Supreme Court Quashes Criminal Proceedings Against Bank Manager in SARFAESI Case

In a significant judgment delivered on April 23, 2025, the Supreme Court of India quashed criminal proceedings against a bank manager in a case involving alleged fraud in a SARFAESI Act auction. The case, Sivakumar vs The Inspector of Police & Anr., highlights important legal principles regarding criminal liability of bank officials in secured debt recovery proceedings.

The dispute originated from a 2012 auction of a property under the SARFAESI Act by HDFC Bank. The complainant had purchased the property at auction, only to later discover it had been acquired by the Tamil Nadu Housing Board in 2003. Criminal proceedings were initiated against two bank officials, including the appellant Sivakumar, alleging cheating, forgery and other offences under Sections 197, 417, 418, 467, 468 and 420 of IPC.

The Supreme Court bench comprising Justices Vikram Nath and Sandeep Mehta noted the crucial fact that the appellant was not the authorized officer during the relevant period (2012-2014) when the auction took place and sale certificate was issued. The Court observed: ‘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.’

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The judgment emphasized that the appellant had assumed the position of Manager only in November 2014, long after the auction process was completed. The Court held: ‘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.’

This decision reinforces the principle that criminal liability must be based on actual involvement in alleged wrongful acts. The Supreme Court’s intervention prevented what it termed as ‘abuse of process of law’ that would cause ‘nothing but miscarriage of justice’ by harassing an official who had no role in the disputed transaction. The judgment serves as an important precedent protecting bank officials from unjust criminal prosecution in SARFAESI Act recovery proceedings.

Petitioner Name: Sivakumar.
Respondent Name: The Inspector of Police & Anr..
Judgment By: Justice VIKRAM NATH, Justice SANDEEP MEHTA.
Place Of Incident: Tirunelveli, Tamil Nadu.
Judgment Date: 23-04-2025.
Result: allowed.

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