K. VIRUPAKSHA & ANR. versus THE STATE OF KARNATAKA & ANR.

Citation: [2020] 2 S.C.R. 1020 · Decided: 03-03-2020 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 2 S.C.R.
K. VIRUPAKSHA & ANR.
v.
THE STATE OF KARNATAKA & ANR.
(Criminal Appeal No. 377 of 2020)
MARCH 03, 2020
[R. BANUMATHI, S. ABDUL NAZEER
AND A.S. BOPANNA, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 – ss.13, 14, 17, 32 –
Respondent No.2 was sanctioned credit facilities amounting to
Rs.2.68 crores by Bank – Property measuring 3 acres 2 Guntas was
offered as security and a charge was created (Secured Asset) – As
per the Bank, respondent no.2 did not repay the loan and his account
was classified as Non-Performing Asset (NPA) – Ultimately, the Bank
took possession of the secured asset – Auction notice issued –
Challenged by respondent no.2 – Rejected by High Court –
Respondent no.2 filed application u/s.17(1) – Dismissed by Debts
Recovery Tribunal (DRT) for delay – Appellate Tribunal (DRAT)
dismissed appeal– Respondent no.2 filed complaint u/s.200, CrPC
against appellants who were working as Deputy General Managers
in the Bank (accused no.1) alleging connivance with auction
purchaser which caused wrongful loss to him – FIR registered –
Appellants filed petition u/s.482, CrPC – Dismissed – Held:
SARFAESI Act is a complete code in itself which provides the
procedure to be followed by secured creditor and also the remedy
to the aggrieved parties including borrower – In such circumstance,
if there is any discrepancy in the manner of classifying the account
as NPA or in the manner in which the property was valued/auctioned,
the DRT is vested with power to set aside such auction at the stage
after the secured creditor invokes power u/s.13 – Though in the
instant case the application filed by Complainant before DRT and
the appeal before DRAT were dismissed, the remedy ought to have
been availed diligently – In that direction the further remedy by
approaching the High Court to assail the order of DRT & DRAT is
also available in appropriate cases – Instead, after dismissal of
application before DRT, the impugned complaint was filed as an
 [2020] 2 S.C.R. 1020
1020
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intimidatory tactic and an afterthought which is an abuse of the
process of law – Criminal proceeding not sustainable in a matter of
present nature – Complaint and the order passed therein as also the
FIR insofar as the appellants are concerned stand quashed –
Complainant at liberty to avail his remedies if he assails the order
passed by DRT & DRAT – Code of Criminal Procedure, 1973 – ss.
200, 482 – Penal Code, 1860 – ss.511, 109, 34, 120-B, 406, 409,
420, 405, 417 & 426 – Security Interest (Enforcement) Rules, 2002.
Allowing the appeal, the court
HELD: 1.1 The fact that the account of the Complainant
was classified as NPA is also the admitted position. 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 Securitisation and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002
(SARFAESI Act) is to be resorted to. Further the Security
Interest (Enforcement) Rules, 2002 provides the procedure to
be adopted with regard to the valuation and sale of the secured
asset. 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 as provided under Section 17 of the SARFAESI Act was
to be availed. It is in that light the High Court in the writ
proceedings had arrived at such conclusion. At that point in time
the Complainant availed the remedy under the Act by filing the
application under Section 17. Since there was delay in filing, an
application was filed under Section 5 of the Limitation Act seeking
condonation of delay. The same was rejected on the ground of
delay against which an appeal is said to have been filed before
the DRAT and it was pending though it is now stated to be
dismissed. It is at that stage when it was still pending the impugned
complaint in P.C. No.389/2016 was filed, wherein through the
order dated 20.05.2016 it had been referred to an investigation
under Section 156 (3) of the Cr.PC. 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 

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