<p>The High Court has said that even after invoking the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, a bank can initiate criminal proceedings in terms of the master circular issued by the Reserve Bank of India, if the account is declared to be a fraud and the account holders to be willful defaulters. </p>.<p>The petition was filed by a company engaged in the business of trading timber, teakwood, packing cases, plywood and other wood products.</p>.<p>A loan facility of Rs 23 crore was extended in 2003 by Corporation Bank (presently Union Bank of India).</p>.<p>The credit limit was enhanced from time to time and the loan account was renewed and enhanced to Rs 60 crore on September 21, 2015. </p>.<p>The Union Bank of India filed a complaint before the CBI against the petitioners on February 15, 2022, on the declaration of fraud.</p>.<p>The FIR was registered on February 17, 2022, for offences punishable under Sections 13 (2) of the Prevention of Corruption Act, 1988 and Section 120B read with section 420 of the IPC. </p>.<p>The company claimed that once having initiated proceedings under the SARFAESI Act and having obtained a recovery certificate against them, the account could not have been declared to be a fraud and a complaint could not have been registered.</p>.<p>The petitioners contended that since there was no staff accountability issue in the case, the CBI will have no jurisdiction. </p>.<p>Justice M Nagaprasanna noted that clause 8.1 of the RBI’s master circular mandates that if the amount involved in the fraud is between Rs 25 crore and Rs 50 crore, the bank could complain to the Banking Security and Fraud Cell of the CBI, irrespective of the involvement of a public servant. </p>.<p>“Therefore, having initiated recovery proceedings before the Debt Recovery Tribunal and having a recovery certificate in their hand would not mean that the proceedings cannot be initiated against these petitioners,” the court said. </p>
<p>The High Court has said that even after invoking the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, a bank can initiate criminal proceedings in terms of the master circular issued by the Reserve Bank of India, if the account is declared to be a fraud and the account holders to be willful defaulters. </p>.<p>The petition was filed by a company engaged in the business of trading timber, teakwood, packing cases, plywood and other wood products.</p>.<p>A loan facility of Rs 23 crore was extended in 2003 by Corporation Bank (presently Union Bank of India).</p>.<p>The credit limit was enhanced from time to time and the loan account was renewed and enhanced to Rs 60 crore on September 21, 2015. </p>.<p>The Union Bank of India filed a complaint before the CBI against the petitioners on February 15, 2022, on the declaration of fraud.</p>.<p>The FIR was registered on February 17, 2022, for offences punishable under Sections 13 (2) of the Prevention of Corruption Act, 1988 and Section 120B read with section 420 of the IPC. </p>.<p>The company claimed that once having initiated proceedings under the SARFAESI Act and having obtained a recovery certificate against them, the account could not have been declared to be a fraud and a complaint could not have been registered.</p>.<p>The petitioners contended that since there was no staff accountability issue in the case, the CBI will have no jurisdiction. </p>.<p>Justice M Nagaprasanna noted that clause 8.1 of the RBI’s master circular mandates that if the amount involved in the fraud is between Rs 25 crore and Rs 50 crore, the bank could complain to the Banking Security and Fraud Cell of the CBI, irrespective of the involvement of a public servant. </p>.<p>“Therefore, having initiated recovery proceedings before the Debt Recovery Tribunal and having a recovery certificate in their hand would not mean that the proceedings cannot be initiated against these petitioners,” the court said. </p>
