Karnataka High Court
Ritesh Agarwal vs State By - Police Inspector on 21 April, 2022
Author: Hemant Chandangoudar
Bench: Hemant Chandangoudar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF APRIL 2022
BEFORE
THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR
CRIMINAL PETITION No.8643/2019
Between
1. Mr.Ritesh Agarwal
s/o Mr.Ramesh Agarwal
Aged 25 years
Director, Oravel Stays
Private Limited ("OYO")
271, Tatvam Vilas, Sohna Road
Sector 48, Gurgaon-122018.
2. Mr.Abhinav Sinha
s/o Mr.Alok Kumar Sinha
Aged 38 years
Chief Operating Officer, OYO
Address at Oravel Stays
Private Ltd., 2339 Crest Ln,
Menlopark, California
Also at C-4-100, Sovereign 4
Vatika City, Sohna Road
Gurgaon-122018.
3. Mr.Abhishek Gupta
s/o Mr.Mohan Gupta
Aged 39 years
Chief Financial Officer, OYO
Address at Oravel Stays
Pvt. Ltd, A-144, The Icon
DLF Phase 5, Gurgaon, Haryana.
2
4. Mr.Nandeesh S
s/o Mr.Shivalingaiah
Aged 29 years
Senior Executive, OYO
Address at Oravel Stays
Pvt. Ltd., No.132
Eachagere, Near Vishveswaraiah
Circle, Hodagatta Post, Mandya,
Karnataka.
5. Mr.Prasun Chowdhary
s/o L K Choudhary
Aged 39 years
Country Head, OYO
Address at Oravel Stays
Pvt. Ltd., Capital Cyberspace
Ullahwas, Sector 59
Gurugram, Haryana-122102
Also at 1002/A 17th Cross
Indiranagar 2nd Stage
Bangalore-560038.
6. Mr.Vishal Pradeep
s/o Pradeep Bhauso Pol
Aged 29 years
Business Development Head, OYO
Address at Oravel Stays Pvt. Ltd.,
D1, Room No.13, Sahayog
CHS Sector 48A Nerul West
Navi Mumbai-400706.
7. Mr.Shivam Mishra,s/o Sarbjit Mishra
Aged 28 years
Revenue Head for Nepal, OYO
Address at Oravel Stays Pvt. Ltd.,
9th Floor, Spaze Palazo, Sector 69
Gurugram, Haryana - 122001
Also K D 34 Indogolf Township
Kothaura Amethi, U P - 227817.
3
8. Mr.Atheeq Zamma
s/o Abdul Arif Khan
Aged 23 years
Ex-Employee, OYO
Address at Oravel Stays
Pvt. Ltd., A011, Sai Sunshine
Construction, Sridi Sai Nagar
Munekollal, Bangalore-560037.
(deleted v/c/o dtd:7.1.2020).
9. Mr.Prasanna Kumar
s/o Rudraswamy HM
Aged 33 years
Business Development
Manager, OYO
Address at Oravel Stays
Pvt. Ltd., OYO, Venjay Edifice
3rd Floor, Above Sony Center
Next to Big Bazar, Ramaswamy
Circle, Mysore - 570 007
Also at No.203, 3rd Phase
KHB Colony, Chickkamangaluru
Jyothinagar-577102.
10. Mr.Ramesh V S, s/o Mr.Shivanna
Aged 29 years, Senior Executive, OYO
Address at Oravel Stays Pvt. Ltd.,
OYO, Venjay Edifice 3rd floor
Above Sony Center, Next to Big Bazar
Ramaswamy Circle, Mysore-570007
Also at No.83, K R Taluk, Mandya-28.
11. Mr.Manoj Purna, s/o Mr.Nagaraju
Aged 38 years, Area Business Head,
OYO, Address at Oravel Stays Pvt. Ltd.,
OYO, Venjay Edifice 3rd Floor
Above Sony Center, Next to Big Bazar
Ramaswamy Circle, Mysore-570007
Also at No.101, 1st Floor, Vandana
4
Coral Apartment, 4th Main
Anugraha Layout, Bangalore-560076.
12. Mr.Sriniwas B, s/o Mr.Babu
Aged 28 years, City Accountant, OYO
Address at Oravel Stays Pvt. Ltd.,
OYO, Venjay Edifice 3rd Floor
Above Sony Center, Next to Big Bazar
Ramaswamy Circle, Mysore-570007.
(deleted v/c/o dtd:7.1.2020)
13. Mr.Kaushik Gowda
s/o.K P Hoovanna Gowda
Aged 33 years, AGM Operations
Mysore, OYO, Address at Oravel
Stays Pvt. Ltd., OYO, Venjay Edifice 3rd Floor
Above Sony Center, Next to Big Bazar
Ramaswamy Circle, Mysore-570007.
Also at Mattikatte, Banakal
Chikkamagaluru, Moodigere-577113. ...Petitioners
(By Sri Samartha S, Advocate)
And
1. State by - Police Inspector
Chickmagaluru Police Station
Represented by SPP
High Court Building
Bangalore-560001.
2. Mr.Uttam Bottolanda Muthappa
Aged about 44 years
s/o Mr.Muthappa B G
Post Box No.109, Kountheya
Hotels Private Ltd. K M Road
Chickmagalur - 577101Karnataka. ... Respondents
(By Sri Renukaradhya R D, HCGP, for R1,
Sri I S Devaiah, Advocate for R2)
5
This petition is filed under Section 482 of the Code of
Criminal Procedure, 1973, praying to quash the criminal
complaint lodged by respondent No.2 vide Annexure-A1 and
registered as FIR No.143/2019 dated 20.9.2019 vide Annexure-
A by the respondent No.1 at Chickmagaluru Police Station
against the petitioner for the offence P/U/S 34, 406, 467, 468,
470 and 420 of IPC 1860 and pending before Principal Civil
Judge (Sr.Dn.) and CJM Court, Chickmagalur.
This criminal petition having been heard and reserved on
21.03.2022 for order and coming on for pronouncement of
order, this day the Court made the following:
ORDER
First Information Report is lodged by the 2nd respondent alleging that a Marketing and Operational Consulting Agreement (for short `Agreement') dated 4.11.2017 was executed between the Oravel Stays Pvt. Ltd. i.e. the accused - Company and Kountheya Hotels Pvt. Ltd. of which the 2nd respondent is the Managing Director. In terms of the said agreement, the accused
- Company was to ensure that the Company was paid a minimum assured benchmark revenue / minimum guarantee of Rs.650/- per room per day for 44 rooms. The accused - Company had complete control over the booking and would receive the booking amount from the customers. The accused - Company was required to renovate the hotel as per its 6 standards, however, induced the 2nd respondent to avail a loan of Rs.30 lakhs for its purpose.
2. Despite regular bookings, minimum assured payments were not paid by the accused - Company and settlement of payment were not honoured and monthly dues were not cleared. Even after assurances they did not honour their promise for clearing the monthly dues but continued to pay only half of the billed amount to the company. The accused - Company continued to deceive the Company by making false assurances and believing their false assurances and under a hope that they would clear the dues shortly, continued to honour the terms of the agreement by accepting their bookings and allotting room to the customers.
3. The accused - Company after being entrusted with the property i.e. rooms and having dominion over the rooms was supposed to accept booking by the customers for the rooms and thereafter pay the company the room charges after deducting the commission but the accused - Company has misused the entrustment of hotel rooms by accepting the cash for bookings 7 made and instead of paying the charges collected, converted the said amount into its own use, thereby committing the offence punishable under Section 406 of IPC. The accused - Company by making false assurances induced the Company to enter into an agreement and dishonestly induced the company to part with the rooms and gain monetarily and willfully by not transfering the amount to the company committed an offence punishable under Section 420 of IPC.
4. During the course of exchange of accounts, it was found that the accused - Company with an intention to cheat the Company created false documents by creating an entry in the records as booking by an individual and received the amount for the said booking, but the actual fact is that no customer had occupied the room thereby making company pay the taxes and GST for no transaction done by it which constitutes an offence punishable under Section 464 of IPC.
5. The police registered the FIR against the petitioners for the offences punishable under Sections 34, 406, 467, 468 8 470 and 420 of IPC. Taking exception to the same, this petition is filed.
6. Sri Sandesh Chouta, learned Senior Counsel for the petitioners would make the following submissions:
a) The allegations made in the FIR do not satisfy essential ingredients so as to constitute the commission of offences alleged, but however, the FIR is lodged by giving a criminal texture to a civil dispute. Even accepting the allegations made in the FIR, utmost, it tantamount to breach of terms and conditions contained in the agreement but does not constitute the commission of offences alleged as against the petitioners. In support, reliance is placed on the decision of the Apex Court in the case of Binod Kumar
-vs- State of Bihar reported in (2014) 10 SCC 663.
b) To constitute an offence of forgery or fabrication of documents, there must be an allegation that a document so made is with dishonest intention to cause damage or injury to the Company. In the absence of any injury or loss caused to the Company, the FIR registered against the petitioners for the offences punishable under Sections 467, 468 and 470 of IPC is without any substance. In support, reliance is placed on the decision of 9 the Apex Court in the case of Sheila Sebastian -vs- R Jawaharaj and Anr. reported in (2018) 7 SCC 581.
7. Hence, he submits that the dispute between the parties arises out of alleged breach of agreement by the Petitioners, however, the FIR is lodged by the respondent No.2 to wreck vengeance and to pressurize the Petitioners to make good the alleged payment due to him and the same requires to be quashed.
8. On the other hand, the learned counsel appearing for the 2nd respondent submits that the allegations made in the FIR clearly disclose the commission of offences by the petitioners. Hence, the allegations made in the FIR require to be investigated by the police and at this stage, the FIR registered against the petitioners cannot be interfered with. In support, he placed reliance on the decision of the Apex Court in the case of Amit Kapoor -vs- Ramesh Chander reported in (2012) 9 SCC 460.
9. He further submits that the allegations made in the FIR and also the documents annexed to the FIR prima facie disclose the commission of offences committed by the 10 petitioners, since complete details need not be given as an encyclopedia and the FIR only needs to make out a prima facie case. In support, reliance is placed in the case of Dineshbai Chandubhai Patel -vs- State of Gujarat and others reported in (2018) 3 SCC 104.
10. He further submits that the allegations made in the FIR may apparently look to be of a civil nature or may involve in commercial transaction but also contains ingredients of criminal offence and such dispute had to be entertained notwithstanding that they are also civil disputes. In support, reliance is placed on the decision of the Apex Court in the case of Arun Bhandari - vs- State of Uttar Pradesh and others reported in (2013) 2 SCC
801.
11. He further submits that though the agreement contains an arbitration clause, that would not bar the prosecution of the accused against the criminal offences committed. In support, reliance is placed on the decision of the Apex Court in the case of Trisuns Chemical Industry -vs- Rajesh Agarwal and others reported in (1999) 8 SCC 686. 11
12. I have examined the submissions made by the learned counsel for the parties.
13. The execution of Marketing and Operation Consulting Agreement dated 4.11.2017 executed between the parties is not disputed. The allegation in the FIR is that the accused - Company after being entrusted with the property i.e. rooms and having dominion over the rooms was supposed to accept booking by the customers for the rooms and thereafter pay the company the room charges after deducting the commission but the accused - Company has misused the entrustment of hotel rooms by accepting the cash and not paying the charges collected and converted the said amount into its own use, thereby committing the offence punishable under Section 406 of IPC. In the FIR , the 2nd respondent has admitted that the accused - Company continued to pay only half billed amount and hoped that they would clear the dues shortly, but apart from assurances nothing factually happened.
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14. There is no allegation in the FIR that from the date of execution of the agreement, there was dishonest intention on the part of the petitioner - accused so as to cheat the 2nd respondent. Mere breach of agreement cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the time of execution of agreement. Having admitted the payment of half billed amount, and in the absence of essential ingredients so as to attract the offence punishable under Section 420 of IPC, the registration of the FIR for the said offence is without any substance. Even accepting the allegations made in the FIR on the face of it, utmost it tantamount to breach of terms and conditions contained in the agreement and the dispute between the parties is with regard to non-payment of the arrears of the booking amount collected from the customers after deducting the commission to which the accused-company is entitled in terms of the agreement.
15. To constitute an offence punishable under Section 406 of IPC, there must be an allegation that the booking amount which was collected from the customers and which was payable 13 to the company is misappropriated by the accused - Company. The petitioners having admitted the payment of half billed amount and in the absence of any allegation as to how and in what manner the amount has been misappropriated by the accused - company except making bald allegation that the accused - Company has misappropriated the amount to its own use, the registration of the FIR against the petitioners for the offence punishable under Section 406 of IPC is also not permissible.
16. To constitute an offence punishable under Section 464 of IPC, there must be a specific allegation that a false document has been created with an intention to cause damage or injury to any person. In the present case, the allegation is that the accused - company with an intention to cheat the company has created false document by creating an entry in the records as a booking by an individual and received the amount from the individual, but the actual fact is that no customer has occupied the room thereby making the company to pay taxes and GST for no transaction done by the company. When the 14 allegation is that an entry has been created as a booking by an individual but in fact has not occupied the room, it is implied that the payment has not been received from the individual and the question of payment of taxes and GST by the respondent No.2 - company does not arise.
17. To constitute an offence of forgery, only those acts of forgery which are accompanied by the elements of deception and injury can be said to be covered by the definition of forgery under Sections 463 and 464 of IPC as held by the Apex Court in the case of Sheila Sebastian (supra). In the absence of any material that the petitioners have committed the offence of forgery with an intention to cheat and in the absence of any injury or loss caused to the 2nd respondent by mere creation of alleged entry, the registration of the FIR for the offence of forgery is without any substance.
18. Though the agreement provides for invoking Arbitration Clause for resolving the dispute between the parties, however, would not bar the criminal prosecution of the accused if the allegations made in the FIR disclose that there was 15 fraudulent or dishonest intention on the part of the Petitioners - accused to cheat the Respondent No.2 as held by the Apex Court in the case of Trisuns Chemical Industry (supra). Hence, the submission of the learned Senior Counsel for the petitioners that the registration of the FIR is impermissible when the agreement provides for invoking Arbitration Clause for resolving the dispute between the parties is unacceptable.
19. In view of the foregoing discussion, I am of the considered view that the allegations made in the FIR are purely civil in nature, however, given a criminal texture, and the FIR is maliciously instituted with an ulterior motive for wreaking vengeance to pressurize the petitioners to pay the amount which is allegedly due to the Respondent No.2 and it would be an abuse of process of law if the investigation is allowed to be continued against the Petitioners. Accordingly, I pass the following:
ORDER
i) Criminal petition is allowed.16
ii) The FIR in Crime No.143/2019 dated 20.9.2019 vide Annexure-A registered by the Chickmagalur Police Station insofar as it relates to petitioners - accused Nos.1 to 8 and 10 to 14 is hereby quashed.
Sd/-
JUDGE bkm