IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF JULY 2019 BEFORE THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION NO.8230 OF 2015 BETWEEN:
MR. BHARAT J. PATEL S/O LATE SRI JAYANTILAL HARJIVANDAS PATEL, AGED ABOUT 62 YEARS NO.3-3A, CHURCHGATE HOUSE,1ST FLOOR, 32/34,VEER NARIMAN ROAD, MUMBAI-400 020 ... PETITIONER (BY SRI: RAVI B.NAIK, SENIOR ADVOCATE A/W SRI: KEMPE GOWDA, ADVOCATE AND SRI: MANJU M.SUBBAIAH, ADVOCATE) AND 1. HINDUJA VENTURES LTD (A COMPANY INCORPORATED UNDER THE COMPANIES ACT,1956) HAVING ITS REGISTERED OFFICE AT "IN CENTER",49/50 12TH ROAD, MIDC, ANDHERI (EAST) MUMBAI-400 093 REPRESENTED BY ITS FULL TIME DIRECTOR AND AUTHORISED REPRESENTATIVE MR.ASHOK MANSUKHANI 2. STATE OF KARNATAKA REPRESETNED BY THE SUB-INSPECTOR OF POLICE DEVANAHALLI POLICE STATION, DEVANAHALLI SUB-DIVISION, BANGALORE CITY DISTRICT ... RESPONDENTS (BY SRI: C.S. PRASANNA KUMAR, ADVOCATE A/W SRI: RAJESH D M, ADVOCATE AND SRI: RAJESH S.V., ADVOCATE FOR R1 SRI: DILDAR SHIRALLI, HCGP FOR R2) THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO QUASH THE COMPLAINT AT ANNEXURE-'A' FILED BY RESPONDENT No.1 IN P.C.R.No. 426/2014 BEFORE THE CIVIL JUDGE AND J.M.F.C. AT DEVANAHALLI AND QUASH THE ORDER AT ANNEXURE-'B' DATED 22.11.2014 PASSED BY THE CIVIL JUDGE AND J.M.F.C. AT DEVANAHALLI, REFERRING THE COMPLAINT FILED BY RESPONDENT No.1 IN P.C.R.No.426/2014 TO THE RESPONDENT No.2 FOR INVESTIGATION AND REPORT U/S.156(3) OF THE CRIMINAL PROCEDURE CODE, 1973; QUASH THE F.I.R. AT ANNEXURE-'C' BEARING CRIME No.74/2015 REGISTERED BY THE RESPONDENT No.2, AGAINST THE PETITIONER HEREIN FOR THE OFFENCES PUNISHABLE UNDER SECTIONS 420 AND 506 OF I.P.C.
THIS CRL.P COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R This petition is filed under Section 482 of Cr.P.C. seeking to quash the complaint at Annexure-A and the order dated 22.11.2014 passed by the learned Magistrate directing investigation under Section 156(3) of Cr.P.C.
2. Heard learned Senior Counsel appearing for the petitioner, learned counsel appearing for respondent No.1 and learned HCGP for respondent No.2-State.
3. Perused the records.
4. Immovable property comprised in S.No.67 measuring 12 acres 26 guntas originally belonged to one Srikantaiah.
Petitioner herein entered into an agreement with him on 7.7.1995. Subsequent to this agreement, the petitioner entered into an agreement with respondent No.1 for sale of aforesaid properties for a total consideration of Rs.6,63,40,500. Respondent No.1 paid part of the consideration amounting to Rs.6,46,93,750/- from time to time and a sum of Rs.16,46,750/- was in balance. At that stage, the petitioner is alleged to have sent a notice to respondent No.1 cancelling the aforesaid agreement of sale. On account of this dispute, respondent No.1 instituted a suit for specific performance numbered as O.S.No.567/2011. During the pendency of the said suit, respondent No.1 filed a private complaint before the Civil Judge and JMFC at Devanahalli interalia contending that the aforesaid agreement was entered into by the petitioner with an intention to cheat and defraud respondent No.1. It was alleged that eventhough respondent No.1 has paid almost the entire sale consideration, accused/petitioner went on dodging the registration with some ulterior motive. The act of the accused canceling the power of attorney and issuing a notice to respondent No.1 cancelling the aforesaid agreement clearly indicated that the accused never had the intention of honouring the commitment. It was further stated that having executed the agreement of sale and power of attorney and having handed over possession of the property, the petitioner failed to execute the sale deed which has resulted in interference over the possession of property by some strangers which has forced respondent No.1 to file the suit on behalf of the petitioner by engaging advocates. Thus, contenting that petitioner has committed the act of cheating and also issued threats to respondent No.1, respondent No.1 sought action against the petitioner for the alleged offences punishable under Sections 420 and 506 of Indian Penal Code. The learned Magistrate on receiving the said complaint referred the same for investigation under Section 156(3) of Cr.P.C.
5. Learned Senior counsel appearing for the petitioner would submit that the allegations made in the complaint even if accepted as true, would make out that the alleged dispute between the parties is purely civil in nature. The dispute has arisen on account of the alleged breach of contract which has given rise to civil consequences and not resulted in a criminal offence. In order to maintain a complaint under Section 420 of Indian Penal Code, complainant is required to establish that the petitioner/accused was motivated to cheat and defraud right from the inception of the transaction. Such averments are not forthcoming in the complaint. On the other hand, the averments made in the complaint go to show that for all purpose the petitioner intended to fulfill his obligation arising out of the contract but on account of intervening circumstances, the sale could not be materialized. The same does not amount to cheating within the meaning of Section 420 of Indian Penal Code and hence, no complaint could be maintained against the petitioner. So far as Section 506 of Indian Penal Code is concerned, except making bald and general allegations, no material is produced in support of this charge. Thus placing reliance on the decision of the Hon’ble Supreme Court in the case of Thermax Limited and Others – vs – K.M.Johny and others reported in (2011) 13 Supreme Court cases 412, the learned Senior Counsel has prayed to quash the impugned proceedings.
6. Repelling the above contentions, learned counsel for respondent No.1 would submit that the conduct of the petitioner and the sequence of events narrated in the complaint clearly disclose that right from inception petitioner had no intention to perform his part of the contract. The petitioner has issued a cancellation notice in spite of receiving substantial consideration which indicates that the petitioner had no intention to execute the sale deed. These facts clearly attract the ingredients of the offence under Section 420 of Indian Penal Code and moreover, the investigating agency having collected necessary material to substantiate these allegations, there is no reason to quash the charge sheet filed against the petitioner for the above offences.
7. Considered the submissions and perused the records.
8. Undisputedly, the dispute between the parties has arisen out of written contract dated 28.7.1995. It was an agreement to purchase the properties for consideration. It is not in dispute that substantial consideration has already been paid by respondent No.1 under the said agreement. It is even submitted that respondent No.1 has also borne the registration expenses to obtain the sale deed in the name of the petitioner. In that background the question that arises for consideration is :
‘Whether on account of breach of the terms of the aforesaid agreement, is the petitioner liable for criminal prosecution?
9. It is trite that in order to constitute an offence under Section 420 of Indian Penal Code :
i) A person must commit the offence of cheating under Section 415; and ii) The person cheated must be dishonestly induced to a) deliver property to any person; or b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.
10. In the instant case, facts discussed above clearly indicate that at the inception of the transaction, petitioner did not have intention to cheat or defraud respondent No.1. The averments made in the complaint go to show that in terms of the aforesaid agreement, petitioner had even delivered possession of the property to respondent No.1 and even executed a general power of attorney in his favour to contest the suits on behalf of the petitioner. These instances therefore, indicate that the petitioner did not have any intention to cheat respondent No.1. The circumstances of the case disclose that the dispute appears to have been arisen only on account of non-
compliance of certain pre-conditions. viz. to secure the permission under Section 269 UL of the I.T.Act and to secure I.T clearance certificate etc. There also seems to be a dispute with regard to the payment of the balance amount. In the course of hearing, a submission is made to the effect that excess payment has been paid by respondent No.1 to the petitioner. But the records disclose that the petitioner has issued a notice canceling the agreement of sale for non payment of a balance of Rs.16.50 lakhs. These disputes appear to have given rise to civil consequences driving respondent No.1 to institute a suit for specific performance of the agreement of sale.
In that view of the matter, the entire dispute between the parties being civil in nature, invocation of the criminal process by respondent No.1 is wholly unwarranted and unjustified and cannot be permitted in law. Moreover, it is stated that the civil suit for specific performance filed by respondent No.1 is pending adjudication before the Civil Court. The matter is sub judice in the aforesaid suit. Therefore, at this juncture the respondent cannot be permitted to prosecute criminal complaint against the petitioner. Consequently it has to be held that recourse to criminal action by respondent No.1 is illegal, and an abuse of process of Court.
For the above reasons, the petition is allowed. The proceedings initiated against the petitioner *arising out of C.C.No.5318/2016 pending on the file of Civil Judge and JMFC at Devanahalli are quashed.
Sd/- JUDGE rs *Corrected vide Court Order dated 27.08.2019