In a significant ruling, the Supreme Court has addressed the intricacies surrounding the Writ Petition (Crl.) No. 166 of 2023 filed by Gagan Banga and Indiabulls Housing Finance Limited under Article 32 of the Indian Constitution. The petition sought to establish protective measures against the initiation of criminal proceedings stemming from civil disputes, particularly in relation to disgruntled borrowers.

The petition included several critical requests:

The petitioners sought a writ of mandamus to prevent law enforcement and judicial authorities from initiating criminal actions against financial institutions and their personnel based on complaints from defaulting borrowers.

They requested the quashing of specific FIRs, which they argued were misusing criminal law to address civil matters.

The petitioners asked for the imposition of exemplary costs against those abusing the legal process. Lastly, they sought any other relief deemed appropriate by the Court.

The writ petition referred to three FIRs registered in various states, which the petitioners claimed were examples of criminal law being misapplied to civil disputes. The Supreme Court, through an interim order dated April 28, 2023, stayed proceedings related to these FIRs.

Subsequently, additional applications were filed, leading to the inclusion of new respondents and the introduction of further FIRs and Enforcement Case Information Reports (ECIRs). On July 4, 2023, the Supreme Court directed that the petitioners could approach the respective High Courts to challenge these FIRs and the ECIR, with a clear expectation for expedited consideration.

After the interim order, the Enforcement Directorate sought to challenge the Court's decision, claiming it had not been given a chance to be heard before the restrictions were placed on investigations. Similarly, a request was made for modifications to the earlier orders, leading to a complex legal situation.

The Supreme Court reiterated the importance of finality in its judgments and the limited scope for post-disposal applications. However, it acknowledged that exceptional circumstances could warrant reconsideration.

In its recent order, the Supreme Court recognized that procedural oversights had occurred, particularly regarding the Enforcement Directorate’s lack of representation at the earlier hearings. The Court modified its previous order by recalling the directions related to the ECIR, allowing the Allahabad High Court to evaluate it on its merits.

Moreover, the Court clarified that the interim protections originally granted would apply only until the respective petitions were filed, enabling High Courts to consider interim relief applications without being influenced by the Supreme Court’s earlier observations.

This ruling underscores the delicate balance between protecting financial institutions from misuse of criminal proceedings and ensuring that legitimate grievances are not overlooked. The Supreme Court’s willingness to modify its own orders reflects its commitment to justice and the need for a robust legal process. As the matter unfolds in the respective High Courts, the implications of this case will likely resonate within the broader legal landscape concerning the intersection of criminal and civil law in India.