Abuse of Section 156(3) Cr P C restricted-protection offered to statutory authorities

The duty cast on the Magistrate while exercising power Under Section 156(3) Code cannot be marginalized. The 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 sending the matter would be conducive to justice and then he may pass the requisite order.

Supreme Court in the present matter dealt with the issue relating to exercise of powers by Magistrate under Section 156(3) of the Code of Criminal Procedure, 1973 (Code) whilst proceedings under SARFAESI Act also pending.

In the instant matter a complaint was filed by loan defaulters against the senior officials of the Bank. The Court after recording the statement of complainant declined to take cognizance and dismissed the same. The Revisionary Court however reversed the order of Magistrate and instead directed to re-hear the matter. This order was passed after hearing the Complainant and State while no notice of hearing was given to bank officials arrayed as accused in the original complaint. After the remand order, the Magistrate took cognizance and issued summons to the accused persons, moved a petition under Section 482 of the Code. The High Court allowed the petition and the complaint was accordingly quashed. 

During the above period the complainant had also filed an objection under Section 13(3A) of the SARFAESI Act, which was rejected by the competent authority. Appeal preferred there against was dismissed by DRT and against the same appeal was filed before DRAT. After the High Court had quashed the earlier proceeding, the complainant filed another application under Section 156(3) of the Code against the bank officials alleging criminal conspiracy and forging of documents referring to three post-dated cheques. The same gave rise to filing of FIR under Sections 465, 467, 468, 471, 386, 506, 34 and 120B of the Indian Penal Code (IPC). Being not satisfied with the same, one more application under Section 156(3) against the accused persons alleging under-valuation of the property was filed, wherein the Trial Magistrate directed registration of another FIR, which was eventually filed. Subsequently, a settlement was entered upon between complainant and accused person and it was agreed that complainant would withdraw various cases filed by him on acceptance of the one-time settlement. The one-time settlement was acted upon and agreed amount was deposited by the complainant. The complainant had not disclosed about the initiation of two complaint cases. The proceedings against bank officials on the FIRs in question also started and bank accordingly moved petition for the quashing of FIR.

In the above background the present proceedings reached before the Apex Court. The point of dispute was that once full amount as agreed was deposited the Bank should return the title deed as also the bank was duty bound to return the same and also whether the FIR should not be quashed.  

The Court held that the statutory remedies in the instead matter was held to have been cleverly bypassed and prosecution route was 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. The Magistrate while exercising the power under Section 156(3) of the Code narrated the allegations and thereafter without any application of mind passed an order to register an FIR for the offences mentioned in the application. The duty cast on the Magistrate while exercising power Under Section 156(3) Code cannot be marginalized. The 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 sending the matter would be conducive to justice and then he may pass the requisite order.

In the present case the Magistrate should have taken note of the allegations in entirety, the date of incident and whether any cognizable case was remotely made out. When a borrower of the financial institution covered under the SARFAESI Act, invokes the jurisdiction under Section 156(3) Code of Criminal Procedure 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. 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, which also encourages the unscrupulous and unprincipled litigants, like the Complainant to take adventurous steps with Courts to bring the financial institutions on their knees. The action of Complainant was solely intended to harass the bank officials and escape the loan liability.

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

The Court further opined and held that a stage has come where applications under Section 156(3) of the Code should be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate. It was further held that such kind of applications is 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 challenged under the framework of said Act or under Article 226 of the Constitution of India. 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 should be filed. The warrant for giving a direction that an application under Section 156(3) is to 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 the authority of the Magistrate under Section 156(3).

In the present case in particular, the Court also referred to section 32 of the SARFAESI Act which deals with “Protection of action taken in good faith”, stating that no suit, prosecution or other legal proceedings would lie against any secured creditor or any of his officers or manager exercising any of the rights of the secured creditor or borrower for anything done or omitted to be done in good faith under this Act. The Magistrate should have kept himself alive to the aforesaid provision before venturing into directing registration of the FIR under Section 156(3) of the Code. The Parliament in its wisdom has made such a provision to protect the secured creditors or any of its officers, and as also the legislative mandate, have to be kept in mind. 

The FIRs were accordingly quashed and a direction was passed was circulation of order to all High Courts to ensure that Magistrates to become more vigilant and diligent while exercising the power Under Section 156(3) Code of Criminal Procedure.

[Priyanka Srivastava and Ors. vs. State of U.P. and Ors.]
(SC, 19.03.2015 – Criminal Appeal No. 781 of 2012)