The Allahabad High Court these days ruled that defaulter individuals or agencies can't spark off criminal court cases to avert moves underneath the SARFAESI Act while the problems are solely under the jurisdiction of the Debt Recovery Tribunal (DRT). This decision got here in reaction to several crook miscellaneous writ petitions filed by way of a corporation and an man or woman hard an FIR filed in opposition to them beneath Sections 420 and one hundred twenty-B of the IPC and Section 82 of the Registration Act, 1908.
The Division Bench, comprising Justice Ashwani Kumar Mishra and Justice Ashutosh Srivastava, emphasized that allegations concerning the transfer of secured belongings or undervaluation can most effective be addressed within the ongoing lawsuits before the DRT. The court noted the tendency of defaulters to resort to criminal proceedings to evade actions under the SARFAESI Act, which they deemed necessary to restrain.
Represented by Senior Advocates Gopal S. Chaturvedi, Siddharth Agarwal, and Anoop Trivedi, the petitioners argued that the FIR was filed maliciously amidst a civil dispute, aiming to pressure the finance company and auction purchaser involved in SARFAESI proceedings. They sought the quashing of the FIR, citing the borrower company's failure to seek protection from coercive SARFAESI actions through appropriate channels.
In its ruling, the High Court referred to a previous Supreme Court case, highlighting the need for caution when entertaining applications under Section 156(3) Cr.P.C. related to SARFAESI Act proceedings. It emphasized the importance of respecting the specialized jurisdiction of the DRT in banking transactions.
Concluding that criminal proceedings shouldn't be initiated by defaulters to disrupt SARFAESI proceedings falling under the DRT's exclusive jurisdiction, the High Court granted the petitions and quashed the FIR.
The case, titled Himri Estate Pvt. Ltd. And 4 Others v. State of U.P. And 2 Others (Neutral Citation: 2024:AHC:66640-DB), saw representation from various legal professionals on both sides.
