Delhi District Court
Sushant Agrawal And Ors vs Govt Of Nct Of Delhi And Anr on 18 March, 2025
IN THE COURT OF SH. PURSHOTAM PATHAK, ASJ-05,
SOUTH DISTRICT, SAKET COURTS : DELHI
DLST010096702024
Cr Rev/349/2024
Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr
1. Ms ET Infra Pvt. Ltd.
R/o E-9, Panchseel Park
New Delhi.
2. Sh. Sushant Agarwal
S/o Ram Mohan Agarwal,
R/o E-9, Panchseel Park,
New Delhi.
3. Sh. Vaibhav Agarwal
S/o Sh. Sushant Agarwal
R/o E-9, Panchseel Park,
New Delhi
4. Ms. Shivani Agarwal
D/o Sh. Sushant Agarwal
R/o E-9, Panchseel partk,
New Delhi. ........ REVISIONISTS
VERSUS
1. Govt. of NCT of Delhi
Through Public Prosecutor
2. Ms. Kirti Buildtech Pvt. Ltd.
Through its Directors,
R/o 23, Sadar Apartments,
Mayur Vihar Phase-1,
New Delhi-110017 .....RESPONDENTS
DATE OF INSTITUTION : 23.08.2024
ARGUMENTS HEARD ON : 10.02.2025
DATE OF JUDGMENT : 18.03.2025
JUDGMENT
1. By way of the instant petition, revisionists takes exception to order dated 15.07.2024, whereby Ld. JMFC, Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 1 of 32 South, Saket Courts, took cognizance against the revisionists after accepting the protest petition filed by complainant, against the cancellation report filed by police and accordingly summoned them to face trial for offences punishable under section 406/420/506(1) IPC, in case FIR no. 215/2019, Police Station, Hauz Khas, titled as 'State Vs. Cancellation'.
2. The relevant facts of the case in nutshell are that, the complainant company/respondent no. 2 entered into an agreement with the revisionist no. 1, of which revisionist no. 2, 3 and 4 are the directors, for purchase of 844.55 sq. ft. super area in a project named 'World Trade Tower (WTT) Commercial Complex' at Noida. It was alleged therein that the accused persons induced the complainant to enter into an allotment letter dated 27.07.2010, as per which complainant was to get possession of allotted unit i.e. unit no. 404 in Tower B, within WTT project. He was also made to believe that the accused persons would obtain all the necessary licenses, permissions, clearances and deliver the unit within 36 months from the date of allotment letter. Pursuant to the allotment letter, complainant paid a sum of Rs.36,46,550/- to the revisionist no. 1 however, the accused persons failed to deliver the possession within the given time. It was also alleged that the accused persons have not completed the construction and have also raised a demand of payment of One Time Lease Rent and annual lease rent contrary to the contract. They also raised a demand of Rs.5,06,730/- towards LEED Pre-certified GOLD rated green building Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 2 of 32 charges and electrification charges, which was beyond the agreement between the parties. It was alleged that when complainant raised objections on the illegal demands made on behalf of Revisionist no. 1, he was threatened that his allotment shall be cancelled and the amount he has paid shall be forfeited. It was also urged that despite payment of huge sum of money to the extent of Rs.36,46,550/-, the construction is incomplete even after 7 years and possession has not been given to the complainant.
3. Trial Court record reveals that based on these facts, FIR in the instant case was registered pursuant to the directions dated 23.07.2019, passed by Ld MM in case bearing CC No. 10337/2018 titled as, Kirti Buildtech Pvt. Ltd. Vs. ET Infra Pvt. Ltd & Ors on an application moved on behalf of complainant under section 156(3) Cr.PC. Record further transpires that after conclusion of investigation, cancellation report in the instant case was filed by Investigating Agency that none of the alleged offences are made out.
4. Thereafter, a protest petition was filed by the complainant against the cancellation report. Arguments were heard and Ld. JMFC vide impugned order, accepted the protest petition and accordingly, took cognizance and summoned the revisionists to face trial for commission of offences under section 406/420/506(1) IPC.
5. Being aggrieved by the order dated 15.07.2024, the revisionists have assailed the said order for taking Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 3 of 32 cognizance and for summoning them as accused after accepting the protest petition on the following grounds:-
i. that the dispute is fundamentally civil in nature, involving issues that should be resolved through civil legal channels but, the complainant has unjustly attempted to give the matter a criminal dimension, thereby misusing the legal process.
ii. that the complainant has wrongfully alleged in the complaint that the company M/s ET Infra Developers Pvt. Ltd. began advertising its World Trade Tower project in Noida, Uttar Pradesh, as early as 2010, with the intent to induce the public at large by offering possession of the units within 36 months, whereas, the revisionist no. 1 only issued a single advertisement related to the project, which was released at the time of the Bhumi Pujan.
iii. that the issue at hand revolves around an allotment letter dated 27.07.2010, issued by petitioner no. 1 in favour of the complainant, which clearly outlines the rights and liabilities of both the parties.
iv. that the allegation that the complainant has been duped of his hard earned money by making him to pay several payments totaling Rs.36,46,550/-, is only an attempt to fabricate a narrative of financial loss. v. that the demands made through various letters were in accordance with the contractual terms as non payment of dues could have significant repercussions Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 4 of 32 on the overall project and the interest of other stakeholders.
vi. that the complainant has falsely alleged that the tower 'B' of the building is not functional whereas, more than 5000 persons are working in the offices situated in Tower 'B' of the project.
vii. that the demand of maintenance from complainant is well within the purview of the allotment letter as the petitioner no. 1 had outsourced the maintenance of the building initially to CBRE and now to JLL and a monthly maintenance charge is due to the allottees and tenants w.e.f 01.06.2016.
viii. that the complainant has already been repaid the entire amount alleged in the transaction and the registration of present FIR is only an attempt to harass the petitioners.
ix. that the petitioners never demanded an illegal amount from the complainant and the demand raised by the petitioners was solely as per the allotment letter dated 27.07.2010.
x. that the cancellation report filed by the investigating officer clearly depicts that the dispute is of civil nature and no criminal offense has been committed.
6. Respondent no.2 has filed reply to the petition wherein he has stated that upon an application made on 27.07.2010 and on payment of Rs. 1,00,000/-, respondent no. 2 company was issued an allotment letter containing various terms and conditions. Thereafter, from time to Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 5 of 32 time, the respondent no. 2 company made timely payments to the petitioner no.1 company as and when demanded by it, against the purported work done by it and as on date, a payment of Rs.36,46,550/- has been made by the respondent no. 2 company in the account of petitioner no. 1 company. It is stated that the petitioners represented that the work is near completion and received around two payments from respondent no. 2 company in July 2013 whereas, as per the closure report, the NGT had stayed the construction of said project during that period. It is stated that on receiving an e-mail, letter of possession, letters demanding money as due amount, One Time Lease Rent, Capital Replenishment Fund and interest free maintenance charges, when representative of respondent no.2 visited the commercial unit, he was shocked to see that the construction at building was far from completion. It is averred that the petitioners threatened in the letter dated 28.11.2015 to take coercive action against respondent no.2 company including the de-freezing of suit allotted, if the said illegal demands were not made out. It is alleged that the petitioner company has neither paid nor had been asked for any One Time Lease Rent by NOIDA. It is also averred that the allotment of the said plot by NOIDA took place on 26.03.2010, whereas as per MCA data petitioner no. 1 company was incorporated after allotment on 13.04.2010.
7. Ld. Advocate appearing for the revisionists submitted that the impugned order is not sustainable in the eyes of law as Trial Court has summoned the revisionists Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 6 of 32 without sufficient material on record to proceed against them. It was argued that there are no specific allegations against the revisionists and other accused persons. He submitted that the cognizance has been taken for offences u/s 406/420/506(1) IPC notwithstanding the absence of any supporting evidence within the chargesheet to validate the alleged offences. He further submitted that during the period from May 2013 till year 2016 there was stay from NGT on construction and issuance of occupancy certificate. It was argued that the respondent no. 2 concocted a false story and levelled baseless allegations against the revisionists so as to put pressure upon them to settle the matter as per its terms. In support of his contentions he relied upon following judgments:- M/s. Pepsi Foods & Anr Vs. Special Judicial Magistrate & Ors., AIR 1998 SC 128, Rashmi Jain Vs. State of Uttar Pradesh (2014) 13 SCC 553, Devendra & Others Vs. State of Uttar pradesh & Another, reported in (2009) 7 SCC 495, V. Y Jose Vs. State of Gujarat, (2009) 3 SCC 78, J.R.D Tata Vs. Payal Kumar and Anr on 05.03.1986 passed by Delhi High Court, Mohd. Sulaiman Vs. Mohd. Ayub & Anr on 9 December 1964 1965 AIR 1319, 1965 SCR (2) 398, AIR 1965 Supreme Court 1319, Common Cause, a Registered Society Vs. Union of India AIR 1999 SC 2979, G. Sagar Suri and Anr. Vs. State of UP and Orts (2000) 2 SCC 636, Chandrapal Singh and Ors. Vs. Maharaj Singh and Anr. AIR (1982) SC 1238, Inder Mohan Goswami & Anr. Vs. State of Uttaranchal & Ors. (2007) 12 SCC 1, Mohammed Ibrahim & ors. Vs. State of Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 7 of 32 Bihar & Anr., (2009) 8 SCC 751), Indian Oil Corporation Vs. NEPC (2006) 6 SCC 736, MadhavraoJiwaji Rao Scindia v. SambhajiraoChandrojiraoAngre [1988 (1) SCC 692], State of Haryana vs. Bhajanlal [1992 Supp (1) SCC 335], Rupan Deol Bajaj vs. Kanwar Pal Singh Gill [1995 (6) SCC 194], Central Bureau of Investigation v. Duncans Agro Industries Ltd., [1996 (5) SCC 591], State of Bihar vs. RajendraAgrawalla [1996 (8) SCC 164], Rajesh Bajaj v. State NCT of Delhi, [1999 (3) SCC 259], Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [2000 (3) SCC 269], Hridaya Ranjan Prasad Verma v. State of Bihar [2000 (4) SCC 168], M. Krishnan vs Vijay Kumar [2001 (8) SCC 645], and Zandu Phamaceutical Works Ltd. v. Mohd. Sharaful Haque [2005 (1) SCC 122] and State of Karnataka v. L. Muniswamy&Ors. [(1977) 2 SCC 699]
8. Per contra, Ld. counsel for complainant/respondent No.2 has argued that the instant revision petition is liable to be dismissed at the threshold as revisionists have failed to point out any patent illegality or infirmity in the impugned order. It was further argued that the present petition is not maintainable being interlocutory in nature. It was submitted that the repayment of Rs.38 lac as against the payment of Rs.36,46,550/- made by respondent no. 2 company to petitioner no.1 company for said unit is extremely inadequate. He further submitted that on including an interest @ 18% on said amount, the value of sum paid by respondent no. 2 would have been more then Rs. 1 crore or as per market value, Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 8 of 32 approximately Rs.1.5 crore on the date of repayment. On the strength of these arguments, it is prayed that instant revision petition may be dismissed. Ld. Counsel for the respondent has relied upon State of Gujarat Vs. Afroz Mohammed Hasanfatta (2019) 20 SCC 539 :(2020) 3 SCC (Cri) 876].
9. Ld. APP for state refuted the said contentions of revisionists by arguing that the present criminal revision has been filed in order to delay the proceedings. It was submitted that the Ld. trial court has not committed any illegality in passing the impugned order.
10. I have heard rival contentions and perused the record including the reply filed on behalf of respondent no. 2.
11. Before testing the case of the revisionists on merits, the issue of the maintainability of the instant revision ought to be resolved first.
12. What is an 'interlocutory order' has been discussed by the Apex Court in the decision reported as (1977) 4 SCC 137 Amar Nath v. State of Haryana:
"6. Let us now proceed to interpret the provisions of Section 397 against the historical background of these facts. Sub- section (2) of Section 397 of the 1973 Code may be extracted thus:
"The powers of revision conferred by sub-section (1) shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding. The main question which falls for determination in this appeal is as to what is the connotation of the term "interlocutory order" as appearing in sub-section (2) of Section 397 which bars any revision of such an order by the High Court. The term "interlocutory order" is a term of well-known legal significance and does not present any serious difficulty. It has been used in various statutes including the code of Civil procedure, Letters Patent of the High Courts and other like statutes. In Webster's New World Dictionary "interlocutory" has been defined Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 9 of 32 as an order other than final decision. Decided cases have laid down that interlocutory orders to be appealable must be those which decide the rights and liabilities of the parties concerning a particular aspect. It seems to us that the term "interlocutory order" in Section 397(2) of the 1973 Code has been used in a restricted sense and not in any broad or artistic sense. It merely denotes orders of a purely interim or temporary nature which do not decide or touch the important rights or the liabilities of the parties. Any order which substantially affects the right of the accused, or decides certain rights of the parties cannot be said to be an interlocutory order so as to bar a revision to the High Court against that order, because that would be against the very object which formed the basis for insertion of this particular provision in Section 397 of the 1973 Code. Thus, for instance, orders summoning witnesses, adjourning cases, passing orders for bail, calling for reports and such other steps in aid of the pending proceeding, may no doubt amount to interlocutory orders against which no revision would lie under Section 397(2) of the 1973 Code. But orders which are matters of moment and which affect or adjudicate the rights of the accused or a particular aspect of the trial cannot be said to be interlocutory order so as to be outside the purview of the revisional jurisdiction of the High Court".
13. Apex Court in case Om Kumar Dhankar Vs. State of Haryana & Anr., (2012) 11 SCC 252 dealing with the issue of maintainability of a revision petition against the order of summoning of accused held as under:-
"8. The counsel for the appellant is not present. However, from the special leave petition, it transpires that two questions have been raised, namely, (one) whether Criminal Revision Petition against the order of summoning is maintainable, and (two) whether in the facts and circumstances of the present case, the sanction under Section 197 of the Code of Criminal Procedure (Cr.P.C.) is required.
9. Insofar as the first question is concerned, it is concluded by a later decision of this Court in the case of Rajendra Kumar Sitaram Pande and Others Vs. Uttam and Another. In Rajender Kumar Sitaram Pande case (supra) this Court considered earlier decisions of this Court in the cases of Madhu Limay Vs. State of Maharashtra,V.C. Shukla Vs. State, Amar Nath Vs. State of Haryana and K. M. Mathew Vs. State of Kerala and it was held as under :-
"6... This being the position of law, it would not be appropriate to hold that an order directing issuance of process is purely interlocutory and, therefore, the bar under sub-section (2) of Section 397 would apply. On the other hand, it must be held to be intermediate or quasi-final and, therefore, the revisional Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 10 of 32 jurisdiction under Section 397 could be exercised against the same...."
10. In view of the above legal position, we hold, as it must be, that revisional jurisdiction under Section 397 Cr.P.C. was available to the respondent No. 2 in challenging the order of the Magistrate directing issuance of summons. The first question is answered against the appellant accordingly".
14. Thus, in light of the aforesaid legal position, it is held that the instant revision petition is maintainable. Having resolved the issue of maintainability in favour of the revisionists, now I proceed to test the case of revisionists on merits.
15. For better appreciation of the issue that as to whether, the impugned order dated 15.07.2024 passed by the Ld. JMFC, South, reflects any application of judicial mind before taking cognizance of the offence in question while accepting the protest petition the order dated 15.07.2024 is reproduced below:-
"Perusal of the record shows that FIR was registered in the present case vide order dated 29.07.2019 passed in application U/s 156(3) Cr.P.C. It is clearly mentioned in the said order that cognizable offence is made out. The perusal of complete investigation conducted by the IO shows that he had mechanically forwarded the cancellation report without conducting any proper investigation and that to at instance of accused persons. It appears that IO had reviewed the order of Ld. MM, giving a contradictory view that the matter is civil case and no cognizable offence is made out.
Even if the amount invested is refunded or the possession is handed over, that in itself not nullify the offence once committed. Thus, there are sufficient grounds for taking cognizance of offence U/s 406/420/506(1)IPC against the accused persons. The protest petition is hereby allowed.
Accused persons be summoned for the NDOH through concerned SHO".
16. At this stage, it would be apt to go through the provisions as contemplated under Section 190 of Criminal Procedure Code which reads as under:-
190. Cognizance of offence by Magistrates:-
Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 11 of 32 (1) Subject to the provisions of this chapter, any Magistrate of the first class and any Magistrate of the Second class specially empowered in this behalf under Sub-Section (2), May take cognizance of any offence -
(a) upon receiving a complaint of facts which constitutes such offence- (b) Upon a police report of such facts- (c) Upon information received from any person other than a police officer or upon his own knowledge, that such offence has been committed. (3) The Chief-Judicial Magistrate may empower any Magistrate of the second class to take cognizance under Sub Section (1) of such offences as are within his competence to inquire into or try.
17. The Hon'ble Supreme Court in Case of Darshan Singh, Ram Kishan Vs. State of Maharashtra reported in (1971) 2 SCC 654, in context to Section 190 of the code of criminal procedure, held that taking cognizance does not involve any formal action or indeed action of any kind but occurs as soon as a magistrate applies his mind to the suspected commission of an offence. Cognizance therefore, takes place at a point where a magistrate first takes judicial notice of an offence. This is the position whether the magistrate takes cognizance of an offence, on a complaint, or on a police report, or upon information of a person other than a police official. Therefore, when a magistrate takes cognizance of an offence upon a police report, prima facie he does so of the offence, or offences disclosed in such report.
18. The Hon'ble Apex Court in Case of Fakhruddin Ahmed Vs. State of Uttranchal and Anr. report in (2008) 17 SCC 157 held that the phrase 'taking cognizance', being an expression of indefinite import, it is neither practicable nor desirable to precisely defined as to what is meant by taking cognizance.
Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 12 of 32
19. It is well settled that before a Magistrate can be said to have taken cognizance of an offence, it is imperative that he must have taken notice of the accusation and applied his mind to the allegations made in the complaint or in the police report or the information received from a source other than a police report, as the case may be, and the material filed therewith. It needs little emphasis that it is only when the Magistrate applies his mind and is satisfied that the allegations if proved would constitute an offence and decides to initiate proceedings against the alleged offender that it can be positively stated that he has taken cognizance of the offence.
20. In the case of Sunil Bharti Mittal Vs CBI, (2015) 4 SCC 609, it has been held:
"Sine Qua Non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the Court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.
Cognizance of an offence and prosecution of an offender are two different things. Section 190 of the Code empowered taking cognizance of an offence and not to deal with offenders. Therefore, cognizance can be taken even if offender is not known or named when the complaint is filed or FIR registered. Their names may transpire during investigation or afterwards. ............................
A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into Court merely because a complaint has been filed. If a prima facie case has been made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction.
Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 13 of 32 However, the words "sufficient grounds for proceeding" appearing in the Section are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect."
21. Thus, it is essential that due application of mind should be reflected from the order taking cognizance. At the time of passing any judicial order including the order taking cognizance and summoning on the chargesheet, the court is required to apply judicial mind and even the order of taking cognizance and issuance of summons cannot be passed in mechanical manner.
22. I have considered the respective arguments of learned counsel for the parties but looking to the fact that the present FIR has originated out of a contractual obligation between the parties, it is necessary to examine the credibility of the complaint to see whether any criminal offence under Section 406/420/ IPC is made out or not.
23. In the present case, looking at the allegations made by the complainant, the revisionists concede the fact that complainant booked for purchase of 844.55 sq. ft. super area in a project named WTT Commercial Complex at Noida, which was launched by the revisionists. In this regard an allotment letter dated 27.07.2010 was issued to the complainant/ respondent no. 2 in reference to his application, through which he was informed that the revisionist No. 1/ has accepted the application and Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 14 of 32 provisionally allotted the corporate suite No. 404 on Fourth Floor, having area 50.99 square meters, on basic sale price of Rs. 38,00,475/-.
24. The revisionists and complainant/respondent no. 2 were under an obligation by way of an allotment letter entered into between them for sale and purchase of the said property. The, revisionist no.1/ was to receive Rs 38,00,475/- from the respondent no. 2 and to give the possession of said property to it within 36 months. The revisionists did not give the possession of property purchased by complainant/ respondent no. 2, within the agreed time of 36 months and the project was yet to be completed at the time of filing of the complaint. Naturally complainant would like to recover his money or possession of property. This ought to have been done by opting for civil remedy such as filing a suit or through Arbitration proceedings as provided in allotment letter. However, the complainant has opted for criminal proceedings u/s 406/420 IPC.
25. Section 405 IPC deals with criminal breach of trust.
A careful reading of the Section 405 IPC shows that a criminal breach of trust involves the following ingredients:
(a) a person should have been entrusted with property, or entrusted with dominion over property;
(b) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or wilfully suffer any other person to do so;
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(c) that such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.
26. Section 406 IPC prescribes punishment for criminal breach of trust as defined in Section 405 IPC. For the offence punishable under Section 406 IPC, the following conditions are required to be fulfilled:-
(i) that the accused was entrusted with property or with dominion over it and (ii) that he (a) misappropriated it, or
(b) converted it to his own use, or (c) used it, or (d) disposed of it.
27. The gist of the offence is misappropriation done in a dishonest manner. There are two distinct parts of the said offence. The first involves the fact of entrustment, wherein an obligation arises in relation to the property over which dominion or control is acquired. The second part deals with misappropriation which should be contrary to the terms of the obligation which is created. Thus, once it is proved that the beneficial interest in the property was vested in some other person other than the accused and the accused has held that property on behalf of that person, appropriation of that beneficial interest in the property by the accused for his own use amounts to 'criminal breach of trust'.
28. So far as Section 420 IPC is concerned, it deals with cheating. Essential ingredients of Section 420 IPC are:- (i) cheating; (ii) dishonest inducement to deliver property or Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 16 of 32 to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security, and (iii) mens rea of the accused at the time of making the inducement.
29. The main allegations which formed the basis of registration of FIR and thereafter accepting the protest petition for commission of offences under section 420/406/506(1)34 IPC are:-
a. that there was delay in completion of project and handing over of the possession.
b. that some of the demands such as replenishment fund and One Time Lease Rent were made in contravention of the terms and conditions of allotment letter.
c. that the NGT had stayed the construction of said project but the petitioners represented that the work is near completion and received around two payments from the respondent no. 2 in July 2013.
d. that the petitioners threatened in the letter dated 28.11.2015 to take coercive action against respondent no.
2, including the defreezing of space allotted. e. that the allotment of the said plot by NOIDA took place on 26.03.2010, whereas, as per the MCA data, petitioner no. 1 company was incorporated after the allotment on 13.04.2010.
f. that the accused persons have also committed the breach of trust.
30. Though the revisionists/ accused persons have been summoned for the offences of cheating and criminal Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 17 of 32 breach of trust but it has not been indicated in the impugned order that how these offences are made out against the revisionists.
31. Vide letter dated 09.04.2014 respondent No. 2 was asked to pay the due amount of Rs. 3,31,445/- which he paid. Thereafter, vide another letter of same date i.e. 09.04.2014, he was asked to pay Rs.5,87,806/- in which Rs. 3,80,047/- was for One Time Lease Rent, Rs. 1,26,682/- was for capital replenishment fund and Rs.8,10,77/- was for interest free maintenance security deposit. A letter was again sent on 28.11.2015 for payment of Rs. 13,95,182/-. The respondent no. 2 refused to make the payment of Rs.5,87,805/-, demanded through letter dated 09.04.2014 and thereafter, Rs.13,95,182/- demanded vide letter dated 28.11.2015. Respondent no.2 has claimed that it refused to make the payment demanded vide letter dated 09.04.2014 and 28.11.2015 as revisionists, in contravention of the terms and conditions, had asked to pay capital replenishment fund and One Time Lease Rent, which the revisionist no. 1 had neither paid nor had been asked to pay by NOIDA.
32. Clause 7 and Clause 8(b) of the allotment letter dated 27.07.2010 speaks about the capital replenishment fund and One Time Lease Rent. Clause 7 provides that:-
"the intending allottee(s) shall make time payment of basic price / premium preferential location charges, interest free maintenance security, capital replenishment fund and all other charges as may be communicated from time to time, as the timely payment of essence."
33. Further, clause 8 (b) provides that:-
Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 18 of 32 "the intending allottee understands that One Time Lease Rent is also payable as and when demanded by the company. In case the intending allottee defaults in timely payment of One Time Lease Rent, the intending allottee authorizes the company to deduct it from the amounts already paid by the intending allottee. In such cases, the amount received by the company would stand decreased to the extent of such payment and an interest @ 18% per annum would be charged from the date of demand of One Time Lease Rent by the company till its payment by the intending alottee".
34. From bare reading of clause 7 and Clause 8(b) of the allotment letter dated 27.07.2010, it is clear that respondent no. 2 was to make the payment of capital replenishment fund and One Time Lease Rent as and when demanded by the revisionist no. 1. Moreover, the demand for annual rent, capital replenishment fund, One Time Lease Rent and letter for cancellation in case of non payment were sent between 09.04.2014 to 20.05.2017 much prior to the receiving of reply on 02.08.2017 on application filed under Right to Information Act. Meaning there by that the respondent no.2 had refused to make the payment without knowing whether One Time Lease Rent and other dues were paid to the NOIDA or not.
35. A perusal of allotment letter depicts that in the para no. 22 of the allotment letter it has been stipulated that:-
"timely payment of all amounts by the intending allottee shall be the essence of this transaction. If the intending allottee neglects omits or fails for any reason whatsoever to pay to the company any of the installments or other amounts and charges under the term & conditions of this application by respective due dates or if the intending allottee in any or other way fails to perform or observe any of the terms and conditions on his/her part within the stipulated time the company shall terminate the allotment and forfeit the earnest money , late payment charges and interest accrued on delayed payment."
36. Further, Clause 24 of allotment letter provides that:-
"the intending allottee shall take possession of the space after making the full payment and get sub lease deed executed within 30 Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 19 of 32 days from the date of the offer of possession issued by the company, subject to terms and conditions of the agreement".
37. The genuineness of documents placed on record along with the cancellation report has not been disputed by the complainant. The said documents reflect that the revisionist no.1 sent multiple reminders to the complainant for payment of outstanding dues in respect of the unit purchased by it in the said project. On account of default of the complainant in making the payment of outstanding dues, the revisionist no. 1 cancelled the allotment. Perusal of allotment letter clearly indicates that the agreement was subject to fulfilling the terms and conditions and one of those conditions was timely payment of all the dues which respondent no. 2 failed to make.
38. Admittedly, both the parties mutually agreed to the terms and conditions mentioned in the agreement. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention since inception is shown at the beginning of the transaction. In the present case, record would disclose that no representation as such claimed by the respondent no. 2 was made by the revisionists/ accused persons.
39. In V. P. Shrivastava Versus Indian Explosives limited and others, (2010) 10 Supreme Court Cases 361, criminal proceedings alleging commission of offence Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 20 of 32 under Section 420, 406 & 120-B IPC were unsuccessfully challenged before the High Court. The criminal complaint had emanated from a tripartite agreement between the Indian Explosives Limited, M/s Bharat Coking Coal Limited and Fertilizer Corporation of India Limited. The appellants were senior employees of Fertilizer Corporation of India Limited which had become a sick company within the meaning of Sick Industrial Companies (Special Provision) Act, 1985. While evaluating the contentions advanced on behalf of the parties, the Hon'ble Supreme Court explained the ingredients of the offence of 'cheating' within the meaning of section 415 of IPC and of 'criminal breach of trust' as defined under Section 405 of IPC and thereafter in para No. 32 of the judgment concluded that "even if the allegations made in the complaint are taken to be correct on their face value, they may amount to breach of terms of contract by the Fertilizer Corporation of India Limited, but do not constitute an offence of 'Cheating' punishable under Section 420 IPC". Similarly, in para No.38 of the judgment, it was concluded that "there is nothing in the complaint which may even suggest remotely that Indian Explosives Limited had entrusted any property to the appellants or that the appellants had dominion over any of the properties of the Indian Explosives which they dishonestly converted to their own use so as to satisfy the ingredients of Section 405 IPC, punishable under Section 406 IPC".
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40. In V. Y. Jose and another versus State of Gujarat and another, (2009) SCC 78, the Hon'ble Supreme Court quashed the proceedings initiated in a case of 'breach of trust' on finding that the case essentially involved a civil dispute and that mere 'breach of trust' does not necessarily involve 'cheating' as there was no culpable intention at the time of the initial promise.
41. It appears from the perusal of the materials on record that it is simply a case of breach of contract and further in the facts and circumstances of the case, there is absolutely no scope to assert that any of the accused were entrusted with any property, or any dominion over property as contemplated under Section 405 IPC.
42. Even the materials on record do not support the main allegation of cheating under Section 415 IPC in as much as there is no material to indicate that the accused persons fraudulently or dishonestly induced the complainant/ opposite party no. 2 to deliver any property. As per the FIR, protest petition and reply to the revision petition filed by the respondent no 2, merely because revisionists demanded the payments which as per respondent no 2 was illegal and there was delay in completion of project were not in itself sufficient to assume existence of intention to cheat the respondent no.
2. It is well settled that to deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 22 of 32 dishonest intention at the time of entering into the contract.
43. The complainant/respondent no. 2, voluntarily entered into a valid agreement and only condition which accused company/ revisionist no. 1 has not been able to fulfill is that it did not deliver the possession of suit/property to the respondent no. 2 within 36 months. Admittedly, there was delay in project due to stay by NGT on construction and issuance of completion certificate and same was beyond the control of revisionists. There is nothing on record to suggest that during the period when there was stay by NGT on construction and issuance of completion certificate, the revisionist no. 1 was not making any payment to the NOIDA as per the lease deed. Respondent no. 2 was also bound by the terms and conditions of allotment letter and to make the payment in the same way as revisionist no.1 was bound to make the payment to NOIDA. Further, the possession was not given to the complainant/ respondent no. 2 as it refused to make the payment of remaining amount although the revisionist company was always ready to give the possession on payment of balance amount. Otherwise also only the non completion of work or slow progress in work does not amount to criminal liability. There is no allegations against any of the revisionists/ accused persons to have practiced fraud or to have dishonestly induced the complainant/respondent at any time. What appears from the record is that there are some breach of contract and Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 23 of 32 perhaps both the parties have failed to discharge their full obligations under contract.
44. In S. W. Palanitkar Versus State of Bihar, 2002 (1) SCC 241, there was an agreement dated 21.2.1995 appointing the appellant as a consignment stockist of respondent No.2-Company. The afore mentioned agreement contained an arbitration clause. As there was a dispute regarding certain payments between the parties that a complaint alleging offence under Sections 406 & 420 read with Section 120-B IPC was filed. The appellant was summoned and their petition for quashing of the summoning order was dismissed by the High Court. Consequently, they approached the Hon'ble Supreme Court where it was held that in order to constitute an offence of 'cheating' the intention to deceive should be in existence at the time when inducement was made and it was necessary to show that a person had fraudulent or dishonest intention at the time of making the promise and that a mere failure to keep the promise subsequently cannot be presumed as an act leading to cheating.
45. If the present case is tested upon the principles of law as laid down by Apex Court in aforesaid cases, then it is evident that no offence for cheating or criminal breach of trust is made out in the present case and act of the accused can at the most be termed as breach of contract only. In my view, the respondent no. 2 is having a grievance of not getting the possession of flats or the return of the amount which he has paid @ 18% p.a. interest or 1.5 crores, the market value of flat from the Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 24 of 32 accused company and appears to have filed the criminal complaint for recovery of same. Failed obligation and frustrated expectations cannot give rise to any criminal liability.
46. Even, Superior Courts have time and again deprecated the initiation of false criminal proceedings in cases having the elements of civil dispute. The quick relief offered by a criminal prosecution as opposed to a civil dispute incentivizes the litigant to initiate false and vexatious proceedings. Moreover, in a country suffering the scourge of world's largest backlog of cases, litigants often view criminal proceedings as a tool to pressurize and obtain a favourable settlement from other side.
47. The Hon'ble Apex Court in G. Sagar Suri Vs State of UP, Crl Appeal No.91/2000, date of decision 28.01.2000 has categorically observed as under :
"It is to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under section 482 Cr.P.C. Jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice".
48. Further, in case titled as M/s Indian Oil Corporation VS M/s NEPC India Ltd & Ors, in Appeal (Crl) No. 834/2002 date of judgment 20.07.2006, Hon'ble Apex court has observed as under:-
"While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 25 of 32 a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged."
49. The following observation made in the case of Uma Shankar Gopalika Vs. State of Bihar & Anr. (2005) 10 SCC 336 may be relevant to note at this stage:-
"6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of the complaint any criminal offence whatsoever is made out much less offences under Section 420/120- B IPC. The only allegation in the complaint petitioner against the accused person is that they assured the complainant that when they receive the insurance claim amounting to Rs. 4,20,000, they would pay a sum of Rs.2,60,000 to the complainant out of that but the same has never been paid. It was pointed out that on behalf of the complainant that the accused fraudulently persuaded the complainant to agree so that the accused persons may take steps for moving the consumer forum in relation to the claim of Rs. 4,20,0000. It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases of breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In the present case, it has nowhere been stated that at the very inception that there was intention on behalf of the accused person to cheat which is a condition precedent for an offence under 420 IPC. "7. In our view petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-B IPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and to prevent the same it was just and expedient for the High Court to quash the same by exercising the powers under Section 482 Cr.P.C which it has erroneously refused."
50. There can be no doubt that a mere breach of contract is not in itself a criminal offence and gives rise to the civil liability of damages.
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51. It has been held in Hridaya Ranjan Prasad Verma & Ors. Vs. State of Bihar & Anr. (2000) 4 SCC 168, the distinction between mere breach of contract and cheating, which is criminal offence, is a fine one. While breach of contract cannot give rise to criminal prosecution for cheating, fraudulent or dishonest intention is the basis of the offence of cheating.
52. In the case at hand, complaint filed by the Respondent No. 2 does not disclose dishonest or fraudulent intention of the accused persons.
53. In Vesa Holdings Pvt. Ltd. & Anr. Vs. State of Kerala & Ors., (2015) 8 SCC 293 the following observations were made:-
"13. It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case, there is nothing to show that at the very inception there was any inception on behalf of an accused person to cheat which is a condition precedent for an offence u/s 420 IPC. In our view, the complaint does not disclose any criminal offence at all. Criminal proceedings should not be encouraged when it is found to be mala fide or otherwise an abuse of the process of the courts. Superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and the High Court committed an error in refusing to exercise the power under Section 482 Cr.P.C to quash the proceedings."
54. Having gone through the complaint/FIR, cancellation report and even the protest petition, it cannot be said that the averments in the FIR and the allegations in the complaint against the revisionists/ accused persons constitute an offence under Section 406 and 420 of IPC, 1860. Even in a case where allegations are made in regard Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 27 of 32 to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent, no offence under Section 420 IPC can be said to have been made out. In the instant case, there is no material to indicate that revisionists/ accused persons had any malafide intention against the respondent no. 2 which is clearly deductible from the documents placed on record.
55. If the present case is tested upon the touchstone of the principles of law as laid down in aforesaid cases by Hon'ble Apex Court, the contention of revisionists that the matter is purely civil in nature, holds a lot of merit. In my considered view, failed obligation and frustrated expectations must not lead to registration of FIR which entails serious consequences.
56. Complainant has contended that the allotment of the said plot by NOIDA took place on 26.03.2010, whereas as per MCA data petitioner no. 1 company was incorporated after allotment on 13.04.2010. No investigation qua this allegation have been done and nothing has come on record to show that the petitioner no. 1 was not incorporated at the time when he filed the bid/tender. Only on the basis of MCA data filed by respondent no. 2 of revisionist no.1, it can not be assumed that the NOIDA allotted such a big project involving huge amount to the revisionist no.1 without any verification.
57. The revisionists have also been summoned for offence u/s 506(1) IPC. A perusal of the alleged letter shows that there is no clear allegation which can come Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 28 of 32 within the ambit of criminal intimidation as defined in Section 503 IPC. The respondent no. 2 has alleged that the petitioners threatened in the letter dated 28.11.2015 to take coercive action against respondent no. 2 company including the de-freezing of suit allotted, if the said illegal demands were not made out. The aforesaid bare claim simply indicates a vague threat. Such bare claim cannot be treated as criminal intimidation.
58. It has been consistently held by the Hon'ble Apex Court and also by various Hon'ble High Courts that before an offence under this section is made out, it must be established that the accused had an intention to cause an alarm to the complainant. In order to attract the ingredients of Section 506 IPC, the intention of accused must be to cause an alarm to the victim. Mere expression of words without any intention to cause any alarm would not suffice. Mere vague and bald allegations that petitioners threatened to take coercive action against respondent no. 2 is not sufficient to attract the provisions under Section 506 IPC. The threat should be a real one and not just a mere word, when the person uttering does not exactly mean what he says and also when the person against whom the threat is launched, does not feel threatened actually. It should appear that the complainant was feeling fear for his life.
59. Reliance is placed upon "Amitabh Adhar & Anr Vs NCT Of Delhi & Anr, 2000 CRI. L.J.4772" wherein the Hon'ble Delhi High Court has observed that:-
Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 29 of 32 "....the averments made in the FIR and in the case diary statement of the complainant against the petitioner also do not satisfy the essential ingredients of the offences punishable 506/509 IPC. The threats alleged to have been given to the complainant Ms Bharti by the criminal petitioners do not fall within the definition of intimidation in as much as the complainant has nowhere stated that the threats given by the petitioners caused an alarm to her. It is well settled that mere threats is no offence......"
60. Further, in judgment titled Surinder Suri Vs State of Haryana, 1996(2) RCR, the Hon;ble Punjab and Haryana High Court observed:
".......the gist of the offence is the effect which the threat is intended to have upon the mind of the person threatened. The threat must be one which can be put into execution by the person threatening. A threat, in order to be indictable must be made with intent to cause alarm to the complainant. As for instance, mere vague allegations by the accused that he is going to take revenge by false complaints cannot amount to criminal intimidation....."
Similar are the observations of Hon'ble Madras High Court in Noble Mohan Dass Vs State of Madras High Court 1988"
61. There is no such allegation against the revisionists that they threatened the respondent/complainant with injury to person, reputation or property or of anyone in whom it/he was interested. Even assuming that there may be some verbal altercation between the parties, as they are having disputes, it cannot be said that the revisionists have threatened the respondent/complainant with intent to cause injury to person, reputation or property.
62. One another aspect which was required to be seen by Ld. JMFC was to go through the role assigned to the directors in the complaint. No specific role has been assigned to the directors in the complaint and even no investigation qua there role has been done.
63. In the case of Sunil Bharti Mittal vs Central Bureau of Investigation, (2015) 4 SCC 609, it is observed by this Court in paragraphs 42 to 44 as under:
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(iii) Circumstances when Director/person in charge of the affairs of the company can also be prosecuted, when the company is an accused person 42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. 43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.
44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of alter ego, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa on the face of it, there appears a simple breach of trust of contract by either parties. for which an effective remedy is to approach the Civil Courts for loss, if any caused due to breach of contract.
64. From the order passed by the learned JMFC issuing the process against the revisionists herein and other accused persons, there does not appear that the learned JMFC has recorded his satisfaction about a prima facie case against the accused persons. Merely because the accused are the directors automatically they cannot be held vicariously liable, unless, as observed hereinabove, there are specific allegations and averments against them with respect to their individual role.
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65. After careful perusal of record, this Court is unable to comprehend as to how offences u/s 406/420/506(1) IPC can be held as having been prima facie made out against the revisionists. Ld. Trial Court failed to examine the material on record in correct perspective. It is settled law that the discretion given to Magistrate for grant or refusal of process must be judicially exercised and a person ought not to be dragged into Court merely because a complaint has been filed.
66. Considering the above discussion, this Court is of view that material on record was not sufficient to summon the revisionists as accused for commission of offence punishable u/s 406/420/506(1) IPC after allowing the protest petition of respondent no. 2. I find that the impugned order dated 10.02.2023, passed by Ld JMFC cannot be sustained in the eyes of law qua the revisionists hence, the same is set aside.
67. In view of the aforesaid, the revision petition is disposed of.
68. TCR alongwith a copy of this judgment be sent to the Ld. Trial Court.
69. The revision file be consigned to the Record Room Digitally signed by after due compliance. PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date: 2025.03.19 16:07:03 +0530 ANNOUNCED IN THE OPEN COURT (PURSHOTAM PATHAK) TODAY ON THIS ASJ-05(SOUTH) 18th DAY OF MARCH, 2025 SAKET COURTS: N.D (This judgment contains total 32 signed pages) Cr Rev/349/2024 Sushant Agrawal and ors Vs. Govt of NCT of Delhi and Anr Page No. 32 of 32