Jammu & Kashmir High Court
Harmohinder Singh And Anr. vs State And Ors. on 21 December, 2018
Author: Sanjay Kumar Gupta
Bench: Sanjay Kumar Gupta
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
CRMC No. 377/2017
Date of order: 21.12.2018
Harmohinder Singh and anr. vs State of J&K and ors.
Coram:
Hon'ble Mr. Justice Sanjay Kumar Gupta, Judge
Appearing counsel:
For Petitioner(s) : Mr. B. S. Salathia, Sr. Advocate with
Mr. Ashish Sharma, Advocate
For respondent (s) : Mr. Rajnesh Oswal, Advocate for respondent Nos.1 to 3.
Mr. R. K. S. Thakur, Advocate for respondent No.4.
i) Whether to be reported in
Digest/Journal : Yes/No.
ii) Whether approved for reporting
in Press/Media : Yes/No.
1. Through the instant petition filed under Section 561-A of the Code of Criminal Procedure (hereinafter for short, Cr.P.C), petitioners seek quashing of criminal proceedings arising out of P.V. No. 61/2017, being inquired by the respondents against the petitioners.
2. The factual matrix of the case are that the petitioners and three other persons started a Company under the name and style of M/S SERA Cue Labs Pvt. Ltd, which is a registered Company under the Companies Act with the Registrar of Companies, Chandigarh, and had been issued a certificate of incorporation in its favour by the said authority. The petitioner No.I was appointed as the Chief Operating Officer (C.O.O.) reporting to Mr. Dilpreet Sahi, Chief Executive Officer (C.E.O.). It is stated that petitioner No. 2 was Director of the said Company amongst three others, namely Col. Arvinder Singh, Arun Bhardwaj and Ritu Sahi. It is submitted each of them are individually 25% stake-holders in the CRMC No. 377/2017 Page 1 of 18 Company as per the Registrar of Companies Records. The Company at that time was in the process of expansion and had spread its Laboratories all over India, thus, one Gurdeep Singh Bali, R/o House No 90, Rolki Bakshi Nagar, Jammu approached petitioner No.I in the month of March, 2016 showing keen interest in investing capital into opening on branch of M/s SERA Cue Labs Pvt. Ltd. in Jammu. It is stated that the petitioner No.1, was Chief Operating Officer (COO) of M/s SERA Cue Labs Pvt. Ltd. and in his capacity as COO of the Company, under bona fide faith entered into agreement dated 01.10.2016 with Naman Singh Bali, S/o Gurdeep Singh Bali, R/o House No. 90, Rolki Bakshi Nagar Jammu to engage into business of M/s SERA Cue Labs Pvt. Ltd. A bare perusal of the agreement dated 01.10.2016 will reveal that the parties to the same out of their own free will and consent mutually entered upon terms and conditions which stipulates an Arbitration Clause. It envisages that in the event of any dispute between the parties to this agreement the same shall be settled by way of arbitration by sole arbitrator. Both parties will mutually decide the arbitrator in event of any dispute arising between the parties to this agreement. It is stated that owing to the huge fall in the drug industry, the Company started running in financial losses. The venue of arbitration shall be at New Delhi. That after fully knowing about the operation of above stated clause, Naman Singh Bali, with a view to extract money from the petitioners served a legal notice upon the Directors of the SERA Cue Labs. Pvt. Ltd., though the same was not duly served upon the petitioners, but somehow a copy of the same was procured by them. In the said notice the petitioners and other persons were given a week's time to make payment to the tune of Rs.1,07,50,000/ (rupees one crore seven lacs fifty thousand only).It is stated that the said Naman Singh Bali, after failing in his attempts to extract money from the petitioners, using his influence & managed to get initiated a preliminary verification in terms of P.V. No. 61/2017 at the CRMC No. 377/2017 Page 2 of 18 behest of respondents. It is submitted that notwithstanding the fact that the only legal remedy available to Mr. Naman Singh Ball is the invocation of Arbitration Clause, which is purely civil in nature and no complaint of preliminary verification is maintainable in the eyes of law. It is further stated that in view of the Arbitration Clause between the parties, no question of any complaint or preliminary verification is required. If any liability arises out of the agreement dated 01.10.2016 towards the petitioners and particularly petitioner No.2 as Director SERA Cue Labs Pvt. Ltd, the same is civil in nature, which can be adjudicated upon by the Arbitrator while conducting the Arbitration. It is stated that the Company has acted in terms of the agreement and in a bona fide manner which does not amount to any breach of any law, It is further submitted that the Company through petitioner no.1 with all bona fide entered into agreement dated 01.10.2016 and always acted in good faith to execute the agreement in its letter and spirit and never made Mr. Naman Singh Bali to part with any amount dishonestly or with criminal intention, as such, the petitioners or the Company stake holders have not committed any crime and the proceedings initiated on the basis of Preliminary Verification are not maintainable in the eyes of law. It is further stated that the petitioner No.1 has resigned from his post of COO of M/s SERA Cue Labs Pvt. Ltd, in Jammu and the petitioner No. 2, Col Arvinder Singh and Arun Bhardwaj (directors of Company) though submitted their resignations from the post of Director, M/s SERA Cue Labs Pvt. Ltd, in Jammu, but fact remains that the Board of Directors has not accepted their resignation. As such, all the three named above continue to be the Directors of the Company, besides, the stake-holders. Further, it is stated that Mrs. Ritu Sahi also submitted her resignation and the Board of Directors accepted the same, but she still remains to be the stake holder of the Company, i.e., in the event of any losses she is liable to the extent of 25%. The petitioner No. 2 was served with a notice No. CRMC No. 377/2017 Page 3 of 18 CBJ/C/C/P.V-61/2017/17/9570 dated 06.05.2017 under Section 160 Cr.P.C. Notwithstanding the fact that the petitioners are not 'witnesses' as alleged by the respondents, another Notice No. CBJ/CC/2017/12586 dated 09.06.2017 with regard to PV No. 61/2017, Crime Branch, Jammu asking the petitioners to report in the office on 12.06.2017 and explain their part of the allegations leveled by the complainant, failing which it shall be presumed that they have nothing to defend and legal action shall be taken against them. The petitioner No.I has submitted his reply to the same. It is stated that despite the fact that the petitioners have submitted their reply to the respondent authorities, the respondents instead of staying their hands, are continuously harassing the petitioners whereas petitioners repeatedly have been approaching the respondents for copy of the complaint, but all their efforts in vain. Till date they have not been supplied with a copy of the complaint without any lawful justification. It is stated that Mr. Arun Bhardwaj and Mr. Dilpreet Sahi have prepared a forged document, suggesting that petitioner No.2 is managing the affairs of the company and, accordingly, a complaint has been lodged against them in Police Station, Vikas Puri, New Delhi which is under investigation.
3. Feeling aggrieved of the initiation of criminal proceedings against the petitioners by the respondents with regard to P.V. No. 61/2017, the same is challenged on the following grounds:-
(i) Because keeping in view of the Arbitration Clause in the agreement dated 01.10.2016, no question of any complaint or preliminary verification arises towards the petitioners. Liability, if any, the same is civil in nature, which can be adjudicated upon by the Arbitrator while conducting the Arbitration. Thus the process of preliminary verification initiated by the respondents is totally in departure to the settled position of law and deserves to be set aside;
(ii) Because the Company M/S SERA Cue Labs Pvt. Ltd. has acted in terms of the agreement and in a bona fide manner which does not amount to any breach of any law. It is further submitted that the Company through petitioner no. 1 with all bona fide entered into agreement dated 01.10.2016 and always acted in good faith to execute the agreement in its letter and spirit and never CRMC No. 377/2017 Page 4 of 18 made Mr.Naman Singh Bali to part with any amount dishonestly or with criminal intention, as such, the petitioners or the Company stake holders have not committed any crime and the proceedings initiated on the basis of Preliminary Verification are not maintainable in the eyes of law. Thus, the process of preliminary verification initiated by the respondents is totally in departure to the settled position of lass and deserves to be set aside;
(iii) Because till date the respondents have not supplied a copy of the complaint to the petitioners The inquiry initiated against the petitioners is so absurd and inherently improbable and there exists no ground at all for proceeding against the petitioners The preliminary verification has been maliciously insisted by the complainant with an ulterior motive to extract money from the petitioners;
(iv) Because the petitioners are respectable law abiding citizens and initiation of the preliminary verification against them is nothing but a ploy in the hands of the respondents to injure and malign their reputation in the society;
(v) Because the respondents, without appreciating the facts and circumstances involved in filing of the complaint against the petitioners and without looking into the veracity of allegations, started harassing the petitioners, despite the fact that the alleged offences do not connect involvement of the petitioners at all;
(vi) Because initiation of inquiry against the petitioners, is totally abuse of process of law. Despite the fact that the petitioners have submitted their reply, the respondents continue to harass them because of the complainant party being influential. Thus, the process of preliminary verification initiated by the respondents is totally in departure to the settled position of law and deserves to be set aside.
4. Status report has been filed by the official respondents, stating therein that a complaint of complainant, namely, Naman Singh Bali S/o S. Gurdeep Singh Bali R/o H. No. 90, Rolki Bakshi Nagar, Jammu was received through CHQ vide its letter No. CHQ/Clt/J-238/17/4807 dated 27.03.2017 with the direction to initiate a preliminary Enquiry/Verification into the matter for in-depth investigation and as such the instant PV was initiated. It is submitted that in the said complaint, the complainant has alleged that Chief Operating Officer of CERA CUE LABS Pvt. Ltd. namely S. Harmohinder Singh, who is the distant relative of the complainant and originally resident of Nanak Nagar, Jammu, approached the complainant and told that his wife, namely, (1) Gurpreet Kour R/o 18/6-B, 1st Floor Tilak Nagar, New Delhi-110018, (2) Arun Bhardwaj R/o Summit Flat, A 051 DLF Phase-V Sector-54 Guroan-122002, Haryana (3) Arvinder Singh, R/o H. No.602, CRMC No. 377/2017 Page 5 of 18 IAS/IPS Society Sector-49, Chandigarh-160047 and Smt. Ritu Sahi, Directors of SERA CUE LABS Pvt. Ltd. R/o C-1517 Sushant Lok, Phase-I Gurgoan-122002, Haryana has established a company under the name & Style as SERA CUE LABS Pvt. Ltd. and are engaged in the business of providing service relating to Pathology labs directly or through association of various hospitals, Nursing Home, Medical Clinics etc. Harmohinder Singh and Smt. Gurpreet Kour (petitioners No. 1 and 2 herein) both visited the house of the complainant at H.No. 90, Rolki Bakshi Nagar, Jammu and assured him to get the franchise of the Lab under SERA Brand at Jammu and told that sum of Rs.50 lacs has to be paid by him for the purpose. Out of which, Rs. 35 lacs would be paid as franchisee fee as non-refundable and Rs.15 lacs as security deposit refundable. They further assured complainant that SERA CUE LABS Pvt. Ltd. would give payout of 25% of the total billing of Lab revenue or minimum assured return of Rs.01 lac per month inclusive of all taxes whichever is higher. On the assurance of petitioners, the complainant agreed to get the franchisee of lab under SERA brand at Jammu. It has been further alleged that on the assurance of Harmohinder Singh and his wife Gurpreet Kour complainant had arranged a building on rent at Bakshi Nagar Jammu on the monthly rent of Rs.25,000/- for the purpose. An agreement dated 01.10.2016 was also executed between the complainant and SERA company through Harmohinder Singh in the Hon'ble court of Sub Registrar-IV (2nd Addl. Munsiff ) Jammu. After executing the agreement the complainant paid an amount of Rs.50 lacs on different dates (Rs.15 lacs on 01.10.2016, Rs.15 lacs on 03.10.2016 and 20 lacs on 22.10.2016) in the accounts of SERA Cue Lab through RTGS mode. After the payment of Rs.50 lacs the complainant had requested Harmohinder Singh and Gurpreet Kour to provide and send all the equipments for running the laboratory, but they adopted dilly-dallying tactics on one pretext or other and finally in CRMC No. 377/2017 Page 6 of 18 December, 2016, they sent old and non-functional machinery which was also inspected by the teams of doctors under the supervision of Deputy Director, Health services, Jammu on 23.02.2017 and after thorough inspection the said machinery and equipments were found old and non- functional and even without proper bills and on the basis of which the teams of doctors deputed by the Deputy Director Health Services, Jammu refused to give permission to run the laboratory. The complainant further alleged that before entering into the agreement, alleged Harmohinder Singh and his wife Gurpreet Kour had provided him documents containing the list of Laboratory processing centers established at the different places which after passage of time proved false and fabricated just to cheat and defraud the complainant. They have also cheated number of people by enticing and offering the false promises earlier in the name of providing franchise of SERA Cue Labs Pvt. Ltd. and 05 FIRs already stands registered against them in the different states of the Country which speak about their frauds and cheating, The complainant time and again requested Harmohinder Singh and his wife Gurpreet Kour to provide either the requisite Machinery and equipments or return Rs.50 lacs which has been received by them from him on false assurance, but neither they have provided the machinery nor the money. During the course of enquiry the statement of complainant was recorded. The statement of Bank transactions was obtained from the ICICI Bank bearing Account No.031405003680 existed on the name of CERACUE LABS Pvt. Ltd. The authorized signatories of CERA CUE LABS Pvt. Ltd. for operation of company account was also obtained. During further course of enquiry, it has been found that suspect Harmohinder Singh and Gurpreet Kour being a relative of the complainant assured the complainant that SERA CUE LABS Pvt. Ltd. is a branded company which deals with the Pathological Lab tests and has a great name and fame and has spread throughout the country and in every CRMC No. 377/2017 Page 7 of 18 State of the country the franchises are running their business and have board of Directors and members which include Gurpreet Kour R/o 18/6- B, 1stfloor Tilak Nagar, New Delhi-110018, Arun Bhardwaj R/o Summit Flat, A 051 DLF Phase-V Sector-54 Guroan-122002, Haryana, Arvinder Singh, R/o H. No602, IAS/IPS Society Sector-49,Chandigarh-160047 and Smt. Ritu Sahi, Directors of SERA CUE LABS Pvt. Ltd. R/oC-1517 Sushant Lok, Phase-I Gurgoan-122002, Haryana and promised that the complainant will get huge benefits if the franchisee is adopted by him. On their assurance, an agreement dated 01.10.2016 was executed between the complainant Naman Singh Bali and Harmohinder Singh, COO SERA CUE LABS Pvt. Ltd. before the court of Learned Sub Registrar-IV (2nd Addl. Munsiff) Jammu on 01.10.2016at Jammu. After execution of the agreement the complainant paid an amount of Rs. 50 lacs on different dates through RTGS mode in the account No.031405003680 existed on the name of SERA CUE LABS Pvt. Ltd. the date wise detail is as under:-
(i) Rs. 15 lacs on 01.10.2016
(ii) Rs. 15 lacs on 03.10.2016
(iii) Rs. 20 lacs on 22.10.2016
5. In the status report, it is further stated that during the course of in-depth enquiry, it came to fore that suspects Harmohinder Singh and his wife Gurpreet (petitioners herein) are professional fraudsters/cheaters as more than 05 FIRs have already been registered against them in the different States of the country before executing an agreement with the complainant Naman Singh. Further that during the course of enquiry, it has been also found that the Directors, namely, Ritu Sahi and Colonel Arvinder Singh have already tendered their resignations on 22.12.2015 and 28.08.2016 respectively prior to the agreement with the complainant Naman Singh and they were not found at fault. During enquiry the CRMC No. 377/2017 Page 8 of 18 documents were obtained from the ICICI Bank in which the company's official Account No. 031405003680 exists, it has been found that the authorized signatories to operate the company's account were only (1) Harmohinder Singh, COO, SERA CUE LABS Pvt. Ltd. and Gurpreet Kour W/o Harmohinder Singh who was functioning as Director of the Company and the whole money of complainant was misappropriated and swindled by none other than Harmohinder Singh, COO SERA CUE LABS Pvt. Ltd and his wife Gurpreet Kour W/o Harmohinder Singh.
6. Heard counsel for parties. Counsel for petitioners has reiterated all grounds taken in memo of petition, and has relied upon judgment of this court passed in CRMC 129/2014 decided on 16.11.2018 in case titled Anil Bhatia v Abdul Salam and ors. Whereas counsel for respondent has stated that FIR is yet to be lodged; that petitioners are habitual fraudster as five more FIRs of similar in nature lodged in different States are pending; that petitioners have committed fraud and swindled Rs.50 lakh hard earned money of complainant.
7. I have considered rival contentions and given my thoughtful consideration to whole aspects of the matter and law on the point.
8. Section 561-A Cr.P.C reads as under:-
"Saving of inherent power of High Court- Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice."
9. The powers of the High Court are partly administrative and partly judicial. The section was added by the Code of Criminal Procedure as the High Courts were unable to render complete justice even if in a given case the illegality was palpable and apparent. The Hon'ble Supreme CRMC No. 377/2017 Page 9 of 18 Court in State of Karnataka v. Muniswami- AIR 1977 SC 1489, held that the section envisages 3 circumstances in which the inherent jurisdiction may be exercised, namely, "to give effect to an order under CrPC, to prevent abuse of the process of the court, and to secure the ends of justice".
10. The section is a sort of reminder to the High Courts that they are not merely courts in law, but also courts of justice and possess inherent powers to remove injustice. The inherent power of the High Court is an inalienable attribute of the position it holds with respect to the courts subordinate to it. They are necessarily judicial when they are exercisable with respect to a judicial order and for securing the ends of justice. Inherent powers under this section include powers to quash FIR, investigation or any criminal proceedings pending before any judicial authority or with police. Such powers can be exercised to secure ends of justice, prevent abuse of the process of any court and to make such orders as may be necessary to give effect to any order under this Code, depending upon the facts of a given case. Power is not to be resorted to, if there is specific provision in code for redress of grievances of aggrieved party. It should be exercised sparingly to prevent abuse of process of any Court or otherwise to secure ends of justice. It should not be exercised against the express bar of the law engrafted in any other provision of the code.
11. In the landmark case titled State of Haryana v. Bhajan Lal reported in 1992 Supp.(1) SCC 335, a two-judge bench of the Supreme Court of India considered in detail, the provisions of section 482 and the power of the High Court to quash criminal proceedings or FIR. The Supreme Court summarized the legal position by laying the following guidelines to be followed by High Courts in exercise of their inherent powers to quash a criminal complaint:
CRMC No. 377/2017 Page 10 of 181. Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
2. Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
3. Where the allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
4. Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
5. Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which, no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
6. Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or, where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
7. Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.
12. Even though the inherent jurisdiction of the High Court under this Section is very wide, it has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. In a proceeding under this section, the High Court will not enter into any finding of facts. When criminal proceeding are threshold and proceeding are pending for collecting evidence as to whether allegation levelled in complaint are true or not, it cannot be quashed, because it will amount to killing of unborn child.
13. In present case, complainant has specifically narrated sequence of events as to how he was duped with Rs.50 lakh by accused- the proprietor of SERA CUE LABS Pvt. Ltd., R/o C-1517 Sushant Lok, Phase-I Gurgoan-
CRMC No. 377/2017 Page 11 of 18122002, Haryana on the pretext of giving the franchise of the Lab under SERA Brand at Jammu, a business of providing service relating to Pathology labs directly or through association of various hospitals, Nursing Home, Medical Clinics etc; in this regard an agreement dated 01.10.2016 was also executed between the complainant and SERA company through Harmohinder Singh in the court of Sub Registrar-IV (2nd Addl. Munsiff) Jammu. The detail of giving amount of Rs.50 lakh has been given in the complaint. There is also specific allegation that after the payment of Rs.50 lacs the complainant requested Harmohinder Singh and Gurpreet Kour to provide and send all the equipments for running the laboratory, but they adopted dilly-dallying tactics on one pretext or other and finally in December, 2016, they sent old and non- functional machinery which was also inspected by the teams of doctors under the supervision of Deputy Director, Health services, Jammu on 23.02.2017 and after thorough inspection, the said machinery and equipments were found old and non-functional and even without proper bills and on the basis of which the teams of doctors deputed by the Deputy Director Health Services, Jammu refused to give permission to run the laboratory.
14. In this way there is clear cut case of cheating etc. This aspect of matter has further been strengthened from the fact that more than 05 FIRs have already been stand registered against them in the different States with same allegations. The detail of these FIRs have already been given, which fact has not been denied by petitioners by filing counter affidavit or counter reply.
15. The argument of counsel for petitioners that there is Arbitration clause in agreements executed between parties, so criminal proceeding is not maintainable. This argument has no force, because this Arbitration clause would have come in force, if the business would have been started.
CRMC No. 377/2017 Page 12 of 18Arbitration clause is meant for resolving the civil dispute; but when there is element of criminal intention to cheat other party right from start of entering into agreement, then certainly criminal law can be set in motion against that party.
16. In AIR 1999 SC 3499 in case titled Chemical Industry v Rajesh Aggarwal, it is held as under:-
"We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana vs. Bhajaj Lal (Supra).‖
17. Another argument that dispute is purely of civil in nature, so criminal law cannot be set in motion, is also not tenable.
18. When there is an element of criminal nature in the allegations leveled in the complaint/FIR, then certainly criminal law can be set in motion. Further, mere pendency of civil litigation with regard to same subject matter or document, criminal proceedings cannot be stayed or quashed.
19. In M.S. Sheriff v. State of Madras, reported in AIR 1954 SC 397, a Constitution Bench of the Supreme Court, while dealing with a question as to whether a civil suit or a criminal case should be stayed in the event CRMC No. 377/2017 Page 13 of 18 both are pending, held that the criminal matter should be given precedence.
20. In Syed Askari Hadi Ali Augustine Imam v. State (Delhi Admn.), reported in (2009) 5 SCC 528, the Supreme Court has held that:
―Indisputably, in a given case, a civil proceeding as also a criminal proceeding may proceed simultaneously. Cognizance in a criminal proceeding can be taken by the criminal court upon arriving at the satisfaction that there exists a prima facie case.‖
21. In Devendra & Ors v. State of U.P. & Another [(2009) 7 SCC 495], it is held:
―There cannot, however, be any doubt or dispute whatsoever that in a given case a civil suit as also a criminal proceeding would be maintainable. They can run simultaneously. Result in one proceeding would not be binding on the court determining the issue before it in another proceeding.‖
22. In 2009 (4) SCC 439 in case titled Mahesh Chowdhary v State of Rajasthan, it is held as under:-
"--------------------------------------. Although allegations contained in the complaint petition may disclose a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue. For the purpose of exercising its jurisdiction, the superior courts are also required to consider as to whether the allegations made in the FIR or Complaint Petition fulfill the ingredients of the offences alleged against the accused.
15. Indisputably, the question as to whether the complainant was entitled to a higher amount of commission in terms of the agreement dated 21.2.1973 is essentially a civil dispute. The complainant in terms of the said agreement was not only entitled to inspect the documents maintained by the accused but also to get the same audited. It is, therefore, difficult to hold as has rightly been opined by the Investigating Officer that a case for imposing a criminal liability on the accused on that score has been made out. While saying so, we are not unmindful of the limitations of the court's power under Section 482 of the Code of Criminal Procedure which is primarily for one either to prevent abuse of the process of any Court or otherwise to secure the ends of justice. The court at that stage would not embark upon appreciation of evidence. The Court shall moreover consider the materials on record as a whole.CRMC No. 377/2017 Page 14 of 18
In Kamaladevi Agarwal vs. State of W.B. & ors. [(2002) 1 SCC 555], this Court opined:
"7. This Court has consistently held that the revisional or inherent powers of quashing the proceedings at the initial stage should be exercised sparingly and only where the allegations made in the complaint or the FIR, even if taken it at the face value and accepted in entirety, do not prima facie disclose the commission of an offence. Disputed and controversial facts cannot be made the basis for the exercise of the jurisdiction."
It was furthermore observed that the High Court should be slow in interfering with the proceedings at the initial stage and that merely because the nature of the dispute is primarily of a civil nature, the criminal prosecution cannot be quashed because in cases of forgery and fraud there would always be some element of civil nature.
This Court in B.Suresh Yadav vs. Sharifa Bee & anr. [(2007) 13 SCC 107] opined as under:
"13. For the purpose of establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. In a case of this nature, it is permissible in law to consider the stand taken by a party in a pending civil litigation. We do not, however, mean to lay down a law that the liability of a person cannot be both civil and criminal at the same time. But when a stand has been taken in a complaint petition which is contrary to or inconsistent with the stand taken by him in a civil suit, it assumes significance. Had the fact as purported to have been represented before us that the appellant herein got the said two rooms demolished and concealed the said fact at the time of execution of the deed of sale, the matter might have been different. As the deed of sale was executed on 30.9.2005 and the purported demolition took place on 29.9.2005, it was expected that the complainant/first respondent would come out with her real grievance in the written statement filed by her in the aforementioned suit. She, for reasons best known to her, did not choose to do so."
Recently in R. Kalyani vs. Janak C. Mehta & ors. [2008 (14) SCALE 85], this Court laid down the law in the following terms:
"9. Propositions of law which emerge from the said decisions are:
(1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a First Information CRMC No. 377/2017 Page 15 of 18 Report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence. (2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.
(3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.
(4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.
In 2001 SCC ( criminal ) 275 case titled Lalmuni Devi v. State of Bihar, it is held as under:-
Mr. Sinha submitted that the impugned Order was unsustainable. He submitted that facts make out a civil wrong as well as a criminal liability. He submitted that merely because civil action can be taken does not mean that a criminal complaint is not maintainable. In support of his submission he relied upon the case of Trisuns Chemical Industry v. Rajesh Agarwal and Ors. reported in JT 1999 (6) SC 618. In this case, the agreement between the parties contained an Arbitration clause. This Court held that merely because the dispute could be referred to arbitration it was not an effective substitute for a criminal prosecution when the act also made out an offence. On the other hand, Mr. Singh submitted that the alleged acts have made out no case for taking cognizance. He submitted that at the highest the remedy would lie in a Civil Court only. He relied upon the cases of State of Haryana v. Bhajan Lal reported in 1992 Supp (1) SCC 335 and Mr. K. Ramakrishna & Ors. v. State of Bihar & Anr. reported in JT 2000 (Supp 1) SC 53, In these cases it is held that inherent powers can be exercised to quash proceedings to prevent abuse of the process of law and to secure ends of justice. It has been held that where the allegations in the FIR do not constitute the alleged offence or where the offence is not disclosed in the complaint or the FIR the frivolous criminal litigation could be quashed.
There could be no dispute to the proposition that if the complaint does not make out an offence it can be quashed. However, it is also settled law that facts may give rise to a civil claim and also amount to an offence. Merely because a civil claim is maintainable does not mean that the criminal complaint cannot be maintained. In this case, on the facts, it cannot be stated, at this prima facie stage, that this is a frivolous complaint. The High Court does not state that on facts no offence is made out. If that be so, then merely on the ground that it was a civil wrong the criminal prosecution could not have been quashed. In our view, the Order of the High Court cannot be maintained and is accordingly set aside. The trial Court to proceed with the Complaint in accordance with law. The Appeal is allowed. There will, however, be no Order as to costs.CRMC No. 377/2017 Page 16 of 18
23. In Kishan Singh (D) through L.Rs. Vs. Gurpal Singh and others;
AIR 2010 SC 3624, the Hon'ble Supreme Court relying on the law laid down in P. Swaroopa Rani v. M. Hari Narayana alias Hari Babu; AIR 2008 SC 1884, it has been held as under:
"It is, however, well settled that in a given case, civil proceedings and criminal proceedingscan proceed simultaneously. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case.... Filing of an independent criminal proceeding, although initiated in terms of some observations made by the civil court, is not barred under any statute.... It goes without saying that the respondent shall be at liberty to take recourse to such a remedy which is available to him in law. We have interfered with the impugned order only because in law simultaneous proceedings of a civil and a criminal case is permissible."
24. In Teeja Devi @ Triza Devi Vs. State of Rajasthan & Ors.', reported in 2015 (1) ACR 564, it is held as under:-
―Criminal Procedure Code, 1973--Section 173 & 482--Indian Penal Code 1860--Sections 420, 465, 467, 468 & 120-B - Scheduled Castes & Scheduled Tribes (Prevention of Atrocities) Act, 1989--Section 3(1)(x)-- Quashing - FIR--Accused persons who fraudulently represented complainant that her thumb impression was being taken for creating a mortgage deed but later she came to know that they had dishonestly prepared an agreement for sale of her lands--Complaint of the appellant was forwarded to police for instituting FIR and investigation-- High Court quashed the FIR and related proceedings--Challenged-- Held, order of the High Court is not in accordance with law--No interference should have been made with the investigation by the Police by quashing the FIR in the facts of the case--This is not at all a rare case--Impugned order of the High Court under appeal is set aside-- Appeal allowed.
10. We have no hesitation in holding that in the facts of the case; the High Court was not justified in interfering with the Police investigation and quashing the FIR. This is not at all a rare case. Without thorough investigation, it is not possible or proper to hold whether allegations made by the complainant are true or not. Hence the investigation should have been allowed to continue so that on filing of the report under CRMC No. 377/2017 Page 17 of 18 Section 173 CrPC the affected party could pursue its remedy against the report in accordance with law. Keeping in view the fact that the criminal case was at the stage of investigation by the Police the High Court was not justified in holding that the investigation of the impugned FIR is totally unwarranted and that the same would amount to gross abuse of the process of court.
11. In view of the above discussion, the impugned order of the High Court under appeal is set aside. The appeal stands allowed. We make it clear that the Police will proceed to complete the investigation fairly with some expedition and submit the required report to the learned Magistrate who shall act in accordance with law without being influenced against either of the parties on account of impugned order of the High Court or this order.‖
25. In view of above, this petition is dismissed. Stay, if any, is vacated.
(Sanjay Kumar Gupta) Judge Jammu 21.12.2018 Bir CRMC No. 377/2017 Page 18 of 18