MRS. PRIYANKASRIVASTAVAANDANOTHERversusSTATE OF U.P.AND OTHERS

                        [2015]4S.C.R.108


A         MRS. PRIYANKASRIVASTAVAANDANOTHER

                                  v.
                   STATE OF U.P.AND OTHERS
B                (Criminal Appeal No. 781 of 2012)

                         MARCH 19, 2015

         [DIPAK MISRA AND PRAFULLA C. PANT, JJ.]
c         Code of Criminal Procedure, 1973: s. 156(3) - Power
  under, scope- Borrower-respondent no.3 who defaulted in
  repayment of Joan and against whom action under
  SARFAESJ Act was taken filed criminal cases against the
D bank officials - Borrower and the bank officials entered one
  time settlement with stipulation to withdraw various cases -
  Borrower had filed another application u/s. 156(3) alleging
  cheating against the bank officials and FIR was registered in
  that complaint- Jn the 0 TS, borrower did not disclose about
E the said FIR-Appellants-bank officials moved High Court-
  High Court refused to interfere - Held: The FIR is liable to
  be quashed - The purpose of respondent no.3 was to only
  harass the appellants with the sole intent to avoid the payment
  of loan - The Magistrate should have kept himself alive to
F the provision relating to protection of action against secured
  creditors or any of its officers before venturing into directing
  registration of the FIR u/s. 156(3) - SARFAESJ Act.

           Allowing the appeal the Court
G
           HELD: 1. 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
H
                                 108
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 109
                 AND OTHERS

Debts due to Banks and Financial Institutions Act, 1993,    A
an attitude of more care, caution and circumspection has
to be adhered to. Issuing a direction stating "as per the
application" to lodge an FIR creates a very unhealthy
situation in the society and also reflects the erroneous
approach of the Magistrate. It also encourages the          B
unscrupulous and unprincipled litigants, like respondent
no.3, to take adventurous steps with courts to bring
the financial institutions on their knees. Respondent no.
3 had prosecuted the earlier bank authorities and after     C
the matter was dealt with by the High Court in a writ
petition recording a settlement, he did not withdraw the
criminal case and waited for some kind of situation where
he could take vengeance. During the tenure of appellant
No.1, who is presently occupying the position of Vice-      o
President, neither the loan was taken, nor the default
was made, nor any action under the SARFAESI Act was
taken. However, the action under the SARFAESI Act was
taken on the second time at the instance of appellant
No.1. The devilish design of the respondent No.3 was        E
to harass the appellants with the sole intent to avoid
the payment of loan. [Paras 24, 25 and 26] [132-F-H;
133-A-C]

       2. The power under Section 156(3) warrants F
application of judicial mind. It is not the police taking
steps at the stage of Section 154, Cr.P.C. A litigant at his
own whim cannot invoke the authority of the Magistrate.
A principled and really grieved citizen with clean hands
must have free access to invoke the said power. It G
protects the citizens but when pervert litigation takes
this route to harass their fellows citizens, efforts are to
be made to scuttle and curb the same. A stage has come
in this country where Section 156(3) Cr.P.C. applications H
110        SUPREME COURT REPORTS                [2015] 4 S.C.R.



A     are to be supported by an affidavit duly sworn by the
      applicant who seeks the invocation of the jurisdiction
      of the Magistrate. That apart, in an appropriate case, the
      Magistrate would be well advised to verify the truth and
      also can verify the veracity of the allegations. This
8     affidavit can make the applicant more responsible.
      Such kind of applications are being filed in a routine
      manner without taking any responsibilitywhatsoever
      only to harass certain persons. That apart, it becomes
C     more disturbing and alarming when one tries to pick up
      people who are passing orders under a statutory
      provision which can be challenged under the
      framework of said Act or under Article 226 of the
      Constitution of India. But it cannot be done to take
o     undue advantage in a criminal court as if somebody is
      determined to settle the scores. There has to be prior
      applications under Section 154(1) and 154(3) while
      filing a petition under Section 156(3). Both the aspects
      should be clearly spelt out in the application and
E     necessary documents to that effect shall be filed. The
      direction that an application under Section 156(3) be
      supported by an affidavit shall deter him to casually
      invoke the authority of the Magistrate under Section
      156(3). That apart, the veracity of the same can also be
F     verified by the Magistrate, regard being had to the
      nature of allegations of the case. The Magistrate should
      have kept himself alive to the provision relating to
      protection of action against secured creditors or any of
G     its officers before venturing into directing registration
      of the FIR under Section 156(3) Cr.P.C. [Paras 26, 27
      and 30] [133-F-H; 134-A-G; 135-E]

        Manharibhai Muljibhai Kakadia and Anr. v.
        Shai/eshbhai Mohanbhai Patel and others 2012 (8)
H
PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 111
                AND OTHERS

  SCR 1015: (2012) 10 SCC 517; Devarapalli                     A
  Lakshminarayana Reddy and Ors. v. V Narayana
  Reddy and Ors. 1976 (0) Suppl. SCR 524: (1976) 3
  SCC 252; Anil Kumar v. M.K. Aiyappa 2013 (9)
  SCR 869 : (2013) 10 SCC 705; Di/a war Singh v. State
  of Delhi (2007) 12 SCC 496; CREF Finance Ltd. v.             B
  Shree Shanthi Homes (P) Ltd. 2005 (2) Suppl.
  SCR 873 : (2005) 7 SCC 467; Ramdev Food Products
  Private Limited v. State of Gujarat Criminal Appeal
  No. 600 of2007 decided on 16.03.2015; Lalita Kumari
                                                               c
  v. Govt. of U.P (2014) 2 sec 1 - relied on.

                   Case Law Reference

2012 (8) SCR 1015               Relied on.      Para 4
                                                               D
1976 (0) Suppl. SCR 524        Relied on.       Para 18

2013 (9) SCR 869                Relied on.      Para 19

(2001) 12 sec 496              Relied on.       Para 20
                                                               E
2005 (2) Suppl. SCR 873         Relied on.      Para 21

(2014) 2 sec 1                 Relied on.       Para 23

      CRIMINAL APPELLATE JURISDICTION : Criminal               F
Appeal No. 781 of2012

      From the judgment and order dated 23.12.2011 of the
High Court of Judicature at Allahabad in Crl. Misc. W.P. No.
24561 of 2011
                                                               G
      Ajay Kumar, Sudeep Dey for the Appellants.

       Vikrant Yadav, Gaurav Dhingra, Ashutosh Sharma,
Sunil Kumar Jain, Kaushik Chaudhary, Akarsh Garg for the
                                                               H
112         SUPREME COURT REPORTS                     [2015] 4 S.C.R.


A     Respondents.

             The Judgment of the Court was delivered by

              DIPAK MISRA, J. 1. The present appeal projects and
B     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
c     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
D     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
E     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. The facts, as we proceed to
F     adumbrate, would graphically reveal how such persons,
      pretentiously aggrieved but potentially dangerous, adopt the
      self- convincing mastery methods to achieve so. That is the
      sad and unfortunate factual score forming the fulcrum of the
      case at hand, and, we painfully recount.
G
         2. The facts which need to be stated are that the
  respondent No.3, namely, Prakash Kumar Bajaj, son of
  Pradeep Kumar Bajaj, had availed a housing loan from the
  financial institution, namely, Punjab National Bank Housing
H Finance Limited (PNBHFL) on 21st January, 2001, vide
PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 113
        AND OTHERS [DIPAK MISRA, J.]

housing loan account No. IHL-583. The loan was taken in the A
name of the respondent No.3 and his wife, namely, Jyotsana
Bajaj. As there was default in consecutive payment of the
installments, the loan account was treated as a Non-
Performing Asset (NPA) in accordance with the guidelines
framed by the Reserve Bank of India. The authorities of the B
financial institution issued notice to the borrowers ·under
Section 13(2) of the Securitisation and Reconstruction of
FinancialAssets and Enforcement of Security lnterestAct,
2002, (for short, 'the SARFAESI Act') and in pursuance of C
the proceedings undertaken in the said Act, the PNBHFL, on
5th June, 2007, submitted an application before the District
Magistrate, Varanasi, U.P. for taking appropriate action under
Section 13(4) of the SARFAESIAct.

       3. At this juncture, the respondent N·o.3 preferred D
W.P, No. 44482 of 2007, which was dismissed by the High
Court on 14th September, 2007, with the observation that it
was open to the petitioner therein to file requisite objection
and, thereafter, to take appropriate action as envisaged E
under Section 17 of the SARFAESI Act. After the dismissal
of the writ petition with the aforesaid observation, the
respondent No.3, possibly nurturing the idea of self-centric
Solomon's wisdom, filed a Criminal Complaint Case
No.1058 of 2008, under Section 200 Cr.P.C. against V.N. F
Sahay, Sandesh Tiwari and V.K. Khanna, the then Vice-
President, Assistant President and the Managing Director
respectively for offences punishable under Sections 163, 193
and 506 of the Indian Penal Code (IPC). ltwas alleged in the
application that the said accused persons had intentionally G
taken steps to cause injury to him. The learned Magistrate
vide order dated 4th October, 2008, dismissed the criminal
complaint and declined to take cognizance after recording
the statement of the complainant under Section 200 Cr.P.C. H
114         SUPREME COURT REPORTS                       [2015] 4 S.C.R.



A     and examining the witnesses under Section 202 Cr.P.C.

              4. Being grieved by the aforesaid order, the respondent
      No.3 preferred a Revision Petition No.460 of 2008, which
      was eventually heard by the learned Additional Sessions
B     Judge, Varanasi, U.P. The learned Additional Sessions
      Judge after adumbrating the facts and taking note of the
      submissions of the revisionist, set aside the order dated 4th
      October, 2008 and remanded the matter to the trial Court
      with the direction that he shall hear the complaint again
C     and pass a cognizance order according to law on the basis
      of merits according to the directions given in the said order.
      Be it noted, the learned Additional S~ssions Judge heard
      the counsel for the respondent No.3 and the learned counsel
      for the State but no notice was issued to the accused persons
0
      therein. Ordinarily, we would not have adverted to the same
      because that lis is the subject matter in the appeal, but it has
      become imperative to do only to highlight how these kind of
      litigations are being dealt with and also to show the
E     respondents had the unwarranted enthusiasm to move the
      courts. The order passed against the said accused persons
      at that time was an adverse order inasmuch as the matter
      was remitted. It was incumbent to hearthe respondents though
      they had not become accused persons. A three-Judge
F     Bench in Manharibhai Muljibhai Kakadia and Anr. v.
      Shaileshbhai Mohanbhai Patel and othersr 11has opined
      that in a case arising out of a complaint petition, when travels
      to the superior Court and an adverse order is passed, an
      opportunity of hearing has to be given. The relevant passages
G     are reproduced hereunder:

        46 ........ If the Magistrate finds that there is no sufficient
        ground for proceeding with the complaint and dismisses
        the complaint under Section 203 of the Code, the
H
      111(2012)10 sec 517
PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 115
        AND OTHERS [DIPAK MISRA, J.]

 question is whether a person accused of crime in the        A
 complaint can claim right of hearing in a revision
 application preferred by the complainant against the
 order of the dismissal of the complaint. Parliament
 being alive to the legal position that the accused/
 suspects are not entitled to be heard at any stage of the   B
 proceedings until issuance of process under Section
 204, yet in Section 401 (2) of the Code provided that no
 order in exercise of the power of the revision shall be
 made by the Sessions Judge or the High Court, as the
                                                             c
 case may be, to the prejudice of the accused or the
 other person unless he had an opportunity of being
 heard either personally or by pleader in his own defence.

                 xxxxx xxxxx xxxxx
                                                             D
 48. In a case where the complaint has been dismissed
 by the Magistrate under Section 203 of the Code either
 at the stage of Section 200 itself or on completion of
 inquiry by the Magistrate under Section 202 or on
                                                             E
 receipt of the report from the police or from any person
 to whom the direction was issued by the Magistrate
 to investigate into the allegations in the complaint,
 the effect of such dismissal is termination of
 complaint proceedings. On a plain reading of sub-           F
 section (2) of Section 401, it cannot be said that the
 person against whom the allegations of having
 committed the offence have been made in the complaint
 and the complaint has been dismissed by the
 Magistrate under Section 203, has no right to be            G
 heard because no process has been issued. The
 dismissal of complaint by the Magistrate under Section
 203-although it is at preliminary stage-nevertheless
 results in termination of proceedings in a complaint
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116      SUPREME COURT REPORTS                    [2015] 4 S.C.R.



A     against the persons who are alleged to have committed
      the crime. Once a challenge is laid to such order at the
      instance of the complainant in a revision petition
      before the High Court or the Sessions Judge, by virtue
      of Section 401 (2) of the Code, the suspects get the
B     right of hearing before the Revisional Court although
      such order was passed without their participation.
      The right given to "accused" or "the other person"
      under Section 401 (2) of being heard before the
      Revisional Court to defend an order which operates
c
      in his favour should not be confused with the
      proceedings before a Magistrate under Sections 200,
      202, 203 and 204. In the revision petition before the
      High Court or the Sessions Judge at the instance of
D     the complainant challenging the order of dismissal
      of complaint, one of the things that could happen is
      reversal of the order of the Magistrate and revival of the
      complaint. It is in this view of the matter that the
      accused or other person cannot be deprived of hearing
E     on the face of the express provision contained in Section
      401 (2) of the Code. The stage is not important whether
      it is pre-process stage or post process stage.

                      xxxxx xxxxx xxxxx
F
      53. We are in complete agreement with the view
      expressed by this Court in P. Sundarrajan2, Raghu Raj
      Singh Rousha3 andA.N. Santhanam4. We hold, as it
      must be, that in a revision petition preferred by the
G     complainant before the High Court or the Sessions
      Judge challenging an order of the Magistrate dismissing
      the complaint under Section 203 of the Code at the
      stage under Section 200 or after following the process
      contemplated under Section 202 of the Code, the
H
 PRIYANKA SRIVASTAVA AND ANR. v. STATEOFU. P. 117
         AND OTHERS [DIPAK MISRA, J.]

  accused or a person who is suspected to have                  A
  committed the crime is entitled to hearing by the
  Revisional Court. In other words, where the complaint
  has been dismissed by the Magistrate under Section
  203 of the Code, upon challenge to the legality of the
  said order being laid by the complainant in a revision        B
  petition before the High Court or the Sessions Judge,
  the persons who are arraigned as accused in the
  complaint have a right to be heard in such revision
  petition. This is a plain requirement of Section 401 (2)
  of the Code. If the Revisional Court overturns the order
                                                                c
  of the Magistrate dismissing the complaint and the
  complaint is restored to the file of the Magistrate and it
  is sent back for fresh consideration, the persons who
  are alleged in the complaint to have committed the crime      D
  have, however, no right to participate in the proceedings
  nor are they entitled to any hearing of any sort
  whatsoever by the Magistrate unti) the consideration
  of the matter by the Magistrate for issuance of process."
                                                                E
   Though the present controversy is different, we have dealt
with the said facet as we intend to emphasize how the Courts
have dealt with and addressed to such a matter so that a
b_orrower with vengeance could ultimately exhibit his high-
handedness.                                                     F

       5. As the narration further proceeds, after the remand,
the learned Magistrate vide order dated 13th July, 2009,
took cognizance and issued summons to V.N. Sahay,
Sandesh Tripathi and V.K. Khanna. The said accused persons G
knocked at the doors of the High Court under Section 482
Cr.P.C. and the High Court in Crl. Misc. No.13628 of 2010, by
order dated 27th May, 2013, ruled thus:

  "A perusal of the complaint filed by the respondent no.2      H
118       SUPREME COURT REPORTS                 [2015] 4 S.C.R.


A     also indicates that the issues were with regard to the
      action of the bank officers against respondent no.2 on
      the ground of alleged malafide and as such an offence
      under sections 166/500 l.P.C. was made out. Both the
      sections are non cognizable and bailable and triable by
B     Magistrate of First Class. For the foregoing reasons
      the 482 Petition deserves to be allowed and the criminal
      complaint filed by the respondent no.2 being Complaint
      Case No.1058 of 2009 is liable to be quashed.
c     Accordingly the application under section 482 Cr.P.C.
      is allowed and the Criminal Complaint Case No.1058
      of 2009, Prakash Kumar Bajaj versus P.N.B. Housing
      Finance Ltd. And others, pending in the Court of
      Additional Chief Judicial Magistrate, Court No.2
D
      Varanasi is quashed."

         6. Presently, we are required to sit in the time machine
  for a while. In the interregnum period the borrowers filed an
E objection under Section 13(3A) of the SAR FAE SI Act. Be it
  noted, as the objection was not dealt with, the respondent
  No.3 preferred W.P. No.22254 of 2009, which was
  disposed of on 5th May, 2009 by the High Court, directing
  disposal of the same. Eventually, the objection was rejected
F by the competent authority vide order dated June 1, 2009.
  Being grieved by the aforesaid order of rejection, the
  respondent No.3 filed Securitisation Appeal No.5 of 2010,
  before the Debt Recovery Tribunal (ORT), Allahabad, U.P.,
  which was rejected vide order dated 23rd November, 2012.
G The non-success before the ORT impelled the borrowers to
  prefer an appeal before the Debts Recovery Appellate
  Tribunal (DRAT), Allahabad, U.P.

        7. At this stage, it is apposite to state that the third
H respondent, if we allow ourselves to say so, have possibly
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 119
         AND OTHERS [DIPAK MISRA, J.]

mastered how to create a sense of fear in the mind of the A
officials who are compelled to face criminal cases. After
the High Court had quashed the earlier proceeding, the third
respondent, in October, 2011, filed another application under
Section 156(3) CrPC against V.N. Sahay, Sandesh Tripathi
and V.K. Khanna alleging criminal conspiracy and forging of B
documents referring to three post-dated cheques and
eventually it was numbered as Complaint Case No. 344/
2011, which gave rise to FIR No. 262 of 2011 under Sections
465, 467, 468, 471, 386, 506, 34 and 120B IPC. Being C
not satisfied with the same, on 30.10.2011, he filed another
application under Section 156(3) against the present
appellants alleging that there has been under-valuation of
the property. It was numbered as Complaint Case No. 396/
2011 wherein the Trial Magistrate directed the SHO to register D
Fl R against the present appellants. Pursuant to the said order,
FIR No. 298/2011 was registered.

        8. At this juncture, it is imperative to state that the third
respondent made the officials agree to enter into one time              E
settlement. The said agreement was arrived at with the
stipulation that he shall withdraw various cases filed by him
on acceptance of the one time settlement. As the factual
matrix would reveal, the third respondent did not disclose
about the initiation of the complaint cases no. 344/2011 and            F
396/2011. On 28.11.2011, the onetime settlement was acted
upon and the third respondent deposited Rs.15 lakhs.

       9. At this stage, it is apt to mention that V.N. Sahay
and two others approached the High Court of Allahabad in                G
Writ (C) No. 17611/2013 wherein the learned Single Judge
heard the matter along with application under Section 482
CrPC in Crl. Misc. No. 13628/2010. We have already
reproduced the relevant part of the order passed therein. Be
                                                                        H
120         SUPREME COURT REPORTS                     [2015] 4 S.C.R.



A     it noted, the writ petition has also been disposed of by the
      High Court by stating thus:

        "Heard Mr. Manish Trivedi, learned counsel for the
        petitioner, Mr. Vivek Kumar Srivastava, learned counsel
B       appearing on behalf of respondent no.3 and learned
        AGA.

        It is submitted by learned AGA that in the present case
        investigation has been completed and final report has
c       been submitted, considering the same, this petition
        has become infructuous.

        The interim order dated 2.12.2011 is hereby vacated.

        Accordingly, this petition is disposed of."
D
              10. At this juncture, we are impelled to look at the
      past again. The respondent had preferred, as has been stated
      before, an appeal before the DRAT. The said appeal was
      numbered as Appeal No. 5 of2013. In the said appeal, the
E     following order came to be passed:

        "During the pendency of the said application, a proposal
        was submitted by the borrower to settle the claim for an
        amount of Rs.15.00 lacs. The said proposal was
F       accepted by the Bank by its letter dated 15.11.2011
        and the appellant also deposited the full amount, for
        which the settlement was arrived at i.e. Rs.15.00 lacs.
        Thereafter, the grievance of the appellant was that since
        the full amount of the settlement has been paid by the
G
        appellant, therefore; the bank should be directed to return
        the title deed, as the title deed was not returned.

        The Tribunal was of the view that since the matter has
        been settled, therefore, the securitization application was
H
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 121
         AND OTHERS [DIPAK MISRA, J.]

   dismissed as infructuous and the Tribunal did not pass          A
   any order for return of the title deed. Therefore, the
   appellant being aggrieved of the judgment dated
   23.11.2011 passed by the Tribunal has filed the present
   appeal.
                                                                   B
   Learned counsel for the appellant submitted that after
   when the full amount under the settlement has been paid,
   the respondent-Bank was duty tiound to return the title
   deed, which has not been returned to the appellant.
                                                                   c
   It is contended on behalf of the respondent-Bank that
   the settlement was accepted by letter dated 14.11.2011,
   wherein the condition was mentioned that the appellant
   shall withdraw the complaint case which he has filed
   before the Criminal Court.                                      D

   Learned counsel for the appellant submitted that he has
   no objection to withdraw the complaint case but the title
   deed must be returned to the appellant.
                                                                   E
  The title deed shall be returned by the respondent-Bank
  to the appellant within seven days from today and
  thereafter, the appellant shall move an application to
  withdraw the Criminal Case No.1058/09 which is
  pending before the Chief Judicial Magistrate, Varanasi."         F

       11. The labyrinth maladroitly created by the respondent
No.3 does not end here. It appears that he had the
indefatigable spirit to indulge himself in the abuse of the
process of the Court. The respondent No.3 had filed an             G
application under Section 156(3) Cr.P.C. before the learned
Additional Chief Judicial Magistrate on 30th October, 2011,
against the present appellants, who are the Vice-President
and the valuer respectively. ·In the body of the petition, as we
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122         SUPREME COURT REPORTS                   (2015] 4 S.C.R.



A     find in the paragraphs 19 and 20, it has been stated thus:

        "That the aforesaid case was referred to the Deputy
        Inspector General of Police, Varanasi through speed
        post but no proceeding had been initiated till today in
B       that regard.

        That the aforesaid act done by the aforesaid accused
        prima-facie comes in the ambit of section 465, 467,
        471, 386, 504, 34 & 120B IPC and in this way cognizable
c       offence is made out and proved well."

             12. On the basis of the aforesaid application the
      learned Additional Chief Judicial Magistrate, Varanasi, U.P.,
      called for a report from the concerned police station and
D     received the information that no FIR had been lodged and
      hence, no case was registered at the local police station.
      Thereafter, the learned Additional Chief Judicial Magistrate
      observed as follows:

E       "It has been stated clearly in the application by the
        applicant that it is the statement of applicant that he had
        already given 3 postdated cheques to the financial bank
        for payment and despite the availability of the
        postdated cheques in the financial society, even a single
F       share in the loan account has not been got paid. The
        opposite parties deliberately due to conspiracy and
        prejudice against applicant have not deposited
        previously mentioned postdated cheques for payment
        and these people are doing a conspiracy to grab the
G       valuable property of the applicant. Under a criminal
        conspiracy, illegally and on false and fabricated
        grounds a petition has been filed before District
        Collector (Finance & Revenue) Varanasi, which comes
        under the ambit of cognizable offence. Keeping in
H
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 123
         AND OTHERS [DIPAK MISRA, J.]

   view the facts of the case, commission of cognizable              A
   offence appears to be made out and it shall be justifiable
   to get done the investigation of the same by the police."

After so stating it directed as follows:
                                                                     B
   "In the light of the application, SHO Bhelpur, Varanasi is
   hereby directed to register the case and investigate the
   same."

       13. On the basis of the aforesaid order, F.l.R. No.298        C
of 2011 was registered, which gave rise to case Crime No.415
of 2011 for the offences punishable under Sections 465,
467, and 4711.P.C. Being dissatisfied with the aforesaid order,
the appellants moved the High Court in Crl. Misc. No.24561
of 2011. The High Court in a cryptic order opined that on a          D
perusal of the F.l.R. it cannot be said that no cognizable offence
is made out. Being of this view, it has declined to interfere
with the order. Hence, this appeal by special leave.

        14. In course of hearing, learned counsel for the State      E
of U.P. has submitted thatthe investigating agency has already
submitted the final report on 21st November, 2012. The said
report reads as follows:

  "Complainant in the present case has not appeared                  F
  before any of the investigators, even after repeated
  summoning. And that the action of Smt. Priyanka
  Srivastava has been done as per her legal rights in 'good
  faith', which is protected under Section 32 of the
  SARFAESI Act, 2002.            With the abovestated                G
  investigations, the present report is concluded."

      15. On a query being made, learned counsel for the
State would contend that the learned Magistrate has not
passed any order on th 0 final report. Mr. Ajay Kumar, learned       H
                               •


124         SUPREME COURT REPORTS                    [2015] 4 S.C.R.


A counsel appearing for the appellants would submit that the
  learned Magistrate has the option to accept the report by
  rejecting the final form/final report under Section 190 Cr.PC.
  and may proceed against the appellants or may issue notice
  to the complainant, who is entitled to file a protest petition
B and, thereafter, may proceed with the matter and, therefore,
  this Court should address the controversy on merits and
  quash the proceedings.

               16. We have narrated the facts in detail as the present
C     case, as we find, exemplifies in enormous magnitude to
      take recourse to Section 156(3) Cr.P.C., as if, it is a routine
      procedure. That apart, the proceedings initiated and the
      action taken by the authorities under the SARFAl=SI Act are
      assailable under the said Act before the higher forum and
D     if, a borrower is allowed to take recourse to criminal law in the
      manner it has been taken it, needs no special emphasis to
      state, has the inherent potentiality to affect the marrows of
      economic health of the nation. It is clearly noticeable that the
E     statutory remedies have cleverly been bypassed and
      prosecution route has been undertaken for instilling fear
      amongst the individual authorities compelling them to concede
      to the request for one time settlement which the financial
      institution possibly might not have acceded. That apart,
F     despite agreeing for withdrawal of the complaint, no steps
      were taken in that regard at least to show the bonafide. On
      the contrary, there is a contest with a perverse sadistic
      attitude. Whether the complainant could have withdrawn the
      prosecution or not, is another matter. Fact remains, no
G     efforts were made.

              17. The learned Magistrate, as we find, while exercising
      the power under Section 156(3) Cr.P.C. has narrated the
      allegations and, thereafter, without any application of mind, has
H
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 125
         AND OTHERS [DIPAK MISRA, J.]

passed an order to register an FIR for the offences mentioned       A
in the application. The duty cast on the learned Magistrate,
while exercising power under Section 156(3) Cr.P.C., cannot
be marginalized. To understand the real purport of the same,
we think it apt to reproduce the said provision:
                                                                    B
      "156. Police officer's power to investigate congnizable
      case. -(1) Any officer in charge of a police station
      may, without the order of a Magistrate, investigate
      any cognizable case which a Court havingjurisdiction
      over the local area within the limits of such station would   C
      have power to inquire into or try under the provisions of
      Chapter XII I.

      (2) No proceeding of a police officer in any such case .
      shall at any stage be called in question on the ground        D
      that the case was one which such officer was no
      empowered under this section to investigate.

      (3) Any Magistrate empowered under section 190
      may order such an investigation as above-mentioned."          E

      18. Dealing with the nature of power exercised by the
Magistrate under Section 156(3) of the CrPC, a three-
Judge Bench in Devarapalli Lakshminarayana Reddy
and others v. V. Narayana Reddy and othersi 21, had to              F
express thus:

      "It may be noted further that an order made under sub-
      section (3) of Section 156, is in the nature of a
      peremptory reminder or intimation to the police to            G
      exercise their plenary powers of investigation under
      Section 156(1 ). Such an investigation embraces the
      entire continuous process which begins with the
      collection of evidence under Section 156 and ends with
                                                                    H
121    (1976) 3 sec 252
126            SUPREME COURT REPORTS                      [2015] 4 S.C.R.


A           a report or chargesheet under Section 173."

  19. In Anil Kumar v. M.K. Aiyappal3l, the two-Judge Bench
  had to say this: "The scope of Section 156(3) CrPC come up
  for consideration before this Court in several cases. This
B Court in Maksud Saiyed [(2008) 5 SCC 66~] examined the
  requirement of the application of mind by the Magistrate
  before exercising jurisdiction under Section 156(3) and held
  that where jurisdiction is exercised on a complaint filed in
  terms of Section 156(3) or Section 200 CrPC, the Magistrate
C is required to apply his mind, in such a case, the Special
  Judge/Magistrate cannot refer the matter under Section 156(3)
  against a public servant without a valid sanction order.
  The application of mind by the Magistrate should be reflected
  in the order. The mere statement that he has gone through the
0
  complaint, documents and heard the complainant, as such,
  as reflected in the order, will not be sufficient. After going
  through the complaint, documents and hearing the
  complainant, what weighed with the Magistrate to order
E investigation under Section 156(3) CrPC, should be reflected
  in the order, though a detailed expression of his views is
  neither required nor warranted. We have already extracted
  the order passed by the learned Special Judge which, in our
  view, has stated no reasons for ordering investigation."y
F
          20. In Dilawar Singh v. State of De/h114l, this Court
  ruled thus:

            "18 .... 11. The clear position therefore is that any Judicial
            Magistrate, before taking cognizance of the offence,
G
            can order investigation under Section 156(3) of the
            Code. If he does so, he is not to examine the
            complainant on oath because he was not taking
            cognizance of any offence therein. For the purpose of
H     !3J     c2013) 1o sec 705
      [4J     c2007) 12 sec 496
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 127
         AND'OTHERS [DIPAK MISRA, J.]

      enabling the police to start investigation it is open to        A
      the Magistrate to direct the police to register an FIR. There
      is nothing illegal in doing so. After all registration of an
      FIR involves only the process of entering the substance
      of the information relating to the commission of the
      cognizable offence in a book kept by the officer in             B
      charge of the police station as indicated in Section 154
      of the Code. Even if a Magistrate does not say in so
      many words while directing investigation under Section
      156(3) of the Code thatan FIR should be registered, it
      is the duty of the officer in charge of the police station to
                                                                      c
      register the FIR regarding the cognizable offence
      disclosed by the complainant because that police officer
      could take further steps contemplated in Chapter XII of
      the Code only thereafter."                                      D
        21. In CREF Finance Ltd. v. Shree Shanthi Homes
(P) Ltd.[51, the Court while dealing with the power of
Magistrate taking cognizance of the offences, has opined
that having considered the complaint, the Magistrate may              E
consider it appropriate to send the complaint to the police
for investigation under Section 156(3) of the Code of Criminal
Procedure.

      And again:                                                      F
  "When a Magistrate receives a complaint he is not bound
  to take cognizance ifthe facts alleged in the complaint
  disclose the commission of an offence. The Magistrate
  has discretion in the matter. If on a reading of the
                                                                      G
  complaint, he finds that the allegations therein disclose
  a cognizable offence and the forwarding of the complaint
  to the police for investigation under [pic]Section 156(3)
  will be conducive to justice and save the valuable
  time of the Magistrate from being wasted in enquiring               H
[51     c2005) 1 sec 467
128            SUPREME COURT REPORTS                        [2015] 4 S.C.R.


A           into a matter which was primarily the duty of the police to
            investigate, he will be justified in adopting that course
            as an alternative to taking cognizance of the offence
            itself. As said earlier, in the case of a complaint
            regarding the commission of cognizable offence, the
B           power under Section 156(3) can be invoked by the
            Magistrate before he takes cognizance of the offence
            under Section 190(1 )(a). However, if he once takes such
            cognizance and embarks upon the procedure embodied
            in Chapter XV, he is not competent to revert back to the
c           pre-cognizance stage and avail of Section 156(3)."

             22. Recently, in Ramdev Food Products Private
      Limited v. State ofGujarat.61, while dealing with the exercise
      of power under Section 156(3) CrPC by the learned
0
      Magistrate, a three-Judge Bench has held that:

            ".... the direction under Section 156(3) is to be issued,
            only after application of mind by the Magistrate. When
            the Magistrate does not take cognizance and does not
E           find it necessary to postpone instance of process and
            finds a case made out to proceed forthwith, direction
            under the said provision is issued. In other words, where
            on account of credibility of information available, or
F           weighing the interest of justice it is considered
            appropriate to straightaway direct investigation, such
            a direction is issued. Cases where Magistrate takes
            cognizance and postpones issuance of process are
            cases where the Magistrate has yet to determine
G           "existence of sufficient ground to proceed."

               23. At this stage, we may usefully refer to what the
      Constitution Bench has to say in Lalita Kumari v. Govt. of
      U.P/11 in this regard. The larger Bench had posed the following
H     (6]    Criminal Appeal No. 600 of 2007 decided on 16.03.2015
      (7J    (2014) 2 sec 1
PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 129
        AND OTHERS [DIPAK MISRA, J.]

two questions:-                                                A

  "(i) Whether the immediate non-registration of FIR leads
  to scope for manipulation by the police which
  affects the right of the victim/complainant to have a
  complaint immediately investigated upon allegations          B
  being made; and

  (ii) Whether in cases where the complainUinformation
 . does not clearly disclose the commission of a
   cognizable offence but the FIR is compulsorily registered   c
   then does it infringe the rights of an accused."

   Answering the questions posed, the larger Bench opined
thus:
                                                               D
  "49. Consequently, the condition that is sine qua non for
  recording an FIR under Section 154 of the Code is that
  there must be information and that information must
  disclose a cognizable offence. If any information
  disclosing a cognizable offence is led before an officer     E
  in charge of the police station satisfying the requirement
  of Section 154(1 ), the said police officer has no other
  option except to enter the substance thereof in the
  prescribed form, that is to say, to register a case on the
  basis of Such information. The provision of Section 154      F
  of the Code is mandatory and the officer concerned is
  duty-bound to register the case on the basis of
  information disclosing a, cognizable [pic]offence. Thus,
  the plain words of Section 154(1) of the Code have to
  be given their literal meaning.                              G

  "Shall"

            xxx   xxx    xxx     xxx
                                                               H
130       SUPREME COURT REPORTS                    [2015] 4 S.C.R.


A     72. It is thus unequivocally clear that registration of FIR
      is mandatory and also that it is to be recorded in the
      Fl R book by giving a unique annual number to each
      FIR to enable strict tracking of each and every
      registered FIR by the superior police officers as well as
B     by the competent court to which copies of each FIR are
      required to be sent.

      "Information"

c            xxx      xxx     xxx     xxx
      111. The Code gives power to the police to close a matter
      both before and after investigation. A police officer
      can foreclose an FIR before an investigation under
D     Section 157 of the Code, if it appears to him that
      there is no sufficient ground to investigate the same. The
      section itself states that a police officer can start
      investigation when he has "reason to suspect the
      commission of an offence". Therefore, the
E     requirements of launching an investigation under Section
      157 of the Code are higher than the requirement under
      Section 154 of the Code. The police officer can also, in
      a given case, investigate the matter and then file a final
      report under Section 173 of the Code seeking closure
F     of the matter. Therefore, the police is not liable to launch
      an investigation in every FIR which is mandatorily
      registered on receiving information relating to
      commission of a cognizable offence.
G            xxx      xxx     xxx     xxx
      115. Although, we, in unequivocal terms, hold that Section
      154 of the Code postulates the mandatory registration
      pf Fl Rs on receipt of all cognizable offences, yet, there
H
PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 131
        AND OTHERS [DIPAK MISRA, J.]

  may be instances where preliminary inquiry may be              A
  required owing to the change in genesis and novelty of
  crimes with the passage of time. One such instance is
  in the case of allegations relating to medical negligence
  on the part of doctors. It will be unfair and inequitable
  to prosecute a medical professional only on the basis          B
  of the allegations in the complaint."

After so stating the constitution Bench proceeded to state
that where a preliminary enquiry is necessary, it is not for
the purpose for verification or otherwise of the information     C
received but only to ascertain whether the information reveals
any cognizable offence. After laying down so, th~ larger Bench
proceeded to state:-

  "120.6. As to what type and in which cases preliminary         D
  inquiry is to be conducted will depend on the facts and
  circumstances of each case. The category of cases in
  which preliminary inquiry may be made are as under:

  (a) Matrimonial disputes/family disputes                       E

  (b) Commercial offences

   (c) Medical negligence cases

   (d) Corruption cases                                          F

   (e) Cases where there. is abnormal delay/laches in
   initiating criminal prosecution, for example, over ·3
   months' delay in reporting the matter without
   satisfactorily explaining the reasons for delay. The          G
   aforesaid are only illustrations and not exhaustive of all
   conditions which may warrant preliminary inquiry.

   120. 7. While ensuring and protecting the rights of the
                                                                 H
132         SUPREME COURT REPORTS                 [2015]4 S.C.R.


A       accused and the complainant, a preliminary inquiry
        should be made time-bound and in any case it should
        not exceed 7 days. The fact of such delay and the causes
        of it must be reflected in the General Diary entry."

B     We have referred to the aforesaid pronouncement for the
      purpose that on certain circumstances the police is also
      required to hold a preliminary enquiry whether any cognizable
      offence is made out or not.

c          24. Regard being had to the aforesaid enunciation of
  law, it needs to be reiterated that the learned Magistrate 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. He has also to bear in mind that
D sending the matter would be conducive to justice and then he
  may pass the requisite order. The present is a case where
  the accused persons are serving in high positions in the
  bank. We are absolutely conscious that the position does
  not matter, for nobody is above law. But, the learned
E 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
F 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.

G        25. · Issuing a direction stating "venas per the
  application" to lodge an FIR creates a very unhealthy situation
  in the society and also reflects the erroneous approach of
  the learned Magistrate. It also encourages the unscrupulous
  and unprincipled litigants, like the respondent no.3, namely,
H Prakash Kumar Bajaj, to take adventurous steps with courts
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 133
         AND OTHERS [DIPAK MISRA, J.]

to bring the financial institutions on their knees. As the factual A
exposition would reveal, he had prosecuted the earlier
authorities and after the matter is dealt with by the High Court
in a writ petition recording a settlement, he does not withdraw
the criminal case and waits for some kind of situation where
he can take vengeance as if he is the emperor of all he surveys. B
It is interesting to note that during the tenure of the appellant
No.1, who is presently occupying the position of Vice-
President, neither the loan was taken, nor the default was
made, nor any action under the SARFAESI Act was taken. C
However, the action under the SARFAESI Act was taken on
the second time at the instance of the present appellant No.1.
We are only stating about the devilish design of the
respondent No.3 to harass the appellants with the sole intent
to avoid the payment of loan. When a citizen avails a loan D
from a financial institution, it is his obligation to pay back and
not play truant or for that matter play possum. As we have
noticed, he has been able to do such adventurous acts as he
has the embedded conviction that he will not be taken to
task because an application under Section 156(3) Cr.P.C. E
is a simple application to the court for issue of a direction
to the investigating agency. We have been apprised that
a carbon copy of a document is filed to show the compliance
of Section 154(3), indicating it has been sent to the
Superintendent of police concerned.                                F

        26. At this stage it is seemly to state that power under
Section 156(3) warrants application of judicial mind. A court
of law is involved. It is not the police taking steps at the stage
of Section 154 of the code. A litigant at his own whim G
cannot invoke the authority of the Magistrate. A principled
and really grieved citizen with clean hands must have free
access to invoke the said power. It protects the citizens but
when pervert litigations takes this route to harass their fellows H
134         SUPREME COURT REPORTS                    [2015] 4 S.C.R.


A     citizens, efforts are to be made to scuttle and curb the same.

             27. In our considered opinion, a stage has come in
      this country where Section 156(3) Cr.P.C. applications are to
      be supported by an affidavit duly sworn by the applicant who
B     seeks the invocation of the jurisdiction of the Magistrate. That
      apart, in an appropriate case, the learned Magistrate would
      be well advised to verify the truth and also can verify the
      veracity of the allegations. This affidavit can make the
      applicant more responsible. We are compelled to say so as
C     such kind of applications are being filed in a routine manner
      without taking any responsibility whatsoever only to harass         .
      certain persons. That apart, it becomes more disturbing
      and alarming when one tries to pick up people who are
      passing orders under a statutory provision which can be
0
      challenged under the framework of said Act or under Article
      226 of the Constitution of India. But it cannot be done to take
      undue advantage in a criminal court as if somebody is
      determined to settle the scores. We have already indicated
E     that there has to be prior applications under Section 154(1)
      and 154(3) while filing a petition under Section 156(3). Both
      the aspects should be clearly spelt out in the application and
      necessary documents to that effect shall be filed. The warrant
      for giving a direction that an the application under Section
F     156(3) be supported by an affidavit so that the person making
      the application should be conscious and also endeavour to
      see that no false affidavit is made. It is because once an
      affidavit is found to be false, he will be liable for prosecution
      in accordance with law. This will deter him to casually invoke
G     the authority of the Magistrate under Section 156(3). That
      apart, we have already stated that the veracity of the same
      can also be verified by the learned Magistrate, regard being
      had to the nature of allegations of the case. We are compelled
H     to say so as a number of cases pertaining to fiscal sphere,
 PRIYANKA SRIVASTAVA AND ANR. v. STATE OF U. P. 135
         AND OTHERS [DIPAK MISRA, J.]

matrimonial dispute/family disputes, commercial offences,            A
medical negligence cases, corruption cases and the cases
where there is abnormal delay/laches in initiating criminal
prosecution, as are illustrated in Lalita Kumari are being
filed. That apart, the learned Magistrate would also be aware
of the delay in lodging of the FIR.                                  B

       28. 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            C
were filed. Such a situation should not happen.

      29. At this juncture, we may fruitfully refer to Section
32 of the SARFAESI Act, which reads as follows :
                                                                     D
   "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               E
   creditor or borrower for anything done or omitted to be
   done in good faith under this Act."

      30. In the present case, we are obligated to say that
learned Magistrate should have kept himself alive to the F
aforesaid provision before venturing ir•o directing registration
of the FIR under Section 156(3) Cr.P.C. It is because the
Parliament in its wisdom has made such a provision to protect
the secured creditors or any of its officers, and needles to
emphasize, the legislative mandate, has to be kept in mind. G

       31. In view of the aforesaid analysis, we allow the appeal,
set aside the order passed by the High Court and quash the
registration of the FIR in case Crime No.298 of 2011,
registered with Police Station, Bhelupur, District Varanasi,         H
136          SUPREME COURT REPORTS                 [2015] 4 S.C.R.


A U.P.
              32. A copy of the order passed by us be sent to the
      learned Chief Justices of all the High Courts by the Registry
      of this Court so that the High Courts would circulate the same
B     amongst the learned Sessions Judges who, in turn, shall
      circulate it among the learned Magistrates so that they can
      remain more vigilant and diligent while exercising the power
      under Section 156(3) Cr.P.C.

C     Devika Gujral                                   Appeal allowed.