Allahabad High Court
Sobhit Gupta Son Of Gulab Gupta vs State Of U.P. And L.N. Agrawal S/O Sarda ... on 24 August, 2007
Equivalent citations: 2008CRILJ478, 2008 CRI. L. J. 478, 2007 (6) ALL LJ 431, 2008 (2) AJHAR (NOC) 363 (ALL.) = 2008 CRI. L. J. 478, (2008) 60 ALLCRIC 264
Author: Saroj Bala
Bench: Saroj Bala
JUDGMENT Saroj Bala, J.
1. The order dated 18.2.2003 having been challenged in criminal misc. application No. 2053 of 2003 and criminal revision No. 935 of 2003, both the cases are being decided by a common judgment.
2. The applicant Shobhit Gupta and revisionist Gulab Gupta are used in the criminal case No. 1784 of 2002 L.N. Agarwal v. Focus trading Pvt. Ltd. and Ors. The allegations made in the complaint are that in pursuance of an advertisement made in the National newspaper, the complainant came to know that City and Industrial Development Corporation of Maharashtra (herein after referred to as CIDCO) owned land in Nerul Mumbai over which Focus Trading Pvt. Ltd. accused No. 1 was authroised to construct flats for the purchaser of the plot, induced by the advertisement the complainant approached the accused persons and offered to purchase plot No. 180 Sector No. 21 Nerul Mumbai for construction of duplex flat No. 5 in proposed Om cottages. The letter of intent for reservation was signed on 2.2.1995 by the complainant and accused No. 2 the revisionist with the approval of accused No. 3 and a sum of 3,15,250/- was paid by the complainant to Focus Trading Pvt. Ltd. through demand draft issued by the State Bank of India Varanasi. The amount of Rs. 4, 16,005/- was to be paid by the complainant as per payment schedule on completion of plinth but accused demanded the said amount before the completion of plinth. The nephew of the complaint after vesting the site informed that no constructions were raised on plot No. 180. The accused vide letter dated 1.9.1997 reiterated that construction of plinth had started and demanded amount of payment. The accused by their letter dated 1.12,1999 informed the complainant that the building was ready for possession in sector No. 21 and required him to visit Mumbai for discussion about alternative building though the complainant had never expressed his willingness for alternative building. The accused by their letter dated 6.12. 2000 again asked the complainant to take possession of the building without reference to any plot. On enquiry from CIDCO the complainant came to know that Focus Trading Pvt. Ltd. had surrendered plot No. 180 to them and said plot was allotted to M/s National Construction Company. The CIDCO despite full knowledge that complainant had lien over the plot in question accepted its surrender. After recording the statement of the complainant under Section 200 Cr.P.C., and of witnesses under Section 202 Cr.P.C. the applicant and revisionist were summoned for the offence under Sections 406, 420 I.P.C. vide order dated 18.2.2003.
3. The contention of the applicant is that he is the director of Focus Trading Pvt. Ltd., a construction company of Mumbai State of Maharashtra. The applicant admitted that the opposite party No. 1/complainant offered to purchase duplex flat constructed by the applicant's company and an agreement was executed on 2.2.1995 between the applicant and opposite party No. 1. The payment of Rs. 3,15,250/- through bank draft by the complainant to the construction company is not disputed. It is alleged that due to slump in the market value of the flats having decreased the opposite party No. 2 was not interested in purchasing the same and failed to pay Second instalment despite repeated demands. On account of default in payment of second installment applicant could not meet the demand of CIDCO and had to surrender the land and suffered loss of Rs. 18 Lacs. There was condition in the agreement dated 2.2.1995 that the amount in full with interest shall be refunded if the construction was abandoned or drawing was changed. There was no penal clause in the agreement nor any offence of breach of trust or cheating is made out. It is a case purely of civil nature. The jurisdiction of court at Varanasi has been challenged on the ground that agreement/intent letter was signed at Mumbai, amount was deposited in the bank of Mumbai and property in dispute was situated at Mumbai. According to the applicant the court below has acted without jurisdiction in summoning the applicant and co-accused.
4. The opposite party No. 2 reiterating the facts stated in the complaint has contended in the counter affidavit that the certificate dated 25.6.1997 (Annexure-2) about plinth completion is a false and fabricated document. The land was surrendered in collusion with the officers of CIDCO. The applicant has received refund of money in relation to the plot in question after paying nominal damage to the CIDCO therefore the intention of the applicant and co-accused was fraudulent since the very inception The plot surrendered by the accused in order to dupe the depositor. The questions raised by the applicant relating to the facts of case which can be adjudicated at the trial.
5. The applicant filed rejoinder affidavit reiterating the averments made in the affidavit. The applicant has stated that the opposite party No. 2 in his statement under Section 200 Cr.P.C. gave out that first installment was paid in pursuance of the terms of the agreement.
6. The revisionist has assailed the summoning order on the grounds that it was passed without application of judicial mind. The opposite party No. 2 entered into an agreement at Mumbai on 2.2.1995 and payment through bank draft was made under the said agreement at Mumbai. The opposite party No. 2 committed default in payment of second installment after the completion of plinth and on account of non-payment the plot was surrendered to CIDCO. After the surrender of plot offer was made by them for alternative accommodation but due to slash in the rates of flats in Mumbai the opposite party No. 2 lost interest in the transaction. The agreement was executed at Mumbai and demand draft having been handed over and encashed at Mumbai, the courts at Mumbai alone have jurisdiction in this matter. There being a clause of refund of amount in the agreement, it is a matter of civil liability. In view of terms and conditions of the agreement there was no criminal liability.
7. Heard Shri Prem Shanker, learned Counsel for the applicant Shri Sudhir Kumar, learned Counsel for the revisionist, Shri Manish Tewari learned Counsel for the opposite party No. 2 learned A.G.A. and have perused the record.
8. The learned Counsel for the applicant submitted that agreement was executed at Mumbai, property situated at Mumbai and payment was made at Mumbai, therefore, courts at Varanasi had no jurisdiction to entertain the complaint. The applicant was not a party to the agreement which was entered into between opposite party and Gulab Gupta the revisionist. There was no dishonest intention on the part of the applicant nor was the opposite party induced to part with money paid in pursuance of the agreement.
9. The learned Counsel for the opposite party submitted that advertisement made in the newspaper was read by the opposite party at Varanasi. The courts at Varanasi and Bombay having parallel jurisdiction in the matter, the court at Varanasi had jurisdiction to entertain the complaint as contemplated under Section 181(4) Cr.P.C. The demand of Second instalment was made before the construction of plinth. The applicant returned the land to CIDCO and money was taken back without giving to the opposite party. The plinth certificate is a forget document.
10. Section 181(4) Code of Criminal Procedure embodies that any offence of criminal misappropriation or of criminal breach of trust may be inquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of offence was received or retained, or was required to be returned or accounted for, by the accused person. The letter of intent of reservation was executed between opposite party No. 2 and Gulab Gupta revisionist director and authorised signatory of Focus Trading Pvt. Ltd. at Mumbai. The bank draft of Rs. 3,15,250/- was handed over by the opposite party No. 2 to Gulab Gupta at Mumbai and was encashed at Mumbai. The property for which payment made was situated at Mumbai. The amount paid by the opposite party No. 2 was received and retained by the applicant at Mumbai. No part of the offence having been taken at Varanasi the court at Varanasi had no jurisdiction to entertain the complaint.
11. Admittedly the opposite party No. 2 offered to purchase plot No. 180 for duplex flat No. 5 in proposed Om cottage situated at sector No. 21 Nerul Mumbai. There is no denying the fact that letter of intent for reservation dated 2.2.1995 (Annexure-1 to the affidavit) was executed between the opposite party No. 2/complainant and Focus Trading Pvt. Ltd. through its director Gulab Chand, revisionist. The payment of a sum of Rs. 3,15,250/- by the opposite party No. 2 to the Focus Trading Pvt. Ltd. through Bank draft in terms of letter of intent for reservation is an admitted fact. The demand of second instalment as per payment schedule was to be made by the accused on completion of plinth. The allegations of the complaint is that the said demand was made before commencement of construction of plinth. The reservation was made subject to the condition that in case of absolute deletion of unit no claim monetary or otherwise will be raised except that the amount received will be refunded in full. If for any reason whether within or outside the control of accused the whole or part of the project was abandoned no claim was preferable except the refund of money sans interest. The receipt of Rs. 3,15,250/- was acknowledged by accused
12. The allegations made in the complaint are that the second instalment of amount was demanded prior to commencement of construction of plinth and plot was surrendered by the accused without consent and information to the complainant. The averments made in paragraph 16 of the compliant in this regard are as under:
That no construction was done over plot No. 180 after its allotment to the complainant and demand for payment was made before completion of plinth and on inquiry regarding status and factual position of the construction, silence of Focus Trading Pvt. Ltd. and CIDCO, their offer for an alternate building without any consent of the complainant, suppression of the fact of surrender and without informing complainant sale of plot No. 180 clearly shows that the accused persons had in collusion with each other, cheated the complainant and misappropriated the money paid by him.
13. The complainant had sent a letter dated 28.12.2001 to the Focus Trading Pvt. Ltd. It was replied on 24.1.2002 stating therein that the opposite party No. 2 was aware of surrender of disputed plot and opted to acquire similar duplex flat. The alternate building in ready condition situated in the same sector was offered and complainant opted for the Duplex flat constructed on plot No. 144 on same terms and condition. The construction company asked the opposite party No. 2 to take possession of alternative building and to pay balance amount.
14. The summoning order, dated 18.2.2003 was passed by the Additional C.J.M II on the grounds that in pursuance of the advertisement complainant had offered to purchase plot No. 180 in sector No 21 and agreement was executed between the complainant and accused No. 2 and payment of Rs. 315250/- was made by the complainant through bank draft. The demand of Rs. 4,16,005/- was made before the commence of construction of plinth. The Focus Trading Pvt. Ltd. through letters dated 1.12.99 and 8.12.2000 informed the complainant that commercial accommodation was ready in sector 21 and he can take possession of alternative building. In the said letters the number of building was not mentioned. The complainant made inquires and came to know that plot No. 180 was surrendered by the company and was allotted to another construction company by CIDCO. The accused in collusion with each other cheated the complainant and misappropriated the amount deposited by him with these findings the cognizance was taken by the Magistrate for the offence under Sections 406 and 420 I.P.C.
The ingredients in order to constitute a criminal breach of trust are: entrusting a person with property or with any dominion over property (ii) that person entrusted (a)dishonestly misappropriating or converting that property to his own use; 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 (ii) of any legal contract made touching the discharge of such trust.
The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceive should be induced to deliver any property to any person or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b) the act of omission on should be one which causes or is likely to cause damage or harm to the person induced in body mind, reputation or property.
15. In Hridaya Ranjan Prasad Verma and Ors. v. State of Bihar and Anr. 2000 (4) SCC 168 the Apex Court held as under:
In determining the question it has to be kept in mind 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 of 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 there fore 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. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise, cannot be presumed.
16. IN G.V. Rao v. L.H.V. Prasad and Ors. , the Apex court has held thus:
As mentioned above Section 415 has two parts. While in the first part the person must "dishonestly" or "fraudulently" induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional.
17. in Mahadeo Prasad v. State of West Bengal , the Apex Court held that in order to constitute the offence of cheating, the mention to deceive should be in existence at the time when the inducement was offered.
18. In Alpic Finance Ltd. v. Sadasivan the Apex court, while considering a case where the complainant had alleged that the accused was not regular in making payment and committed default in payment of instalments and the bank had dishonored certain cheques issued by him and on physical verification certain chairs were found missing from the premises of the accused and thus it was alleged that the accused committed cheating and caused misappropriation of the property belonging to the complainant, held as under:
The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form the basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the aggrieved person may have a right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed. an offence of criminal breach of trust or cheating a Here the main offence alleged by the appellant is that the respondents committed the offence under Section 420 I.P.C. and the case of the appellant is that the respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practising the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any will fill misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharged their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception.
19. In Madhab Rao Jiwaji Rao Scindia and Ors. v. Sambhaji Rao Chandroji Rao Angre and Ors. the Apex Court held that 'if the allegations in the complaint are both of 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.'
20. In Anil Mahajan v. Bhor Industries Ltd. and Anr. (2006) 1 SCC (Cri) 746, Apex Court has held as under:
The substance of the complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence. Except mention of the words "deceive" and "cheat" in the complaint field before the magistrate and "cheating" in the complaint field before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay.
21. The execution of intent of reservation and payment of amount for purchase of plot for construction of flat through bank draft are undisputed facts. The payment of Rs. 3,15,250/- was received by the revisionist for and behalf of Focus Trading Pvt. Ltd., under the terms and condition of reservation letter without any fraudulent, inducement or willful misrepresentation, the amount with interest was to be refunded by the construction company to the opposite party No. 2 on deletion of unit or abandonment of project. The plot was allotted by the CIDCO to the construction company of accused for construction of flats on depositing Rs. 59,8,6,942.76.On surrender of plot the accused suffered a loss of Rs. 1,86,2472.76 P. It is not a case where promise was made before acquisition of plot the same from CIDCO. All the payments were made by the accused to CIDCO on due dates and prior to entering into an agreement with opposite party No. 2. In order to constitute the offence of cheating the intention to deceive at the time of inducement of making promise is necessary. A mere failure to keep up promise subsequently cannot be presumed as an act leading to cheating. The accused admitted their liability to refund the amount with interest in accordance with terms of letter of intent of reservation. There was no fraudulent or dishonest intention at the time of making promise. The allegations made in the complaint and sworn statements do not make out the necessary ingredients of the offences.
22. In Nagawa v. Veeranna Shivalingappa Konjalgi it was held by the Apex Court that the order of Magistrate issuing process against the accused could be quashed under the following circumstances:
(1) Where the allegations made in the complaint or the statements of the witness 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 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 fundamentals legal defects, such as want of sanction, or absence of a complaint by legally competent authority and the like.
23. The gist of complaint reveals that it is purely a case of breach of contract and principles laid down by the Apex Court in Alpic Finance Ltd. (supra) are applicable.
24. For the aforesaid reasons the summoning order dated 18.2.2003 and further proceedings of complaint case No. 1784 of 2002 L.N. Agarwal v. Focus Trading Pvt. Ltd. and Ors. pending in the court of Additional chief judicial Magistrate Court No. 2 Varanasi are liable to be quashed. The application under Section 482 Cr.P.C. and criminal revision are allowed. The summoning order dated 18.2.2003 and proceedings of above mentioned criminal complaint case are quashed.