate; Mr. Manu Krishnan G, Advocate-on-Record (AOR)
Case Title: Sivakumar v. The Inspector of Police & Anr.
Neutral Citation: 2025 INSC 558
Case Number: Criminal Appeal arising out of SLP (Crl) Nos. 5815-5816 of 2023
Bench: Justice Vikram Nath, Justice Sandeep Mehta
[Read/Download order]
