Calcutta High Court Quashes Criminal Case Against SBI Officials, Says Dispute Was Purely Civil

On 17 June, the Calcutta High Court held that criminal proceedings cannot be used to pressurise parties in disputes that are essentially civil in nature and must disclose the essential ingredients of the alleged offences before a Magistrate can take cognisance.

Justice Ajoy Kumar Mukherjee quashed criminal proceedings initiated against two State Bank of India officials who had been accused of offences under Sections 120B, 420, 409, 467, 468 and 471 of the IPC in connection with the auction sale of a car parking space under the SARFAESI Act. He observed:

“...a bare perusal of the allegation and the ingredients to attract them, as adverted to hereinbefore would reveal that the allegations are vague and they do not carry the essential ingredients to constitute the alleged offences. The factual position reveals that the genesis as also the purpose of criminal proceeding is vaxious and the dispute involve is essentially civil in nature. The defacto complainant have given a cloak of criminal offence in the issue. All these aspects of the matter were not considered by the concerned magistrate.”

The dispute arose from a car parking space at Pritha Apartment, Kolkata, which State Bank of India had taken into symbolic possession under the SARFAESI Act on 7 November 2013. The Bank issued an e-auction notice on 29 October 2021 on an "as is where is" basis.

The complainant emerged as the highest bidder on 30 December 2021 after paying Rs. 2.9 lakh. He later alleged that the Bank failed to deliver possession of the entire 148 sq. ft. parking space and initiated criminal proceedings against the bank officials.

The High Court held that, even if the complaint was accepted in its entirety, it failed to make out the offence of cheating because it did not allege any false representation or dishonest intention on the part of the bank officials at the inception of the transaction. The Bench observed:

“...even if the entire allegation levelled in the petition of complaint is taken in its entirety, no prima facie case of cheating can be said to have been made out against the petitioners as there was no malafide intention from the very inception of the transaction to cheat the opposite party. Therefore the essential ingredients of the offence of cheating under section 420 of the IPC as sought to be foisted upon the petitioners by the Opposite party no.2 in the letter of complaint is missing.”

The Court also rejected the allegation of forgery, holding that the complaint did not accuse the officials of making any false document or manipulating records. It further found that the Magistrate had failed to apply judicial mind before issuing process. Justice Mukherjee said:

“Thus, the primary requirement for the offence of forgery i.e. 'making a false document' by the petitioners herein is absent in the complaint and the order of the court below clearly shows that he did not apply his judicial mind while considering the fact that even if the allegations levelled against petitioners are taken to be true they cannot be held liable under relevant provisions for the commission of the offence of forgery under the Indian Penal Code.”

Referring to the investigation records, the Bench observed that the real dispute concerned possession of the entire parking space rather than ownership. It also relied on an earlier writ order and proceedings before the Consumer Commission, both of which had directed the parties to pursue civil remedies in relation to their possession-related grievances.

It further held that the complainant had initiated the criminal case to pressurise the bank officials and give a criminal colour to a civil dispute and concluded that allowing the prosecution to continue would amount to an abuse of the process of law.

Accordingly, the High Court quashed the complaint.