Andhra Pradesh High Court - Amravati
Unknown vs Nepc India Ltd. [2006 (6) Scc 736]. Let Us ... on 2 November, 2022
Author: K. Sreenivasa Reddy
Bench: K. Sreenivasa Reddy
HON'BLE SRI JUSTICE K. SREENIVASA REDDY
Criminal Petition No.7312 of 2019
Order:
The Criminal Petition, under Section 482 of the Code of
Criminal Procedure, 1973, has been filed to quash the proceedings in
Crime No.169 of 2018 of Jami Police Station, Vizianagaram district.
2. Originally, a private complaint has been filed by 2nd
respondent/de facto complainant as against the petitioner herein/A1
and others for the offences punishable under Sections 120-B, 420 and
406 read with 34 IPC. The same was referred to the police under
Section 156(3) Cr.P.C. Thereafter, the police registered a case in
Crime No.169 of 2018 of Jami Police Station, Vizianagaram district.
3. Brief facts of the case are that 2nd respondent/de facto
complainant was doing real estate business in the name and style
"Swarna Properties, Bangalore" and in the course of business he got
acquaintance with the petitioner/A1. The de facto complainant
started real estate business for purchasing house sites for the
employees of APCT Employees' Co-operative House Building Society
at Visakhapatnam. Unfortunately, due to insufficient funds of the
said society, as they dropped from their house site project, the de
facto complainant paid back the society amount, but he continued
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with the petitioner/A1 as he has been taking the project by paying
money to the concerned Ryots and land owners through the
petitioner/A1. 2nd respondent/de facto complainant had been making
all transactions with the help of the petitioner/A1. During the period
between October 2010 and November 2013, the petitioner/A1 made
2nd respondent/de facto complainant to part with an amount of
Rs.13,39,34,878/- on different occasions by way of cheques, account
transfers and cash either to him or to the accounts of A2 to A8. Out
of the said amount of Rs.13,39,34,878/-, the petitioner/A1 had
accounted for Rs.9,26,70,000/- and he had not accounted for the
remaining amount of Rs.4,12,64,878/-. A1 to A8 conspired together
and with a mala fide intention, they cheated the 2nd respondent/de
facto complainant.
4. Learned counsel for the petitioner/A1 contends that even
accepting that the entire accusations to be true, the offence would
not attract against the petitioner/A1 for the reason that he is an
agent to the de facto complainant. The only accusation made as
against the petitioner/A1 is that, certain amounts were deposited in
the accounts of the petitioner/A1 and his relatives to a tune of
Rs.13.00 Crores and odd, out of which the petitioner/A1 purchased
the lands to the extent of Rs.9.00 Crores and the remaining amounts
have not been accounted for by the petitioner/A1. He further
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contends that the dispute is purely civil in nature and by any stretch
of imagination the offences would not attract as against the
petitioner/A1.
5. On the contrary, learned counsel for 2nd respondent/de facto
complainant contended that, prima facie, basing on the accusations,
an offence has been made out for the reason that out of the
accounted money of Rs.13.00 Crores, which was deposited into the
accounts of the petitioner and his relatives, the petitioner/A1 has only
accounted for Rs.9.00 Crores and odd and the rest of the amounts
have not been accounted for. The investigation is at nascent stage.
The police have to investigate into the said offence and come to
finality.
6. On the other hand, Sri Soora Venkata Sainath, learned Special
Assistant Public Prosecutor, contended that all the accused and the
de facto complainant are related to each other. The amounts were
deposited into the accounts of the petitioner/A1 and his relatives. He
submitted that the amounts were deposited into the accounts of A4
and A7 who happened to be closely related to the petitioner herein.
The residential addresses of those people were not furnished to the
de facto complainant. He further submitted that the petitioner/A1
visited the place of the de facto complainant on few occasions and
induced the de facto complainant to purchase the lands in
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Visakhapatnam and Vizianagaram districts as a boom would arise in
respect of the lands. Basing on such contention, the de facto
complainant has resorted in investing the amounts through the
petitioner herein.
7. Heard. Perused the record.
8. Admittedly, the petitioner/A1 is related to the de facto
complainant. Going by the averments in the FIR, it has been
categorically stated that the petitioner/A1 used to visit the house of
the de facto complainant. He submitted that there are some other
lands in which the Society is not interested and suggested the de
facto complainant to purchase the same in view of the great boom for
the lands in Visakhapatnam and Vizianagaram districts. Since the de
facto complainant was favouring with the proposal, as he is also
engaged in real estate business in Bangalore, after persistent
enquiries of the petitioner, the de facto complainant accepted the
suggestion of the petitioner. On 27.10.2010, the de facto
complainant paid an amount of Rs.2,00,000/- and, thereafter, he
continuously paid the amounts to the tune of Rs.13,39,34,878/- by
way of cheques, account transfers and cash to the petitioner herein
and other accused i.e., A2 to A8. Petitioner acknowledged the receipt
of the above said amount in his own handwriting on 20.05.2014.
Thereafter, it is alleged that the petitioner accounted for an amount
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of Rs.9,26,70,000/-, out of the total amount of Rs.13,39,34,878/-. In
respect of the amount of Rs.4.00 Crores and odd, the petitioner
neither purchased the lands nor repaid the amounts to the de facto
complainant. It is pertinent to mention here that the amounts have
been routed to the petitioner herein in the year 2014.
9. On a plain reading of the contents of the FIR goes to show
that, the remaining amount of Rs.4.00 Crores and odd has not been
repaid by the petitioner to the de facto complainant. On a reading of
161 Cr.P.C statement of the de facto complainant, goes to show that
the petitioner herein purchased the lands in respect of
Rs.9,26,70,000/- and the same was accounted for, but for the
remaining amount of Rs.4,12,64,878/-, the petitioner has neither
purchased the lands nor repaid the said amount to the de facto
complainant. Prima facie, there appears to be some transaction
which has not been disclosed by the petitioner. Since the present
Criminal Petition has been filed when the investigation is in progress,
this Court granted stay of all further proceedings in Crime No.169 of
2018, dated 13.07.2022, the investigating agency could not complete
the investigation till now.
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10. Learned counsel for the petitioner has relied upon a decision
reported in Mohammed Ibrahim v. State of Bihar1, wherein the
Hon'ble Supreme Court, in para 8, held thus.
"8. This Court has time and again drawn
attention to the growing tendency of complainants
attempting to give the cloak of a criminal offence to
matters which are essentially and purely civil in
nature, obviously either to apply pressure on the
accused, or out of enmity towards the accused, or to
subject the accused to harassment. Criminal courts
should ensure that proceedings before it are not used
for settling scores or to pressurise parties to settle civil
disputes. But at the same, it should be noted that
several disputes of a civil nature may also contain the
ingredients of criminal offences and if so, will have to
be tried as criminal offences, even if they also amount
to civil disputes. [See: G. Sagar Suri v. State of U.P.
[2000 (2) SCC 636] and Indian Oil Corporation vs.
NEPC India Ltd. [2006 (6) SCC 736]. Let us examine
the matter keeping the said principles in mind."
11. He also relied upon a decision of the Hon'ble Supreme Court
reported in V.Y. Jose v. State of Gujarat2, wherein it was held
thus.
1
(2009) 8 SCC 751
2
(2009) 3 SCC 78
7
"14. 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 part of
the accused to keep his promise, in absence of a
culpable intention at the time of making initial promise
being absent, no offence under Section 420 of the Indian
Penal Code can be said to have been made out.
............
21. There exists a distinction between pure contractual dispute of civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there 8 cannot be any doubt whatsoever that in absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.
22. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Indian Penal Code is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract.
23. Section 482 of the Code of Criminal Procedure, saves the inherent power of the court. It serves a salutary purpose viz. a person should not undergo harassment of litigation for a number of years although no case has been made out against him.
24. It is one thing to say that a case has been made out for trial and as such the criminal proceedings should not be quashed but it is another thing to say that a person should undergo a criminal trial despite the fact that no case has been made out at all."
12. Learned counsel for the petitioner also relied upon a decision of the Hon'ble Supreme Court reported in Thermax Limited v. K.M. Johny3, wherein it was held in para 43 as follows. 3 (2011) 13 SCC 412 9 "43. The Courts below failed to appreciate an important aspect that the complaint came to be filed in the year 2002 when the alleged disputes pertain to the period from 1993-1995. As rightly pointed out, the Courts below ought to have appreciated that respondent No.1 was trying to circumvent the jurisdiction of the Civil Courts which estopped him from proceeding on account of the law of limitation."
13. While relying on the said decisions, learned counsel for the petitioner submits that, prima facie, basing on the accusations contained in the FIR, would not make any offence under Section 420 IPC for the reason that there is no dishonest intention on the part of the petitioner right from the beginning. Further, he strenuously contended that mere nonpayment of monies to the de facto complainant would not attract any of the offences as alleged.
14. On the other hand, learned counsel for 2nd respondent/de facto complainant has relied upon a decision reported in Dr. Lakshman v. State of Karnataka4, wherein the Hon'ble Supreme Court, in para 9, held thus.
"9. It is not seriously disputed by the parties with regard to the entering of the agreements for procuring the land in favour of the appellant in Ballur Village, Anekal Taluk, Bangalore Urban District and respondents have received 4 AIR 2019 SC 5268 10 the amount of Rs.9 crores by way of demand drafts and cheques. It is the specific case of the appellant that there are schedules mentioned to the agreements as per which respondents have agreed to procure the land covered by Survey Nos.115 and 117 of Ballur Village apart from other lands. In a petition under Section 482, Cr.P.C. it is fairly well settled that it is not permissible for the High Court to record any findings, wherever there are factual disputes. Merely on the ground that there is no pagination in the Schedule, the High Court has disbelieved such Schedule to the Agreements. It is the specific case of the appellant that the lands covered by Survey Nos.115 and 117 of Ballur Village were sold even prior to the first agreement, as such respondents have committed an act of cheating. It is also the specific case of the appellant that two cheques were issued by respondents-accused by way of security for the amount of Rs.9 crores which is advance but the account of such cheques was closed even prior to entering into the Agreement itself. The second complaint filed by the appellant is self-explanatory and he is forcefully made to sign the sale deed which were executed subsequently for the lands covered by Survey Nos.115 and 117 of Ballur Village. Mere filing of the suits for recovery of the money and complaint filed under Section 138 of the N.I. Act by itself is no ground to quash the proceedings in the complaints filed by the appellant herein. When cheating and criminal conspiracy are alleged against the accused, for advancing a huge 11 sum of Rs.9 crores, it is a matter which is to be tried, but at the same time the High Court has entered into the disputed area, at the stage of considering the petitions filed under Section 482, Cr.P.C. It is fairly well settled that power under Section 482 Cr.P.C. is to be exercised sparingly when the case is not made out for the offences alleged on the reading of the complaint itself or in cases where such complaint is filed by way of abuse of the process. Whether any Schedules were appended to the agreement or not, a finding is required to be recorded after full fledged trial. Further, as the contract is for the purpose of procuring the land, as such the same is of civil nature, as held by the High Court, is also no ground for quashing. Though the contract is of civil nature, if there is an element of cheating and fraud it is always open for a party in a contract, to prosecute the other side for the offences alleged. Equally, mere filing of a suit or complaint filed under Section 138 of the N.I. Act, 1881 by itself is no ground to quash the proceedings. While considering the petition under Section 482 of Cr.P.C., we are of the view that the High Court also committed an error that there is a novation of the contract in view of the subsequent agreement entered into on 08.11.2012. Whether there is novation of contract or not and the effect of such entering into the contract is a matter which is required to be considered only after trial but not at the stage of considering the application under Section 482, Cr.P.C."12
15. Learned counsel for 2nd respondent/de facto complainant also relied upon a decision reported in M/s. Medchl Chemicals and Pharma Pvt.Ltd. v. M/s. Biological E. Ltd5, wherein the Hon'ble Supreme Court, in para 16, held thus.
"Be it noted that in the matter of exercise of High Courts inherent power, the only requirement is to see whether continuance of the proceeding would be a total abuse of the process of Court. The Criminal Procedure Code contains a detailed procedure for investigation, charge and trial, and in the event, the High Court is desirous of putting a stop to the known procedure of law, the High Court must use a proper circumspection and as noticed above, very great care and caution to quash the complaint in exercise of its inherent jurisdiction. Recently, this Court in Trisuns Chemical Industry v. Rajesh Agarwal and others (1999 (5) SCALE
609) observed:
5. Respondents counsel in the High Court put forward mainly two contentions. First was that the dispute is purely of a civil nature and hence no prosecution should have been permitted, and the second was that the Judicial Magistrate of First Class, Gandhidham has no jurisdiction to entertain the complaint. Learned Single Judge has approved both the contentions and quashed the complaint and the order passed by the magistrate thereon.5
AIR 2000 SC 1869 13
6. On the first count learned Single Judge pointed out that there was a specific clause in the Memorandum of Understanding arrived between the parties that disputes, if any, arising between them in respect of any transaction be resolved through arbitration. High Court made the following observations:
"Besides supplies of processed soyabean were received by the complainant company without any objection and the same have been exported by the complainant- company. The question whether the complainant- company did suffer the loss as alleged by it are the matters to be adjudicated by the Civil Court and cannot be the subject matter of criminal prosecution."
7. Time and again this Court has been pointing out that the quashment of FIR or a complaint in exercise of inherent powers of the High Court should be limited to very extreme exceptions (vide State of Haryana v. Bhajan Lal (1992 Suppl.(1) SCC 335 and Rajesh Bajaj v. State NCT of Delhi (1999 (3) SCC 259)].
8. In the last referred case this court also pointed out that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. We quote the following observations:
"It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly a reason for holding that the offence of cheating would elude from 14 such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions."
9. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana v.Bhajan Lal (Supra)."
16. Learned counsel for 2nd respondent/de facto complainant also relied upon a decision reported in State of Bihar v. Rajendra Agrawalla6, wherein the Hon'ble Supreme Court, in para 6, held thus.
"Bearing in mind the aforesaid parameters if the charge sheet and the F.I.R. filed in the case in hand are examined and the impugned order of the High court is 6 (1996) 8 SCC 164 15 tested, the conclusion becomes irresistible that the High Court exceeded its jurisdiction by trying to appreciate the evidence and coming to a conclusion that no offence is made out. On examining the material on record and the impugned judgment of the High Court we are of the considered opinion that the High Court was wholly unjustified in invoking its inherent power under Section 482 of the Code of Criminal Procedure to quash the cognizance taken in as much as the allegation in the F.I.R. and material referred to in the charge sheet do make out an offence under Section 414 of the Indian Penal Code, so far as the respondent is concerned. In the aforesaid premise the impugned order of the High Court dated 5.3.1992 passed in Criminal Miscellaneous No. 475 of 1992 is quashed and this appeal is allowed.
The Magistrate is directed to proceed with the trial against the respondent. The respondent may now appear before the Magistrate forthwith."
17. Learned counsel for 2nd respondent/de facto complainant also relied upon a decision reported in Rajesh Bajaj v. State NCT of Delhi7, wherein the Hon'ble Supreme Court, in paras 11 and 12, held thus.
"11. The crux of the postulate is the intention of the person who induces the victim of his representation and not the nature of the transaction which would become 7 (1999) 3 SCC 259 16 decisive in discerning whether there was commission of offence or not. The complainant has stated in the body of the complaint that he was induced to believe that respondent would honour payment on receipt of invoices, and that the complainant realised later that the intentions of the respondent were not clear. He also mentioned that respondent after receiving the goods have sold them to others and still he did not pay the money. Such averments would prima facie make out a case for investigation by the authorities.
12. The High Court seems to have adopted a strictly hyper-technical approach and sieved the complaint through a colander of finest gauzes for testing the ingredients under Section 415 IPC. Such an endeavour may be justified during trial, but certainly not during the stage of investigation. At any rate, it is too premature a stage for the High Court to step in and stall the investigation by declaring that it is a commercial transaction simpliciter wherein no semblance of criminal offence is involved."
18. Relying on the said decisions, learned counsel for 2nd respondent/de facto complainant contended that the present Criminal Petition has filed to quash the proceedings at a nascent stage; time and again this Court and the Hon'ble Apex Court categorically held that in a petition under Section 482 Cr.P.C., the proceedings cannot be quashed at a nascent stage; it is for the investigating agency to 17 conduct investigation and to arrive at a decision either to file charge sheet or to submit their final report in respect of the offences alleged.
19. Learned Special Assistant Public Prosecutor contended that basing on the accusations made in the FIR and 161 Cr.P.C statements, prima facie, there is some material where the investigating agency has to conduct their investigation and draw the inference in respect of the said offences. He relied upon a decision reported in Skoda Auto Volkswagen India Private Limited v. State of Utter Pradesh8, wherein the Hon'ble Supreme Court in para 41 held thus.
"41. It is needless to point out that ever since the decision of the Privy Council in King Emperor vs. Khwaja Nazir Ahmed1, the law is well settled that Courts would not thwart any investigation. It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on. As cautioned by this Court in State of Haryana vs. Bhajan Lal2, the power of quashing should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. While examining a complaint, the quashing of which is sought, the Court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or in the complaint. In S.M. Datta vs. State of Gujarat3, this Court again 1 AIR 1945 8 2020 SCC Online SC 958 18 PC 18 2 (1992) Supp. (1) SCC 335 3 (2001) 7 SCC 659 cautioned that criminal proceedings ought not to be scuttled at the initial stage. Quashing of a complaint should rather be an exception and a rarity than an ordinary rule. In S.M. Datta (supra), this Court held that if a perusal of the first information report leads to disclosure of an offence even broadly, law courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities and one ought not to tread over the other sphere."
20. In view of the facts, as narrated in the FIR, admittedly, the amounts were paid to the petitioner herein and his relatives. The petitioner was able to show the account to the extent of Ac.9.00 Crores and in respect of Rs.4.00 Crores and odd, the petitioner was not able to show the account. Neither he purchased the lands for the amount that was given nor he paid back the entire amount to the de facto complainant. This Court, at this stage, feels that the matter requires examination by the investigating agency. It is premature for this Court to come to a conclusion, at this stage, that the offence under Section 420 IPC would not attract. This Court would not be in a position to hold that the offence of cheating would delete from the said transaction.
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21. From the above, it is clear that the intention of the person is essential who induces the victim of his representation and not the nature of the transaction to come to a conclusion that an offence of cheating would make out or not.
22. Section 406 IPC prescribes punishment for criminal breach of trust. Section 405 IPC, which deals with criminal breach of trust, reads thus.
"405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust."
23. The following are the essential ingredients of the offence of criminal breach of trust:
(1) Entrusting any person with property or with any dominion over property;
(2) The person entrusted-
(a) dishonestly misappropriates or converts to his own use that property; or
(b) dishonestly uses or disposes of that property or willfully suffers any other person so to do in violation-20
(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. A reading of the above provision contemplates that there should be (1) entrustment and (2) the entrusted amount should have been converted to personal use. When the petitioner has not shown the account of the entrusted amount in toto, it requires investigation by police. It is too premature for this Court to come to a conclusion and draw inference.
25. The contentions of the learned counsel for the petitioner is premature and the same cannot be decided at the stage of investigation.
26. In view of the aforesaid facts and circumstances of the case, at this stage, this Court is not inclined to interfere with the proceedings.
27. Accordingly, the Criminal Petition is dismissed.
As a sequel thereto, the miscellaneous petitions, if any, pending in this Criminal Petition shall stand closed.
____________________ K. SREENIVASA REDDY, J Dated:02.11.2022 Nsr 21 HON'BLE SRI JUSTICE K. SREENIVASA REDDY Criminal Petition No.7312 of 2019 Dated:02.11.2022 Nsr