Delhi District Court
Angle Infrastructure P. Ltd And Ors vs State And Anr on 19 October, 2024
IN THE COURT OF SH. PURSHOTAM PATHAK, ASJ-05,
SOUTH DISTRICT, SAKET COURTS : DELHI
CRL. Rev No. 263/2023
CNR No. DLST01-006677-2023
1. M/s Angle Infrastructure Pvt. Ltd.
Through its Directors,
2. Sh. Amulya Kumar Mishra,
Director, M/s Angle Infrastructure Pvt. Ltd
3. Sh. Satish Kumar Seth,
M/s Angle Infrastructure Pvt. Ltd.
4. Sh. Rajiv Narda,
Director, M/s Angle Infrastructure Pvt. Ltd
All At 201, Elegance Tower, Plot No. 8,
District Center Jasola,
New Delhi-110025 ........ REVISIONISTS
VERSUS
1. State
Through Department of Prosecution (South District),
Saket Court, New Delhi.
2. M/s Oasis Infra Development Private Limited,
Having office at:
12 & 13, 1st Floor, Salcon Ram Vilas
9, Saket District Center,
New Delhi-110017 .....RESPONDENTS
DATE OF INSTITUTION : 17.07.2023
ARGUMENTS HEARD ON : 09.09.2024
DATE OF JUDGMENT : 19.10.2024
JUDGMENT
1. The present criminal revision has been filed against the impugned summoning order dated 10.02.2023, passed PURSHOTTAM by Ld. CMM, South in case bearing FIR no. 30/2022 PATHAK Police Station, EOW under section 406/420/120-B, titled Digitally signed by PURSHOTTAM as State Vs. Amit Katyal and ors., whereby, the Ld. Trial PATHAK Date: 2024.10.19 18:16:15 +0530 Court took cognizance and issued summons against Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 1 of 28 accused persons/ revisionists for facing trial in the aforesaid FIR.
2. The relevant facts of the case in nutshell, which are required to be mentioned are that a complaint dated 12.04.2021 was filed by Mr. Pramod Kumar Bindal, (authorised representative of Oasis Infra Developers Pvt Ltd.) to DCP, Economic Offence Wing, Delhi Police Mandir Marg, New Delhi, against M/s Angle Infrastructure Private Limited, a company engaged in the business of real estate development and its directors namely Mr. Amit Katyal, Rajesh Katyal, Mr. Rajiv Narda, Satish Kumar Seth and Mr. Amulya Kumar Mishra, for commission of offences under sections 420/406 and 120B of the Indian Penal Code, 1860.
3. It is alleged that the a Development Rights Agreement dated 05.06.2012 was executed between the different parties including the complainant company and accused No. 1 company and as per the terms of agreement, the accused No.1 Company had acquired the development rights title and interest in the land ad-measuring 14.468 Acres in Rect. No. 55 & 56 in Sector 70, Village Fazilpur, Jharsa, Tehsil & District Gurgaon, Haryana. The Complainant company was supposed to receive a sum of Rs. 35,00,00,000/- (Thirty-Five Crores only) from the accused No. 1 on account of transfer of development right PURSHOTTAM PATHAK in the aforesaid project/land measuring 14.468 Acres.
Digitally signed by PURSHOTTAMPATHAK 4. Subsequently, in the year 2013-2014, the accused Date: 2024.10.19 18:16:20 +0530 Amit Katyal and Mr. Rajesh Katyal approached the Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 2 of 28 complainant on behalf of the accused company and offered to allot flats to complainant on a discounted price in the project that was being developed in the name of Florence Estate by the accused company in the above mentioned land situated at Sector 70, Gurgaon. It was also represented by them that in very future the prices of the flats are likely to increase many folds and the complainant shall be able to sell the flats and realize his investment with handsome return from the aforesaid project. It was further assured to the complainant that the possession of the said flats shall be handed over after completion within 48 months from the date of allotment.
5. Accordingly, the complainant agreed to purchase 42 flats having a total area of 85090 Square Feet (26 flats of 2125 Square Feet each and 16 Flats of 1865 Square Feet each) at a basic sales price of Rs. 4150 per square feet. The payment of Rs. 35 Crores, which was to be received by the complainant company, was adjusted against these 42 fully paid allotted flats by the accused company. Subsequently, the accused No. 1 Company issued 42 allotment letters, all dated 27.07.2014 in respect of the allotment of 42 flats favouring the complainant company and also accepted therein that entire consideration/payment including Prime Location Charges against these flats have already been received.
PURSHOTTAM PATHAK
6. Thereafter, on 24.08.2014 the Accused Company Digitally signed by PURSHOTTAM PATHAK through its director/authorized signatory namely Mr. Amit Date:
2024.10.19 18:16:24 Katyal also executed 42 Builder Buyer Agreements with +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 3 of 28 the complainant company and reiterated the initial representation that the possession of the flats shall be handed over within 48 months from the date of execution of the Builder Buyer Agreement with a grace period of 9 months. Based on representations made by the accused persons, the entire sale consideration of the aforesaid 42 flats stood paid way back in 2014, which includes basic sale price, car parking and other charges.
7. It is urged that even after 7 years of allotment, there has been no progress in the block of the project where allotment to the complainant was made. Recently, the complainant company has also come to know that the accused persons/company have further sold these 42 flats allotted to the complainant to other victims/customers and have received crores of rupees from them. It is also claimed that, the accused persons have collected huge amount from the other victims/customers and were supposed to deposit the EDC/IDC payment with the Directorate of Town & Country Planning, Haryana but have diverted the money received from the complainant and other customers for this project to other projects and for their personal use.
8. It is further the grievance of complainant that the Accused persons/company acting with mala fide intention PURSHOTTAM PATHAK had dishonestly induced the complainant company to enter into the agreement on the basis of false representations and Digitally signed by PURSHOTTAM PATHAK have caused wrongful loss to the complainant to the tune Date: 2024.10.19 18:16:27 +0530 of Rs. 35 Crores as well as other victims to the tune of Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 4 of 28 hundred of crores and wrongful gain to themselves. Accordingly, all the directors of the Accused No. 1 Company who were managing the affairs of the company during this period are liable for the criminal action.
9. Based on these facts as alleged by the complainant, on 17.02.2022, the FIR no. 0030/2022 PS-EOW u/s 406/420/120B IPC was registered.
10. Thereafter, chargesheet was filed, on which cognizance was taken of the offences under section 406/420/120B and the Ld, CMM ordered issuance of summons against the revisionists and other accused persons vide impugned order dated 10.02.2023.
11. Being aggrieved by the order dated 10.02.2023, the revisionists have assailed the said order for taking cognizance and for summoning them as accused on the following grounds:-
i. that the impugned summoning order is ex-
facie perverse, arbitrary and unsustainable and is liable to be set aside.
ii. that the Ld. Trial court erred in passing the summoning order without specifying the role of each of the revisionists in capacity of Director.
iii. that the offence under section 420 IPC and Digitally signed by 406 IPC are in itself contradictory and the two can PURSHOTTAM PURSHOTTAM PATHAK PATHAK not be committed at the same time.
Date:
2024.10.19 18:16:30 +0530 iv. that the Arbitration was pending between the parties when the FIR was registered and the parties Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 5 of 28 in order to decide the liability of one and another had approached Arbitration Tribunal, thus a civil remedy has already been availed, hence no criminal proceedings can continue.
v. Ld. Trial Court erred in considering the fact that the allegations have been leveled in such a manner to give impression that the complainant/ respondent no. 2 is the buyer/investor in the project of the petitioner whereas, it is the petitioner who has invested in the project on the representation of complainant.
vi. that the FSI granted to it by accused company was not against the sale consideration but towards right it derived from DRA, hence, no valuable property was transferred from the possesion of the complainant to accused company and no breach of trust or cheating has taken place.
vii. that the complainant/respondent has alleged that the accused company has misappropriated the complainant and other buyers money which it collected for paying EDC/IDC charges to DTCP and by doing so committed offence under section 406 IPC however, it is false as the list of defaulters issued by DTCP, the name of accused no.1 or Digitally signed by PURSHOTTAM licence number is not shown neither there are any PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 dues qua the project as per the IDC shedule issued 18:16:35 +0530 by DTCP.Cr. No. 263/2023
ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 6 of 28 viii. that the project is near completion and it got delayed due to various stay/restrain orders passed in various litigations and also due to restrictions imposed due to lockdown.
ix. that the matter is of civil nature and the complainant has given it a criminal nature hence, the order of cognizance and summoning passed without any reason is liable to be set aside.
12. Ld. Sr. Advocate appearing for the revisionists in addition to above grounds, submitted that the impugned order is not sustainable in the eyes of law as Trial Court has summoned the revisionists 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. It was further agued that the accused company has initiated arbitration proceedings against the respondent no. 2/complainant as it has incurred losses due to disputes between the parties and same has been referred to Delhi International Arbitration Centre. It was further argued that the evidence obtained during the investigation and subsequently presented in the chargesheet fails to manifest essential elements of the statutory provisions pursuant to which the charge sheet has been instituted. He submitted that the cognizance has been taken u/s 406/420/120B IPC notwithstanding the absence Digitally signed by PURSHOTTAM of any supporting evidence within the chargesheet to PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 validate the alleged offences. It was argued that the 18:16:38 +0530 respondent no.2 concocted a false story and levelled Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 7 of 28 baseless allegations against the revisionists and other accused persons 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:- Rajendra Kumar Sitaram Pande Vs. Uttam (1999) 3 SCC 134, State of Gujarat Vs Afroz Mohammed Hasanfatta, (2019) 20 SCC 539, R. Nagender Yadav vs. State of Telengana (2023) 2 SCC 195, Indian Oil Corporation Vs. NEPC India Ltd. & Ors. (2006) 6 SCC 736, Morgan Securities & Credits P. Vs. State of Delhi & Anr. 2013 SCC OnLine Del 3789. Mehmood Ul Rehman Vs. Khazir Mohammad Tunda, (2015) 12 SCC 420, G. Sagar Suri Vs. State of UP (2000) 2 SCC 636, Vesa Holdings Private Limited & Anr Vs. State of Kerala (2015) 8 SCC 293, Randheer Singh Vs. State of UP and Ors. 2021 SCC Online SC 942, Satishchandra Ratanlal Sah Vs. State of Gujarat, (2019) 9 SCC 148, Pepsi Foods Ltd. Vs. Special Judicial Magistrate (1998) 5 SCC 749, Deepak Gaba Vs. State of UP (2023) 3 SCC 423, Deepak Gaba Vs. State of UP (2023) 3 SCC 423, Archana Rana Vs. State of Uttar Pradesh (2021) 3 SCC 751.
13. Per contra, Ld. counsel for complainant/respondent No.2 had 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 PURSHOTTAM PATHAK petition is not maintainable being interlocutory in nature Digitally signed by PURSHOTTAM PATHAK and only remedy against summoning order under Section Date: 2024.10.19 204 Cr.P.C for the accused/revisionists is to invoke the 18:16:43 +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 8 of 28 inherent power of Hon'ble High Court under section 482 Cr.PC. 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].
14. 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.
15. I have heard rival contentions and perused the record including the reply/written synopsis filed on behalf of parties.
16. Before testing the case of the revisionists on merits, the issue of the maintainability of the instant revision ought to be resolved first.
17. 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 Digitally signed by Court. The term "interlocutory order" is a term of well-known legal significance and does not present any serious difficulty. It has been PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 18:16:47 used in various statutes including the code of Civil procedure, +0530 Letters Patent of the High Courts and other like statutes. In Webster's New World Dictionary "interlocutory" has been defined as an order Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 9 of 28 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".
18. 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 PURSHOTTAM PATHAK interlocutory and, therefore, the bar under sub-section (2) of Section 397 would apply. On the other hand, it must be held to be Digitally signed by intermediate or quasi-final and, therefore, the revisional jurisdiction PURSHOTTAM under Section 397 could be exercised against the same...."
PATHAK Date: 2024.10.19 10. In view of the above legal position, we hold, as it must be, that 18:16:50 +0530 revisional jurisdiction under Section 397 Cr.P.C. was available to the Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 10 of 28 respondent No. 2 in challenging the order of the Magistrate directing issuance of summons. The first question is answered against the appellant accordingly".
19. 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 revisionist, now I proceed to test the case of revisionists on merits.
20. For better appreciation of the issue that as to whether, the impugned summoning order dated 10.02.2023 passed by the Ld. CMM, South, reflects any application of judicial mind before taking cognizance of the offence in question. The cognizance and summoning order dated 10.02.2023 is reproduced below:-
"On the basis of charge-sheet and annexed documents, I hereby take cognizance of the offence.
Accused persons be summoned afresh for 27.03.2023."
21. 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:-
(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 PURSHOTTAM offences as are within his competence to inquire into or try.
PATHAK
22. The Hon'ble Supreme Court in Case of Darshan Singh, Ram Kishan Vs. State of Maharashtra reported in Digitally signed by PURSHOTTAM PATHAK (1971) 2 SCC 654, in context to Section 190 of the code of Date: 2024.10.19 18:16:53 +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 11 of 28 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.
23. 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.
24. 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 Digitally is only when the Magistrate applies his mind and is signed by PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
satisfied that the allegations if proved would constitute an 2024.10.19 18:16:57 +0530 offence and decides to initiate proceedings against the Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 12 of 28 alleged offender that it can be positively stated that he has taken cognizance of the offence.
25. 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.
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."
26. Thus it is essential that due application of mind PURSHOTTAM PATHAK should be reflected from the order taking cognizance. At the time of passing any judicial order including the order Digitally signed by PURSHOTTAM taking cognizance and summoning on the chargesheet, the PATHAK Date: 2024.10.19 18:17:02 +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 13 of 28 court is required to apply judicial mind and even the order of taking cognizance and issuance of summons cannot be passed in mechanical manner.
27. 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.
28. In the present case, looking at the allegations in the complaint quoted in the preceding paragraphs of the order it appears that the revisionists and complainant/respondent no.2 were under an obligation by way of agreement entered into between them. There was some business transaction between the parties and initially accused company invested money for development of a project, executing an agreement with complainant and other parties, who were the land holders. Thereafter, the complainant company who was to receive Rs.35,00,00,000/- from accused company agreed to purchase 42 flats in a project developed by accused company and payment of Rs. 35 crores which was to be received by complainant was adjusted against flats allotted by accused company. But, the possession of flats could not be given within agreed 48 months and they are yet to be Digitally completed. Naturally complainant would like to recover signed by PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
his money or possession of flats. This ought to have been 2024.10.19 18:17:05 +0530 done by opting for civil remedy such as filing a suit or Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 14 of 28 through Arbitration proceedings. However, the complainant has opted for criminal proceedings u/s 406/420 IPC.
29. 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;
(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.
30. 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.
31. The gist of the offence is misappropriation done in a Digitally signed by PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 18:17:09 dishonest manner. There are two distinct parts of the said +0530 offence. The first involves the fact of entrustment, wherein Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 15 of 28 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'.
32. 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 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.
33. The main allegations which formed the basis of registration of FIR and thereafter filing of chargesheet for offences under section 420/406/34 IPC are:-
a. that the respondent no. 2 has come to know that the accused company had further sold the 42 flats allotted to respondent no. 2 to other victims/customers. b. that the non completion of work even after 10 years in PURSHOTTAM the towers, in which 42 flats were allotted to the PATHAK respondent no.2, shows that false representation as well as Digitally signed by false promise was made by the revisionists and other PURSHOTTAM PATHAK Date: 2024.10.19 18:17:14 +0530 accused persons at the time of allotment.Cr. No. 263/2023
ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 16 of 28 c. that the accused company was suppose to deposit the EDC/IDC payment with the directorate of Town Country Planning Haryana but have diverted the money received from respondent no. 2.
d. that the accused persons have also committed the breach of trust.
34. Though the revisionists/ accused persons have been summoned for the offences of cheating and criminal breach of trust but it has not been indicated in the chargesheet itself that how these offences are made out against the revisionists. As per the chargesheet, in respect of sale of 42 flats to other customers, it has come in investigation that in Tower D there are 106 flats and 75 flats have been allotted out of which 32 flats are in the name of respondent no.2. Further, in Tower E, 9 flats out of 71 allotted flats from 112 flats are in name of respondent no.2. After investigation, investigating officer in respect of allegations of sale of flats has given the finding that the flats allotted to the complainant company still stands in the name of Oasis Infra Developers Pvt. Ltd. i.e. the complainant company. Complainant also failed to provide any detail to show that the flats allotted to it were re-sold by alleged company i.e.M/s. Angel Infrastructure Private Ltd.
35. Further, during investigation it was found that the Digitally Florence project at Gurgaon Sector-70 of the alleged signed by builder company was duly approved by the DTCP/Haryana PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 18:17:19 +0530 and alleged company held a valid licence granted by Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 17 of 28 DTCP. There were also no dues towards IDC/EDC charges and all the dues were paid to the DTCP as per rules. No investigation qua allegations of diversion of funds have been done and nothing has come on record to show that funds have been diverted.
36. After coming to the conclusion that the 42 flats sold to complainant are still in the name of complainant and the accused company has paid the IDC/EDC charges as per rules. It appears that IO has come to conclusion that accused persons had an intent to cheat the complainant since beginning and they have used the allotment of flats to the complainant as tool to misappropriate the money to be paid to the complainant, only on the basis that the work in tower D and E, in which 42 flats have been allotted to respondent no.2 has been deliberately slowed down. Rather, materials on record indicate that the owners of said land represented and assured the developer i.e. accused company and on there representation, accused company agreed to acquire developmental rights. It appears from 'full and final settlement agreement' dated 27.08.2014, that except amount of Rs.35,00,00,000/- the developer had paid all the amount due to respondent no 2.
37. Admittedly the accused company has invested an amount of Rs.75,88,21,000/- in the project. It is clear from the para 1 of the settlement that revisionist no. 1 agreed and undertaken to assign 42 flats to respondent no 2. Both Digitally signed by PURSHOTTAM PURSHOTTAM PATHAK the parties mutually agreed to the terms and conditions PATHAK Date:
2024.10.19 18:17:23 mentioned in the agreement. A distinction has to be kept in +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 18 of 28 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.
38. In V.P.Shrivastava Versus Indian Explosives limited and others, (2010) 10 Supreme Court Cases 361, criminal proceedings alleging commission of offence 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 Digitally para No. 32 of the judgment concluded that "even if the signed by PURSHOTTAM PURSHOTTAM PATHAK allegations made in the complaint are taken to be correct PATHAK Date:
2024.10.19 18:17:26 +0530 on their face value, they may amount to breach of terms of contract by the Fertilizer Corporation of India Limited, but Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 19 of 28 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".
39. 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.
40. Record would further disclose that the arbitration clause was invoked by the accused company against respondent no. 2 and other companies, who transferred the development rights to the accused company and the matter has been referred to the Delhi International Arbitration Centre for appointment of an arbitrator for the conduct of the arbitration proceedings. It appears from the perusal of the materials on record that it is simply a case of breach of Digitally contract and further in the facts and circumstances of the signed by PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 18:17:31 +0530 case, there is absolutely no scope to assert that any of the Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 20 of 28 accused were entrusted with any property, or any dominion over property as contemplated under Section 405 IPC.
41. 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. 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 dishonest intention at the time of entering into the contract.
42. Admittedly, the complainant/respondent no.2, as per agreement, voluntarily entered into a valid agreement and only condition which accused company has not been able to fulfill is that it did not deliver the possession of 42 flats to the respondent no.2 within 48 months or the grace period of 9 months. 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 perhaps both the parties have failed to discharge their full obligations under contract. PURSHOTTAM PATHAK
43. In S. W. Palanitkar Versus State of Bihar, 2002 (1) Digitally signed by PURSHOTTAM SCC 241, there was an agreement dated 21.2.1995 PATHAK Date: 2024.10.19 18:17:34 +0530 appointing the appellant as a consignment stockist of Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 21 of 28 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.
44. 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 from the accused company and appears to have filed the PURSHOTTAM PATHAK criminal complaint for recovery of same. Failed obligation and frustrated expectations cannot give rise to Digitally signed by PURSHOTTAM PATHAK any criminal liability.
Date: 2024.10.1918:17:39 +0530 45. Even, Superior Courts have time and again deprecated the initiation of false criminal proceedings Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 22 of 28 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.
46. 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".
47. 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 a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also Digitally an impression that if a person could somehow be entangled in a signed by PURSHOTTAM criminal prosecution, there is a likelihood of imminent PURSHOTTAM PATHAK PATHAK Date:
settlement. Any effort to settle civil disputes and claims, which 2024.10.19 18:17:42 do not involve any criminal offence, by applying pressure though +0530 criminal prosecution should be deprecated and discouraged."Cr. No. 263/2023
ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 23 of 28
48. 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."
49. 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.
50. It has been held in Hridaya Ranjan Prasad Verma & PURSHOTTAM Ors. Vs. State of Bihar & Anr. (2000) 4 SCC 168, the PATHAK distinction between mere breach of contract and cheating, Digitally signed by which is criminal offence, is a fine one. While breach of PURSHOTTAM PATHAK Date: 2024.10.19 contract cannot give rise to criminal prosecution for 18:17:46 +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 24 of 28 cheating, fraudulent or dishonest intention is the basis of the offence of cheating.
51. In the case at hand, complaint filed by the Respondent No. 2 does not disclose dishonest or fraudulent intention of the accused persons.
52. 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."
53. Having gone through the complaint/FIR and even the chargesheet, it cannot be said that the averments in the FIR and the allegations in the complaint against the revisionist/ accused persons constitute an offence under Section 405 & 420 IPC, 1860. 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 promise being absent, no Digitally signed by PURSHOTTAM offence under Section 420 IPC can be said to have been PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 18:17:50 made out. In the instant case, there is no material to +0530 indicate that revisionists/ accused persons had any Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 25 of 28 malafide intention against the respondent no. 2 which is clearly deductible from the agreements arrived between the parties.
54. It is clear from the chargesheet that same is marred with inconsistent and contradictory stands. On one hand, the concerned Investigating Officer reports that the revisionists have not sold the flats allotted to complainant, they have cleared all their dues and that construction in A, B and C Tower is complete and work is only slow in D and E tower whereas on the other hand, he concludes the said chargesheet by opining the accused persons had an intent to cheat the complainant from beginning and they used the allotment of flats to the complainant as tool to misappropriate the money to be paid to the complainant. The said inconsistent version of Inquiry Officer has remained unexplained.
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. One another aspect which was required to be seen PURSHOTTAM by Ld. CMM was to go through the role assigned to the PATHAK directors in the complaint. No specific role has been Digitally signed by assigned to the directors in the complaint and even no PURSHOTTAM PATHAK Date: 2024.10.19 18:17:54 +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 26 of 28 investigation qua there role has been done except filing of list of their tenure as directors of accused company.
57. 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:
(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.
58. From the order passed by the learned CMM issuing the process against the revisionists herein and other accused persons, there does not appear that the learned CMM has recorded his satisfaction about a prima facie Digitally case against the accused persons. Merely because the signed by PURSHOTTAM PURSHOTTAM PATHAK PATHAK Date:
2024.10.19 accused are the directors automatically they cannot be held 18:17:57 vicariously liable, unless, as observed hereinabove, there +0530 Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 27 of 28 are specific allegations and averments against them with respect to their individual role.
59. At the outset, I find substance in the plea canvassed by the Ld. Senior Advocate that a bare perusal of the chargesheet shows that there is no material to proceed against the revisionists/ accused persons. The impugned order passed by the Ld. CMM appears to have been passed in a mechanical manner, simply proceeding upon the conclusion arrived at by the Investigating Officer and the summoning order appears to be suffering from patent illegality for having been passed on taking cognizance of the offence under Section 420/406/34 of the IPC which offences are not made out qua the accused persons.
60. In view of the foregoing discussion, I find that the impugned order dated 10.02.2023, passed by Ld CMM cannot be sustained in the eyes of law qua the revisionists and other accused persons hence, the same is set aside.
61. In view of the aforesaid, the revision petition is disposed of.
62. TCR alongwith a copy of this judgment be sent to the Ld. Trial Court.
63. The revision file be consigned to the Record Room after due compliance. PURSHOTTAM Digitally signed by PURSHOTTAM PATHAK PATHAK Date: 2024.10.19 18:18:01 +0530 ANNOUNCED IN THE OPEN COURT (PURSHOTAM PATHAK) TODAY ON THIS ASJ-05(SOUTH) 19th DAY OF OCTOBER, 2024 SAKET COURTS: N.D (This judgment contains total 28 signed pages) Cr. No. 263/2023 ANGLE INFRASTRUCTURE P. LTD AND ORS Vs STATE AND ANR Page No. 28 of 28