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Synopsis

The Supreme Court on February 13, 2024 set aside the Allahabad High Court's orders which stayed the Enforcement Complaint Information Report and the FIRs lodged against India Bulls Housing Finance Ltd and its top officers for allegedly showing the Shipra group to be the defaulters to misappropriate the properties owned by it through illegal means. 

A bench of Justices Bela M Trivedi and Prasanna B Varale noted the High Court has also granted blanket orders restraining the arrest without the accused applying for the anticipatory bail under Section 438 of CrPC, in utter disregard to the settled position of law.

The bench said that higher courts should follow the law to ensure judicial discipline and not to use their extraordinary and inherent powers to act as per its whims and caprice.

"The statutory power has to be exercised sparingly with circumspection and in the rarest of rare cases," the bench said, noting the High Court, in a way, by passing such orders, stayed the investigations and restrained the agencies from taking any coercive measure against the accused pending the petitions under Section 482 CrPC.

Counsels for the respondents-accused contended that the allegations made in the FIRs are of civil nature, and have been given a colour of criminal nature. 

They claimed a number of proceedings had ensued between the parties pursuant to the actions taken by the IHFL against the complainant-borrower for the recovery of its dues under the SARFAESI Act. The borrower M/s Shipra after having failed in the said proceedings had filed the complaints with ulterior motives, they said.

The bench, however, said, "The impunged orders passed by the High Court are in utter disregard and in the teeth of the guidelines issued by the three-judge bench (Neeharika Infrastructure Pvt Ltd Vs State of Maharashtra and Others, 2021)".

The bench said it is a matter of serious concern that despite the legal position settled by this court in catena of decisions, the High Court has passed the impugned orders staying the investigations of the FIRs and ECIR in question.

"Without undermining the powers of the High Court under Section 482 of CrPC to quash the proceedings if the allegations made in the FIR or complaint prima facie do not constitute any offence against the accused, or if the criminal proceedings are found to be manifestly malafide or malicious, instituted with ulterior motive etc, we are of the opinion that the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR, particularly when the investigations were at a very nascent stage," the bench said.

"It hardly needs to be reiterated that the inherent powers under Section 482 of CrPC do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice," the bench added.

The court explained it has not expressed any opinion on the merits of the writ petitions which are pending before the High Court, and that it would be open for the concerned respondents-accused to take all legal contentions or take recourse to the legal remedies as may be available to them in accordance with law.

However, the court emphasised, "Suffice it to say that judicial comity and judicial discipline demands that higher courts should follow the law. The extraordinary and inherent powers of the court do not confer any arbitrary jurisdiction on the court to act according to its whims and caprice."

Appellant Enforcement Directorate contended in all the three appeals that this court had passed the order on July 04,2023 in Gagan Banga’s case staying the proceedings of ECIR and the FIRs registered against the concerned respondents without hearing it.

Therefore, the ED has filed a review petition, which is pending before this court, Additional Solicitor General S V Raju said on behalf of the agency.

He further submitted that the High Court also without assigning any cogent reasons in the impugned orders stayed the said proceedings of ECIR and FIRs under the guise of following the said order passed by this court. 

The bench pointed out, "The impugned interim orders have been passed by the High Court under the umbrella of the order dated 04.07.2023 passed by this court in Gagan Banga’s case, creating an impression that the impugned orders were passed in furtherance of the said order, though this Court had passed the said order leaving it open to the High Court to decide the writ petitions on their own merits".

On April 9, 2023, an FIR was filed by Amit Walia, a Director of Shipra Hotels, against IHFL and its officers for the offences under Sections 420, 467, 468, 471, 120-B IPC, 323, 504 & 506 at Police Station Indirapuram, Ghaziabad alleging inter alia that IHFL had illegally showed the Shipra group to be the defaulters, so that they may misappropriate the properties owned by the Group through illegal means. 

On April 15, 2023, another FIR was filed by YEIDA against IHFL, M3M India, M/s Kadam and M/s Beacon Trusteeship Ltd for the offences under Sections 420, 467, 468, 471 and 120-B at Police Station Beta-2, Greater Noida alleging inter alia that the first charge of YEIDA was preserved in the permission issued on January 09, 2018 for pledging the shares to IHFL however, the IHFL neither informed nor sought any permission of YEIDA before transferring the shares of M/s Kadam to M3M India.

On July 22, 2023, yet another FIR came to be filed by one Mohit Singh, authorised representative of Shipra Group, against Reena Bagga in her capacity as an authorized officer of IHFL and others for the offences under Section 420, 120B IPC and 82 of Registration Act at Police Station Kavi Nagar, Ghaziabad, alleging therein that 'Shipra Mall', which formed a part of the properties mortgaged with IHFL, had been sold in pursuance of recovery proceedings on the basis of false and fabricated documents, for a sum of Rs 551 Crore to Himri Estate Pvt, Ltd although the actual value of the land was over 2000 Crore.

The Enforcement Directorate also filed it's complaint on June 9, 2023.