Karnataka High Court
M/S Insatiable Business vs State Of Karnataka on 17 December, 2020
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17 TH DAY OF DECEMBER, 2020
BEFORE
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
CRIMINAL PETITION NO.2973 OF 2020
Between:
1. M/s. Insatiable Business
Solutions Pvt. Ltd.,
A Company registered under the
Companies Act, 1956.
Having Office at No.3/4,
2nd Floor, Maruthi Towers,
Opp. to Aiyappa Temple,
Madiwala,
Bangalore - 560 068.
Represented by its
Managing Director,
Naveen Varadarajan.
2. Mr.Naveen Varadarajan,
S/o Varadarajan,
Aged about 46 years,
R/a No.427, 9th B Main,
HRBR Layout, Kalyan Nagar,
Bangalore - 560 043.
3. Smt.Manjula Krishnamurthy,
W/o Naveen Varadarajan,
Aged about 48 years,
R/a No.427, 9th B Main,
HRBR Layout, Kalyan Nagar,
Bangalore - 560 043.
... Petitioners
(By Sri.Uday Holla, Sr. Counsel for
Sri.Vyasa Kiran Upadhya B.R., Advocate)
Crl.P.No.2973/2020
2
And:
1. State of Karnataka,
By the Police of
Basaswadi Police Station,
Bangalore.
Represented by
State Public Prosecutor,
High Court of Karnataka,
Bangalore - 560 001.
2. Inspector of Police,
F & M Squad, N.T.Pet,
Bengaluru - 560 001.
3. Mr.Ashish Dubey,
S/o R.N.Dubey,
R/a No.A-603,
Ittina Akkaka Apartments,
Raj Palya, Mahadevpura,
Hudi Circle,
Bangalore - 560 048.
4. M/s.BOB Tech Solutions
Pvt. Ltd.,
Having office at No.3/4,
2nd Floor, Maruthi Towers,
Opp.to Aiyappa Temple,
Madiwala,
Bangalore - 560 068.
... Respondents
(By Sri K.Nageshwarappa, HCGP for R1 and R2;
Sri.Ajay Kadkol, Advocate for R3;
Sri.Rakesh B Bhat, Advocate for R4)
This Criminal Petition is filed under Section 482 of
Cr.P.C praying to quash the FIR in Cr.No.24/2020 registered
under Section 406, 420, 506 120(B) read with 34 of IPC
which FIR is submitted to the file of IV Addl.C.M.M.,
Nrupathunga Road, Bengaluru.
Crl.P.No.2973/2020
3
This Criminal Petition coming on for Orders, this day,
through video conference, the Court made the following:
ORDER
1. The petitioners are before this Court seeking for quashing the FIR in Crime No.24/2020 registered under Sections 406, 420, 506, 120(B) read with Section 34 of IPC, on the basis of the complaint filed by respondent No.3 on 13.01.2020 which is now pending on the file of IV Additional C.M.M., Court, Bengaluru.
2. On 13.01.2020, Respondent No.3 lodged a complaint with the Banaswadi Police alleging the aforesaid offences contending that Respondent No.3 had advanced several amounts of money to the Petitioners and companies including by investing in the Petitioner No.1 and Respondent No.4-company.
3. On the promise made by Petitioner No.2 that Respondent No.3 will get suitable returns or high rate of returns for such investments, it is stated in Crl.P.No.2973/2020 4 the said complaint that an amount of Rs.50,00,000/- (Rupees Fifty Lakhs only) was invested by Respondent No.3 in Respondent No.4- company and a sum of Rs.1,00,00,000/- (Rs. One Crore only) was invested in Petitioner No.1- company.
4. Despite the promise of high rate of returns at 20%, no such returns were made available to respondent No.3, hence, respondent No.3 contacted petitioner Nos.2 and 3 and others seeking for the returns on investment. However, the same was not furnished on repeated demand for repayment of Rs.50,00,000/-, a sum of Rs.30,00,000/- was repaid on 13.08.2017, a sum of Rs.10,00,000/- was repaid on 19.7.2018 and the balance amount of Rs.10,00,000/- is yet to be returned. Nothing of the amount of Rs.1,00,00,000/- (Rupees One Crore only) invested in petitioner No.1 company i.e., M/s.
Crl.P.No.2973/2020 5Insatiable Business Solutions Pvt. Ltd., was returned.
5. It is in that background; it is alleged that petitioner Nos.2 and 3 have misled respondent No.3 and have induced him to invest in the said Companies without intending to pay any returns. Therefore, action is sought to be initiated against the petitioners for the aforesaid offences.
6. Sri Udaya Holla, learned senior counsel for the petitioners would submit that 6.1. the transactions between the petitioners and respondent No.3 is a commercial transaction, is well documented, inasmuch as a Memorandum Of Understanding dated 12.05.2017 is entered into between respondent No.4 and respondent No.3 herein.
Whereunder the respondent No.3 has invested an aggregate amount of Rs.50,00,000/- by Crl.P.No.2973/2020 6 subscribing to the shares of Respondent No.4, in pursuance thereof, shares have been allotted and certificates issued to respondent No.3 which has been received by the respondent No.3 without demur in the year 2017 itself.
6.2. As regards the investment of Rs.1,00,00,000/-
made in the petitioner No.1-company, a binding term sheet has been entered into on May 2017, where under the respondent No.3 was required to invest Rs.2,00,00,000/-.
However, only an amount of Rs.1,00,00,000/-
was invested and even as regard this, the shares have been allotted to respondent No.3.
6.3. The payment made by respondent No.3 is in the form of investment and therefore, the matter being commercial in nature, criminal proceedings could not be initiated.
Crl.P.No.2973/2020 76.4. There are no offences as such made out in the complaint, inasmuch as the claim of respondent No.3 is only for recovery of money. In this regard, he relies on the following decisions:-
6.5. Hari Prasad Chamaria Vs. Bishun Kumar Surekha and Others reported in (1973) 2 SCC 823.
Para 4. We have heard Mr. Mafteshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 Indian Penal Code. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 Indian Penal Code. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35,000. There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000 by deceiving him. It is further not the case of the appellant that a representation was made by the respondents to him at or before the time he paid the money to them and that at the time the representation was made, the respondents knew the same to be false. The fact that the Crl.P.No.2973/2020 8 respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would not be sufficient to fasten criminal liability on the respondents for the offence of cheating.
6.6. Suneet Gupta vs. Anil Triloknath Sharma and others reported in (2008) 11 Supreme Court Cases 670.
Para 25. In the case in hand, the High Court was right in coming to the conclusion that a civil dispute - pure and simple - between the parties was sought to be converted into a criminal offence only by resorting to pressure tactics and by taking police help which was indeed abuse of process of law and has been rightly prevented by the High Court.
6.7. Indian Oil Corpn. Vs. NEPC India Ltd. And Others reported in (2006) 6 SCC 736. Para 13. 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 civilo law remedies are time consuming and do not adequately protect the interests of lenders / creditors. Such a tendency is seen in several family disputes also leading to irretrievable breakdown of marriages/families. There is also an impression that if a person Crl.P.No.2973/2020 9 could somehow he 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 through criminal prosecution should be deprecated and discouraged. In G. Sagar Sure v. State of U.P.11 this Court Observed: (SCC p.643. para
8) "It is to be seen if a matter, which is essentially of a 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 is a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which the High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this section has to be of the Code. 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."
6.8. Chandran Ratnaswami Vs. K.C.Palanisamy and Others reported in (2013) 6 SCC 740.
Para 7. While the proceedings before the CLB were pending, respondent 1 started filing multiple criminal complaints. On 27-02-2006, respondent 1 filed a complaint before the Crl.P.No.2973/2020 10 Economic Offences Wing, Chennai (EOW) against ORE, Fairfax, Prem Watsa, Ramaswamy Athappan, Chandran Ratnaswami (appellant herein), Paul Rivett, M/s. Odyssey America Reinsurance Corporation and N. Athappan making them Accused 1 to 8, inter alia on the following allegations:
"Through this strategic acquisition accused, through Accused 7 and Accused 4 through Accused 8 acquired substantial ownership and management rights in VML and CPL also. The complainant states that the sole objective of the sacrifice made by the complainant of his highly valuable prime immovable properties is the assurance of Accused 3, 4, 5 & 6 that about Rs. 375 crores would be brought into the joint venture Company as investment and loans and projects worth thousands of crores would be commenced.
The complainant states that, as per the joint venture agreement dated 30.1.2004, M/s. Odyssey America Reinsurance Corporation, the 7th accused herein which is a subsidiary company of the Fair Fax Group and Accused 2 had agreed to extend a Corporate Guarantee in favour of the lender for arranging the syndicated credit facility of US$ 65 Million (approximately Rs. 300 crores) to the joint venture company. In confirmation of the said fact the Crl.P.No.2973/2020 11 Accused 2, 3 and 4 and 8 while signing the joint venture agreement, cleverly included in the same, a model draft of the Irrevocable Corporate Guarantee Agreement to be furnished by the 7th accused in favour of the lender and even signed the said draft so as to make believe the complainant in no uncertain terms about their intention to honour their commitments. Thus, the joint venture business could commence only upon the 1st accused arranging for the syndicated credit facility of US$ 65 million, on the strength of the Corporate Guarantee to be given by the 7th accused.
xxx xxx xxx ..... On the one hand the accused had miserably failed to organize the funds even after the complainant had parted with the ownership rights over valuable properties held by him through VML and CPL and on the other hand they defrauded and cheated the complainant by not organizing the promised funds, upon the receipt of which alone, the complainant would be able to commence the projects worth thousand of crores.
.... From the above, it is therefore evident that the consideration of entering into the JV agreement was the promise and assurance that accused 2 to 6 shall also arrange for a loan of Rs. 300 crores in addition to Crl.P.No.2973/2020 12 the share investment of Rs. 75 crores as stipulated under the JV agreement.
xxx xxx xxx Thus the accused have induced the complainant to enter into an agreement under the guise of a joint venture agreement which was conceived in pursuance of a criminal conspiracy with an intention of cheating. In addition to the above, the accused 4 and 8 have also obtained a gratification, amounting to approximately Rs. 37.40 crores from the complainant, by getting the shares of the companies allotted to them to a discounted rate, as consideration for facilitating the joint venture and for arranging the term loan thereby making wrongful gains to themselves while causing wrongful loss to the complainant. Moreover after receiving the said consideration in the form of shares at a discounted value, accused 4 and 8 have now joined hands with M/s ORE Holdings Ltd. for gaining an illegal majority in the joint venture company and have thus defrauded the complainant of several crores of rupees.
Therefore, the accused 1 to 7 have committed various offences under section 120-B, read with sections 409, 420, 405, 471 and 389 among other provisions of the Penal Code, which amount to the offences of Criminal Conspiracy, Cheating, Criminal Breach of Trust, making False Representation and Promises and Extortion by putting the fear of Crl.P.No.2973/2020 13 accusation of offences against the complainant among others, and have induced the complainant to part with the shares of his company and the control over the valuable immovable properties owned by him through VML and CPL on the strength of the false promises and assurances made by the accused."
Para 33. The doctrine of abuse of process of Court and the remedy of refusal to allow the trial to proceed is well-established and recognized doctrine both by the English courts and courts in India. There are some established principles of law which bar the trial when there appears to be abuse of process of Court.
Para 47. In the case of Uma Shankar Gopalika vs. State of Bihar22 this Court has held as under: (SCC pp.. 338-39, Paras 6-7) "6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of complaint any criminal offence whatsoever is made out much less offences under Sections 420/120-B IPC. The only allegation in the complaint petition against the accused persons 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. Apart Crl.P.No.2973/2020 14 from that there is no other allegation in the petition of complaint. It was pointed out 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 4,20,000. It is well settled that every breach of contract would not give rise to an offence of cheating and only in those cases 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 there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC.
7. In our view petition of complaint does not disclose any criminal offence at all much less any offence earlier 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 Crl.P.No.2973/2020 15 to quash the same by exercising the powers under Section 482 CrPC which it has erroneously refused."
Para 60. We are of the definite opinion that the complainant has manipulated and misused the process of Court so as to deprive the appellants from their basic right to move freely anywhere inside or outside the country. Moreover, it would be unfair if the appellants are to be tried in such criminal proceedings arising out of the alleged breach of a Joint Venture Agreement specially when such disputes have been finally resolved by the Court of competent jurisdiction. Hence, allowing the criminal proceedings arising out of FIR No.7 of 2007 to continue would be an abuse of the process of the Court and, therefore, for the ends of justice such proceedings ought to be quashed. Since the High Court failed to look into this aspect of the matter while passing the impugned order, in our opinion, the same could not be sustained in law.
6.9. Crl.P.3338/2015 (Mr. Magadi Shankar
Rao Krishnamurthy & Other Vs.
Commissioner of Police & others) (DD:
28.10.2015)
10. The petitioners are much aggrieved by the order of the Police Commissioner, Bengaluru, as at Annexure 'D' dated 25.04.2015, whereby he directed further investigation by City Crime Branch. Assistant Commissioner of Police (Crimes) was directed Crl.P.No.2973/2020 16 to order investigation to be carried out by a Police Officer of CCB. The Police Inspector of jurisdictional Police Station was directed to hand over the investigation to such Police Officer of CCB, who would carry out investigation. Consequent upon this order, the Investigating Officer sought permission from the learned Magistrate to transfer the investigation to CCB as per the letter Annexure 'X'. It is evident from Annexure 'D' that because of the representation of the wife of the complainant, this order is passed. The petitioners among other things are questioning the locus standi and propriety of the wife of the complainant in making representation to the Police Commissioner and the legality of the action taken by the Police Commissioner on her representation. But it is immaterial on whose request and for what reason the order at Annexure 'D' is passed.
The matter for concern is, the legality of the order at Annexure 'D' in the middle of the ongoing investigation by the local police under the order of the jurisdictional Magistrate. A situation has arisen that the order of the Commissioner stands in confrontation viz-a- viz with the judicial order passed by the Magistrate.
14. The above observation comes in aid to solve the legal puzzle we are faced with. The Commissioner of Police could have exercised his jurisdiction under Section 36 of the Code and could have conducted the investigation by himself. But in the absence of any statutory authority to delegate the power of investigation to an inferior Officer, he could not have assigned the case to the CCB unit. Power to delegate investigation to some extent is vested with the Station House Officer Crl.P.No.2973/2020 17 who is acting under Section 157(1) of the Code, whereby on receipt of the information he can depute his subordinate officer not below of such rank as the State Government, may direct to proceed to investigate the fact and circumstances of the case and if necessary, to take measures for the discovery and arrest of the offender. Except the provision at Sub-section (1) of Section 157 of the Code, the concept of delegation of power cannot be perceived either from the Code or Karnataka Police Act. That answers the question raised supra in the beginning of the discussion. Thereby, the order passed by the Commissioner at Annexure 'D' is without authority and propriety. Intervening and transferring the case in the middle of investigation which would have been concluded by this time is illegal. The petition is filed touching the legality of registration of the complaint etc. Though the petitioners are seeking to quash the complaint and FIR itself, the order of the learned Magistrate passed under Section 156(3) of the Code convinces that he has perused the complaint averments and felt it necessary for police investigation and the said order does not call for interference. However, both the complainant and the accused, if aggrieved by the final report of the investigation, will have their opportunity to challenge the said order.
6.10. Ajay Mitra Vs. State of M.P. And Others Vs. State of M.P. and others reported in (2003) 3 Supreme Court Cases 11.
Head note: A. Penal Code, 1860, - S. 420 - Cheating - Mens rea at the time of inducing Crl.P.No.2973/2020 18 the person deceived to deliver any property to any person essential to constitute offence under - Where A-1 entered into an agreement with complainant authorizing the latter to manufacture and sell certain specified.
6.11. Vesa Holdings Private Limited an Another Vs. State of Kerala and Others reported in (2015) 8 Supreme Court Cases 293.
Head Note: Penal Code, 1860 - S. 420 - Absence of ingredients of cheating - Culpable intention at the time of making initial promise, absent - Time - bound consultancy contract between appellants and complainant to settle loan with bank - Non-payment of consultancy fees due to settlement of loan beyond time- limit fixed, without help of complainant consultant - Said non-payment of consultancy fees, held, does not attract the ingredients of cheating under S. 420 IPC - Mala fide criminal proceedings which amount to abuse of process of Court should not be allowed - Complaint and FIR, therefore, quashed - High Court not exercising power to wash complaint and FIR under S. 482 CrPC in present case, disapproved - Criminal Procedure Code, 193 - S. 482 - Quashing of India - Ingredients of offence under S.420 IPC absent - Constitution of India - Art.136 - Quashing of FIR - Abuse of process and absence of ingredients of offence.
Para 12. From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those Crl.P.No.2973/2020 19 cases 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 other words for the purpose of constituting an 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. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.
Para 14. Accordingly all the appeals are allowed and the impugned order dated 28.1.2011 rendered by the High Court is set aside and the complaint and the proceedings in Crime No. 1461/2010 of Changanasserry Police Station against the appellants are hereby quashed.
6.12. Kishan Singh (Dead) Through Lrs. Vs. Gurupal Singh and Others reported in (2010) 8 Supreme Court Cases 775.
Para 21. Prompt and early reporting of the occurrence by the informant with all its vivid details gives an assurance regarding truth of its version. In case, there is some delay in filing the FIR, the complainant must give explanation for the same. Undoubtedly, delay in lodging the FIR does not make the Crl.P.No.2973/2020 20 complainant's case improbable when such delay is properly explained. However, deliberate delay in lodging the complaint is always fatal. [vide: Sahib Singh Vs. State of Haryana10] Para 22. In cases where there is a delay in lodging a FIR, the Court has to look for a plausible explanation for such delay. In absence of such an explanation, the delay may be fatal. The reason for quashing such proceedings may not be merely that the allegations were an after thought or had given a coloured version of events. In such cases the Court should carefully examine the facts before it for the reason that a frustrated litigant who failed to succeed before the Civil Court may initiate criminal proceedings just to harass the other side with mala fide intentions or the ulterior motive of wreaking vengeance on the other party. Chagrined and frustrated litigants should not be permitted to give vent to their frustrations by cheaply invoking the jurisdiction of the criminal Court. The court proceedings ought not to be permitted to degenerate into a weapon of harassment and persecution. In such a case, where an FIR is lodged clearly with a view to spite the other party because of a private and personal grudge and to enmesh the other party in long and arduous criminal proceedings, the Court may take a view that it amounts to an abuse of the process of law in the facts and circumstances of the case. (vide : Chandrapal Singh & Ors. Vs. Maharaj Singh11., State of Haryana & Ors. Vs. Ch. Bhajan Lal12., G. Sagar Suri & Anr. Vs. State of U.P. 13.,and Gorige Pentaiah Vs. State of A.P. 14.
Crl.P.No.2973/2020 21Para 23. The case before us relates to a question of the genuineness of the agreement to sell dated 4.1.1988. The said agreement was between Kishori Lal and the respondents and according to the terms of the said agreement, the sale deed was to be executed by 10.6.1989. As the sale deed was not executed within the said time, suit for specific performance was filed by the other party in 1989 which was decreed in 1996.
Para 24. So far as the present appellants are concerned, agreement to sell dated 22.10.1988 was executed in favour of their father and the sale deed was to be executed by 15.6.1989. No action was taken till 1996 for non-execution of the sale deed. The appellants' father approached the Court after 7 years by filing Suit No.81 of 1996 for specific performance. However, by that time, the suit filed by the present respondents stood decreed. The appellants' father filed another Suit No.1075/96 for setting aside the judgment and decree passed in favour of the respondents 1 to 4. The said suit was dismissed by the Additional District Judge (Senior Division), Khanna on 10.6.2002. Subsequently, the appellants preferred RFA No. 2488/2002 on 15.7.2002 against the aforesaid order, and the said appeal is still pending before the Punjab & Haryana High Court.
6.13. On the basis of the above, he submits that the petition is required to be allowed and criminal proceedings to be quashed.
Crl.P.No.2973/2020 227. Per contra, Sri Ajay Kadkal, learned counsel for respondent No.3 would submit that 7.1. the ex-facie reading of the complaint itself would establish the serious nature of the crimes committed by the petitioners inasmuch as it is alleged in the complaint that on the basis of fake orders shown to respondent No.3, as also the claim made by the petitioners that they have contacts with the Ambani Group, Mahindra Group etc., he invested the moneys in the companies, if not for such representation made, respondent No.3 would never have invested the money.
7.2. The facts that no payments have been made would indicate the dishonesty on the part of the petitioners and their intention to cheat respondent No.3.
Crl.P.No.2973/2020 237.3. The allegations made in the complaint being factual in nature. This Court ought not to exercise the power under Section 482 of Cr.P.C., for quashing of the same.
7.4. In this regard, he relies upon the following decisions.
7.5. Skoda Auto Vokswagen India Private Limited Vs. State of Uttar Pradesh and Others reported in 2020 SCC online SC 954 more particularly para 41 thereof, which reads as follows:
It is needless to point out that ever since the decision of the Privy Council in King Emperor v. Khwaja Nazir Ahmed1, the law is well settled that Courts would not thwart any investigation. It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on. As cautioned by this Court in State of Haryana v. Bhajan Lal2, the power of quashing should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. While examining a complaint, the quashing of which is sought, the Court cannot embark upon an enquiry as to the reliability or Crl.P.No.2973/2020 24 genuineness or otherwise of the allegations made in the FIR or in the complaint. In S.M.Datta v. State of Gujarat3, this Court again cautioned that criminal proceedings ought not to be scuttled at the initial stage. Quashing of a complaint should rather be an exception and a rarity than an ordinary rule. In S.M. Datta (supra), this Court held that if a perusal of the first information report leads to disclosure of an offence even broadly, law courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities and one ought not to treat over the other sphere.
7.6. Mohd. Allauddin Khan Vs. State of Bihar and Others reported in (2019) 6 Supreme Court Cases 107 more particularly para 14 reads as follows:
In our view, the High Court had no jurisdiction to appreciate the evidence of the proceedings under Section 482 of the Code Of Criminal Procedure, 1973 (for short "Cr.P.C.") because whether there are contradictions or/and inconsistencies in the statements of the witnesses is essentially an issue relating to appreciation of evidence and the same can be gone into by the Judicial Magistrate during trial when the entire evidence is adduced by the parties. That stage is yet to come in this case.
7.7. Pratibha Vs. Rameshwari Devi and others reported in (2007) 12 Supreme Crl.P.No.2973/2020 25 Court Cases 369 more particularly para 21 reads as follows:
Therefore, in view of our discussions made herein above, while exercising power under Section 482 of the Code, it is not open to the High Court to rely on the report of the investigating agency nor can it direct the report to be submitted before it as the law is very clear that the report of the investigating agency may be accepted by the Magistrate or the Magistrate may reject the same on consideration of the material on record. Such being the position, the report of the investigating agency cannot be relied on by the High Court while exercising powers under Section 482 of the Code. Accordingly, we are of the view that the High Court has erred in quashing the FIR on consideration of the investigation report submitted before it even before the same could be submitted before the Magistrate.
7.8. He submits that the matter being under investigation, it may be pre-mature for this Court to interfere and quash the proceedings.
8. Heard Sri Udaya Holla, learned senior counsel for Sri. Vyasa Kiran Upadhaya B.R., learned counsel for the petitioners, Sri K. Nageshwarappa, learned High Court Government Pleader for respondent Nos.1 Crl.P.No.2973/2020 26 and 2 and Sri Ajay Kadkal, learned counsel for respondent No.3.
9. Though several arguments have been advanced, the short question which arises is, whether the allegations made in the complaint amount to criminal offences or not?
10. As stated above, while referring to the facts respondent No.3 has invested an amount of Rs.1,50,00,000/- in respondent No.4 and petitioner No.1 companies towards which shares have been allotted. If at all, the respondent No.3 has a grievance as regards allocation of shares, he should have raised the dispute in the year 2017, or thereafter, in the year 2018, when admittedly, respondent No.3 has received various amounts of monies. The allegations made in the complaint is only that the balance amounts have not been paid.Crl.P.No.2973/2020 27
11. Though for the purposes of lodging the complaint several allegations have been made, the essence of the allegations is that neither the money invested by respondent No.3 nor the returns on it has been provided to respondent No.3. In fact at para No.4 of the complaint, the only allegations made is that the amount invested has not been returned.
12. This in my considered opinion would not give raise to a criminal complaint to be filed, more so, when the transaction between the parties is documented by way of agreements under the memorandum of understanding, a binding term sheet as also by issuance of share certificates.
13. Any dispute that the parties may have in terms of the said commercial transaction would have to be agitated in a Court of Competent Jurisdiction in terms of the agreement entered into between the parties.Crl.P.No.2973/2020 28
14. The transaction between the parties having been reduced to in writing in terms of Memorandum of Understanding and term sheet as regards the investment made by respondent No.3 in respondent No.4 and petitioner No.1's companies. The issue relating to the said dispute would have to be resolved in terms of agreement arrived at which cannot now be said that there is any inducement and/or offence of cheating said to have been committed by the petitioners where a business as prospered cannot be a ground for initiating of criminal proceedings. Respondent No.3 having taken the risk of making investment by subscribing the shares of respondent No.3 and petitioner No.1, the same cannot be made a part of a criminal offence. It was for respondent No.3 to exercise his due diligence, verify the record and thereafter invested in the Companies. Now, it cannot be believed that merely because the petitioners made a statement, respondent No.3 invested the amounts Crl.P.No.2973/2020 29 in respondent No.4 and petitioner No.1. Be that as it may. Being relating to the terms of the agreement cannot be a subject of criminal proceedings.
15. There being several decisions which have been sought to be relied on by both the counsel, I am of the considered opinion that those decisions would not be applicable to the present facts, since the present facts are based on the documents whereas all those decisions were relating to criminal offences under various other provisions.
16. In view thereof, any remedy of respondent No.3 being covered under the memorandum of understanding and a binding term sheet, reserving liberty to respondent No.3 to agitate the same before the appropriate Forum, the proceedings in Crime No. 24/2020 registered under Sections 406, 420, 506, 120(B) read with Section 34 of IPC, on the basis of the complaint filed by respondent No.2 Crl.P.No.2973/2020 30 on 13.01.2020 which is now pending on IV Additional C.M.M., Court, Bengaluru 24/2020 is hereby quashed.
17. Accordingly, petition is allowed.
Sd/-
JUDGE GJM