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Synopsis

The Supreme Court has on April 23, 2025 come to the rescue of a Bank manager by quashing a criminal case initiated against him for the offence of cheating, in respect of auction of a property in 2012 following proceedings under the SARFAESI Act, 2002.

A bench of Justices Vikram Nath and Sandeep Mehta allowed a plea by Sivakumar, then working as Manager in the Head Office of HDFC Limited at Thiruvananthapuram, against the High Court order which dismissed his plea under Section 482 CrPC, 1973.

After hearing the parties, the Top Court noted that it was evident that the sale certificate was issued by the appellant’s predecessor and at the relevant time, he was not the authorised officer empowered to issue the certificate - In fact, 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 authorised officer during the said period and assumed the office of Manager only in November, 2014.

"Therefore, it becomes clear as day that the appellant had no role to play in the transaction leading to the FIR as he was not a signatory to the sale certificate. 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 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," the bench observed. 

The appellant contended before the Top Court that he was appointed as Manager on November 03, 2014 whereas the auction process and issuance of the sale certificate took place in 2012. At the relevant time, he was only serving as an Assistant Manager and it was solely the Manager who was authorized to initiate proceedings under the SARFAESI Act hence he had no role to play in the said proceedings.

Brief Background

In 2004, one A Kannan had borrowed loan from HDFC Limited by mortgaging his immovable property, situated at Keela Natham Village, Palayankottai Taluk, Tirunelveli District and the superstructure built up therein. 

Since the said borrower had defaulted in repaying the loan amount, HDFC Ltd initiated proceedings under the provisions of SARFAESI Act and auction notice for the property was issued on May 22, 2012 by the Head Office in the vernacular newspaper.

On the basis of the auction notice, the respondent no. 2, i.e. the de-facto complainant participated in the public auction and purchased the property for a sum of Rs 7,25,000. The entire sale consideration was paid and the sale certificate was issued in July, 2012. 

Dispute arose when the complainant approached the Sub-Registrar, Palayankottai to register the said sale certificate and he was informed that the property in question was already acquired by the Tamil Nadu Housing Board.

A Consumer Complaint was thereby filed in 2013, before the District Consumer Redressal Forum against the Chairman, Managing Director and Senior Manager of HDFC Ltd.

Following this, criminal action was initiated and FIR was lodged alleging that the accused persons, by suppressing the acquisition of the property by the Tamil Nadu Housing Board, sold the property to the complainant in public auction thereby committing offence of cheating against them.

Aggrieved by the same, appellant preferred an application under Section 482 of CrPC seeking quashing of criminal proceedings against him whereby the High Court refused to provide the relief sought and held that a prima facie case is made out against the appellant and it is not a fit case for quashing of the final report at the threshold. 

Case Title: Sivakumar v. Inspector of Police and Anr.