Sri P Vijayashekar Vs State of Karnataka

CANARA BANK REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE SRI. PRABHA GANESH, SENIOR MANAGER, ASSET RECOVERY MANAGEMENT, BRANCH II, AGED ABOUT 38 YEARS, NO.86, SPENCER TOWERS, 2^ND FLOOR, M.G. ROAD, BENGALURU.

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…RESPONDENTS

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NC: 2025:KHC:45690 CRL.P No. 10189 of 2024

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HC-KAR

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(BY SRI. JAGADEESHA B.N., ADDL. SPP FOR R1 (P/H); SRI. C. VINAY SWAMY, ADVOCATE FOR R2)

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THIS CRL.P IS FILED U/S.482 CR.P.C (FILED U/S.528 BNSS) PRAYING TO: (A) CALL FOR RECORDS IN PCR NO.3817 OF 2024 PENDING BEFORE THE XXX ADDL. CHIEF METROPOLITAN MAGISTRATE, BENGALURU CITY; (B) QUASH THE FIR BEARING CRIME NO.173/2024 FOR THE OFFENCES PUNISHABLE UNDER SECTION 120-B, 420, 464, 465, 468, 471 R/W 34 OF THE INDIAN PENAL CODE, 1860, LODGED BY THE SUBRAMANYAPURA P.S., THE RESPONDENT NO.1 HEREIN, ON THE FILE OF XXX ACMM, BENGALURU IN PCR.NO.3817/2024.

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THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 29.10.2025, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:

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CORAM: HON'BLE MR. JUSTICE MOHAMMAD NAWAZ

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CAV ORDER

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This criminal petition is filed by the petitioner/accused No.2 under Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the FIR registered in Crime No.173/2024 of Subramanyapura Police Station, Bengaluru, for the offences punishable under Sections 120B, 420, 464, 465, 468, and 471 read with Section 34 of the Indian Penal Code, 1860, and the consequent proceedings pending on the file of the XXX Additional Chief Metropolitan Magistrate, Bengaluru, arising out of PCR No.3817/2024.

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HC-KAR

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Heard the learned counsel for petitioner, learned

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Additional SPP for the respondent no.1/ State, the learned counsel for respondent no.2 and perused the material on record.

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Respondent No.2, Senior Manager, Asset Recovery Management Branch–II, Canara Bank, filed a private complaint in PCR No.3817/2024 on 07.03.2024 before the learned 2^nd Additional Chief Metropolitan Magistrate, Bengaluru, under Section 200 read with Section 156(3) of Cr.P.C. The learned Magistrate by order dated 15.03.2024, referred the matter to the Station House Officer, Subramanyapura Police Station, for investigation under Section 156(3) Cr.P.C.

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The Subramanyapura Police Station registered an FIR in Crime No.173/2024 on 29.04.2024, for the offences punishable under Sections 120B, 420, 464, 465, 468, and 471 read with Section 34 of IPC, 1860, against five accused persons, including the present petitioner (accused No.2).

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HC-KAR

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It is alleged that accused No.1, namely

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Doreswamy Reddy, during the year 2018, obtained a loan of Rs.2 crores from Canara Bank by mortgaging an immovable property situated at Dodda Kalasandra Village, bearing Site No.18 in Survey No.44/1, which stands in the name of accused No.2– P. Vijayashekar / petitioner. The said property was offered as collateral security in favour of the Bank for the

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loan availed by Accused No.1 for his company, Kartar Corporation. The accused failed to repay the said loan, and consequently, the Bank, in accordance with law, took possession of the mortgaged property and brought it to sale by way of public auction held on 05.01.2024, wherein the

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property was purchased by one Sri Balakrishna G. and Smt. K. Neela. When the auction purchasers proceeded to register the sale deed in their favour, it came to light that accused Nos.1 and 2, in collusion with each other, had earlier

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executed sale agreements in respect of the very same property in favour of Accused Nos.3, 4, and 5 on 30.06.2023 and 17.10.2023, despite the said property having already

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HC-KAR

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been mortgaged to the Bank. The complaint alleges that the accused persons, without informing the Bank and by creating false and fabricated documents, conspired together to cheat the Bank and unlawfully transferred the mortgaged property in favour of accused Nos.3 to 5.

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The learned counsel for the petitioner contended that the complaint filed by respondent No. 2 and the consequent registration of FIR are actuated by mala fides and have been initiated with an intention to harass the petitioner for offences which are purely civil in nature. It is submitted that the dispute essentially arises out of loan-related transactions between the petitioner and the bank, and that the allegations, even if accepted on their face value, do not constitute the ingredients of the offences alleged. The entire complaint, according to the petitioner, is a misuse of the criminal process for enforcing a civil liability, and continuation of the proceedings would amount to an abuse of process of law.

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NC: 2025:KHC:45690 CRL.P No. 10189 of 2024

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HC-KAR

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It is further contended that pursuant to the One-

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Time Settlement (OTS) accepted by the bank, the petitioner had executed sale agreements dated 30.06.2023 and 17.10.2023 and deposited the sale consideration of Rs.2,20,00,000/- towards the loan account, balance loan amount was of Rs.2,90,00,000/-. Despite such payment and while the OTS was still in force, the bank proceeded to sell the very same mortgaged property to third parties by issuing a sale certificate dated 20.01.2024. It is submitted that the present complaint was lodged thereafter, only to cause undue harassment to the petitioner, that there is an inordinate and unexplained delay in initiating the proceedings, and that the allegations, even if taken in entirety, do not disclose any cognizable offence against the petitioner.

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Per contra, the learned Additional Special Public Prosecutor appearing for the respondent-State submitted

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that the allegations made in the complaint disclose prima facie material constituting the offences alleged, and the

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HC-KAR

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investigation is still at a nascent stage. It is contended that

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there are specific allegations of creation of false documents and cheating the bank after mortgaging the property, and therefore, the question as to whether the petitioner is guilty

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or not cannot be gone into at this stage. Hence, it is urged that the petition is premature and devoid of merit and the same deserves to be dismissed.

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Learned counsel for respondent No. 2/complainant submitted that the petitioner, despite being fully aware that the subject property was mortgaged to the bank and that possession had been taken under Section 13(4) of the SARFAESI Act through notice dated 03.09.2020, has executed agreements of sale dated 30.06.2023 and 17.10.2023 in favour of third parties. It is contended that

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such conduct is in clear violation of the mortgage terms and constitutes a deliberate attempt to defeat the lawful recovery proceedings initiated by the bank. The sale agreements are alleged to be collusive documents created to defraud the bank and the auction purchasers, and the petitioner’s actions

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HC-KAR

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disclose a clear element of criminal conspiracy and fraudulent intention.

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It is further contended that the petitioner, having admitted execution of the sale agreements during the subsistence of the mortgage and without the bank’s consent, cannot now claim that the dispute is civil in nature. The learned Magistrate, after considering the materials produced by the complainant, has rightly found that the allegations disclose criminal intent and that the matter requires investigation and trial. It is therefore urged that this petition under Section 482 Cr.P.C. is misconceived, as the issues raised involve disputed facts which cannot be adjudicated at this stage, and the petition deserves to be dismissed in limine.

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Learned Counsel appearing for Respondent No.2 placed reliance upon the judgment of the Hon’ble Supreme Court in Dinesh Sharma v. Emgee Cables and Communication Ltd. and Anr. in Special leave to Appeal

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NC: 2025:KHC:45690 CRL.P No. 10189 of 2024

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HC-KAR

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(Crl.) Nos.10744-10745/2023 reported in 2025 INSC

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571 observed in para nos. 18 and 23 as hereunder:

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“ 18 . Though the High Court had unfettered powers conferred by the Cr.P.C for exercising its inherent jurisdiction under section 482., the same is expected to be used very sparingly and only in exceptional circumstances. There cannot be any straight jacket formula as to when the High Court would be justified to exercise jurisdiction under section 482 Cr.P.C and each case is required to be dealt with on its own merits.

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23. A profitable reference can be made to the case of Parbatbhai Ahir v. State of Gujrat and Anr. Reported in 2017(9) SCC 641 wherein it was observed that economic offences by their very nature lie beyond the domain of mere dispute between private parties and the High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanor. The consequences of the act complained of upon the financial or economic system will weigh in the balance. Thus, it can be concluded that economic offences by their very nature stand on a different footing than other offences and have wider ramifications. They constitute a class apart. Economic offences affect the economy of the country as a whole and pose a serious threat to the financial health of the country. If such offences are viewed lightly, the confidence and trust of the public will be shaken.”

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HC-KAR

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This Court finds that the allegations made in the

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complaint and the FIR disclose prima facie material constituting the offences alleged against the petitioner. The records indicate that the petitioner had executed sale agreements in respect of the mortgaged property even after the Bank had taken possession under Section 13(4) of the SARFAESI Act. Such transactions, made during the subsistence of the mortgage and in the face of pending recovery proceedings, raise serious questions of fraudulent intent and criminal conspiracy, which necessarily require investigation. Therefore, the contention that the dispute is merely civil in nature cannot be accepted at this stage. The contentions raised by the petitioner touch upon disputed questions of fact, which cannot be adjudicated in these proceedings. At this nascent stage, this Court is not justified in interdicting the investigation or terminating the proceedings.

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While exercising inherent jurisdiction under Section 482 of Cr.P.C., this Court cannot conduct a roving

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HC-KAR

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inquiry or a mini trial to assess the correctness or otherwise of the allegations. At this stage of investigation, when the FIR and complaint disclose prima facie material against the petitioner, the proceedings cannot be quashed merely on the basis of the petitioner’s defence.

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It is well settled that mere existence of civil remedy does not automatically warrant the quashing of criminal proceedings under the same set of facts and if allegations disclose prima facie element of criminality, civil and criminal proceedings may validly co-exist and the complainant is not precluded from setting in motion the proceedings in criminal law.

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For the forgoing reasons, petition is dismissed.

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Sd/(MOHAMMAD NAWAZ) JUDGE

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TL

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List No.: 1 Sl No.: 1

Sri P Vijayashekar v. State of Karnataka

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Sri P Vijayashekar v. State of Karnataka

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