Supreme Court Quashes Criminal Case Against HDFC Bank Official Over Auction Sale

The Supreme Court recently quashed a criminal case against an official of the HDFC Bank, after noting that he was not the "authorised officer" when the auction sale in question was held.

The criminal case, alleging the offences of cheating and forgery, was filed in Tamil Nadu over the allegation that the Bank had sold in auction a property which was previously acquired by the Tamil Nadu Housing Board.

The de-facto complainant (the auction purchaser) had alleged that the Bank officials suppressed the acquisition of the property by the Tamil Nadu Housing Board. The auction purchaser had also filed a consumer complaint against the Chairman, Managing Director and Senior Manager of HDFC Ltd.  

The appellant then filed a S. 482 CrPC petition before the Madras High Court seeking the quashing of the criminal proceedings, which was rejected.

Before the Supreme Court, the appellant pointed out that he was only serving as an Assistant Manager at the time of the auction sale in 2012, and it was solely the Manager who was authorised to initiate proceedings under the SARFAESI Act. 

Notably, Rule 2(a) of Security Interest (Enforcement) Rules, 2002 defined 'Authorized Officer' as "an officer not less than a chief manager of a public sector bank or equivalent, as specified by the Board of Directors of Board of Trustees of the secured creditor or any other person or authority exercising powers of superintendence, direction and control of the business or affairs of the secured creditor, as the case may be, to exercise the rights of a secured creditor under the [Act]." 

Thus , the appellant contended that he had no role in the auction process, and a civil dispute is being given a criminal color. He added that the District Consumer Disputes Redressal Commission vide order dated 14.07.2022 also dismissed the complainant's consumer complaint. The Commission held that the possession receipt, which was signed by the complainant, clearly showed her awareness of the acquisition process before participating in the auction.

The appellant's counsel also argued that S.32 of the SARFAESI Act provides immunity to secured creditors and officers for actions done under good faith. 

The Police, on the other hand contended that the complainant was completely unaware of the fact that the said property was already acquired by the Tamil Nadu Housing Board and only when she went to the Sub Registrar to register the property, she was informed that it was already acquired by the Housing Board in 2003.

The respondent also contended that protection under S. 32 will not apply as the appellant's actions were not in good faith. The concealment of the status of the property signalled bad faith. 

The bench found merit in the argument of the appellant that he was not the authorised officer at the time of the auction, and there is no evidence of any direct involvement of the appellant in the whole process of auctioning. The Court held that in the absence of any criminal liability, allowing the criminal proceedings against him would be a 'miscarriage of Justice'. 

A bench comprising Justice Vikram Nath and Justice Sandeep Mehta said :

"It is evident that the sale certificate was issued by the appellant's predecessor and, at the relevant time, the appellant was not the authorized officer empowered to issue the certificate. In fact, right from the initiation of the auction process to the issuance of sale certificate, no direct involvement of the appellant can be seen as he was not the authorized officer during the said period and assumed the office of Manager only in November, 2014."

"Therefore, it becomes clear as day that the appellant had no role to play in the transaction leading to the FIR as he was not a signatory to the sale certificate. Since the appellant was neither the authorized officer at the relevant time nor responsible for the auction process or issuance of the sale certificate, the allegations against him are baseless and do not attract criminal liability. The continuation of the instant criminal proceedings against the appellant shall lead to abuse of process of law, cause nothing but miscarriage of justice and inordinately harass the appellant who has been implicated without due cause." 

The bench proceeded to quash the criminal proceedings against the appellants. 

Case Details : SIVAKUMAR v. THE INSPECTOR OF POLICE & ANR. SLP(CRL) NOS.5815-5816 OF 2023

Citation : 2025 LiveLaw (SC) 478

Click here to read the judgment