Madhya Pradesh High Court
Amit Khampariya vs The State Of Madhya Pradesh on 30 May, 2024
Author: Gurpal Singh Ahluwalia
Bench: Gurpal Singh Ahluwalia
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE GURPAL SINGH AHLUWALIA
ON THE 30th OF MAY, 2024
MISC. CRIMINAL CASE No. 39276 of 2022
BETWEEN:-
AMIT KHAMPARIYA S/O SHRI A.P.
KHAMPARIYA, AGED ABOUT 32 YEARS,
OCCUPATION: BUSINESSMAN SANJEEVANI
NAGAR 3162 GANGA NAGAR GARHA P.S. GARHA
DISTRICT JABALPUR (MADHYA PRADESH)
.....APPLICANT
(BY SHRI SURENDRA SINGH - SENIOR ADVOCATE WITH SHRI VIKAS
MISHRA - ADVOCATE)
AND
1. THE STATE OF MADHYA PRADESH
THROUGH POLICE STATION SANJEEVANI
NAGAR JABALPUR JABALPUR (MADHYA
PRADESH)
2. GOPIKRISHNA MAHESHWARI S/O LATE
SHRI RADHAKRISHNA MAHESHWARI R/O
VILLAGE SAHSIPUR, POLICE STATION
AURAI, DISTRICT BHADEHI (UTTAR
PRADESH)
.....RESPONDENTS
(RESPONDENT NO.1 BY SMT.SWATI A. GEORGE - DEPUTY GOVT. ADVOCATE)
(RESPONDENT NO.2 BY SHRI PARAG TIWARI - ADVOCATE)
This application coming on for admission this day, the court passed the
following:
ORDER
2
1. This application under section 482 Cr.P.C. has been filed seeking the following reliefs :-
It is therefore prayed that this Hon'ble Court be pleased to set aside and quash the FIR registered by Police of Police Station Sanjeevani Nagar Jabalpur MP in Crime No.134/2022 and b further pleased to set aside all the consequential proceedings.
2. By this application, the applicant has challenged the FIR lodged by the respondent No.2 for offence under sections 420, 406 and 386 of IPC.
3. It is submitted by counsel for the applicant that the respondent No.2 has lodged an FIR to the effect that about three years back, he met with the applicant through Shri Anand Tiwari who was already known to him. Anand Tiwari informed the respondent No.2 that the applicant is in the business of operating Toll Plaza and thereafter, he arranged a meeting with applicant. With passage of time, the relationship between the respondent No.2 and the applicant became good and accordingly the applicant informed that in the business of Toll Plaza, good profit can be earned and he is already running multiple Toll Plazas in different parts of the country. Various persons have invested in the said business and are earning good profit. He also informed that some ministers and officers are also known to him and they have also invested in the business of Toll Plaza. The respondent No.2 got impressed. Thereafter, the applicant also requested the respondent No.2 that he can also invest with him and he would give profit per month which would be 15%-20% of the investment and in addition to that whatever amount will be invested by him as an earnest money shall be returned after the contract of Toll Plaza is over. He also informed that an amount of RS. 3,38,00,000/- has been deposited with N.H.A.I. Accordingly, on the persuasion made by the applicant and considering that he would get 3 better profit, he withdrew the amount from his Bank which was deposited in F.D., mutual fund etc. and he paid Rs.2,06,00,000/- through R.T.G.S. in an account maintained in Bank of Maharashtra, Sanjeevni Nagar Branch, Jabalpur for investment in Kunwarpur Toll Plaza. This was 60% of the total earnest money. Accordingly, he was to be inducted as a partner and thus the applicant called him at his office situated in Sanjeevni Nagar, Jabalpur for execution of agreement. The applicant informed that at present he is making the respondent No.2 a partner of 25% and the remaining amount of Rs.1,21,50,000/- will be returned to him. Accordingly, the respondent No.2 requested the applicant to return the excess amount of Rs.1,21,50,000/-. At that time, the applicant informed that he has to take money from other partners and as soon as the money is received, he would refund Rs.1,21,50,000/- which he has received in excess of the partnership. It was also mentioned in clause 5 of the agreement that the initial earnest money i.e. Rs. 84,50,000/- would be refunded after the contract with N.H.A.I. is over. However, even after contract of N.H.A.I. was over, the said amount was not being refunded by the applicant. When the respondent No.2 demanded his money back, then the applicant called him in his office at Jabalpur in order to disclose the accounts. Accordingly, the respondent No.2 came to his office at Jabalpur and requested that his amount of Rs.84,50,000/- and an amount of Rs.1,21,50,000/- which was taken in excess be returned back. However, he assured that he would return the amount after 2-4 days. Thus, it was alleged that by playing fraud on the respondent No.2 the applicant had taken Rs.2,06,00,000/- but made him a partner of 25% only. Thereafter, the applicant insisted that he has prepared an Agreement Cancellation Deed, which has to be signed by the respondent No.2. It was also said by the applicant that he has already disclosed the account and now he 4 would not work as per the wishes to the respondent No.2. Whatever amount was invested by the respondent No.2 has been lost (iSlk Mwc x;k) because of various penalties imposed by N.H.A.I. and accordingly, on 11.01.2021 the applicant gave a cheque of Rs.30,00,000/- and also alleged that the amount of Rs.1,21,50,000/- which is being claimed by respondent No.2 does not belong to him whereas the said amount belongs to the other partners and the aforesaid amount would not be returned back to the respondent No.2 and the remaining amount of Toll Plaza stamp duty, force majeure, TCS etc. would be refunded after the same is credited in his account. When the respondent No.2 insisted that the applicant is giving wrong details, therefore, he should supply the penalty sheet issued by N.H.A.I., then the applicant stated that there is no such provision. At that time. 3-4 persons armed with weapons were present in the office of the applicant. In their presence the respondent No.2 became apprehensive that he may be kept in captivity or abducted, as the discussion about commercial transaction was going on in the presence of armed persons for which closed room was not required. Although respondent No.2 was not agreeable to the terms of the Agreement Cancellation Deed, but since he was made to sit in the office for hours together in the presence of armed persons, therefore, applicant forcibly obtained his signatures on the Agreement Cancellation deed. The respondent No.2 is aged about 80 years and was apprehensive of his life and was intending to return back to his house and it was already 11:00 P.M., therefore, he thought it proper to leave the office of the applicant. Therefore, it was alleged by respondent No.2 that the applicant has cheated him in a very planned manner. The respondent No.2 has also sent a notice to the applicant through his counsel but an incorrect reply was given. When he informed the applicant that he would make a complaint to the police, 5 then he extended a threat that he may do whatever he wants, but no one can take any action against him. He also extended a threat that respondent No.2 would be arrested in any case. Since the respondent No.2 was apprehensive of the contacts of the applicant with the Ministers and police officers, therefore, he could not lodge the FIR at the earliest.
4. Challenging the said FIR, it is submitted by counsel for the applicant that even if entire allegations are accepted, then it is clear that no offence of cheating would be made out. It is further submitted that the FIR discloses the civil dispute only. Whether the respondent No.2 was rightly made a partner of 60% or 25% can be decided by the Civil Court? Counsel for the applicant also relied upon the judgment passed by the Supreme Court in the case of V.Y. Jose v. State of Gujarat, reported in (2009) 3 SCC 78.
5. Per contra, it submitted by counsel for the respondent No.2 that the intention of the applicant from the very inception was to cheat the respondent No.2. Initially an assurance was given that he would be made a partner of 60% and accordingly, the applicant also took Rs.2,06,00,000/- through R.T.G.S. and thereafter, he deliberately made the respondent No.2 a partner of 25% and in spite of the assurance given by applicant, after closure of the contract he did not return the entire earnest amount of Rs.84,50,000/- which was initially paid by the respondent No.2.
6. When a specific question was put to counsel for the applicant whether the amount of Rs.2,06,00,000/- was received by the applicant or not, then it was submitted by Shri Vikas Mishra that amount was not directly received from the respondent No.2 but the said amount was received by the applicant through R.T.G.S. from other persons but the receipt of Rs.2,06,00,000/- has been accepted by the applicant.
67. Heard the learned counsel for the parties.
8. Before considering the submissions made by counsel for the parties, this Court would like to consider the scope of interference under Section 482 Cr.P.C. at this stage.
9. The Supreme Court in the case of XYZ v. State of Gujarat reported in (2019) 10 SCC 337 has held as under :
"14. Having heard the learned counsel for the parties and after perusing the impugned order and other material placed on record, we are of the view that the High Court exceeded the scope of its jurisdiction conferred under Section 482 CrPC, and quashed the proceedings. Even before the investigation is completed by the investigating agency, the High Court entertained the writ petition, and by virtue of interim order granted by the High Court, further investigation was stalled. Having regard to the allegations made by the appellant/informant, whether the 2nd respondent by clicking inappropriate pictures of the appellant has blackmailed her or not, and further the 2nd respondent has continued to interfere by calling Shoukin Malik or not are the matters for investigation. In view of the serious allegations made in the complaint, we are of the view that the High Court should not have made a roving inquiry while considering the application filed under Section 482 CrPC. Though the learned counsel have made elaborate submissions on various contentious issues, as we are of the view that any observation or findings by this Court, will affect the investigation and trial, we refrain from recording any findings on such issues. From a perusal of the order of the High Court, it is evident that the High Court has got carried away by the agreement/settlement arrived at, between the parties, and recorded a finding that the physical relationship of the appellant with the 2nd respondent was consensual. When it is the allegation of the appellant, that such document itself is obtained under threat and coercion, it is a matter to be investigated. Further, the complaint of the appellant about interference by the 2nd respondent by calling Shoukin Malik and further 7 interference is also a matter for investigation. By looking at the contents of the complaint and the serious allegations made against 2nd respondent, we are of the view that the High Court has committed error in quashing the proceedings."
(Underline supplied)
10. The Supreme Court in the case of State of Tamil Nadu Vs. S. Martin & Ors. reported in (2018) 5 SCC 718 has held as under:-
"7. In our view the assessment made by the High Court at a stage when the investigation was yet to be completed, is completely incorrect and uncalled for ..........."
11. The Supreme Court in the case of Ajay Kumar Das v. State of Jharkhand, reported in (2011) 12 SCC 319 has held as under :
"12. The counsel appearing for the appellant also drew our attention to the same decision which is relied upon in the impugned judgment by the High Court i.e. State of Haryana v. Bhajan Lal. In the said decision, this Court held that it may not be possible to lay down any specific guidelines or watertight compartment as to when the power under Section 482 CrPC could be or is to be exercised. This Court, however, gave an exhaustive list of various kinds of cases wherein such power could be exercised. In para 103 of the said judgment, this Court, however, hastened to add that as a note of caution it must be stated that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases for the Court would not be justified in embarking upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the first information report or in the complaint and that the extraordinary or the inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice."
12. The Supreme Court in the case of Mohd. Akram Siddiqui v. State of Bihar reported in (2019) 13 SCC 350 has held as under :
8"5. Ordinarily and in the normal course, the High Court when approached for quashing of a criminal proceeding will not appreciate the defence of the accused; neither would it consider the veracity of the document(s) on which the accused relies. However an exception has been carved out by this Court in Yin Cheng Hsiung v. Essem Chemical Industries; State of Haryana v. Bhajan Lal and Harshendra Kumar D. v. Rebatilata Koley to the effect that in an appropriate case where the document relied upon is a public document or where veracity thereof is not disputed by the complainant, the same can be considered."
13. The Supreme Court in the case of State of A.P. v. Gourishetty Mahesh reported in (2010) 11 SCC 226 has held as under :
"18. While exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an enquiry whether the evidence in question is reliable or not or whether on a reasonable appreciation of it accusation would not be sustained. That is the function of the trial Judge/Court. It is true that the Court should be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before issuing process, otherwise, it would be an instrument in the hands of a private complainant to unleash vendetta to harass any person needlessly. At the same time, Section 482 is not an instrument handed over to an accused to short-circuit a prosecution and brings about its closure without full-fledged enquiry.
19. Though the High Court may exercise its power relating to cognizable offences to prevent abuse of process of any court or otherwise to secure the ends of justice, the power should be exercised sparingly. For example, where the allegations made in the FIR or complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused or allegations in the FIR do not disclose a cognizable offence or do not disclose commission of any offence and make out a case against the accused or where there is express legal bar provided in any of the provisions of the Code or in any other enactment under 9 which a criminal proceeding is initiated or sufficient material to show that the criminal proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused due to private and personal grudge, the High Court may step in.
20. Though the powers possessed by the High Court under Section 482 are wide, however, such power requires care/caution in its exercise. The interference must be on sound principles and the inherent power should not be exercised to stifle a legitimate prosecution. We make it clear that if the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of inherent powers under Section
482."
14. The Supreme Court in the case of M. Srikanth v. State of Telangana, reported in (2019) 10 SCC 373 has held as under :
"17. It could thus be seen, that this Court has held, that where the allegations made in the FIR or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute a case against the accused, the High Court would be justified in quashing the proceedings. Further, it has been held that where the uncontroverted allegations in the FIR and the evidence collected in support of the same do not disclose any offence and make out a case against the accused, the Court would be justified in quashing the proceedings."
15. The Supreme Court in the case of CBI v. Arvind Khanna reported in (2019) 10 SCC 686 has held as under :
"17. After perusing the impugned order and on hearing the submissions made by the learned Senior Counsel on both sides, we are of the view that the impugned order passed by the High Court is not sustainable. In a petition filed under Section 482 CrPC, the High Court has recorded findings on several disputed facts and allowed the petition. Defence of the accused is to be tested after appreciating the evidence during trial. The very fact that the High Court, in this case, 10 went into the most minute details, on the allegations made by the appellant CBI, and the defence put forth by the respondent, led us to a conclusion that the High Court has exceeded its power, while exercising its inherent jurisdiction under Section 482 CrPC.
18. In our view, the assessment made by the High Court at this stage, when the matter has been taken cognizance of by the competent court, is completely incorrect and uncalled for."
16. Further, the Supreme Court in the case of State of MP Vs. Kunwar Singh by order dated 30.06.2021 passed in Cr.A. No.709/2021 has held that a detailed and meticulous appreciation of evidence at the stage of 482 of CrPC is not permissible and should not be done. In the case of Kunwar Singh (supra), the Supreme Court held as under:-
"8........At this stage, the High Court ought not to be scrutinizing the material in the manner in which the trial court would do in the course of the criminal trial after evidence is adduced. In doing so, the High Court has exceeded the well- settled limits on the exercise of the jurisdiction under Section 482 of CrPC. A detailed enquiry into the merits of the allegations was not warranted. The FIR is not expected to be an encyclopedia..........."
17. Similar law has been laid down by the Supreme Court in the cases of Munshiram v. State of Rajasthan, reported in (2018) 5 SCC 678, Teeja Devi v. State of Rajasthan reported in (2014) 15 SCC 221, State of Orissa v. Ujjal Kumar Burdhan, reported in (2012) 4 SCC 547, S. Khushboo v. Kanniammal reported in (2010) 5 SCC 600, Sangeeta Agrawal v. State of U.P., reported in (2019) 2 SCC 336, Amit Kapoor v. Ramesh Chander reported in (2012) 9 SCC 460, Padal Venkata Rama Reddy Vs. Kovuri 11 Satyanarayana Reddy reported in (2012) 12 SCC 437, M.N. Ojha v. Alok Kumar Srivastav reported in (2009) 9 SCC 682.
18. The allegations made in the FIR can be summarized as under :-
(i) The respondent No.2 came in contact with the applicant through one of his best friend Shri Anand Tiwari.
(ii) The applicant persuaded the respondent No.2 to invest money in Kunwarpur Toll Plaza.
(iii) The applicant also informed the respondent No.2 that he has close contacts with Ministers and Officers.
(iv) The applicant also assured 15%-20% profit of the invested amount per month.
(v) An agreement was executed between the partners including the respondent No.2 in which it was mentioned that the contract of Toll Plaza has been accepted on yearly amount of Rs.20,28,99,888/- + TDS which is situated on Raibarely to Jaunpur Road. Other partners including the respondent No.2 have already paid Rs.3,38,00,000/- in the account of the applicant and the aforesaid earnest money has been deposited with N.H.A.I. which shall be refunded by the applicant to the partners after the contract is over and in case if any penalty is imposed, then the same shall be deducted from the earnest money.
(vi) In case of any dispute it shall be mutually resolved by the partners.
19. Although, it is the submission made by counsel for the applicant that the respondent No.2 was made a partner of 25% only, but according to the respondent no.2, in the FIR it is alleged that respondent No.2 had paid Rs.2,06,00,000/- to the applicant which was 60% of the total earnest money and, thus, there is a dispute as to whether the initial settlement between the applicant 12 and the respondent No.2 was partnership of 60% or 25%. Even after termination of contract, the payable earnest money as well as the excess earnest money taken by the applicant has not been refunded to the respondent No.2. When the respondent No.2 came to Jabalpur for having talk with the applicant in connection with the business transactions, then the same was held in a closed room in presence of armed persons and a threat was also extended by the applicant that he would get him arrested at Jabalpur.
20. Now, the only question for consideration is as to whether the aforesaid allegations would make out a case predominantly of civil in nature or it also involves the criminal ingredients.
21. The Supreme Court in the case of Sarabjit Kaur v. State of Punjab, reported in (2023) 5 SCC 360 has held as under:
13. A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings.
From the facts available on record, it is evident that Respondent 2 had improved his case ever since the first complaint was filed in which there were no allegations against the appellant rather it was only against the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by Respondent 2. When the offence was made out on the basis of the first complaint, the second complaint was filed with improved version making allegations against the appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which FIR was registered was filed nearly three years after 13 the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the court.
22. The Supreme Court, in the case of Mitesh Kumar J. Sha v. State of Karnataka, reported in (2022) 14 SCC 572 has held as under :-
"32. Upon a careful assessment of such facts, by no stretch can it be concluded that the appellants herein have deceptively or intentionally tried to sell excess flats if any, as contended by Respondent 2. Here, it must also be borne in mind that subsequent to the revocation of GPA, it was the appellants herein who had first resorted to arbitration proceedings on 2-3-2016 for redressal of dispute between the parties, to which Respondent 2 had accordingly filed his statement of objections dated 9-3-2016. It was only on 29-3- 2016 that Respondent 2 had filed the FIR in question bearing Crime No. 185/2016 against the appellants. Moreover, it was Respondent 2 who had withdrawn his prayer with respect to selling of four excess flats by the appellants, only to pursue the same in civil proceedings. Whether sale of excess flats even if made amounts to a mere breach of contract?
36. This Court in Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] , has observed : (SCC p. 177, para
15) "15. ... that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise."
37. Applying this dictum to the instant factual matrix where the key ingredient of having a dishonest or fraudulent intent under 14 Sections 405, 419 and 420 is not made out, the case at hand, in our considered opinion is a suitable case necessitating intervention of this Court.
Whether the dispute is one of entirely civil nature and therefore liable to be quashed?
38. Having considered the relevant arguments of the parties and decisions of this Court we are of the considered view that existence of dishonest or fraudulent intention has not been made out against the appellants. Though the instant dispute certainly involves determination of issues which are of civil nature, pursuant to which Respondent 2 has even instituted multiple civil suits, one can by no means stretch the dispute to an extent, so as to impart it a criminal colour. As has been rightly emphasised upon by this Court, by way of an observation rendered in Indian Oil Corpn. v. NEPC India Ltd. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 :
(2006) 3 SCC (Cri) 188] , as under : (SCC p. 749, para 14) "14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law."
39. It was also observed : (Indian Oil Corpn. case [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] , SCC pp. 748-49, para 13) "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 civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. ... There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged."
1540. On an earlier occasion, in G. Sagar Suri v. State of U.P. [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636 : 2000 SCC (Cri) 513] , this Court has also observed : (SCC p. 643, para 8) "8. Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. 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 the High Court is to exercise its jurisdiction under Section 482 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."
23. The Supreme Court, in the case of Alpic Finance Ltd. v. P. Sadasivan, reported in (2001) 3 SCC 513 has held as under:
5. Contours of the power under Section 482 CrPC have been explained in a series of decisions by this Court.
In Nagawwa v. Veeranna Shivalingappa Konjalgi [(1976) 3 SCC 736 : 1976 SCC (Cri) 507] it was held that the Magistrate while issuing process against the accused should satisfy himself as to whether the allegations in the complaint, if proved, would ultimately end in the conviction of the accused. It was held that the order of Magistrate issuing process against the accused could be quashed under the following circumstances: (SCC p. 741, para 5) "(1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused;
(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can 16 ever reach a conclusion that there is sufficient ground for proceeding against the accused;
(3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like."
6. In State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 :
1992 SCC (Cri) 426] a question came up for consideration as to whether quashing of the FIR filed against the respondent Bhajan Lal for the offences under Sections 161 and 165 IPC and Section 5(2) of the Prevention of Corruption Act was proper and legal. Reversing the order passed by the High Court, this Court explained the circumstances under which such power could be exercised. Apart from reiterating the earlier norms laid down by this Court, it was further explained that such power could be exercised where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. However, this Court in Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 : 1995 SCC (Cri) 1059] , held (at SCC p. 209, para 23) that "at the stage of quashing an FIR or complaint the High Court is not justified in embarking upon an inquiry as to the probability, reliability or genuineness of the allegations made therein".
7. In a few cases, the question arose whether a criminal prosecution could be permitted when the dispute between the parties is of predominantly civil nature and the appropriate remedy would be a civil suit. In one case reported in Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692 :
1988 SCC (Cri) 234] this Court held that if the allegations in the complaint are both of a civil wrong and a criminal offence, there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. That was a case relating to a trust. There were three trustees including the settlor. A large house constituted part of the trust property. The respondent 17 and the complainant were acting as Secretary and Manager of the Trust and the house owned by the Trust was in the possession of a tenant. The tenant vacated the building and the allegation in the complaint was that two officers of the Trust, in conspiracy with one of the trustees and his wife, created documents showing tenancy in respect of that house in favour of the wife of the trustee. Another trustee filed a criminal complaint alleging that there was commission of the offence under Sections 406, 467 read with Sections 34 and 120-B of the Penal Code, 1860. The accused persons challenged the proceedings before the High Court under Section 482 of the Code of Criminal Procedure and the High Court quashed the proceedings in respect of two of the accused persons. It was under those circumstances that this Court observed: (SCC Headnote) "Though a case of breach of trust may be both a civil wrong and a criminal offence but there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. The present case is one of that type where, if at all, the facts may constitute a civil wrong and the ingredients of the criminal offences are wanting. Having regard to the relevant documents including the trust deed as also the correspondence following the creation of the tenancy, the submissions advanced on behalf of the parties, the natural relationship between the settlor and the trustee as mother and son and the fall out in their relationship and the fact that the wife of the co-trustee was no more interested in the tenancy, it must be held that the criminal case should not be continued."
8. In another case recently decided by this Court in Trisuns Chemical Industry v. Rajesh Agarwal [(1999) 8 SCC 686 : 2000 SCC (Cri) 47] the complainant Company had alleged that the directors of another company offered to supply "toasted soyabean extractions"
for a price higher than the market price. The complainant Company had to pay the price in advance as demanded by the accused Company. Complainant paid the amount through cheques. However, the accused supplied the commodity, which was of a most inferior and sub-standard quality and the complainant suffered a loss of Rs 17 lakhs. The complainant alleged that he was induced to pay the price on the representation that the best quality commodity would be supplied. A criminal complaint was filed alleging commission of the 18 offence punishable under Section 420-A. The Magistrate forwarded the complaint for investigation under Section 156(3) CrPC. The accused directors moved the High Court for quashing the complaint alleging that the dispute was purely of a civil nature and hence no prosecution should have been permitted. The High Court accepted this plea and the complaint was quashed. But this Court held in paras 8 and 9 of the judgment as follows: (SCC p. 690) "[M]erely because an act has a civil profile is not sufficient to denude it of its criminal outfit.
*** We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases...."
9. In Pratibha Rani v. Suraj Kumar [(1985) 2 SCC 370 : 1985 SCC (Cri) 180] the question arose that when the civil as well as the criminal remedy is available to a party, can a criminal prosecution be completely barred. In this case, the matter related to the stridhan property. The complainant alleged that her husband, father-in-law and other relatives misappropriated her jewellery and other valuable articles entrusted to them by her parents at the time of marriage. The complainant alleged that these dowry articles were meant for her exclusive use and that the accused misbehaved and maltreated her and ultimately he turned her out without returning the dowry articles. The accused filed a criminal miscellaneous petition under Section 482 for quashing the criminal proceedings and the High Court quashed the same. The accused contended that the dispute was of a civil nature and no criminal prosecution would lie. Under that circumstance, this Court held in para 21 at pp. 382-83 as under:
19"There are a large number of cases where criminal law and civil law can run side by side. The two remedies are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence. The object of the criminal law is to punish an offender who commits an offence against a person, property or the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life. This does not, however, affect the civil remedies at all for suing the wrongdoer in cases like arson, accidents, etc. It is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import."
24. The Supreme Court in the case of Amit Kapoor v. Ramesh Chander and another, reported in (2012) 9 SCC 460 has held as under:
27. Having discussed the scope of jurisdiction under these two provisions i.e. Section 397 and Section 482 of the Code and the fine line of jurisdictional distinction, now it will be appropriate for us to enlist the principles with reference to which the courts should exercise such jurisdiction. However, it is not only difficult but is inherently impossible to state with precision such principles. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be:
27.1. Though there are no limits of the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. 27.2. The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion 20 and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.
27.3. The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.
27.4. Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loath to interfere, at the threshold, to throttle the prosecution in exercise of its inherent powers. 27.5. Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused. 27.6. The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender.
27.7. The process of the court cannot be permitted to be used for an oblique or ultimate/ulterior purpose.
27.8. Where the allegations made and as they appeared from the record and documents annexed therewith to predominantly give rise and constitute a "civil wrong" with no "element of criminality" and does not satisfy the basic ingredients of a criminal offence, the court may be justified in quashing the charge. Even in such cases, the court would not embark upon the critical analysis of the evidence. 27.9. Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction; the court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.
27.10. It is neither necessary nor is the court called upon to hold a full-fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction.21
27.11. Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.
(underline supplied) 27.12. In exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was possibility of his acquittal.
The Court has to consider the record and documents annexed therewith by the prosecution.
27.13. Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie.
27.14. Where the charge-sheet, report under Section 173(2) of the Code, suffers from fundamental legal defects, the Court may be well within its jurisdiction to frame a charge.
27.15. Coupled with any or all of the above, where the Court finds that it would amount to abuse of process of the Code or that the interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debito justitiae i.e. to do real and substantial justice for administration of which alone, the courts exist. [Ref. State of W.B. v. Swapan Kumar Guha [(1982) 1 SCC 561 :
1982 SCC (Cri) 283 : AIR 1982 SC 949] ; Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692 :
1988 SCC (Cri) 234] ; Janata Dal v. H.S. Chowdhary [(1992) 4 SCC 305 : 1993 SCC (Cri) 36 : AIR 1993 SC 892] ; Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 : 1995 SCC (Cri) 1059] ; G. Sagar Suri v. State of U.P. [(2000) 2 SCC 636 : 2000 SCC (Cri) 513] ; Ajay Mitra v. State of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703] ; Pepsi Foods Ltd. v. Special Judicial Magistrate [(1998) 5 SCC 749 : 1998 SCC (Cri) 1400 : AIR 1998 SC 128] ; State of U.P. v. O.P. Sharma [(1996) 7 SCC 705 : 1996 SCC (Cri) 497] ; Ganesh Narayan Hegde v. S. Bangarappa [(1995) 4 SCC 22 41 : 1995 SCC (Cri) 634] ; Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [(2005) 1 SCC 122 : 2005 SCC (Cri) 283] ; Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [(2000) 3 SCC 269 : 2000 SCC (Cri) 615 : AIR 2000 SC 1869] ; Shakson Belthissor v. State of Kerala [(2009) 14 SCC 466 : (2010) 1 SCC (Cri) 1412] ; V.V.S. Rama Sharma v. State of U.P. [(2009) 7 SCC 234 : (2009) 3 SCC (Cri) 356] ; Chunduru Siva Ram Krishna v. Peddi Ravindra Babu [(2009) 11 SCC 203 : (2009) 3 SCC (Cri) 1297] ; Sheonandan Paswan v. State of Bihar [(1987) 1 SCC 288 : 1987 SCC (Cri) 82] ; State of Bihar v. P.P. Sharma [1992 Supp (1) SCC 222 : 1992 SCC (Cri) 192 : AIR 1991 SC 1260] ; Lalmuni Devi v. State of Bihar [(2001) 2 SCC 17 : 2001 SCC (Cri) 275] ; M. Krishnan v. Vijay Singh [(2001) 8 SCC 645 : 2002 SCC (Cri) 19] ; Savita v. State of Rajasthan [(2005) 12 SCC 338 : (2006) 1 SCC (Cri) 571] and S.M. Datta v. State of Gujarat [(2001) 7 SCC 659 :
2001 SCC (Cri) 1361 : 2001 SCC (L&S) 1201] .] 27.16. These are the principles which individually and preferably cumulatively (one or more) be taken into consideration as precepts to exercise of extraordinary and wide plenitude and jurisdiction under Section 482 of the Code by the High Court. Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance with the requirements of the offence.
25. Thus, it is clear that although every business transaction would necessarily involve civil ingredients but the primary question is whether it also involves criminal ingredients or not ?
26. In order to make out an offence under section 420 of IPC, mere failure to keep promise is not sufficient. Breach of contract and intention to cheat from very inception are two different aspects. Whether a person had an intention from very inception to cheat the complainant or it is a case of breach of contract will depend on facts and circumstances of each case.23
27. The Supreme Court in the case of Harmanpreet Singh Ahluwalia v. State of Punjab, reported in (2009) 7 SCC 712 has held as under :-
23. Criminal breach of trust is defined in Section 405 IPC. The ingredients of an offence of the criminal breach of trust are: "1. Entrusting any person with property or with any dominion over property.
2. That person entrusted (a) dishonestly misappropriating or converting to his own use that property; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation--
(i) of any direction of law prescribing the mode in which such trust is to be discharged, or
(ii) of any legal contract made touching the discharge of such trust."
24. Section 415 IPC defines cheating as under:
"415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to 'cheat'."
25. An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied:
"(i) deception of a person either by making a false or misleading representation or by other action or omission;
(ii) fraudulently or dishonestly inducing any person to deliver any property; or
(iii) to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit."
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 24 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 Penal Code can be said to have been made out. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Penal Code is existence of an intention (sic a fraudulent or dishonest intention at the time) of making initial promise or existence thereof from the very beginning of formation of contract.
26. In Ajay Mitra v. State of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703] this Court held : (SCC p. 19, paras 15-16) "15. Section 420 IPC says that:
'420. Cheating and dishonestly inducing delivery of property.-- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person ... shall be punished with imprisonment...'.
Cheating has been defined in Section 415 IPC and it says that:
'415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".'
16. A guilty intention is an essential ingredient of the offence of cheating. In other words 'mens rea' on the part of the accused must be established before he can be convicted of an offence of cheating. (See Jaswantrai Manilal Akhaney v. State of Bombay [AIR 1956 SC 575] .) In Mahadeo Prasad v. State of W.B. [AIR 1954 SC 724] it was held as follows : (AIR p. 724) 'Where the charge against the accused is under Section 420 in that he induced the complainant to part with his goods, on the understanding that the accused would pay for the same on delivery but did not pay, if the accused had at the time he promised to pay cash against delivery an intention to do so, the fact that he did not pay would not convert the transaction into one of cheating. But if on the other hand he had no intention whatsoever to pay but merely said 25 that he would do so in order to induce the complainant to part with the goods then a case of cheating would be established.' "
27. In Hira Lal Hari Lal Bhagwati v. CBI [(2003) 5 SCC 257 :
2003 SCC (Cri) 1121] this Court held : (SCC p. 280, para 40) "40. It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning, that is, at the time when the promise was made cannot be presumed. It is seen from the records that the exemption certificate contained necessary conditions which were required to be complied with after importation of the machine. Since the GCS could not comply with it, therefore, it rightly paid the necessary duties without taking advantage of the exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention of either the GCS or the appellants in their capacities as office-
bearers right at the time of making application for exemption."
(emphasis in original) (See also Indian Oil Corpn. v. NEPC India Ltd. [(2006) 6 SCC 736 :
(2006) 3 SCC (Cri) 188] )
28. In Vir Prakash Sharma v. Anil Kumar Agarwal [(2007) 7 SCC 373 : (2007) 3 SCC (Cri) 370] , noticing, inter alia, the aforementioned decision, this Court held : (SCC pp. 375-76, para 8) "8. The dispute between the parties herein is essentially a civil dispute. Non-payment or underpayment of the price of the goods by itself does not amount to commission of an offence of cheating or criminal breach of trust. No offence, having regard to the definition of criminal breach of trust contained in Section 405 of the Penal Code can be said to have been made out in the instant case."
It was furthermore opined : (Vir Prakash Sharma case [(2007) 7 SCC 373 : (2007) 3 SCC (Cri) 370] , SCC p. 377, paras 13-16) "13. The ingredients of Section 420 of the Penal Code are as follows:
(i) Deception of any persons;
(ii) Fraudulently or dishonestly inducing any person to deliver any property; or 26
(iii) To consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
No act of inducement on the part of the appellant has been alleged by the respondent. No allegation has been made that he had an intention to cheat the respondent from the very inception.
14. What has been alleged in the complaint petition as also the statement of the complainant and his witnesses relate to his subsequent conduct. The date when such statements were allegedly made by the appellant had not been disclosed by the witnesses of the complainant. It is really absurd to opine that any such statement would be made by the appellant before all of them at the same time and that too in his own district. They, thus, appear to be wholly unnatural.
15. In law, only because he had issued cheques which were dishonoured, the same by itself would not mean that he had cheated the complainant. Assuming that such a statement had been made, the same, in our opinion, does not exhibit that there had been any intention on the part of the appellant herein to commit an offence under Section 417 of the Penal Code.
16. Furthermore, admittedly, their residences are in different districts. Whereas the appellant is a resident of the district of Ajamgarh, the respondent is a resident of the district of Rampur. Cheques were admittedly issued by the appellant at his place. There is nothing on record to show that any part of the cause of action arose within the jurisdiction of the court concerned. Even if such statements had been made, the same admittedly have been made only at the place where the appellant resides. The learned Magistrate, therefore, had no jurisdiction to issue the summons."
29. The said principle has been reiterated in All Cargo Movers (India) (P) Ltd. v. Dhanesh Badarmal Jain [(2007) 14 SCC 776 :
(2009) 1 SCC (Cri) 947 : (2007) 12 Scale 391] , stating : (SCC pp.
781-82, para 16) "16. ... For the said purpose, allegations in the complaint petition must disclose the necessary ingredients therefor. Where a civil suit is pending and the complaint petition has been filed one year after filing of the civil suit, we may for the purpose of finding out as to whether 27 the said allegations are prima facie correct, take into consideration the correspondences exchanged by the parties and other admitted documents. It is one thing to say that the Court at this juncture would not consider the defence of the accused but it is another thing to say that for exercising the inherent jurisdiction of this Court, it is impermissible also to look to the admitted documents. Criminal proceedings should not be encouraged, when it is found to be mala fide or otherwise an abuse of the process of the court. Superior courts while exercising this power should also strive to serve the ends of justice."
(See also Sharon Michael v. State of T.N. [(2009) 3 SCC 375 : (2009) 2 SCC (Cri) 103 : (2009) 1 Scale 627] )
30. It is, therefore, evident that the element of wrongful intention should ordinarily exist from the inception of the contract. FIR does not satisfy the aforementioned test. So far as the allegation in regard to criminal breach of trust is concerned, it related to the dowry articles. No allegation has been made that the appellants are guilty of commission of offence punishable under Section 3 and/or 4 of the Dowry Prohibition Act. If any dowry has been given, the same would attract the provisions of the special Act in preference to the general statute. Furthermore, if any article is given by way of dowry, the question of entrustment thereof for or on behalf of the bride would not arise.
28. If the allegations made in the FIR are considered in the light of the law laid down by the Supreme Court, then it is clear that the applicant had persuaded the respondent No.2 to invest a huge amount on the pretext that he would be made a partner of 60% and accordingly, Rs.2,06,00,000/- which was 60% of the earnest money to be deposited with the department, was received by the applicant, whereas subsequently respondent No.2 was made a partner of 25% only. The applicant had assured the respondent No.2 that excess amount of Rs.1,21,50,000/- would be returned but, the same was not done. Even the earnest money which was refundable after the contract was over was not returned back by the applicant in its entirety and according to the respondent 28 No.2 his signatures on partnership cancellation deed were obtained under coercion, pressure and threat. Had it been a case that after receiving 60% of the earnest money with an intention to make the respondent No.2 a partner of 60% but thereafter, on account of certain eventualities some breach of contract took place, then this Court would have certainly held that there was no intention on the part of the applicant to deceive the respondent No.2 from the very inception. However, after having received an amount of Rs.2,06,00,000/- i.e., 60% of the earnest money, from the respondent No.2 may be directly or indirectly, if the applicant made the respondent No.2 a partner of 25% only and thereafter did not return the excess amount, then it is clear that the intention of the applicant from the very inception was to cheat the respondent No.2.
29. Under these circumstances, this Court is of considered opinion that on the basis of the allegations made in the FIR, it cannot be said that the dispute is predominantly of a civil nature.
30. Consequently, no case is made out warranting interference.
31. The application fails and is hereby dismissed.
(G.S. AHLUWALIA) JUDGE HEMANT SARAF 2024.06.03 19:46:19 +05'30' HS